Los Angeles is facing a severe housing crisis, with over 400,000 households living in substandard housing and many residents spending more than 50% of their income on rent and utilities. The city has the highest homelessness rate in the country, with 58,000 people living on the streets in 2017. It is estimated that a 5% increase in rent could result in an additional 2,000 people becoming homeless. Statewide in California, the median home price is more than 2.5 times higher than the national median.

Karl Beitel, a public banking expert, believes that public banks can help address this crisis by providing loans for affordable housing development, including construction loans and long-term bond and mortgage loans for multi-unit housing developments. According to Beitel, a municipal bank in Los Angeles “could, over time, be expanded to become a significant supplier of long-term affordable housing credit…and fund a property acquisition program that would acquire existing rental properties and place them into permanently affordable cooperative housing arrangements and land trusts.”

Public banks offer a smooth pathway for funding and an alternative to reliance on private investors and the for-profit housing market. They can help ensure that future housing development linked to publicly funded transit investments does not result in widespread displacement of residents, which often occurs in predominantly African-American, Asian, and Latino working-class neighborhoods. This can also be achieved through co-lending with local private banks and by encouraging and backstopping their investments in local housing initiatives.