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Lawsuit alleges cronyism in city Fillmore Heritage Center deal

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After years of standing vacant, the Fillmore Heritage Center reopened to the public in November. (Kevin N. Hume/S.F. Examiner)

A Fillmore District businessman who made four attempts to purchase the long-vacant Fillmore Heritage Center has sued city officials including Mayor London Breed for alleged fraud and cronyism in the bidding process that led to its recent takeover by a group of community advocates.

The 50,000-square-foot center, which had been vacant for years, reopened to the public in November when a coalition of community advocates in partnership with the San Francisco Housing Development Corporation was awarded $50,000 and a six-month lease to temporarily activate the space.

But weeks later, former Rasselas Jazz club owner Agonafer Shiferaw filed a lawsuit in federal court alleging “acts of mismanagement and malfeasance by San Francisco government officials charged with the administration and disposition” of the center. Mayor London Breed, Fillmore Supervisor Vallie Brown, Third Baptist Church Pastor Rev. Amos Brown and a number of city department heads.

Shiferaw alleges The City granted control of the center to “entities whose chief qualification is that they are friends and supporters” of Breed.

The lawsuit also alleges officials violated procedural safeguards and contributed to fraud, resulting in some $100 million in failed public and private investments, and exacerbated the Fillmore’s “stagnant economic conditions” by stalling a request for proposal process.

Brown and a spokesperson for Breed did not respond to request for comment by press time, and Rev. Brown declined to comment for this story.

City Attorney’s Office spokesperson John Cote called the lawsuit “long on rhetoric and short on facts.”

“It is wholly without merit, and The City will vigorously defend against it,” he said.

Shiferaw’s is one of several lawsuits surrounding the center, one of the last projects built under The City’s redevelopment program. Once hailed as an anchor space and an opportunity for economic growth, in recent years it has earned a reputation as the neighborhood’s “million dollar blight.”

City Attorney Dennis Herrera last August sued the center’s developer, former Yoshi’s owner Michael Johnson, to recover a $5.5 million loan from the U.S. Department of Housing and Urban Development which, along with city funding, was used to build the $80.5 million project in 2007.

A month later, Johnson countersued, claiming that city interference undermined the project.

After Yoshi’s declared bankruptcy in 2014, the center appeared to struggle to find permanent ownership.

But Shiferaw claims there is another side to the story for which San Francisco leaders “don’t want to take responsibility.”

“The whole idea of an $80 million public and private investment was that it was supposed to be a catalyst for economic development, bringing the jobs and culture and entertainment and music to the Fillmore,” Shiferaw told the San Francisco Examiner, adding that he first proposed to buy the center for $6.5 million from Johnson after the latter “defaulted” on his loan.

“I made an offer, he was going to lose it. He accepted it with a signed contract, and [The City] refused it. They didn’t even consider it,” said Shiferaw.

The City is looking to sell the center for $6.5 million, and members of the nonprofit currently operating the center alongside San Francisco Housing Development Corporation, New Community Leadership Foundation, have indicated interest in being a potential buyer.

In November 2017, the group called for more participation, accountability and oversight in The City’s RFP process and began the process of establishing a community oversight board to monitor it.

An NCLF spokesperson did not respond to requests for comment about Shiferaw’s lawsuit by press time.

Among the claims laid bare in the lawsuit, which the community blog New Fillmore first reported, is that the defendants “defrauded San Francisco City taxpayers by simply erasing a $4.8 million loan to the former proprietor of Yoshi’s SF (anchor tenant of the Fillmore Heritage Center), hidden from public scrutiny, in order to re-secure control of the property in preparation for re-offering it as a prize to political supporters.”

In the 2017 RFP process, The City issued a request for proposals for the property and tasked a selection committee consisting of community and city representatives with identifying viable applicants.

“The RFP was a fraud and a charade from start to finish, designed as a pretext and a smokescreen to sidestep state and local government contracting and bidding laws,and to steer the project into the hands of defendants’ chosen cronies,” the lawsuit alleges.

Shiferaw claims that after a complaint with the Ethics Commision, the process was terminated.

Office of Economic and Workforce Development spokesperson Gloria Chan told the San Francisco Examiner last January that the city review panel tasked with selecting a new owner for the property was disbanded after “none of the five complete proposals successfully met the requirements outlined in the RFP.”

But Shiferaw, whose wife owns and operates the Fillmore’s Sheba Lounge, said he was more than qualified in terms of capital and rigorous community benefits plan required under the RFP.

“There were five of us [applicants] — I’m sure one us was qualified. There was no reason to cancel it,” Shiferaw said. He claims that the center’s current operators, which include celebrity boxer Karim Mayfield, are less qualified.

“I don’t know what their problem is, I wish I knew. I feel very discriminated against and it’s coming from City Hall,” Shiferaw said. “They have no legitimate moral reason to deny me.”

lwaxmann@sfexaminer.com

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