Audit reveals San Francisco has $482M in unspent affordable housing funds

A contractor fills a hole in the street outside a newly completed housing redevelopment project at 1491 Sunnydale Avenue in San Francisco, California, U.S., on Wednesday, Oct. 30, 2019. Photographer: Amy Osborne/Bloomberg via Getty Images)

A San Francisco supervisor is calling for a hearing to find solutions to problems within the city's affordable housing production team.

Supervisor Dean Preston requested the hearing during the Board of Supervisors meeting on Tuesday, in response to a nearly two-year performance audit of the Mayor's Office of Housing and Community Development released the same day.

The audit found that the department, which oversees the city's affordable housing projects, counted on informal records and internal discussions for its decision-making. The department has also had an average surplus of $482 million in unspent funds for the past five years.

Per request by the Board of Supervisors in July 2021, the San Francisco Budget and Legislative Analyst investigated how the housing department reported the status of housing projects, prioritized funding and handled unspent funds.

The audit found that the department did not comply with city reporting requirements, did not have a formalized record-keeping system on how financial decisions were made and could not provide clarity on where unused funds are going.

The audit cited that 93 percent of the department's unused funds were dedicated to housing developments, though it's unknown if 58 percent of those funds are officially set in stone with a committed loan.

Preston, who called for the audit, alleged that the office itself is a "major barrier" to the city reaching its ambitious affordable housing goals - San Francisco is aiming to build 46,500 new units by 2031.


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"Given what is revealed in this audit, I am deeply concerned that we are entrusting the crucial task of affordable housing production to a department that has no oversight, no transparency, no policies guiding key funding decisions, and cannot even account for a half billion-dollar balance -- namely how much is committed and how much is available," Preston said at Tuesday's meeting.

Eric Shaw, director of MOHCD, responded to the audit via letter, and said the department faces "substantial complexities" that make it difficult to make concrete policies.

"Due to the complexity of aligning unpredictable funding streams in a volatile market, financing affordable housing projects is a complex process that cannot be replicated or standardized over years or across projects," reads the letter addressed to Severin Campbell, director of the Budget and Legislative Analyst's Office.