If San Francisco voters have made anything clear in recent years, it’s this: They want more money spent on homelessness, and they want it spent more effectively.
But the watchdogs whom voters overwhelmingly approved in 2022 say they’ve been left in the dark on one of the very issues they’re meant to oversee.
The tension between urgently addressing homelessness and spending money wisely could arise again Tuesday. The Board of Supervisors will debate and potentially approve a five-year extension of the Homelessness and Supportive Housing (HSH) Department’s power to bypass city rules and award contracts without bidding.
[Update 2/27/24: The Board of Supervisors approved the extension without discussion by a 7–4 vote. It requires a second vote in coming weeks to pass and move to the mayor’s desk.]
This emergency no-bid power was granted in 2019 to address SF’s homelessness crisis. It kicked into high gear when the pandemic struck and HSH scrambled to turn suddenly empty hotels into safe shelters for thousands of unhoused people. Since then, HSH has awarded nearly 400 contracts, and about one third have not had competitive bidding.
Four years after SF voters approved a 2018 business tax to fund more housing and services for unhoused people, voters demanded more oversight with 67 percent approval of a 2022 measure to create the Homelessness Oversight Commission (HOC).
Conceived in the wake of investigations by several outlets, including The Frisc, HOC monitors HSH and its nonprofit contractors, which provide the bulk of the services from the agency. “The [commission] is expected to bring a new level of supervision and transparency to HSH’s critical work,” a civil grand jury report stated last year.
The same report found HSH’s contracting process lacking. This was three years after a separate report, from the city’s legislative analyst, that flagged HSH’s contract management among other things. HSH currently has a two-year budget of more than $1.3 billion.
All the while, the agency’s nonprofit vendors have faced accusations and, in one case, an FBI investigation, in cases that range from mismanaging public funds to providing dilapidated hotels to engaging in nepotism and mispaying employees.
Now members of the oversight board charged with keeping eyes on all this say they’re being kept out of the loop, and lawmakers are taking notice.
How much sight for oversight?
When two thirds of SF voters said yes to the commission in Nov. 2022, they were in part reacting to HSH being the only major city agency without a general oversight board. It was expected that HOC would scrutinize contracts, monitor data, and advocate for spending money more wisely. (Months before the election, Sup. Rafael Mandelman cited SF’s frustration with “multiple decades and many billions of dollars spent to ‘solve homelessness.’ It’s reasonable to expect clear improvement … and frankly, people are not seeing that.”)
Commissioners now say they were not consulted about the no-bid extension on the table. HSH and the mayor’s office said the no-bid authority has been essential to deliver services. The department cited 159 no-bid contracts across 52 nonprofits, allowing HSH to run 10,199 units of supportive housing and 2,858 shelter beds, among other homelessness services.
In 2022, SF tallied 7,754 unhoused people, a 3.5 percent reduction from 2019, but the so-called point-in-time count is considered a rough estimate; the same year, HSH estimated as many as 20,000 people experience homelessness at any given time.
We want to know what the gaps are and what changes, if any, need to be made to ensure that the commission is successful in its mission to oversee the department.
Jeff Buckley, aide to Sup. Ahsha Safaí, on calling a hearing about the Homelessness Oversight Commission
A spokesperson for the city attorney told The Frisc that SF’s charter grants HOC the authority to set policy for HSH. When asked why it didn’t consult the commission, HSH officials said the bylaws “focus on reviewing contracts and monitoring programs,” and the commission does not typically review legislation.
HSH deputy director for communications and legislative affairs Emily Cohen said the department’s director Shireen McSpadden has been reporting to the commission on the progress of this ordinance every month. (In the Feb. 12 meeting, McSpadden included a brief mention among several legislative updates.)
When The Frisc asked for the specific bylaw language, HSH spokesperson Deborah Bouck emailed links to the bylaws and a website summary without explanation.
Whether HSH was following the letter of the bylaws or not, two commissioners and two lawmakers said HOC should have been more involved. Told about HSH’s explanation, Sup. Connie Chan said it seemed like a loophole to avoid oversight. Chan recently tried and failed to put limits on the no-bid extension.
Sup. Ahsha Safaí, who sponsored the 2022 measure that created the commission, has requested a hearing that’s expected to happen “very soon,” according to aide Jeff Buckley. “We want to know what the gaps are and what changes, if any, need to be made to ensure that the commission is successful in its mission to oversee the department,” said Buckley.
