Last month, while performing a routine accounting of the South of Market Community Stabilization Fund, staff members from the Mayor’s Office of Housing and Community Development noticed the money was missing. The agency contacted the Association of Bay Area Governments, which acted as trustee for the fund along with Union Bank, and learned that the money had been given to Rincon Developers LLC, which is controlled by develper Urban West, as a reimbursement for traffic improvements the developer had made.
ABAG Executive Director Ezra Rapport said the developer was entitled to the money. He said the $925,666 was about 5 percent of the money raised by selling bonds under a special Mello-Roos tax district set up to pay for public improvements in the neighborhood.
“These bonds were set up in accordance with IRS rules — there is a contract for how the money is spent,” Rapport said. “(The developer) wasn’t so much getting money back as being reimbursed for cash that they had laid out.”
Projects under review
But a Jan. 21 memo from the Mayor’s Office of Housing and Community Development argues that the money from the fund can only be approved by city public finance officials, who knew nothing of the transaction. The memo said the committee in charge of spending the stabilization money was actively studying projects to spend the $925,666 on, including a crosswalk and traffic light on Folsom Street and the renovation of South Park.
“Why was Urban West provided a preferential disbursements of funds given the ongoing discussions at the CAC (community advisory committee) to find alternative projects?” the memo stated.
Olson Lee, executive director of the mayor’s housing office, said the “city is looking at all options to recover the funds.”
(SFGate)
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