The Morning Report
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At the start of 2021, few political eyes in San Diego were on the Housing Commission.
The agency, created by the city in the 1970s to handle its low-income housing needs, was actually coming off what many considered a success.
Late in 2020, it purchased two extended-stay hotels for conversion into housing for formerly homeless San Diegans. In the spring, city leaders began imploring Housing Commission officials to act quick to find housing during the height of the pandemic.
When the state dedicated pandemic-relief money for distressed hotels to be converted into low-income housing, the commission jumped on it. The agency closed the deal in the fall and began moving in residents last December.
But city officials soon learned there was a problem. The broker the commission hired to help buy the hotels had invested substantially in a company that sold one of the hotels. Housing Commission lawyers concluded it was a criminal conflict of interest.
The revelation, though, led to a series of disputes about how Housing Commission staff shared the information once they learned of it, and the ways in which the agency’s legal structure kept the City Council and the commission’s board from openly discussing the issue. City Attorney Mara Elliott then forced the commission to provide more information to the city on future decisions after concluding the city “could not and cannot” rely on the commission’s own legal counsel.
That was all before city leaders learned that at least 10 residents of the two hotels had died on the property or after being injured there, as Voice of San Diego revealed in October. Again, the City Council was angry to learn it hadn’t been told of the deaths – or of the high volume of calls for service to the hotels – until Voice began asking questions about the issue.
The City Council is now pursuing significant governance reforms of the agency. That all started when Council President Sean Elo-Rivera and Councilman Chris Cate asked Elliott to outline areas ripe for change. The Independent Budget Analyst’s office conducted its own report on possible reform areas, and the Council said last month those ideas could come into clarity early in 2022.
Cate said he never imagined at the start of the year that he’d spend so much time and effort on changing the Housing Commission.
“The city oftentimes has taken a position that, we do something and it’s like, ‘mission accomplished,’ and we never revisit it,” he said. “But we’ve given the Housing Commission so much responsibility, and so much money over the last 10 years, and so it’s time to look back and say, ‘What are we doing right and wrong, what can we fix and change.’ Good cities and good organizations should be doing those things.”
Indeed, the Housing Commission’s total expenses doubled from 2009 to 2021, from $175 million to $350 million. The value of its assets minus its liabilities – the agency’s overall financial position, basically – had nearly tripled in that same time. Its assets were worth $350 million more than its liabilities in 2009; by 2021, that had increased to over $1 billion.
Still, Cate said it was the conflict of interest, the problems at the hotels and the difficulty getting information on both issues that led him to dig into reforming the commission.
“There needs to be a catalyst for these kinds of things,” he said. “For the Kearny Mesa hotel, we knew there were some ancillary neighborhood issues we were trying to address, but a robust review of processes and roles and accountability would not have happened without these revelations.”
Elo-Rivera, meanwhile, wasn’t on the Council when it approved the hotel purchases. He joined in December with a relevant progressive vision – that affordable housing is important, and the city needs more of it – that might have primed him to look at the Housing Commission.
“That’s the role they’ve been tasked with, so they’re obviously an important vehicle,” he said. “But to qualify that, it’s not that I thought they were doing a terrible job, it’s just that I generally think government should deliver more.”
Tuesday, a group of councilmembers – Cate, plus Councilman Stephen Whitburn and Councilman Joe LaCava – sent Elo-Rivera a memo outlining the potential reform areas the Council could pursue in 2022 .
That list included some significant changes, like removing homelessness-related services from the Housing Commission’s responsibilities, and smaller ones, like creating a new position as a liaison between the Council and Housing Commission’s board. It considered giving the Council increased accountability and oversight of the agency’s executive director, Rick Gentry, and suggested redefining the role of the agency’s legal counsel. The three councilmen also suggested reconsidering the qualifications for Housing Commission board members and the training they receive, creating a process so anything that goes to the commission’s board in closed session also goes to the Council.
The Housing Commission also has its own nonprofit company that competes for affordable housing projects and funding against other, private affordable developers. The group suggested taking a look at the rules around when the Housing Commission can award funding to that company over other developers, along with other possible changes to the oversight of that company.
The group suggests Elo-Rivera create a new committee in 2022 to tackle those issues.
Elo-Rivera said he learned early in his tenure that the Housing Commission had room for improvement, once he fully understood its legal structure and realized how atypical it was compared to other nonprofits and corporations.
“I’m excited we’re doing this work,” Elo-Rivera said. “Governance work isn’t always glamorous, but if it isn’t done well the big, bold things we want to move on will fall on their face for lack of a solid foundation.”
Disclosure: Mitch Mitchell, a Housing Commission board member, also serves on Voice of San Diego’s board of directors.