potrero view

July 2010

Lack of Transparency Dogs Community Trust Fund

By Lori Higa

In 2007, TMG Partners created a $1.5 million community benefits fund as part of an agreement that enabled the developer to convert 650 Townsend – the brick building adjacent to the Concourse –from business services to offices without having to provide the hundreds of parking spaces that would otherwise have been required under the City and County of San Francisco’s Planning Code.  Brokered by Dogpatch-based real estate consultant and community advocate Joe Boss, the Eastern Neighborhoods Public Benefits Trust Fund (ENPBTF) has steadily drawn on these funds to support a number of local nonprofits.  However, because of the way the agreement was structured, the Trust Fund’s operations, including the identification of which organizations have received funds, has largely remained secret.

The Eastern Neighborhoods (EN) is a geographic designation created by a decade-long, hotly contested City rezoning plan.  The collection of communities that make up EN – Potrero Hill, Showplace Square, Dogpatch, the Central Waterfront and northeast SoMa – sprawls across 2,200 acres, almost twice the size of Golden Gate Park.  The Eastern Neighborhoods Plan, approved last year, calls for the creation of up to 10,000 new housing units in the area.  The plan was designed to balance affordable and market-rate housing, and preserve production, distribution and repair jobs (see related article in this month’s View on the front page).  

As the EN planning process reached its final stages, the ENPBTF was hastily put together by Boss, with the help of District 10 Supervisor Sophie Maxwell and other community advocates, including then Potrero Boosters Neighborhood Association president Tony Kelly.  The trust fund took form in a matter of weeks, a timeline forced by TMG Partners and the Mayor’s Office of Housing’s desire to collect the $6.5 million in fees for housing programs it stood to gain from the conversion.  

The ENPBTF’s mission is to fund projects with long-term, public benefits in the eastern neighborhoods, and to coordinate planning with the Mission Bay and northeast SoMA neighborhoods.  Initial Trust

Fund grants were dispersed to Thick Description, a theater managed by Kelly, which has since significantly reduced its operations; the Potrero Residents Education Fund (PREFund), to develop a preschool at Daniel Webster Elementary School; the Potrero Hill Neighborhood House; and the San Francisco Municipal Transportation Agency.  GreenTrustSF, a nonprofit dedicated to creating and preserving open space along the Central Waterfront, also received funds.  

A complete list of grantees is unavailable due to the ENPBTF’s status as a donor-advised fund, as administered by the San Francisco Foundation, according to Boss.  Because of its legal designation, information on the fund, its grantees and award amounts is not “public domain,” stated Boss in an email to the View.

“The agreement for the ENPBTF established a policy of confidentiality which prohibits the advisors from revealing the grantees or the amounts granted,” Boss explained. “I was brokering the deal because I know TMG partners, and was asked to move this along at the request of [the] Boosters and Dogpatch [associations].” Boss insisted that he didn’t want to serve as an advisor, “but the deal was done. The fund was set up and non-disclosures were signed.   If we disclose anything, then TMG Partners could rescind the funds.  It was set up that way because that is how San Francisco Foundation sets up donor-advised funds, to keep people from trying to gum up the work.”

The fund’s advisors – selected from a list of 10 individuals considered by the development firm, according to Boss – consist of Boss, a long-time Potrero Boosters officer and Dogpatch Neighborhood Association (DNA) member; Keith Goldstein, president of the Potrero Hill Association of Merchants & Businesses and owner of Everest Waterproofing; and local designer Susan Eslick, DNA’s founder and vice president. Goldstein and Eslick wouldn’t provide comment for this article.  “The Fund’s three advisors were chosen by the donors and accepted by the San Francisco Foundation based on their past community involvement, their understanding of development impacts to the area and their known neighborhood advocacy,” Boss said.  

In addition to grants of $150,000 to Thick Description, some amount less than $50,000 to GreenTrustSF, $500,000 to SFMTA and $200,000 to PREFund, ENPBTF has provided $14,000 to the 18th Street and Rhode Island permaculture garden, to pay for a tool shed and irrigation system; several thousand dollars to the McKinley Square Park Foundation; and unknown amounts to the Potrero Hill Archives Project, Potrero Hill Neighborhood House and the San Francisco Public Library’s Potrero branch as part of its recently completed multimillion dollar renovation.  Boss declined to confirm any of the above-named grantees or amounts.  

According to Boss, SFMTA received what appears to be the largest chunk of fund monies “because the greatest potential impact to the area is perceived to be the increased daytime population of the project, and the lack of strong transit service in the area...the donor conditioned that over $500,000 of the funds would...[go] to ongoing transportation planning.”  According to Boss, little progress has been made on the SFMTA transit assessment.  The View was unable to get comment from the agency before this story went to press.

A donor-advised fund (DAF) is “a type of charitable giving account sold by community foundations and other public grant making charities...by national funds such as the Schwab Charitable Gift Fund, Vanguard and Fidelity,” according to Lucy Bernholz of Blueprint Research & Design, Inc., which provides consulting services to grant-making organizations.  “They’ve been around for decades,” explained Bernholz in an email.  “Donors like them for several reasons.  They get professional support at a low fee, they are much less expensive than a private foundation to manage – which means much more of the money goes to communities and less to overhead – and they are very flexible.”