(Safaí and Sup. Catherine Stefani are also pushing to give the city controller broader contract audit powers of the city’s more than 600 nonprofit vendors, who deliver an estimated $1.4 billion in work, according to the supervisors’ bill.)
In a brief interview with The Frisc, HSH executive director Shireen McSpadden said the HOC “gives the public an opportunity to really understand the work of the department, whether it’s how we tackle permanent supportive housing, or how we take our contracts to them for approval, which we’re just starting to do. But really, this is a public airing of the work we are doing.”
The first HOC meeting was in May 2023, and it meets monthly. Until mid-February, a span of nearly nine months, the commission reviewed a total of two contracts. A package of six more came up at a special Feb. 16 meeting. At the commission’s outset, McSpadden estimated that 10 contracts per month would go before the HOC.
Five more years
This week, when the full Board of Supervisors meets, city lawmakers will get a second chance to put guardrails on HSH’s request to extend its no-bid contract power into 2029.
Sup. Chan was unsuccessful the first time. As chair of the Budget and Finance Committee, she spent two months trying to add amendments against the wishes of HSH and Mayor Breed. Committee members Mandelman and Sup. Myrna Melgar overrode Chan to send the bill, unamended, to the full board. Mandelman said competitive bidding has become too complex, lengthy, and results in less competition, not more. “We are checking for things like commitments to not buy particular kinds of wood based on concern for Myanmar,” he said, referring to the city’s administrative code. “I think this is not beneficial.”
Chan’s amendments proposed three tiers of restrictions, including two- and three-year time limits for no-bid contracts. She had support from two prominent homelessness advocates: HOC commissioner Christin Evans, a Haight-Ashbury small business owner, and Coalition on Homelessness executive director Jennifer Friedenbach.
HSH’s Cohen said the required paperwork would force HSH to postpone new projects for six months. She added that it would make HSH’s work “incredibly complicated” operationally. “When we’re talking about human beings on the street, getting them inside three or four months faster makes a really big difference in their lives,” Cohen said.
Cohen also noted that HSH two years ago started using an in-house alternative to the city’s competitive bidding process. These “solicitations of interests” — which are distributed to providers and posted on HSH’s website — have been used frequently, according to the department.
At the commission’s outset, HSH said the oversight body wasn’t required to review contracts. But “in the interest of bringing greater transparency,” Director McSpadden recommended that HOC review those with an annual amount of at least $500,000 — or $100,000 for new programs or services. A few months later, the department also stated that the HSH director retains final contract approval. (Those of $10 million or more must also be approved by the Board of Supervisors.)
Competitive public bidding is widely considered the best practice for spending public funds. When granted authority in 2019 to skip the process, HSH was obligated to submit to supervisors annual reports of all no-bid contracts. As The Frisc reported in 2022, these reports were just boilerplate information: contract date, provider name, dollar amount, and a general description of services. Some no-bid contracts were missing from the reports, and it was unclear if supervisors or staff even read them. (The 2019 waiver also applied to the Department of Public Works for homelessness projects.)
Nine months on the job
Multiple HOC commissioners said that in their nine months so far, they’ve spent much of their time learning how the department works. There are seven members, four appointed by the mayor and three by the Board of Supervisors, and they must have specific backgrounds: personal experience with homelessness, work as a service provider, small business experience, and more.
One of Breed’s first nominees, tech executive Vikrum Aiyer, had to withdraw after revelations that he falsified expense reports and inflated his resume at a previous job in the federal government.
Commissioners will serve four-year terms, although the terms of three current members expire in 2025. It’s a diverse group with a mountainous responsibility, and they’re still figuring out their role. Evans touted some of HOC’s accomplishments, such as asking for data that brought to light how Black residents of HSH’s permanent supportive housing make up a disproportionate 45 percent of all evictions.
Commissioner Whit Guerrero said he felt commissioners have been effective, particularly providing transparency about how the department works and giving people and nonprofits a platform to be heard.
Commissioner Sharky Laguana emphasized that the board is still in its early days: “I feel like, with all of the education and work that has happened to date, we are finally getting into position to sink our teeth into the meat of the work we’re doing.”
