Two weeks ago I reported on one of Oakland’s largest landlords, Neill Sullivan, the man behind the Sullivan Management Company (SMC). Sullivan’s firm manages three real estate investment funds named REO Homes. These three LLCs own approximately 270 properties, mostly single family houses and apartment buildings, mostly in West Oakland.
Neill Sullivan’s business is a for-profit venture, but he and his employees say that they’re seeking a “triple bottom line” that will show positive social justice and environmental gains, in addition to monetary gains.
Integral to Mr. Sullivan’s real estate play are the deep-pocketed investors and financial institutions backing him. These investors, and one of the banks supporting his acquisition of Oakland housing stock, also claim to have a triple bottom line emphasis that looks beyond profit.
As I explained in the story, one of these investors is Tom Steyer, a retired San Francisco hedge fund manager who amassed a personal fortune of well over a billion dollars. Steyer put up personal money to support REO Homes, LLC, one of Neill Sullivan’s acquisition funds. And a bank that Steyer and his wife Kat Taylor founded in 2007 also made loans to REO Homes, LLC to finance property acquisitions.
The CEO of One PacificCoast Bank, Kat Taylor, took issue with my presentation of these facts, writing in a letter to the East Bay Express last week that my report was an “outrage,” and a “gross misrepresentation” because of my inclusion of Oakland community voices who are critical of Neill Sullivan and investors like him who have monopolized a good share of West Oakland’s rental housing. Taylor wrote:
“OPCB is a triple-bottom-line bank mandated to achieve social justice and environmental well-being; at the same time, we are financially sustainable. Our ethical standards are beyond reproach and our procedures and safeguards meet or exceed those required by our main regulator, the Office of the Comptroller of the Currency.”
Taylor added that:
“Our ownership reinforces our mission. The bank’s foundation owns 100 percent of the economic rights of the bank. If and when profits are distributed, they can only go to the foundation, which is required by its bylaws to reinvest them into the low-income communities we serve or the environment upon which we all depend.”
But there’s another place that the One PacificCoast Bank’s profits have been going besides philanthropic ventures, according to tax records of the Foundation.
The One PacificCoast Foundation, the non-profit that owns the banks’ stock, has been heavily indebted to Tom Steyer. Steyer loaned the OPC Foundation $26.5 million to allow the Foundation to purchase 100 percent of the One PacificCoast Bank’s stock, effectively capitalizing the bank, according to the Foundation’s recent tax records. The OPC Foundation has been paying back that loan to Steyer, and according to a tax file from 2011, the Foundation paid $2.246 million in balance due.
Thus a lot of the profit generated by the One PacificCoast Bank that was channeled back to the Foundation was used to pay back Steyer for the loan, in addition to being doled out as grants to non-profits.
One PacificCoast Bank is linked to other major real estate investors besides Neill Sullivan. In fact, the One PacificCoast Bank and Foundation exist in a complex network of real estate ventures where the lines between for-profit enterprise, and tax-exempt philanthropy are blurred.
The One PacificCoast Foundation’s links to Bridge Housing Corporation are a case in point.
On the board of the One PacificCoast Foundation is Cynthia Parker, the president and CEO of Bridge Housing Corporation, an affordable housing developer. Bridge Housing has numerous real estate projects in the works in Oakland, especially West Oakland. The Mandela Gateway apartments are a Bridge Housing property. So too is the MacArthur BART Station’s planned 625 unit apartment complex called “Mural.”
What qualifies projects like these as non-profit and affordable is that a portion of the units are set aside for renters below the area’s median income level. For example, the Mural apartments going up next to MacArthur BART will include about 90 “affordable” units, or about 14 percent of the total.
The One PacificCoast Foundation directly supports Bridge Housing Corporation.
Also on the board of directors of One PacificCoast Foundation, at least until 2011, is Rick Holliday. Holliday established Bridge Housing in the early 1980s and he remains on Bridge Housing’s board of directors. But Holliday’s main focus these days appears to be his own for-profit real estate company, Holliday Development.
Holliday Development’s first project in 1988 was conversion of an industrial building in San Francisco’s SOMA into lofts. Today one bedroom units in the building, 601 4th Street, are priced at approximately $1 million.
Before the crash in 2008 that brought the Bay Area’s real estate market to a brief standstill, Rick Holliday was betting big money on West Oakland. That year the San Francisco Business Times ran a profile on Holliday and explained his ambitions for West Oakland: “Some developers see West Oakland as the next South of Market, a San Francisco neighborhood transformed from an under-utilized industrial zone to a booming office and residential district.” Holliday said he was “bullish” on West Oakland real estate.
SOMA’s median rent for a one bedroom apartment is currently about $2,500, making it one of the most unaffordable places to live in the United States.
West Oakland’s rents are quickly rising too. Holliday’s marquee West Oakland project, the Pacific Cannery Lofts sold out last year. Prices in the 163 unit property ranged from one quarter million to half a million dollars, according to the San Francisco Chronicle.