According to Wikipedia, DAFs are “administered by a third party and created for the purpose of managing charitable donations on behalf of an organization, family, or individual. A donor-advised fund offers the opportunity to create an easy-to-establish vehicle...as an alternative to direct giving or creating a private foundation.”  Donor-advised funds, cites Wikipedia, are the fastest growing charitable giving vehicle in the United States, with more than 125,000 donor-advised accounts holding more than $27 billion in assets.  “Because the fund is housed in a public charity, donors receive the maximum tax deduction available, while avoiding excise taxes and other restrictions imposed on private foundations,” according to Wikipedia.   

“They allow a donor to make a gift to open the DAF and take the tax exemption immediately,” Bernholz wrote.  “They can then advise the holding entity...on other gifts to be made to other public charities.  They are called ‘advised’ because legally, once the initial gift is made, the funds are the property of the [foundation], not of the donors.  Therefore the donor can only advise future gifts.”  

Dana Lanza, founder of Bayview-Hunters Point-based nonprofit Literacy for Environmental Justice (LEJ), supports ENPBTF’s advisors’ desire to keep their giving anonymous.  Lanza described the “nightmare” LEJ went through to create its green Eco Center – which was completed this year after almost a decade-long development process – located in the restored Heron’s Head wetland sanctuary.  “We received a $1 million grant from the City’s Department of the Environment for it.  It was such a public process it became a nightmare.  Anyone who didn’t get the grant caused a lot of trouble and made a nuisance of themselves,” Lanza recalled.  

“The eastern neighborhoods are so politicized, there was rivalry, jealousy, racial politics, people jumping to insane conclusions, raising hell, and preventing progress.  It added three to five years to our project and wasted hundreds of thousands of dollars,” said Lanza.  Lanza, now a nonprofit consultant, even considered a restraining order against one particularly vocal opponent.  “If the Eastern Neighborhoods Fund were to be more publicly visible, they would probably have to add more staff to handle the demand, which is greater than the resources they have.”  ENPBTF’s advisors work on a voluntary, unpaid basis.  

Architect, contractor and longtime Hill resident Kepa Askenasy, of Studio Askenasy, disagreed with Lanza.  “Here we are, two years later and there’s still the same concerns about the fund:  no transparency around the process, a tremendous amount of conflict of interest, a situation of self-dealing, ethics issues and so many unanswered questions,” said Askenasy.  Askenasy, who has a long history of activism related to local land use issues – including participating in the EN planning process – successfully advocated that Boss register as a City Hall lobbyist.  “The fund is like lipstick on a pig.  It’s doing some good things, but it was a backroom deal, formed by developers and lobbyists, ostensibly for all the eastern neighborhoods, but benefitting primarily the same people who helped set up the fund.”

 Askenasy believes monies donated by developers should be overseen by the City, with a master plan on how funds are to be allotted.  “How much money is left?  Are they keeping the lion’s share? Where’s the accountability?  This isn’t FarmVille play money,” Askenasy said.  “What it says is that the neighborhood is for sale, that it can be bought, and it is not.  So many people deeply care about the neighborhood.”

“Organizations that want [ENPBTF] funds have to be a 501(c)3; grants can’t go towards paying for salaries,” Boss explained.  “The [fund’s guidelines] are based on criteria set up by the donors in the first place.  We cannot disclose who received funds.”  According to ENPBTF guidelines, grants aren’t for “one-time operational costs, but rather for...long range capital or planning functions that will have lasting impacts. The Target Areas are: Transportation, Open Space, Arts, Cultural Resources, Education and Social Services.”  Boss cited selection criteria as “based on: 1. Grantee’s recognized involvement with the community; 2. The grant falls within the Targeted Areas; 3.The funding will have long-term effects on the Community (no program funding); 4. The grantees either have a long standing place in the community, or are managed or governed by people with long standing in the community.”

Boss is trying to replenish the fund, “but the current economy is making it difficult,” he said.  While he described the advisors’ main job “is to represent the fund,” he pointed out that “San Francisco Foundation reviews recommendations against the criteria, and the board only votes to say yea or nay.  We don’t advertise the specific fund, but most people know the fund exists.”

ENPBTF issued a 2007 memorandum that described various means of outreach to potential grantees including “1. Presentation to Neighborhood Associations.  2. Articles in local newspapers. 3. Word of mouth.”  However, the fund has made few, if any, presentations at associations, and hasn’t advertised funding opportunities in the View.   David Cody, manager of the 18th & Rhode Island St. permaculture garden, was unaware of the fund’s existence until he was approached by fund advisor Goldstein at a neighborhood meeting.

When asked for his thoughts about the ENPBTF, San Francisco Ethics Commission executive director John St. Croix pointed out that “forming community partnerships with developers is a rather new area in law and not regulated.”  In order for the City to get involved in oversight of such a fund, “Government has to prove an overriding public interest,” he stated.  Since “historically, partnerships with developers are traditionally done by cities,” St. Croix said, ENPBTF falls into a gray area.

“I’ve never heard of grants and grantees being kept secret,” said long-time local community organizer and author Mike Miller. “What’s going on with the ENPBTF seems typical of the nature of San Francisco politics...There’s no shortage of nonprofits who claim to give voice to the voiceless, but end up excluding their constituents…people are bought off in various ways, the conditions that started the protests, remain the same. What neighborhoods and communities need is the equivalent of a union,” said Miller.  

This article was written with support from Lisa Tehrani.

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