City considers proposal to put more money in local credit unions
Portland's City Council is considering a plan to invest part of the city's tax dollars in local credit unions and community banks. But first, the city must change its own rules on investing.
On Friday, Mayor Sam Adams released the draft of a three-page ordinance that would give the city some flexibility in investing its money in local credit unions and community banks. The city already deposits some of its money in local banks, but is prohibited by its rules, and some state regulations, from putting large amounts of money in credit unions.
Adams said the city has 'a substantial amount of money invested in banks (about $37.4 million) and strives to maintain an investment portfolio that preserves the city's principal while serving the liquidity needs of the City and also generating a fair return.'
'In order to better serve these priorities, the city would like to be able to explore potential options for investment in credit unions and community-based banks and to include community investment practices as part of the evaluation criteria for selecting banking services in future contracting opportunities,' Adams said last week.
To do that, the city would have to change its investment rules to match new state guidelines that go into effect in 2013. Right now, the city's deposit into a local credit union or community bank can only be as much as the credit union's/bank's federal insurance limit - about $250,000 in some cases.
New rules would allow the city to invest more if it wished in those institutions. The draft ordinance allows the city treasurer to make up to 10 initial investments in credit unions and community banks.
City Council members could consider the new ordinance in the next few weeks. Adams is asking the public to comment on the proposal by 5 p.m. Friday, Feb. 10.
Adams said the proposal has been discussed for more than a year, but resurfaced during last fall's Occupy Portland movement, which pressed the city and local governments to put more tax dollars into credit unions and community banks. In the past month, the council has dealt with other issues raised by the Occupy movement, such as rejecting corporate personhood and campaign finance reform.
Under the city's investment policy, which requires a conservative strategy to get the best rate of return, most of the city's tax dollars are invested in federal securities. The city also deposits $7.2 million in Wells Fargo Bank, $250,000 in Albina Bank, $3,000 in Key Bank, $29.9 million in Umpqua Bank and $17,000 in US Bank.
If the ordinance is approved, the council could hire a firm to manage the city's banking services using the new guidelines.