S.F. homeless housing nonprofit blasted for misusing taxpayer funds

One of San Francisco’s largest providers of housing for formerly homeless people “misused” taxpayer funds, lacked key financial controls and engaged in other problematic practices that “heightened the risk of fraud,” according to a city report released Tuesday.

“(T)he breadth and magnitude of financial and compliance problems we found at HomeRise is concerning,” wrote Sjoberg Evashenk Consulting Inc., an independent firm the city hired to audit the nonprofit.

Janéa Jackson, CEO of HomeRise, said Tuesday afternoon that the nonprofit’s leadership is “100% committed” to resolving the issues noted in the audit. Jackson, who took over as head of the nonprofit in June 2023, said she has already addressed several of the concerns. 

San Francisco nonprofits receive hundreds of millions of dollars to provide services to the city’s most vulnerable residents — whether unhoused or struggling with mental illness or substance abuse. But nonprofits have come under increasing scrutiny in recent years as local organizations have been accused of financial mismanagement, or worse. 

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HomeRise was the subject of controversy last week after one of the nonprofit’s complexes in Mission Bay was criticized during a hearing at City Hall where residents complained it was contributing to violent and disturbing incidents in the neighborhood, a characterization the city rejected.

The revelations in the report on HomeRise follow a slew of scandals at nonprofits that contract with San Francisco over the past three years. The executive director of a Bayview food bank was accused of using city funds to enrich herself. Other nonprofits were accused of labor violations and overspending their budget. And a public-safety-focused nonprofit fired its executive director after finding it spent nearly $80,000 in grant money on ineligible expenses, including a Lake Tahoe trip, luxury gift boxes and limo service.  

HomeRise operates more than 1,500 units at 19 properties across the city, with an annual budget of about $34 million and some 250 employees. The city’s current agreements with HomeRise total more than $240 million in loans, grants and subsidies. That includes $110 million in loans to develop or rehabilitate properties, $90 million for operations and maintenance, and more than $40 million in grants for support services.

Auditors found “unallowable, imprudent, or questionable spending” by HomeRise that was inconsistent with the terms of its agreement, such as using city dollars for fundraising, paying staff bonuses, and providing lunches and gifts to its staff.  

As of January 2023, the nonprofit had 118 active credit cards in use — equivalent to roughly half of its workforce — of which more than a third had credit limits of $10,000 or higher, according to the audit. HomeRise did not have sufficient controls on the credit cards to prevent risk of fraudulent expenses, waste or other abuse going undetected, the report found. 

Jackson said Tuesday that the organization has recently reduced its number of corporate credit cards to about 30 and that most now have a limit of $2,500.

The audit also uncovered that the nonprofit gave out “signing” bonuses to employees who had been working for HomeRise for two to 13 years. Through job promotions, one HomeRise official’s salary allegedly increased more than $87,000, or 74%, in the span of just nine months. More than $200,000 in bonuses were “unplanned and unbudgeted,” worsening cash flow problems, the report stated.

The large raises and bonuses were handed out despite the nonprofit reportedly losing millions of dollars a year due to high vacancy rates in its buildings. In July 2023, more than 14% of units across the nonprofit’s properties were empty, the report found. Two of the nonprofit’s oldest buildings, the San Cristina at 1000 Market St. and the Senator Hotel at 519 Ellis St., had vacancy rates of 34.5% and 29.2% respectively.

The audit stated that the vacancies not only reduce the nonprofit’s potential rental revenue, but, “More importantly, vacant units represent missed opportunities to provide unhoused people with permanent, supportive housing.”

At the same time, the nonprofit had questionable costs including more than $100,000 in temporary rental charges, $96,000 for salaries paid to tenant program services staff and $12,500 for a social event.

The report criticized the lack of leadership and accountability at the organization, which was partly due to an “alarming rate of turnover” in key corporate positions, the document noted. 

The controller’s office could not determine the total magnitude of HomeRise’s inappropriate spending or unallowable charges because, in most cases, there was no supporting documentation.

After trying and failing to work with HomeRise to address growing concerns, the homelessness department and the Mayor’s Office of Housing and Community Development, or MOHCD, requested the audit in 2022. 

Formerly known as Community Housing Partnership, HomeRise was founded in 1990 as a partnership between the Coalition on Homelessness and a group of nonprofit housing developers called the Council of Community Housing Organizations. To this day, the coalition and council each get to appoint four members to the organization’s board of directors. 

Six months after a city department issued a notice of default at one of HomeRise’s properties, the city controller placed HomeRise on “elevated concern status” due to its financial instability. 

HomeRise remains on that elevated concern status. 

Click here to read the full article in the SF Chronicle

Walters: California progressives forced to play defense as state faces huge budget deficits

A couple of years ago, California’s left-leaning interest groups – those seeking a more expansive array of social and medical services to benefit workers and the state’s large population of low-income residents – seemed to be making a breakthrough after decades of frustration.

With Gov. Gavin Newsom bragging about a nearly $100 billion state budget surplus, progressive coalitions gained footholds on some long-sought priorities, such as medical coverage for undocumented immigrants, income supports for the working poor and more expansive care and education for preschool children.

That was then and this is now.

