“San Francisco’s Department of Elections and its employees have been doing an exemplary job,” Herrera said. “I’m equally confident that our co-defendants are also meeting or exceeding their legal duties.”

Herrera sues Fillmore developer for refusing to repay $5.5 million City loan

Balance of 2005 loan used to build the commercial space at the Fillmore Heritage Center now tops $6.5 million; Johnson for years has refused to repay taxpayers

“San Francisco’s Department of Elections and its employees have been doing an exemplary job,” Herrera said. “I’m equally confident that our co-defendants are also meeting or exceeding their legal duties.”SAN FRANCISCO (Aug. 16, 2018) — City Attorney Dennis Herrera announced today that he had filed suit against developer Michael E. Johnson for breach of contract over Johnson’s repeated failure to repay a $5.5 million City loan used to help construct the Fillmore Heritage Center.

The lawsuit filed this morning in San Francisco Superior Court seeks repayment of the loan balance plus interest and late charges. That total was more than $6.5 million as of July 15, 2018. The lawsuit names Johnson individually as well as three companies that he controls: Fillmore Development Commercial, LLC; EM Johnson Interest, Inc.; and Urban Core Development LLC. Besides repayment of the loan plus interest, the lawsuit seeks compensatory damages to be determined by the court and reasonable attorney’s fees and costs.

“The City made this loan in good faith and has given Mr. Johnson every chance to pay back San Francisco taxpayers,” Herrera said. “San Francisco has worked with Mr. Johnson at every turn. Mr. Johnson has never held up his end of the bargain. The years of excuses are over. Time’s up. San Francisco taxpayers need to be made whole.”

The San Francisco Mayor’s Office of Community Development loaned Johnson’s company, Fillmore Development Commercial LLC, $5.5 million in 2005 to build out the commercial space at the Fillmore Heritage Center, a mixed-use development with a large housing component in San Francisco’s historic Fillmore Jazz Preservation District. The commercial space was a key part of the project and was designed to provide a San Francisco location for the famed Oakland jazz club Yoshi’s, as well as a separate restaurant space that became 1300 on Fillmore, and the Jazz Heritage Center, a nonprofit dedicated to the long history of jazz in San Francisco and the Fillmore District.   

The Mayor’s Office of Community Development borrowed the $5.5 million for Johnson’s loan from the U.S. Department of Housing and Urban Development, also known as HUD. The City’s loan from HUD was backed by San Francisco’s allocation of the federal Community Development Block Grant.  

These grants fund important community programs that principally benefit low- and moderate-income people, eliminate slums and blight, or meet an urgent need, like earthquake recovery. For example, the grants are used to fund projects that preserve and maintain the affordable housing supply.

“Because Mr. Johnson’s has not repaid his loan to the City, that money is not available to fund other crucial community-building projects, like preserving affordable housing in the middle of a housing crisis,” Herrera said. “We are going to ensure that this money goes to benefit the community, not line a developer’s pocket.”   

The case is: City and County of San Francisco v. Michael E. Johnson et al., San Francisco Superior Court case no. CGC-18-568954, filed Aug. 16, 2018. Additional documentation from the case is available on the City Attorney’s website at: sfcityattorney.org.

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