A little help from their friends

Reporters say Delancey Street gets no money from the government. They're wrong.
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The San Francisco Chronicle’s intrepid reporters have insisted repeatedly in recent weeks that the Delancey Street Foundation accepts absolutely no government funds. “Instead, it relies on donations and the profits from its commercial enterprises,” San Francisco’s paper of record wrote on Feb. 6.

A simple search of the city’s vendor database, however, confirms that several local agencies in San Francisco paid Delancey Street amounts totaling well over $1 million for the last two fiscal years alone. The Department of Children, Youth & Their Families gave Delancey Street $98,000 in program grants for each of the last two fiscal years and by the end of 2007 will have given the nonprofit more than $300,000.

And the mayor’s office gave Delancey Street $435,000 in fiscal year 2006 and $483,000 in 2005, the records show.

The city has paid the foundation more than $200,000 so far this year, and there’s another $64,000 in outstanding payments. The Guardian obtained copies of the grant agreements through sunshine requests made last week.

Mayor Newsom is receiving "counseling" for a self-diagnosed excessive love of white wine from Delancey Street’s politically well-connected executive director, Mimi Silbert, who has known Newsom and his family for years.

The foundation’s easily accessible federal tax forms reflect the hundreds of thousands in annual government dollars paid to Delancey Street.

After local blogger Michael Petrelis began contesting the claims, a Chronicle reporter clarified for Petrelis following a call to Silbert that grant money from the city supports a charter school on Treasure Island called the Life Learning Academy. The academy is managed by Delancey Street and targets troublesome teens – half of them on probation – who have had problems elsewhere in the school district. Silbert told us that the school was designed in part to emulate Delancey Street by operating businesses like its organic produce subscription service and bike maintenance shop.

She said, as Delancey Street has for years, that program residents living at the nonprofit’s Embarcadero Street headquarters depend on one another to keep the place operating through its variety of undertakings.

“We structured it without a staff and without day-to-day funding so that people could help each other,” Silbert said. “And it’s in the helping of each other that you begin to find your strength. And since they run the organization and go from department to department to department, they eventually find what they are good at.”

But there’s more. According to Delancey Street’s tax forms and deed records maintained by the county recorder, the Mayor’s Office of Housing facilitated a $4 million loan for Delancey Street in 1989 using city money to help with the construction of its sprawling residential and commercial center on the Embarcadero, which cost $20 million to build, not including donated labor. As long as Delancey Street complied with a series of terms, the loan, plus interest, would be forgiven after 20 years. Free government money, in other words.

The city’s mayor at that time was Art Agnos. Delancey Street leveraged $18 million more through the private sector to cover the rest of its construction costs for the Embarcadero Triangle Project, according to its tax forms.

They did so using a cash-generating scheme known as a “leaseback” agreement. A third party purchased the property for $18.7 million paid to Delancey Street and also covered the expense of the $4 million loan made by the city. The whole transaction took place only on paper, and in exchange, the third party got to take advantage of the property’s low-income housing tax credits by technically owning 600 Embarcadero St.

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