The state now faces a monumental budget deficit, in part because the state committed portions of a supposed surplus that never materialized. While Newsom so far has pegged the deficit at $38 billion, state revenues continue to lag behind forecasts and the Legislature’s budget analyst, Gabe Petek, says it could top $70 billion.

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Moreover, both Newsom’s budget department and Petek are warning that annual deficits in the $30 billion range are likely for several years to come.

The harsh fiscal reality not only may doom expansion of the programmatic gains that those on the left championed, but imperil their very existence just as the additional benefits begin kicking in.

In short, it’s crunch time for California’s progressive activists.

A couple of years ago, California’s left-leaning interest groups – those seeking a more expansive array of social and medical services to benefit workers and the state’s large population of low-income residents – seemed to be making a breakthrough after decades of frustration.

With Gov. Gavin Newsom bragging about a nearly $100 billion state budget surplus, progressive coalitions gained footholds on some long-sought priorities, such as medical coverage for undocumented immigrants, income supports for the working poor and more expansive care and education for preschool children.

That was then and this is now.

The state now faces a monumental budget deficit, in part because the state committed portions of a supposed surplus that never materialized. While Newsom so far has pegged the deficit at $38 billion, state revenues continue to lag behind forecasts and the Legislature’s budget analyst, Gabe Petek, says it could top $70 billion.

Moreover, both Newsom’s budget department and Petek are warning that annual deficits in the $30 billion range are likely for several years to come.

The harsh fiscal reality not only may doom expansion of the programmatic gains that those on the left championed, but imperil their very existence just as the additional benefits begin kicking in.

In short, it’s crunch time for California’s progressive activists.

Click here to read the full article in CalMatters

After Issuing Death Sentence on CA’s Death Penalty, Gov. Newsom Approves 3 more Prison Closures

Gov. Jerry Brown’s AB 109 was the first move by California Democrats to dismantle California’s criminal justice system

“Newsom has approved three California prison closures but resists pressure to shutter more,” the Los Angeles Times headline reports… as if Gov. Newsom is so altruistic, he is restraining himself from closing more prisons – for the good of the people.

After running for governor on upholding voter’s support of the death penalty, California Gov. Gavin Newsom announced in March 2019, shortly after taking office, that he would grant reprieves for all death penalty murderers on California’s death row. He called the death penalty “ineffective, irreversible and immoral.” Newsom then signed an executive order putting a moratorium on the executions of the 737 inmates currently incarcerated in California’s death row.

With Newsom’s announcement a political friend said, “Another 737 just went down.”

“We cannot advance the death penalty in an effort to soften the blow of what happens to these victims,” Newsom said. “If someone kills, we do not kill. We’re better than that.”

In 2016, California voters rejected a ballot initiative that would have repealed the death penalty, and instead voted to expedite the executions of the inmates currently sitting on death row. Newsom supported the initiative to repeal.

“With his announcement that he is granting sentencing reprieves for all death penalty eligible murderers on California’s death row, Governor Gavin Newsom has substituted his own opinion for the repeated decisions of the state’s voters,” Michael Rushford with the Criminal Justice Legal Foundation said in an interview.

While Gov. Newsom and the state’s Democrat lawmakers continue to dismantle the criminal justice system, top to bottom, poll after poll shows escalating crime is one of the top issues among  Californians, which is why voters passed Proposition 66 in 2016, reaffirming the state’s death penalty, but also to speed up the appeals process.

In 2016 when Prop. 66 was passed, it was intended to be a remedy to the most heinous criminals sitting on death row for 30 years, with endless appeals delaying justice and costing taxpayers hundreds of millions – and to ensure no innocent person was executed. Opponents sued, taking the case to the California Supreme Court, which upheld voters’ decision, but watered down a part of the initiative. The Court stated that provisions requiring the state to speed up the death penalty appeals process were directive, rather than mandatory.

On the latest prison closures, the LA Times addresses the 2011 Supreme Court ruling that deemed overcrowding of prisons unconstitutional and ruled that prisons cannot exceed 137.5% of capacity. That same year, the state passed a law that relocated low-level offenders without prior serious or violent felonies to serve their time in a county jail instead of state prison.

What they don’t say is that Gov. Jerry Brown’s Assembly Bill 109, the “Prison Realignment” bill was the first move by California Democrats to dismantle California’s criminal justice system.

Assembly Bill 109, in 2011, was then-Gov. Jerry Brown’s signature legislation he sold as “prison realignment.” However, AB 109 only served to overwhelm county jails by moving “nonviolent” state offenders from prison. Gov. Brown could have built more prisons, but instead reduced the population by releasing or pushing inmates to local county jails, which are not designed to house someone past a year, and prevents law enforcement from taking low-level offenders in.

Adding insult to injury, Proposition 47, passed by misinformed voters in 2014, flagrantly titled “The Safe Neighborhoods and Schools Act,” decriminalized drug possession from a felony to a misdemeanor, removing law enforcement’s ability to make an arrest in most circumstances, as well as removing judges’ ability to order drug rehabilitation programs rather than incarceration. And perhaps the most obvious aspect of Prop. 47 on display today raised the theft threshold to $950 per location, and bumped theft down to a misdemeanor from a felony.

