Green Benefit District Assessments are Public Money
Assessments collected by the city are public money and not a Green Benefit District’s money even when given to the private non-profit Green Benefit District. Green Benefit Districts’ private non-profit organizations are contracted by the city of San Francisco for the administration of the GBD. These non-profit corporations, also known as “owner’s associations”1 in the contract and legislation1 often refer to the money as their money, but they hold the funds in trust and the city is the actual owner.For example in the “AGREEMENT FOR THE ADMINISTRATION OF THE “DOGPATCH & NORTHWEST POTRERO HILL GREEN BENEFIT DISTRICT" “: Recitals
“WHEREAS, Corporation shall hold in trust all funds it receives from the City that are derived from the City's levy and collection of the Assessments exclusively for the purposes of implementing the Management District Plan, and administering, managing and providing District Programs, directly by Corporation's personnel or by third party providers contracting with Corporation, as set forth in the Management District Plan, Resolution to Establish, and annual budgets set forth in the Plan for the first Fiscal Year of operations and, in subsequent Fiscal Years, set forth in the Annual Reports approved by the Board of Supervisors and Corporation's board of directors pursuant to Streets and Highways Code Section 36650, subject to the terms, conditions and restrictions set forth in this Agreement.”
If the funds are not used, the contract and GBD Management Plan is not followed, or the owner’s association is dissolved, any unused funds are collected back by the city to go back to the homeowners in the district.
“Section 4.5 Notification of Changed Status. If the Corporation is dissolved, dissolves itself, no longer has nonprofit status, or has its corporate powers suspended by the Secretary of State or otherwise fails to maintain in good standing its authority to conduct business or operate in the City or the State of California, prior to or upon the expiration of this Agreement, Corporation shall immediately transmit to City all unexpended Assessment Funds for distribution to the owners of Identified Parcels, less amounts City, in its sole discretion, may pay or agree to pay to Corporation's unpaid creditors for Eligible Expenses, unless Corporation makes arrangements for payment of creditors and return of excess Assessment Funds acceptable to City. Corporation will immediately notify Public Works and the Controller in writing of any such change in the status of the Corporation described in this Section or which constitutes a breach of this Agreement.”
Since the city is responsible for the assessment funds, throughout a GBD contract the city has various controls that it requires a non-profit owner’s association to meet. The city also maintains the ability to audit.
1 CA Str & Hwy Code §36651 (“‘Owners' association’ means a private nonprofit entity that is under contract with a city to administer or implement improvements, maintenance, and activities specified in the management district plan.”)