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City always had control over TIDA accounts

File Photo (4/18/5)
Photo(s) by Luke Thomas

By Pat Murphy

Copyright fogcityjournal.com, 2005
All Rights Reserved

Thursday, September 15, 2005, 1:30 p.m.

All Treasure Island Development Authority (TIDA) funds are under the control of the San Francisco City Controller, and have always been, according to TIDA Director Tony Hall.

Hall produced documents, and an email, to the Sentinel to back up his response to allegations separate TIDA bank accounts had been established without knowledge of the City Controller.

The allegations, Hall said, arrived by fax from the City Controller 30 minutes before the TIDA Board of Directors met last night.

A San Francisco Chronicle reporter also received the letter, reported TIDA public information officer Frank Gallagher.

"Just at the meeting's onset…I stepped out for a drink of water, and Chronicle reporter Charlie Goodyear pulled me aside, and showed me the content of the letter, and asked me when this was going to be brought up," Gallagher said.

The Wednesday TIDA Board of Directors meeting was the first board meeting attended by Goodyear, added Gallagher.

An anonymous telephone call to the Office of the City Controller prompted the letter.

"We recently received an anonymous report that the Treasure Island Development Authority has started to remove funds from under the control of the City and County of San Francisco," wrote Controller Ed Harrington.

"After a quick check, this appears to be true," Harrington continued.

Harrington's letter was brought up by the TIDA board as its final item, Hall reported.

Hall maintains the issue was launched to distract attention from more substantive matters at last night's board meeting, including who should have control over TIDA staff, and Hall's conclusion a Treasure Island contract developer has performed inadequately.

Harrington raised concern TIDA has moved away from city administration.

"It is important to note that over the past year or so, TIDA has been slowly moving away from the city's administrative infrastructure and TIDA is legally entitled to do this should the TIDA board so desire," Harrington wrote.

"TIDA has been providing administrative functions through its own staff, or contracting with the Redevelopment Agency or a third party.

"For example, the majority of employees have moved from the city's payroll system to receive payroll and benefits administration from the city's payroll system to receive payroll and benefit administration from the Redevelopment Agency, and TIDA's executive director is paid through a third party administrator.

"However, we were progressing with the understanding that TIDA's funds were being held and managed by the (city) Treasurer and all accounting transactions were flowing through the city's books.

"We now have been informed that TIDA has opened three Certificates of Deposit with a combined value of $173,000 that have not been invested through the Treasurer and of which the Treasurer had no knowledge.

"We do not know the source of these funds and whether rents, grants or other income is being diverted from the Treasurer's accounts for some specific purpose," continued Harrington.

"The other area of concern is whether these out of Treasury activities are recorded in the city's financial records," Harrington stated.

For his part, Hall told the Sentinel that the Controller always has had those financial records.

"I have before me documents that show the City Controller, the Treasurer, and the Mayor's Office, knew about these accounts, and the TIDA board voted on setting them up that way," Hall said.

Hall added that those accounts were set up not only by knowledge of Jesse Blout, director of the Mayor's Office of Economic and Workforce Development, but by Blout suggestion.

An email dated January 13, 2005, from TIDA's John Farrell to then city Budget Director Ben Rosenfield reads:


I checked FAMIS for the $87,500 upfront rental payments from Rent Productions LLC as you said and it was still not posted. It was not were the $25,000 security deposit was deposited (Index 210009, subbject 39899).

Please find out where the funds were deposited and where are they posted in FAMIS and let me know. I need to transfer the funds to the third party account per the TIDA and Rent Productions LLC agreement.

I can be reached at 554-5650

John Farrell"

The online journal entry referred to by Farrell was posted January 18, 2005. FAMIS is the City and County of San Francisco online accounting system.

Hall told the TIDA board Blout suggested the separate accounts, causing Blout, who attended the meeting to blush, Hall stated.

"He blushed. He put his head down and blushed because quite frankly he was the only guy in the room that knew about the account being set up in a third party outside of the Controller and the Mayor's Office," maintained Hall.

"It was Blout who suggested it be set up that way.

"If this turns out to be a mayor's staffer who planted this story, they should be immediately fired.

"They're not serving the best interests of this city," Hall said.


1. TIDA has removed funds from under CCSF control.

· No. These funds are not revenues; these funds represent security deposits and rent credits received as a result of short-term commercial leasing activity that will be refunded to TIDA's commercial tenants at the conclusion of the respective leases, including $87,500 received from RENT productions in connection with their recently concluded production activity. The balance of the $173,000 includes a $35,000 deposit from the Voice of Pentecost for its one-year lease of production facilities and $50,000 received from the TI Sailing Academy for work done in connection with improvements to their facility.

- The TIDA Board of Directors approved the creation of a third-party account when they approved the lease with RENT Productions LLC

· All of TIDA's funds have always been, and remain, firmly under the administration of the Office of the Controller and the Treasurer.

· For example, withdrawals on these funds cannot be made without the Treasurer's approval.

2. TIDA has been slowly moving away from City's administrative infrastructure.

· False. No administrative functions have changed at Treasure Island. The only change that has occurred, placing TIDA's employees under the control of the SF Redevelopment Agency, was made at the request of the mayor and with the full approval of this board.

3. TIDA has opened CDs without the Treasurer's knowledge.

· TIDA practice has been to set aside monies received from commercial tenants as security deposits or rent credits. These funds, in keeping with that practice, have been placed in an account that cannot be drawn upon without the Treasurer's approval.

· The mayor's office has been fully aware of this practice; in fact, it was suggested by mayoral staffer Jesse Blout, who negotiated with TIDA on behalf of RENT Productions LLC for movie production space, that the security deposit and rent credit funds be deposited in an third-party account so they could be returned in a timely fashion at the conclusion of the lease.

· The attached email, from TIDA Financial Manager John Farrell to mayoral Budget Director Ben Rosenfield, clearly indicates TIDA's intent and references the third-party account created at Blout's insistence.

4. TIDA's cash balances have dropped by $500,000 in the last two months.

· Absolutely, because we have paid work orders from a number of city departments promptly and in full. The Controller's ledger accurately reflects those payments.

5. TIDA's financial activities are not recorded with the City.

· False. These funds are accurately and fully accounted for in TIDA's records, and TIDA is audited annually by the city.


"These allegations made by this anonymous caller are absolutely untrue and unfounded.

TIDA's financial practices and accounts are fully in order and available to anyone at any time.

In fact, since I have joined the agency, our management practices have been strengthened and improved.

My first order of business was to request an audit from the Harvey Rose Accountancy Corp., and that audit yielded more than two dozen recommendations, all of which have been implemented.

However, it's worth noting that these allegations made by an anonymous source were not the main subject of debate at last night's meeting of the Treasure Island Development Authority; instead, the issue of extending for three years TIDA's relationship with a development team who has failed to meet important deadlines, and the matter of who controls TIDA's staff, were hotly debated.

These anonymous allegations about TIDA's financial practices, which are subject to strict oversight on a number of levels, are simply a smokescreen meant to obscure these truly important questions.

Unfortunately, what we have here is another example of political gamesmanship from someone who doesn't have the courage to come forward, who prefers to hide behind a mask of anonymity. That is unfortunate, because the Treasure Island project is too important to the people of San Francisco for someone's personal political agenda to derail it.

I will not allow that to happen, and I will continue to push for the best possible project to make sure that the people of San Francisco get the most for their money, because in the final analysis, they are the ones who are paying for it."




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