Overnight, the formerly obscure Music Concourse Community Partnership has vaulted into city headlines as a horrendous example of what can go wrong when a nonprofit corporation founded by public-spirited philanthropists is established with sloppy legislation that doesn’t guarantee adequate fiscal oversight. Just one day after Examiner columnist Ken Garcia broke the story on Monday, MCCP Chief Financial Officer Greg Colley reportedly confessed to embezzling $3.5 million in donations and losing it on unsuccessful trades during the stock market downturn.
Colley, a contracted consultant, apparently succumbed to the temptation of easily manipulated gaps in the concourse partnership’s financial controls. The money-skimming scheme began to unravel when a construction company made calls asking why they hadn’t been paid.
Embarrassingly, it was then revealed that neither agency the MCCP reports to — the Golden Gate Park Concourse Authority and the Recreation and Park Department — believed they had authority to double-check Colley’s occasional financial presentations. So the CFO of publicly supported MCCP was free for several years to claim anything he wanted to in his accounting statements without anyone doubting his word.
The MCCP was authorized in 2003 by the San Francisco Board of Supervisors and the Recreation and Park Commission. It was granted a 30-year ground lease to build and manage a privately funded 800-car underground parking garage, plus a $35 million state revenue bond that is to eventually be repaid from parking revenues.
The $55 million garage opened in 2005. Spearheaded by well-known city financier-philanthropists Warren Hellman and George Hume, an underground parking facility was necessary to gain approval for constructing the new M.H. de Young Museum and expanding the California Academy of Sciences at Golden Gate Park’s central concourse — despite active opposition from various communitygroups.
The MCCP raised more than $36 million in donations to construct the garage and obtained pledges for the rest. The missing $3.5 million was taken from a fund designated for cost overruns. At this point, separate forensic audits of MCCP finances are under way by the City Attorney’s Office and a law firm hired by the partnership board.
As yet it is undetermined whether Colley — who allegedly promised to repay the losses — will face criminal prosecution. He could potentially be charged by the San Francisco district attorney or by publicity-savvy state Attorney General Jerry Brown, whose office has ultimate responsibility to regulate California nonprofit agencies.
Plainly San Francisco will receive additional offers of public-private partnerships to create cultural attractions on public land — the pending Fisher Art Museum on the Presidio comes immediately to mind. What The City must learn from its easily preventable MCCP fiasco is that any such future deals must be crafted to include ironclad guarantees of independent auditing. And there should be prompt contractual review of the MCCP and any similar partnerships to verify that taxpayer interests are genuinely enforced.