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.

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“(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

Comments

  1. Otis R. Needleman says

    How is this any sort of surprise? It isn’t, par for the course, just grifters feeding at the trough. And, as always, nobody working there will be held accountable. Blame will be shifted to people no longer working there, who won’t face any consequences.

    • PRAISE THE LORD ALL MY SOUL !! GOOD OLD WASHINGTON DC WITH THEIR FANTASTIC BUDGETS EVERY YEAR T HELP THE PEOPLE THEN PASS IT DOWN TO EVERY DEM STATE

  2. Nonprofit. An interesting description.

  3. I can say for certain that this is not the only one. A lot of these NGOs nonprofits are in dire need of audits. Especially with taxpayers money involved. They see it as a piggybank. It’s also surprising how much the top people make in these places.

  4. SURPRISED??? miss use of TAXPAYER DOLLARS??? and the RATS keep on course!

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