Supervisors Advance $22.2M MEDA Housing Deal Despite City Watch-List Status

The Board of Supervisors’ Budget and Finance Committee voted Wednesday to recommend a $22.2 million financing agreement for a Mission District apartment building operated by the Mission Economic Development Agency (MEDA). The vote came one week after supervisors delayed the item over concerns about the nonprofit’s finances.

The deal

Mission Local reports that the city would buy an existing $20.3 million Housing Accelerator Fund loan on 2059-2065 Mission St., which Mission Local describes as a 35-unit building with four commercial spaces. The city would then become the lender. MEDA bought the building in 2024 for $11.35 million through the city’s Small Sites program, which helps nonprofits buy buildings to keep rents affordable. The item now goes to the full board.

The watch list

On Oct. 19 the city controller gave MEDA a “Tier 3” designation, the most serious level for nonprofit contractors. The San Francisco Chronicle first reported the move. According to the Chronicle, the controller’s letter cited an employee’s unauthorized expenses and “self-dealing,” plus nine other concerns. MEDA says the employee no longer works there and that it believes it was “a victim of a crime.” Mission Local reports that an independent audit dated Sept. 30 described unauthorized IT spending by a former employee and serious weaknesses in financial controls.

The controller’s office told the Chronicle that MEDA has been “proactive” and that the designation could be lowered once the necessary steps are taken. “MEDA is not a Tier 3 organization,” Executive Director Luis Granados told the Chronicle.

Why supervisors moved ahead

Supervisor Danny Sauter said the delay gave him more confidence that the loan is insulated from MEDA’s organizational problems. City housing official Alea Gage told the committee that the building’s projected income exceeds its first-year debt payments by 37%. She added that Small Sites properties sit in separate legal entities and carry a 99-year affordability restriction. Supervisor Chyanne Chen asked how supervisors are told when contractors run into trouble. A housing department official acknowledged that communication had not been consistent.

Background: last year the city refinanced about $37.8 million in debt on 15 MEDA properties, and in April MEDA laid off 12 employees, Mission Local reports.