An audit that calls for more transparency from the Mayor’s Office of Housing and Community Development found that the department presently relies on staff expertise, “informal documentation” and “memories for records” to make important housing decisions.
Many of the departments’ financial plans and strategies are informal and internally discussed, making it difficult for policymakers or the public to hold it accountable, according to a Budget and Legislative Analyst audit released Tuesday.
In the prior fiscal year, the Mayor’s Office of Housing ran a surplus of $537 million, one of several recent years when the surplus totaled in the vicinity of half a billion dollars. While the vast majority of those funds were already allocated or loosely committed to housing developments — 93 percent — it’s unclear if more than half of those allocated funds, about 58 percent, had an official committed loan or mere gentlemen’s agreements, the audit stated. The department did not clarify the amounts to the analyst. So, likely more than at least 7 percent of the total — $37 million — was not allocated at all.
“We knew it was bad,” said District 5 Supervisor Dean Preston, who requested this audit in 2021. “We didn’t know it was this bad.”
Better quarterly reports and public presentations could provide insight into the department’s ending budget, which shows how much money is left at the conclusion of the year.
“To have half a billion dollars and not be able to account for how much of that is available?” Preston asked. “How could they make decisions about acquisitions, or what they can or not afford, when they can’t even keep track of their account?”
Housing budget surplus (millions of $)
600
Last year, at least $37 million of
the surplus was not committed
to any future project
500
400
300
MOHCD has not disclosed
exactly how much of the
remaining $499 million surplus
is allocated to unfinalized,
“anticipated” projects – which
may never come to fruition
200
100
0
2017–18
2018–19
2021–22
2019–20
2020–21
Financial year
Housing budget surplus (millions of $)
Last year, at least
$37 million of the surplus
was not committed to any
future project
600
500
400
300
MOHCD has not disclosed
exactly how much of the
remaining $499 million surplus
is allocated to unfinalized,
“anticipated” projects – which
may never come to fruition
200
100
0
’17–18
’18–19
’21–22
’19–20
’20–21
Financial year
Chart by Will Jarrett. Data from the San Francisco Budget and Legislative Analyst.
CollapseHigh ending fund balances reflect a recent pattern, according to the report. From the fiscal year 2017-18 to 2021-22, the mayor’s housing department has averaged an ending balance of $482 million a year, suggesting that the city rakes in revenue faster than it spends it. One reason is that the office holds onto funds committed to future projects that take years to break ground.
The budget analyst recommended speeding up the permitting and construction process to disburse money faster.
The Mayor’s Office of Housing defended its books, and said in a response that navigating “unpredictable funding streams in a volatile market” was complicated. Changes to state and federal funding formulas in 2020 prevented local developers from receiving funds, backlogging money disbursal. The global pandemic and its effects on construction costs also played a large role.
And holding onto money for future projects may help in the long run. The department bailed out nonprofit affordable housing developer Mission Housing when the pandemic caused its acquisition of public housing sites to go over “$1 million or $2 million,” said the nonprofit’s executive director Sam Moss.
“MOHCD acknowledged it wasn’t our fault, and they supported and helped us,” Moss said.
The audit follows repeated accusations that the mayor’s office plays politics when it comes to housing. In January, Preston accused the mayor’s office of withholding affordable housing funds from his district, and in 2021, the mayor spent months stalling the disbursal of millions of affordable housing dollars.
But Tuesday’s audit shows a “systemic” issue beyond anecdotes, Preston said. The audit found housing reports to be incomplete, including a missing 2020 quarterly report and several reports that did not abide by reporting requirements.
No one tracks how much time passes between the pre-development funding stage and when a building earns a Certificate of Occupancy, nor is there a standard for how much of a subsidy the city pays per unit. The department should have both, the audit concluded.
Beyond alienating the public, a lack of information could result in a loss of state money, the report argued, since subsidy cost-per-unit factors into state funding applications. Yet the city subsidies ranged widely and with little explanation: Some units received $30,580, while others got $608,844.
By providing more information, the report states, the department “would … put decision-makers in a better position to control costs that are within their purview.”
The mayor’s office politely pushed back against the recommendations, according to a published response to its report, and said its staff relies on its storied expertise.
“In general, we agree” with more financial transparency, said an email from Anne Stanley, a spokesperson for the Mayor’s Office of Housing. The department, however, still wants to maintain its “flexibility” and “discretionary policy” to achieve its goals.
The mayor’s office doubted that more transparency would speed housing construction, and expressed concern that more reports might create time-consuming bureaucracy.
Generally, the city funds 37 percent of an affordable housing project, with state and federal money making up the rest. According to its website, the mayor’s office has helped “build or preserve” 10,573 units since 2014, approximately 1,170 units on average a year.
Knowing how exactly the department chooses to fund future development is important, stated the audit. Preston agreed.
“We see plenty of examples of when politics, and not housing, are making decisions,” Preston said. “That is easier to do when there is no transparency.”
“memories for records” ??! why track data and metrics to support policy when you have vibes. shocking that homelessness has worsened since london breed came up.
Great reporting, Annika.
Such disgusting levels of housing/real estate corruption in this city.
Breed and her homeless commission ssid they cant end the housing crisis. They re lying. They could if they wanted to. But the real estate lobby is strong. More housing takes away their power. Which is high housing values.