Proposition 57, shamelessly titled “the Public Safety and Rehabilitation Act” passed in 2016, now allows nonviolent felons to qualify for early release, and parole boards can now only consider an inmate’s most recent charge, and not their entire history because of this proposition. Notably, both Prop. 47 and 57 were given their ballot titles by then-Attorney General Kamala Harris.

Crimes now considered “nonviolent” under Proposition 57 in California include:

  • human trafficking of a child
  • rape of an unconscious person or by intoxication
  • drive by shooting at inhabited dwelling or vehicle
  • assault with a firearm or deadly weapon
  • assault on a police officer
  • serial arson
  • exploding a bomb to injure people
  • solicitation to commit murder
  • assault from a caregiver to a child under eight years old that could result in a coma or death
  • felony domestic violence. 

Ten years of increased drug and serial theft crimes, and a violent crime wave across California has taken its toll on the state’s residents and businesses. A proposed ballot initiative to amend Prop. 47 is currently collecting signatures for the November 2024 ballot. More than 500,000 California voters have already signed the petition to place the measure on the ballot.

The campaign reports that a survey of likely California voters found that 70% of voters support the title and summary of the Homeless, Drug Addiction, Retail Theft Reduction Act. The overwhelming support was consistent across every demographic and geography including the Bay Area and Los Angeles. Furthermore, 89% of likely voters support amending Proposition 47 for stronger penalties for those engaged in repeated retail theft and trafficking hard drugs like fentanyl. The measure also includes incentives to complete drug and mental health treatment for people who are addicted to hard drugs.

Gov. Newsom’s push to close more prisons ahead of Californians’ opportunity to vote on Prop. 47 reforms make his agenda clear – he’s not interested in the safety and security of California’s residents – he’s prioritizing campaign funders and anti-criminal justice special interests.

The LA Times reports on more Democrat altruism:

Sen. Steven Bradford (D-Gardena) and Assemblymember Mia Bonta (D-Alameda), both members of the Legislative Black Caucus whose priorities include prison reform, say they want more prisons to close.

Bradford said that he supports a more “holistic vision” of public safety.

“Investing in rehabilitation will pay dividends by reducing the revolving door of recidivism and will allow formerly incarcerated individuals to successfully re-integrate when they return home to their communities and families,” he told The Times in an email.

While serving in her former role as chair of the Assembly’s budget subcommittee on public safety, Bonta was outspoken about the opportunity California had to close more prisons.

“We have an insurmountable budget deficit,” she said, referring to the state’s $73-billion budget shortfall estimated by the Legislative Analyst’s Office. Bonta said the deficit is forcing the legislature to look for cuts.

Click here to read the full article in the California Globe

Coupal: The League of California Cities’ war on taxpayers

The League of California Cities has always been biased against the interests of taxpayers. This became especially clear during the historic Proposition 13 campaign in 1978 when the League, along with the rest of the spending lobby, predicted the end of Western Civilization if Prop. 13 passed.

Just how out of touch was the League with the voting public?  Based on election results, the voters approved Prop. 13 in 90% of the cities in California.

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The League of Cities’ conduct during the Prop. 13 campaign was so bad that then Governor Jerry Brown scolded the League for demanding more money and being oblivious to the tax revolt. According to an article in the Los Angeles Times on May 5, 1978, just one month before the vote, “Gov. Brown [was] peppered with demands for more state money from a group of city officials [at a League meeting in San Diego] suggest[ing] they resembled passengers on the Titanic demanding more deck chairs. ‘You, of all people, should realize that a tax revolt is under way’ . . .  Said Brown to a chorus of boos, ‘you’d better wake up to the tax revolt.’”

The League’s intransigent position on tax relief even earned it criticism from Democratic legislative leadership. “Modest cuts in taxes and government spending were proposed and ignored.” Dan Boatwright, chairman of the state Assembly Ways and Means Committee, said, “The League of California Cities and the County Supervisors Assn. lobbied [legislators] to death.”‘

To add insult to injury, all this anti-taxpayer lobbying was paid for with taxpayer dollars.

In addition to advocating against taxpayers, a more recent phenomenon is that many of the League positions are contrary to the interests of cities and the principle of local control. Several municipal officials who are actually concerned about the fiscal health of their cities are growing disenchanted with the League and are moving to distance themselves from League positions and even to leave the League entirely.

This past Tuesday, the Orange City Council voted to leave the League over its support for Proposition 1 – a measure many local officials say could worsen the problems currently associated with group homes. “It should be noted that housing projects funded by this bond would be considered ‘use by right,’ potentially preempting local zoning law for properties with multifamily residential, office, retail, or parking uses,” reads the City of Orange staff report.

The move by Orange comes after Newport Beach and Huntington Beach left the League of California Cities over its support for Prop. 1.  Newport Beach Mayor Will O’Neill stated, “While the League of California Cities has regularly taken positions opposite the interests of taxpayers, the tipping point to leave the League completely came when they advocated for Proposition 1 despite acknowledging the serious and disastrous effects buried in the fine print. Specifically, Prop. 1 will take away local control by requiring cities to approve rehab housing funded with billions of dollars in new bond money. The League is supposed to advocate for cities, but they have actively harmed cities with this overtly political decision. Cities should not fund an organization putting Sacramento’s interests above our residents.”

