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San Francisco controller flags MEDA for financial oversight; $22 million loan vote delayed
Mission Economic Development Agency, which owns and operates more than 1,000 affordable homes, has been placed in the city’s highest-risk monitoring tier after concerns about an employee’s spending and the nonprofit’s financial controls. Two supervisors postponed a vote on a proposed loan of up to $22 million while they seek more information.
San Francisco’s controller has placed Mission Economic Development Agency (MEDA) in the city’s most serious risk category for nonprofits with city contracts, citing concerns that include unauthorized employee spending, possible self-dealing and gaps in internal controls.
The designation, delivered in a letter Monday, could bring tighter monitoring and put millions of dollars in city funding at risk if MEDA does not address the concerns. The controller’s office said the tier 3 status can be lowered or removed once required steps are taken, and described MEDA as proactive in working to resolve the issues.
The letter did not detail the employee’s alleged actions. MEDA said the employee no longer works for the organization and that it believes it was the victim of a crime. Executive Director Luis Granados said MEDA has worked with the controller’s office since April to respond to the concerns and has taken internal steps to prevent a recurrence.
The controller also listed nine other financial concerns, including possible errors in financial statements and discrepancies between reported costs and budget documents. Granados said earlier layoffs and other cost-cutting measures were prompted in part by cash-flow difficulties, including a delayed $1.3 million city payment and grants that had not arrived. He said the organization is now in better financial shape.
The city has paid MEDA tens of millions of dollars in recent years for service contracts, in addition to loans for housing development. MEDA owns and operates more than 1,000 affordable units and has more than 700 additional units in its development pipeline.
The designation has also put a proposed housing loan under scrutiny. Supervisors Matt Dorsey and Danny Sauter postponed a committee vote on a city loan of up to $22 million that would help MEDA buy a 39-unit building and preserve it as affordable housing. Dorsey said the supervisors wanted more clarity about the nonprofit’s financial issues and the use of taxpayer funds. He expected the proposal to return for a vote within three weeks.
Founded in 1973 to support Mission District families, MEDA has become a major affordable-housing developer. Its projects include the Marvel in the Mission development near 16th and Mission streets, where a nine-story building recently broke ground.
The Mayor’s Office of Housing and Community Development said MEDA plays an important role in serving San Francisco communities and described the tier designation as a structured process to strengthen the nonprofit’s financial management, controls and long-term stability. Granados said he expects MEDA to move quickly out of tier 3.