Stellar reporting. Thank you. This Mayor is my former supervisor. I am well acquainted with her transactional ways of rewarding (and punishing) her go-alongs versus anyone who disagrees with her. Never forget the FBI investigation of corruption at City Hall involving Breed’s appointees Nuru, Harlan, Makras and others. Never forget Breed’s secret policy of requiring her appointees to sign undated letters of resignation. Punish and reward. Transactional “leadership.” I can think of 5 massive sites that are golden opportunities for the city to buy and build 100s of units of truly 100%affordable housing in Preston’s district. Even before he took office, he was advocating for land banking and development of deeply affordable homes there. And Breed is sitting on almost a half a billion dollars. Why? Fight Truth Decay. Fund and support local and independent journalism.
I won’t offer any commentary on whether I concur with your statements about the Mayor’s transactional style of governing. Nor do I know where the 5 massive sites in Dean Preston’s district are exactly located. However, as someone who builds affordable housing in San Francisco for a living, (and thus interfaces with MOHCD on a daily basis), I am willing to bet that the reason why these 5 sites remain fallow has a lot more to do with recent changes in funding criteria at the State level, which this article briefly mentions. Pretty much every new affordable housing development built in San Francisco in the past 10 + years has had to rely on tax exempt bonds (aka private activity bonds) as a financing source, which are distributed by an arm of the State Treasurer’s Office. Each year the IRS decides how much money in tax exempt bonds each state can award. The IRS also grants states a wide degree of latitude in determining how they will prioritize certain projects over others.
In 2019 and 2020 tax exempt bonds in California started to become oversubscribed. In response the State Treasurer’s Office decided that it would prioritize bond awards to affordable housing projects located in what it has determined are “highest” and “high resource areas.” As a matter of public policy there are a lot of reasons why this makes sense. The main point of the changes was to foster more economic integration by offering incentives to build affordable housing in more affluent areas that have historically and systematically excluded low income people and racial minorities – as opposed to concentrating it in more marginalized neighborhoods that already have higher concentrations of poverty. However, for San Francisco, this change was incredibly disruptive because almost 100% of the census tracts that the State Treasurer determined were “highest” and high resource areas” are on the Westside of town: mostly the Sunset, Richmond, and West of Twin Peaks. (You can Google “TCAC Opportunity Maps” and see for yourself). At the time San Francisco’s pipeline of affordable housing developments had almost no projects in these areas, and all of its community based affordable housing developers are based in neighborhoods like the Tenderloin, SOMA, Bayview, Western Addition, and Mission which have ZERO “highest” and “high” resource census tracts. The effects of this disruption were so acute that in 2021 there was only one affordable housing project in San Francisco that received a bond award from the State, and that was because it was a very unique and rare type of rehab project that didn’t have to be in a higher resource area to successfully compete for a bond award (the article also mentions this specific project in the quote from Sam Moss of Mission Housing). In response, MOHCD has tried to incentivize more affordable housing development in higher resource census tracts. The State has also tweaked it’s funding formulas in response to lobbying efforts from San Francisco and other Cities that got the short straw from these changes. But the bottom line is, I still would not expect the State to open up the floodgates anytime soon for these 5 sites in Preston’s district.
A few months ago Annika wrote an excellent in-depth article that talks about how disruptive these changes in state funding criteria were by profiling a large affordable housing rehab project in the Bayview. Unfortunately, in this case it’s the current tenants of the building who have had to bear the biggest brunt of disruption.
Are you saying that SF needs to wait for the state before it spends the half a billion-odd in local affordable housing funding laying around?
No. There’s room on that site for 4 or 5 multi unit buildings + the DMV on the ground floor.
Thank you for the thoughtful and detailed response. The nuances of financing “affordable” or “100% affordable” housing in SF are incredibly complex. 730 Stanyan is one of the five sites; construction begins this summer largely thanks to local and very engaged residents. It is in a “high resource area.” So is the DMV site on Fell (state owned land). 400 Divisadero is another of the 5 sites in a “high resource area.” Many of us are tired of being told by this mayor and her MoHCD that we don’t have the money to buy up existing buildings (a solid affordable option, as they are already built), and we don’t have the funds to build desperately needed 100% affordable for workers, elders and low income families. The audit shows we do have the money…….almost a half billion dollars. Another of the golden opportunity sites is the Fillmore police station site.
And nobody is surprised. The level of incompetence in our local government is astonishing.
True, but incompetence, just like bureaucratic red tape, endures and has flourished since the pandemic (maybe the pandemic made it all more obvious). And we have to ask, who benefits from all the mindless red tape and opacity in the housing department? One of the key beneficiaries would be the regulators, the bureaucrats themselves. There are always work-arounds, available for a price. Ask Santos and Bernie Curran. Mindless red tape and bureaucratic incompetence invite the kind of bureaucratic petty corruption Joe has reported for the past two or three years. It’s systemic, and the dysfunction it has engendered will be the lasting legacy of The Family, or The Cartel, or the Willie Brown Mob, or whatever you want to call the City’s ruling regime over the past generation.
try “the mayor’s administration” ….this office is hand-picked. city gov workers quietly do great work every day, apart from the disgrace of corrupt mayoral appointments & friends.
The untraceable cash gift cards begin and end with Breed, but what about the buck?
this says it all: “In general, we agree” with more financial transparency, said an email from Anne Stanley, a spokesperson for the Mayor’s Office of Housing. The department, however, still wants to maintain its “flexibility” and “discretionary policy” to achieve its goals.
“goals” or embezzlement?