The most recent target of the League’s hysterical outrage is the Taxpayer Protection and Government Accountability Act (TPA), a proposed constitutional amendment which has already qualified for the November 2024 ballot. It is sponsored by taxpayer and business organizations to restore key provisions of Proposition 13 and other pro-taxpayer laws that give voters more control over when and how new tax revenue is raised.

Although TPA, unlike previous tax reform measures, doesn’t reduce or eliminate any state or local tax, it does impose both enhanced voter approval requirements for fee and tax increases as well as robust accountability and transparency provisions. And yet, even though TPA is relatively modest, the League, once again, is predicting End Times disasters.

For example, the League’s chief complaint about TPA isn’t about TPA at all, but rather a long-standing provision of Proposition 13 requiring a two-thirds vote for local special taxes (taxes for a specific purpose). This 44-year-old requirement was weakened in 2017 by ambiguity in the California Supreme Court’s infamous Upland decision. Lower courts have interpreted the decision to allow special taxes to pass with only 50% plus one vote if the tax was put on the ballot by a “citizens’ initiative.” This has enabled special interests to draft their own tax increases, direct the money to themselves, and get these self-serving measures passed with only a simple majority vote. TPA simply restores the two-thirds vote requirement and closes this costly loophole.

Click here to read the full article in the OC Register

Newsom has approved three California prison closures but resists pressure to shutter more

SACRAMENTO —  Gov. Gavin Newsom went far beyond the promise he made in his first year in office to close at least one California state prison. But now, he is resisting calls from criminal justice advocates and liberal state lawmakers to shutter five more penitentiaries.

Shortly after taking office, Newsom placed a moratorium on the death penalty and has approved the closure of three prisons since 2019, but his administration appears to be pulling back from a 2022 budget proposal that considered “right-sizing California’s prison system” by possibly closing even more facilities. The administration fears that operating the state’s existing 31 prisons remains necessary to accommodate California’s fluctuating inmate population, enhance rehabilitation programs and avoid a repeat of the overcrowding that led to federal court intervention over a decade ago.

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“The governor has a long track record of being on the progressive side of criminal justice. His belief that we can reduce prison populations and improve public safety is achievable. That’s the core of his goal,” said Michael Romano, director of the Three Strikes Project at Stanford University. “But the question of closing more prisons is complicated and goes beyond public safety. I don’t think they go as hand-in-hand as people want them to.”

Newsom finds himself in a precarious political spot. Crime was among the top issues that Californians want the Legislature and governor to work on in 2024, according to a Public Policy Institute of California poll released in February. But no matter what he decides to do, large swaths of California voters will disagree. On the one hand, he could disappoint liberal lawmakers and others advocating for the end of California’s tough-on-crime era of mass incarceration. On the other, he’d provoke moderates and conservatives concerned that prison and criminal justice reforms have gone far enough.

Sen. Steven Bradford (D-Gardena) and Assemblymember Mia Bonta (D-Alameda), both members of the Legislative Black Caucus whose priorities include prison reform, say they want more prisons to close.

Bradford said that he supports a more “holistic vision” of public safety.

“Investing in rehabilitation will pay dividends by reducing the revolving door of recidivism and will allow formerly incarcerated individuals to successfully re-integrate when they return home to their communities and families,” he told The Times in an email.

While serving in her former role as chair of the Assembly’s budget subcommittee on public safety, Bonta was outspoken about the opportunity California had to close more prisons.

“We have an insurmountable budget deficit,” she said, referring to the state’s $73-billion budget shortfall estimated by the Legislative Analyst’s Office. Bonta said the deficit is forcing the legislature to look for cuts.

The Legislative Analyst’s Office, which advises state lawmakers, suggested that over the next four years the state can save up to $1 billion annually if it closes five more prisons.

Sen. Roger Niello (R-Fair Oaks), the vice chair of the Senate Budget and Fiscal Review committee, told The Times that he disagreed with the prospect of more closures. He said there is a debate over whether crime rates are up and, because of that, uncertainty about whether prison populations will rise in the coming years. Niello also said the enactment of tougher new laws, including a ballot measure to reform Proposition 47, could lead to longer prison sentences for property and drug crimes and in turn higher incarceration rates.

Niello said closing five additional state correctional facilities would take capacity down to a “dangerously low level.”

The Newsom administration has no plans to close more prisons, said H.D. Palmer, a representative from the Department of Finance. Palmer told The Times that prison populations “can and do” fluctuate but said the numbers would not go up as dramatically as some worry.

“One thing we don’t want to go back to is where we had triple bunking in cells,” Palmer said. “But I don’t think we’d return to old numbers.”

The administration has to comply with a 2011 Supreme Court ruling that deemed overcrowding of prisons unconstitutional and ruled that prisons cannot exceed 137.5% of capacity. That same year, the state passed a law that relocated low-level offenders without prior serious or violent felonies to serve their time in a county jail instead of state prison.

There have been other efforts to reduce population swelling in the last decade.

