The San Francisco Controller's Office on Tuesday accused HomeRise, one of the city's largest providers of housing for formerly homeless people, of misusing taxpayer funds.
The office released an audit where it accused HomeRise of gross mismanagement and wasteful spending. According to the report, which was prepared by outside auditors, HomeRise granted pay raises of up to 20% to some employees despite insufficient cash flow. Additionally, HomeRise also paid out $200,000 in bonuses.
Further exacerbating its financial issues, the auditors found that HomeRise had created three new corporate positions during the audit period without considering the fiscal impact. All the misused funds could have been used toward improving services in its housing units or making facility improvements, the report said.
Vacancies at many of the nonprofit's housing facilities led to a loss of $6 million during the audit period. Auditors also noted that HomeRise had improperly recorded expenses and improperly borrowed funds from restricted accounts to resolve its cash flow issues.
The audit was initiated by the Mayor's Office of Housing and Community Development and the Department of Homelessness and Supportive Housing and covers four years from 2019 through some months of 2023.
"Diverting any portion of city funding to questionable uses when it's earmarked to benefit residents is careless and irresponsible," Controller Greg Wagner said. "No matter the extenuating circumstances, HomeRise had an obligation to ensure public funds were managed appropriately."
HomeRise operates over 1,500 housing units at 19 properties in San Francisco. The nonprofit currently has an annual budget of $34 million. It also has an agreement with the city with $240 million in loans, grants, and subsidies to develop, rehabilitate, operate, and maintain properties.
Nonprofit Scandals in San Francisco
HomeRise is the latest city-funded nonprofit to be accused of misusing taxpayer funds. In February, the City Attorney and Controller's Offices accused J&J Community Resource Center of improperly billing the city for expenses that included reimbursements for alcohol, cigars, and motorcycle rentals.
Last year, a lawsuit was filed against homeless services nonprofit United Council of Human Services and its chief executive, Gwendolyn Westbrook, for allegedly using the funds to fuel her "lavish" lifestyle. Westbrook was accused of using taxpayer funds to buy luxury vehicles for herself, her niece, and a close family friend.
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