San Francisco supervisors on Wednesday advanced a $22.2 million financing agreement for a Mission District apartment building operated by the Mission Economic Development Agency, or MEDA, one week after delaying a vote amid concerns about the nonprofit’s financial management.
The Board of Supervisors’ Budget and Finance Committee voted to recommend allowing San Francisco to purchase an existing $20.3 million loan from the Housing Accelerator Fund, which financed the acquisition and rehabilitation of the building, a 35-unit apartment building at 2059-2065 Mission Street with four commercial spaces.
The purchase would make the city the new lender, meaning the MEDA-affiliated company that borrowed the money would now owe it to San Francisco.
The measure now heads to the full Board of Supervisors for consideration.
MEDA is a 53-year-old Mission District nonprofit and major affordable-housing developer, which has assembled a portfolio of more than 1,300 housing units.
The Mission Street building is part of San Francisco’s Small Sites program, which helps nonprofits purchase and rehabilitate apartment buildings to prevent tenants from being displaced and to keep rents affordable. MEDA acquired the building in 2024 for $11.35 million.
The vote comes amid heightened scrutiny of MEDA’s finances.
On Oct. 19, the San Francisco controller placed MEDA under its highest level of financial monitoring for nonprofit contractors, citing 10 unresolved findings, including concerns about unsupported invoices and allegations of employee self-dealing.
An independent audit dated Sept. 30 also detailed alleged unauthorized IT spending of undisclosed amounts by a former MEDA employee and identified serious weaknesses in the nonprofit’s financial controls.
Juan Mesa, a MEDA spokesperson, described the nonprofit as the “victim of a crime.” MEDA’s PR representative, Will Reisman, declined to state whether MEDA had filed a police report.
Supervisors postponed an Oct. 21 committee vote after the controller’s concerns became public, seeking more information before proceeding.
On Wednesday, however, committee members said discussions with MEDA and the controller’s office had reassured them that the housing project could move forward while the nonprofit addressed its broader financial problems.
Supervisor Danny Sauter said the week’s delay had allowed him to gain greater confidence that the city’s loan to MEDA is insulated from the nonprofit’s organizational difficulties.
“Last week, we did the right thing in trying to slow down and get more information,” he said.
Alea Gage, preservation program manager at the Mayor’s Office of Housing and Community Development, told supervisors that the building’s projected income would exceed its first-year debt payments by 37 percent, above the 15 percent cushion required under the city loan agreement.
Gage also emphasized that Small Sites properties are held through separate legal entities, insulating them from their nonprofit sponsors’ organizational debts.
The Mission Street property carries a 99-year affordability restriction, limits on its sale and provisions allowing the city to acquire it at a restricted value if necessary to preserve its affordability.
The housing department also plans to monitor the property’s financial performance quarterly, as it already does for 15 other MEDA properties, Gage said.
The decision follows another city intervention in MEDA’s housing portfolio.
As Mission Local reported in May, supervisors approved a $37.8 million refinancing package last year for 15 MEDA-owned Small Sites properties containing 89 apartments. Most of that package restructured existing debt, while approximately $6.2 million in new financing went toward repairs and reserves.
That refinancing came roughly six months before MEDA, that April, laid off 12 employees and made salary cuts for remaining staff, amid other signs of fiscal strain.
Wednesday’s hearing also exposed concerns about how city departments communicate financial risks to elected officials.
Supervisor Chyanne Chen asked how supervisors are notified when nonprofit contractors face serious financial problems.
Sheila Gregorius, an official with MOHCD, acknowledged that communication with supervisors had not been consistent and said the department could improve.
MEDA Executive Director Luis Granados thanked the supervisors on the committee for their support and said the nonprofit had worked closely with the controller’s office since April to strengthen its financial procedures.
He said MEDA’s finance staff had been receiving coaching from BDO, a private consulting group, twice weekly since July, and that the nonprofit had paid off its operating line of credit.
Granados maintained that MEDA had addressed the problems underlying its demotion to Tier 3 earlier this month, and said it would meet with the controller’s office Friday to review supporting documentation.
The controller’s office has not publicly confirmed that its findings have been resolved. But Supervisor Matt Dorsey, who said he had spoken directly with Controller Greg Wagner, indicated that the city was comfortable advancing MEDA’s financing agreement while oversight continued.
“It sounds like we agree that we don’t want questions to hold up this project,” he said, referring to his fellow committee members, “especially given the controller’s confidence.”
An earlier version of this story misattributed a quote to Supervisor Matt Dorsey. It was made by Supervisor Danny Sauter.
Is there a place to read… I guess you might call it case studies of nonprofits that get into this kind of situation? Some people would have you believe that government connected nonprofits are just scam mechanisms from the get. Others would say they are well intentioned people who got overwhelmed by the technical details of running a development firm or similarly complex organization. I’m inclined to the cynical position but I’d rather base my opinion on facts where possible. Any links or other pointers appreciated.
Luis Granados, ED of MEDA, was taking in $464K in 2024, the last year of reporting. Given the historical rate of increase in his pay over the past several years, I’d be surprised if he’d not eclipsed $500K before the fiscal improprieties led to mass layoffs and the ED taking a 46% pay cut.
The “Scrappy little social justice warriors getting overwhelmed by bureaucratic intricacies” excuse don’t cut it when the guy running the shop is pulling in that kind of compensation in exchange for this kind of malfeasance and improprieties.
Too Big to Fail, amiright?
The incompetence and grift continues.
“SF Values” apparently means not just tolerating, but actively enabling bad behavior, whether its open-air drug dealing and doing or non-profit grift.
‘”Juan Mesa, a MEDA spokesperson, described the nonprofit as the “victim of a crime.”’
DARVO here. MEDA is the perpetrator of organized crime, bid rigging, price fixing, intimidation and extortion.
Mission residents and San Francisco taxpayers are the victims in this scenario.
Note that in addition to regular cash infusions, MEDA operated homes pay almost nothing in property taxes. These “affordable houses” are cheap to the renters because everyone is paying for their rent through taxes.