Voters have passed various ballot measures, including Proposition 36 in 2012, which allows eligible defendants convicted of nonviolent drug possession charges to enter treatment instead of going to jail or prison; Proposition 47 in 2014, which reduced some drug and property theft crimes from felonies to a misdemeanors; and Proposition 57 in 2016, which allows parole consideration of people convicted of nonviolent felonies, once they’ve already completed a prison term for their primary offense.

One year after the passage of Proposition 47, the prison and jail populations declined by 6% and 8.7%, respectively, according to a 2018 PPIC report. The report also noted court-ordered population reduction measures contributed to these dips.

The legislative analysts report noted that the administration has said that closing more prisons could create challenges, such as reducing the availability of treatment and reentry programs. The administration also states concerns over whether unexpected population increases in the future could raise the risks of overcrowding or even eliminate the necessity for prisoners to work some part-time and full-time jobs that provide them with a “meaningful way to occupy their time,” according to the LAO report.

But the legislative analyst’s report also found that the California Department of Corrections and Rehabilitation — which consumes $14.5 billion of the governor’s proposed 2024-2025 budget — should be able shut down more facilities due to dwindling costs.

The report said the department’s expenses have declined, specifically mentioning fewer confirmed COVID-19 cases, alleviating healthcare costs. The department spends $4.5 billion annually on healthcare, including mental health and dental work.

The report also cites a shrinking prison population, which fell by 34,000 over the last five years, the largest period of decline in the last decade. The population is projected to fall from 94,000 today to 85,000 inmates by 2027. There are currently 15,000 empty beds, and the analyst’s office projects an increase to 19,000 empty beds by 2028.

“The reality is that this generally means the upper bunk may be vacant, but the lower bunk is occupied by an incarcerated individual,” Palmer told The Times in an email. The population in some facilities still far exceeds the design capacity of one incarcerated person per cell or bunk.

The Newsom administration argues that having a lower population in a prison provides opportunities for more effective rehabilitation, since fewer people will be competing for the same programs.

While in theory, fewer inmates mean the state should be spending less, the department has accrued significant costs due to raises to correctional officers’ salaries and pensions and in part due to COVID-19.

The department estimates that it will save the state $778 million starting next year, after the closure of three state prisons: Deuel Vocational Institution in Tracy in 2021, California Correctional Center in Susanville in 2023, and Chuckawalla State Prison in Blythe, scheduled to close in March 2025.

California has also closed portions of various facilities across the state, and at the end of March will terminate its lease with the last private prison, California City Correctional Facility.

Californians United For a Responsible Budget, a statewide coalition whose mission is to identify wasteful prison spending, along with other organizations have gone as far as to demand the closure of 10 more prisons. Their requests stretch beyond saving the state money and argue it is a way for the state to repurpose land and invest back into communities, including those where the local economies are impacted by prison closures.

The department remains under pressure to trim its budget. Senate lawmakers recently asked agency officials to consider cutting costs by as much as $2 billion, or 15% of its total budget, in addition to what the department planned to save through its recent prison closures.

Scott Graves, the director of research at California Budget & Policy Center, told The Times that while the state should close more prisons, he is skeptical whether the money saved from closures would resolve budget woes in the immediate short term.

Click here to read the full article in the LA Times

Santa Clara has no money to meet $624 million in infrastructure needs

City officials are recommending a general obligation bond to fix some of the aging infrastructure

Ray Chavez/Bay Area News Group

In the heart of Silicon Valley, a region renowned for its innovation and wealth, Santa Clara has struggled for decades to keep pace with its aging infrastructure.

Many of its city facilities — parks, community centers, fire stations and swimming pools — reached the end of their expected lifespan years ago. But Santa Clara historically hasn’t had the revenue streams to maintain or replace its physical assets, leading to what is now a whopping $624 million in unfunded infrastructure needs, according to City Manager Jovan Grogan.

The ballooning problem came to a head earlier his year when the George F. Haines International Swim Center — a storied facility widely considered to be Santa Clara’s crown jewel — closed over safety concerns following decades of neglect.

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Santa Clara’s plight is not unique. Cities across the Bay Area are grappling with similarly aging infrastructure and significant funding challenges to address deferred maintenance.

“It’s literally the cost of replacing many of our facilities that were built in the 50’s and 60’s,” Grogan said. “Many of them are aging at the same time.”

In neighboring San Jose, the maintenance backlog for the city’s parks alone is more than $544 million, city spokesperson Carolina Camarena estimated. And across the bay in Berkeley, the city’s unfunded infrastructure is expected to be $2.1 billion by the end of this fiscal year.

It’s a symptom of the suburban sprawl that ignited after World War II when the region began to boom and large swaths of single-family homes shot up. Whole neighborhoods of low density housing that stretched far across cities meant more roads, sewer lines and other infrastructure to maintain.

At the time, many cities relied on property taxes to generate revenues, said Michael Lane, the state policy director for urban think tank SPUR. But when California voters passed Proposition 13 in 1978, effectively limiting property tax increases, things changed.

It’s a symptom of the suburban sprawl that ignited after World War II when the region began to boom and large swaths of single-family homes shot up. Whole neighborhoods of low density housing that stretched far across cities meant more roads, sewer lines and other infrastructure to maintain.

