November 27, 2019; San Francisco Public Press
New leadership and the community came together to save a culturally significant building for Mission Language and Vocational School (Mission) in San Francisco. This comes after a messy legal battle between Mission and its former building tenant.
Mission—which has operated for 48 years and which can trace its origins even further back to Centro Social Obrero, founded in 1962—exists to give skills and training to Spanish-speaking immigrants so they can integrate into various industries within the community. Their building became the hub for the different trainings, and also hosted community dances and events.
According to Laura Wenus, writing for San Francisco Public Press, Mission came under major financial stress and looked for a tenant to help relieve some of it. A solution was found in an agreement with a for-profit company called Huckleberry Friends, a private firm that works on clean energy technology, advanced manufacturing, and promoting science education for youth.
The agreement Wenus describes in the article is not an ideal one for a nonprofit, to say the least. However, as Wenus points out, Mission was desperate. Huckleberry Friends agreed to cosign on a loan with Mission against the building (enabling Mission to access needed financing) and agreed to pay rent to lease a third of the building. In exchange, it received the option to buy that portion of the building later.
The nonprofit knew when signing the deal that while it staved off immediate financial problems, it could put the nonprofit in long-term peril, according to an El Tecolote article. A board member who was a part of the original agreement said of the deal, “I recognized it for what it was. We were having to give up an important piece of our property to save our school.”
How did Mission’s financial situation become so dire that they were willing to make this deal? They say it was a combination of bank worries, lack of adequate community financial backing, and lessening foundation support in 2013. However, it seems mismanagement was also likely a cause.
At the start of the legal battles, Wenus wrote an article for Mission Local in 2017, giving some background into how it went from a cosigned loan in 2013 to a messy legal battle in 2017. For one, Mission had not made payments on its loan for a year and a half, with Huckleberry Friends, as co-signer, being obliged to make $250,000 in payments on Mission’s loans. After being fed up with this and other negative interactions, Huckleberry Friends decided to use its option to buy their portion of the building, although the way the $3-million sale was structured in 2018, both the firm and the nonprofit became co-owners (“tenants in common”) of the building.
One has to ask, where was the leadership? The board? The Mission Local article quotes some of the board members as saying there was major turnover. Not all of the board was informed of some things (especially leading up to the sale negotiations in 2017 and 2018) and it appears that many of them had at best limited knowledge of the nonprofit’s financial troubles and mismanagement issues.
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El Tecolote further explained that Rosario Anaya, executive director and Mission leader for forty years, died unexpectedly of cancer in 2015; her replacement, Daniel Brajkovich, misled the board into thinking they were financially sound, even though he had stopped paying the mortgage. The board was not made aware of this until Saul Griffith, owner of Huckleberry Friends, notified them that the company had been forced into the position of covering the nonprofit’s loan payments to avoid default.
One of the new board members (and new board president), Tracy Brown-Gallardo, found some of the mismanagement so troubling it kept her up at night. As quoted by San Francisco Public Press, after realizing the organization’s nonprofit registration had lapsed, she thought, “Oh my god. This means that technically, if we don’t renew this, we will be out of business.” Worse, the school had a history of sometimes not meeting payroll, which also had to be remedied. As Brown-Gallardo explains:
There were definitely times where I was not sure I was going to make payroll. And as the board president, it’s almost like, I can’t not pay my staff. I think once I assumed the role of the board presidency, within three to four months, there was never a time that we did not make payroll. So that was a huge celebration.
The legal battles have now ended with a settlement. With the support of three other San Francisco nonprofits—Jamestown Community Center, the Mission Economic Development Agency, and Mission Neighborhood Centers, Inc.—and with a $1 million grant from the city, the nonprofit was able to raise $4.75 million to buy out Griffith; it also agreed to pay Griffith $700,000 in damages.
For his part, Griffith claims that the dispute damaged his business to the tune of millions of dollars, meaning that the settlement leaves him less than fully whole, but says he agreed to the settlement because he and his wife “simply could not afford to continue fighting this fight.”
Clearly, for Mission to survive this chain of financial mismanagement speaks to its deep community support. Now, that support will have to be met with sound board oversight going forward.
Brown-Gallardo understands the challenge. She notes that the school will be “paying off the building and the $700,000 awarded to Griffith in damages for a long time.”
“That was steep for us. It will hurt us for years to come. We will be fundraising for many years,” she said. “I was put here by community to advocate for what was best for community, and I knew that I could not take any risk at losing the building. And so ultimately, that’s why we agreed to settle with such high damages.”—Sarah Miller