At the time, many cities relied on property taxes to generate revenues, said Michael Lane, the state policy director for urban think tank SPUR. But when California voters passed Proposition 13 in 1978, effectively limiting property tax increases, things changed.

Click here to read the full article in the Mercury News

Days before Easter, Newsom announces dozens of pardons and commutations

SACRAMENTO —  Days before Easter, California Gov. Gavin Newsom on Friday moved to commute sentences for 18 people, issue pardons for 37 others and submit a pardon application for an award-winning San Quentin podcaster, Earlonne Woods.

(Courtesy of Ear Hustle)

The application is the first step in a lengthier process toward a pardon that requires final approval from the state Supreme Court, which is needed in cases involving those with more than one felony conviction.

Woods was sentenced to 31 years to life for his role in a 1997 armed robbery under the state’s tough-on-crime “three strikes” law, following two prior convictions when he was a teenager. Woods launched the “Ear Hustle” podcast from San Quentin State Prison in 2017. Morgan Freeman’s Revelations Entertainment is reportedly partnering with “Ear Hustle” for an upcoming docuseries, according to Deadline.

State law does not allow Newsom to pardon or commute the sentences of someone with more than one felony conviction without the high court’s approval. Instead, Newsom submitted Woods’ application to the Board of Parole Hearings, which would first have to recommend the pardon to the court.

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Former Gov. Jerry Brown commuted Woods’ sentence in 2018, making him eligible for parole. Brown noted that correctional staff and volunteers had praised Woods’ behavior and leadership among the other inmates. After his release, Woods interviewed Brown for the podcast at the governor’s mansion in Sacramento.

“I believe Earlonne will continue to educate, enlighten and enrich the lives of his peers at San Quentin and the many, many people who listen faithfully to ‘Ear Hustle,’” Brown wrote in 2018.

Newsom also commuted the sentence of Rahsaan “New York” Thomas, a former San Quentin inmate and “Ear Hustle” co-host, in January 2022. The parole board granted his parole in August and Thomas was released the following February.

His departure from San Quentin followed an investigation by The Times into dozens of people who remained in prison despite receiving mercy from the governor.

Newsom also granted a posthumous pardon to William Burwell, who helped organize protests as a student at San Fernando Valley State College, now Cal State Northridge, during the Civil Rights Movement. Burwell was arrested in 1969 and convicted of misdemeanor trespass and failure to disperse during a racial justice protest on campus in 1969, according to the governor’s office.

The students eventually negotiated for the creation of what would later become the Department of Africana Studies, which Burwell co-founded and later chaired. Burwell died in August 2022.

“Dr. Burwell’s decades of work and contributions advancing equity and justice benefited innumerable students, faculty, the CSUN community, and many others in California and beyond,” Newsom wrote in his pardon. “His visionary leadership will continue to serve as a legacy for future generations.”

Anyone convicted of a crime in California can apply for a pardon or commutation from the governor.

A pardon restores some rights to former felons, such as the ability to serve on a jury or to seek a professional license. In limited cases, pardons can restore gun rights to those convicted of crimes that did not involve a dangerous weapon or relieve a sex offender from being required to register.

Click here to read the full article in LA Times

Walters: Californians pay high gas prices and high gas taxes yet still drive on bad highways

To state the obvious, California motorists are experiencing one of the state’s periodic spikes in gasoline prices.

California’s average price for regular grade gas has again topped $5 a gallon, according to the most recent American Automobile Association report. It’s more than $6 in some areas. The average is up about 20 cents from a year ago and is about $1.50 higher than the national figure.

I can attest to the differential, having spent part of March driving some 3,000 miles through four western states, mostly to visit national parks, and buying about 200 gallons of fuel along the way. All of my fill-ups were under $3.50 a gallon, with the lowest price being $2.99 in Wyoming.

The difference between California prices and those in other states raises, for the umpteenth time, is the question of why it exists.

A couple of years ago, Gov. Gavin Newsom spent months vilifying oil companies as price-gouging enemies of the people and demanded that the Legislature punish them with taxes on excess profits. He couldn’t win approval the tax proposal, switched to seeking civil penalties, and ultimately had to settle for relatively toothless legislation directing the state Energy Commission to gather data, establish a reasonable profit level and assess penalties for exceeding it.

“Finally, we’re in a position to look our constituents in the eye and say we now have a better understanding of why you’re being taken advantage of,” Newsom said a year ago as he signed the bill. “There’s a new sheriff in town in California, where we brought Big Oil to their knees. And I’m proud of this state.”

We have heard virtually nothing from officialdom about gas prices since, and Newsom apparently didn’t bring Big Oil to its knees.

The vast majority of the differential in gas prices between California and other states can be attributed to differing policies.

Severin Borenstein, a UC Berkeley economist regarded as the state’s leading expert on the issue, parsed the differential in a 2023 paper, pointing out that California’s direct and indirect taxes on fuel amount to nearly $1 per gallon – 70 cents higher than the national average in such taxes – and the state’s unique fuel blend to battle smog adds another dime.

That left what he calls the “mystery gasoline surcharge,” or MGS, of about 43 cents a gallon that cannot be directly attributed to oil prices or California’s taxes and other official factors. It may be a mystery, but at least some of it can be logically attributed to the relatively high costs of doing any kind of business in California – rents, electricity and other utilities, wages and regulatory overhead, for example.

Even if the MGS could be eliminated from the equation, California’s gas prices would still be at least $1 higher than those in other states.

Click here to read the full article in the OC Register

Gov. Gavin Newsom: How to Destroy California in Less than 10 Years

The one thing Newsom is good at is destroying the Golden State

Photo by Anne Wernikoff for CalMatters

If I was a “progressive” governor and wanted to destabilize and destroy my state, there are certain policies I would impose, and orders I’d make, while insulating myself from my own policies:

Create a housing shortage.

Cut water off to rural areas in the state; remove dams and hydroelectric plants.

Limit water deliveries to farmers and ranchers.

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Raise the minimum wage so high, restaurant owners are forced to lay off employees.

Pass policies killing manufacturing.

Pass policies bolstering a service economy.

Limit energy production to renewable energy only.

Limit gas and oil production creating a shortage, forcing people out of their cars and on to public transportation.

Order all internal combustion cars banned by 2035.

Mandate an all-electric state, including autos and trucks.

Install thousands of floating offshore wind turbines at a cost of $150 billion.

Legalize drugs.

Legalize sex with minors.

Legalize abortion up to baby’s birth.

Destroy the public education system by watering down actual disciplines of math and English, while sending your own children to private schools.

Promote affirmative action, racial preferences over merit.

Create fake crises – climate change, reparations.

Infringe on the people’s right to keep and bear arms by passing laws which nibble around the edges of the 2nd Amendment, creating defacto gun control.

Stop prosecuting crime.

Decriminalize certain crimes, resulting in emptying out state prisons.

Raise corporate taxes to discourage businesses from expanding.

Raise taxes and fees on public services and energy.

Raise income taxes on all income brackets.

Make it easier for local governments to raise taxes.

Impose a wealth tax.

Impose a death tax.

Force doctors to comply with state medical directives; punish those who refuse to comply.

Allow hundreds of thousands of illegal immigrants into the state.

Provide free health care and welfare payments to illegal immigrants.

Allow illegal immigrants to vote in local elections.

Expand the size of government by hiring hundreds of thousands of state workers.

Create more labor unions jobs by expanding state government.

Encourage public schools to convince kids they are another gender; provide secret counseling to those kids; shelter kids from parents.

Limit media access in Capitol; reward compliant media.

Click here to read the full article in the California Globe

Embattled LA developer accuses its financial chief of looting millions intended for homeless housing

Embattled Los Angeles developer Shangri-La Industries, which has left a trail of unpaid debts, unfinished projects and foreclosure threats since it took $114 million from the state to convert motels into housing for the homeless, is now accusing its former chief financial officer of embezzling millions of dollars to fund an extravagant lifestyle.

Shangri-La, which is being sued by state housing authorities for breaching the terms of its agreement under Gov. Gavin Newsom’s signature Project Homekey program, alleges in a lawsuit that former CFO Cody Holmes, 29, engaged in bank fraud and check kiting in 2022 and 2023 with Shangri-La’s lenders, banks and brokers.

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The suit, filed last month in Los Angeles Superior Court, seeks more than $40 million in damages and other costs.

Holmes, according to the lawsuit, allegedly transferred vast sums of company cash and property to bank accounts and shell companies he set up and controlled and to his suspected ex-girlfriend, Madeline Witt, 28, who is a defendant in the lawsuit.

He used the money to host extravagant parties, cover $46,000 a month in rent at a leased home in Beverly Hills, travel regularly on private jets, lease exotic cars — including a 2021 Bentley Bentayga and a Ferrari Portofino — and even $12,000 to cover a student loan payment, the lawsuit alleges.

Additionally, Holmes purchased high-dollar luxury items for himself and Witt, including two Birken handbags valued at nearly $128,000, Chanel and Louis Vuitton handbags valued at more than $14,000, a $127,000 Riviera diamond necklace, a $35,000 Audemars Piguet diamond watch, and 20 VIP passes for the 2023 Coachella Music and Arts Festival valued at more than $53,000, according to the suit.

Holmes and Witt did not respond to multiple emails, telephone calls and text messages requesting comment.

Legal maneuvering

Attorneys representing Shangri-La, its affiliate businesses and Chief Executive Officer Andrew Meyers Abdul Wahab, who professionally uses the surname “Meyers,” filed the suit seeking a temporary restraining order that would prevent Holmes from withdrawing money from nine bank accounts he controls.

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Shangri-La fired Holmes in January following an internal investigation, according to court records.

“For the past two years, defendant Cody Holmes has looted Shangri-La and its subsidiaries of public funds earmarked for Shangri-La’s affordable housing projects,” attorney Brian A. Sun said in the motion filed March 6. “A (temporary restraining order) will prevent the public funds embezzled by Holmes from being hidden, withdrawn, or used to purchase extravagant expenses.”

Sun, according to his motion, said Holmes continued to make extravagant purchases after he was fired from Shangri-La, including leasing a 2024 Porsche Taycar and renting another luxury home in the Hollywood Hills.

A judge denied Sun’s request on March 7, but the lawyer said he plans to push the issue by refiling another motion.

In a telephone interview, Sun said Holmes is “dissipating assets as we speak. He’s selling off assets.”

Homekey program

Since 2020, the state Department of Housing and Community Development has provided Shangri-La Industries more than $114 million in Homekey funds to convert motels up and down the state into permanent supportive housing for the homeless.

Shangri-La has partnered with the Santa Monica-based nonprofit Step Up on Second, which provides support services to the homeless, in its efforts to purchase and upgrade motel properties and set up housing operations for the homeless.

Problems began surfacing when lenders and general contractors and subcontractors stopped being paid. Dozens of mechanic’s liens totaling millions of dollars have been filed over the past year at county recorder offices where the Homekey projects were located.

At the San Bernardino County Recorder’s Office alone, more than $2 million in liens were filed from March 7 to May 3, 2023, by contractors and suppliers not paid for work completed at the former Good Nite Inn in Redlands, now called Step Up in Redlands, and the former All Star Lodge in San Bernardino, now Step Up in San Bernardino.

Step Up in Redlands, which opened in January 2023, and Step Up in San Bernardino, which opened in March 2023, are the only two of Shangri-La’s seven Homekey-funded projects that were completed and are now operating.

Another of the developer’s Homekey projects, at the former Salinas Inn, has 44 units and is about 95% complete, Sun said.

State action

In January, the state Department of Housing and Community Development sued Shangri-La Industries and its partners in the Homekey projects, including the county of San Bernardino, the city of Redlands and Step Up on Second.

The state alleged Shangri-La and its co-defendants breached their obligations, granting and recording deeds of trust to secure loans from the third-party lenders without first obtaining the state’s written authorization, as required under the Homekey agreements.

Newsom launched Project Homekey in June 2020 to protect unhoused individuals from the threat of the coronavirus pandemic. The state has allocated more than $3 billion to cities and counties to purchase motels, hotels, vacant apartment buildings and other properties to provide permanent housing for the homeless.

The state alleges in its lawsuit that for each of its Homekey-funded projects, Shangri-La used the address of each motel to create undercapitalized shell companies to engage in misconduct. All the hotel properties face possible foreclosure, according to the lawsuit, which is set for a status conference on April 17.

Officials at the Department of Housing and Community Development did not respond to requests for comment. It could not be determined whether the state is conducting a criminal investigation.

Career trajectory

Holmes, according to the lawsuit, began working at Shangri-La as in intern in 2014 while still an undergraduate at USC. He earned his master’s degree in finance while working at the company as its director of finance.

When the company’s chief financial officer left in 2019, Meyers made Holmes its new CFO, according to the lawsuit.

“Meyers promoted Holmes to CFO because Meyers believed Holmes to be an intelligent problem solver and resourceful employee. Most importantly, Meyers trusted Holmes,” according to the lawsuit. “Holmes exploited that trust and intentionally deceived plaintiffs in order to enrich himself and his then girlfriend, defendant Witt.”

Alleged fraud

On March 22, 2023, the lawsuit alleges, Holmes recorded a fraudulent deed of trust on one of Shangri-La’s Homekey properties, the Salinas Inn at 1030 Fairview Ave. He falsely represented that the property owed money to one of Holmes’ alleged shell companies, Millenium Partners Inc., which was doing business as 310 REIT, according to the lawsuit.

In June 2023, Meyers and Shangri-La’s affiliates received notice from a lender that one of its Los Angeles properties, a vacant lot at 1228 Normandie Ave., was in default, even though Shangri-La and its affiliates paid cash for the property in September 2021 and it was completely debt free.

The lawsuit alleges Holmes, “without plaintiff’s knowledge or authorization, encumbered the property with loans and then allowed the loans to default.”

Holmes also used other people’s identifying information, including that of Meyers, to misappropriate funds from Shangri-La and its affiliated businesses, the suit alleges.

In April 2022, according to the lawsuit, Holmes forged Meyers’ signature on a lease for a 2021 Bentley Bentayga and created a fake email account to communicate with the lender. Two months later, Holmes allegedly forged Meyers’ signature again, this time on a lease agreement for the $46,000-a-month rental house in Beverly Hills.

Additionally, the lawsuit accuses Holmes of engaging in check kiting by drafting checks drawn on his alleged shell companies’ bank accounts and depositing them into the bank accounts of Shangri-La and/or those of its affiliates, knowing there were insufficient funds to cover the checks.

14 lawsuits over unpaid debts

Holmes’ conduct, the lawsuit alleges, is responsible for at least 14 lawsuits filed by lenders and general contractors up and down the state involved in Shangri-La-affiliated motel conversion projects who claim they were never paid. Half of the lawsuits were filed in San Bernardino County and involve the San Bernardino and Redlands projects.

The other Homekey projects include three in Salinas, one in Thousands Oaks and another in King City.

“Many of the projects remain incomplete due to the fiscal malfeasance and mismanagement of defendant Holmes,” according to the lawsuit.

Click here to raed the full article in the OC Register