Growth and Problems for Sacramento Self-Help Housing

In 2023, Sacramento Self-Help Housing, an organization that had been adept at helping chronically homeless people get off the street, went bankrupt and shut its doors. This is the third-part in an investigative series on how an organization that once played a vital local role combating a vexing societal issue failed. Catch up by reading part I, about the organization’s final days and part II, about more successful times that predated its fall.

By 2019, the stakes around servicing the Sacramento region’s homeless population were growing dramatically.

The homelss advocacy group Sacramento Steps Forward had identified 3,665 people experiencing homelessness on a night in January 2017, in the bi-annual point-in-time count mandated by the U.S. Department of Housing and Urban Development, or HUD. Numbers have more than doubled since, reaching 9,278 in January 2022. (Results of the most recent count, from January 2024, should be out later this year.)

With the homeless population soaring in the late 2010s, Sacramento Self-Help Housing began to rapidly expand in response, both in terms of revenue and the number of people it served. From a small nonprofit in the 2000s, SSHH crossed $10 million in revenue in 2019 and didn’t look back. SSHH noted in its 2021 tax filing that it had housed more than 800 people and rehoused more than 600 others.

Still, there were signs even then that all was not well, according to longtime founding CEO John Foley.

“We were open to growth but it was kind of crazy,” Foley said. “We got almost everything we applied for, which maybe should have been a clue right there that other people were smarter and didn’t want to get into some of these things.”

Having had some early successes, SSHH embarked on an aggressive course of growth, one that would ultimately doom it.

Money Problems

For Foley and the people he worked with at SSHH, taking on tough cases and putting folks into shared housing was just what they did, even if other local groups couldn’t or wouldn’t do this.

“What John was able to be able to do was work with care houses and landlords and just figure out a way to house people that nobody else could, because they didn't have any money,” said Dr. Ethan Evans, an assistant professor at California State University, Sacramento, who served on SSHH's board and was chair in its final months last year.

Clients included people like Gary Fowler, went to live in recent years at an SSHH house in south Sacramento, where he got to have his dog with him. Fowler said he’d been released from prison in 2017 and wound up homeless, living in Miller Park. 

“Honestly, I was thinking about robbing a bank or ODing on some fentanyl,” Fowler said.

There was a time that SSHH’s approach worked extremely well and made Foley locally famous. The Sacramento Bee noted that mayor Darrell Steinberg referred to Foley as a “hero” at a city council meeting as late as April 2022, when SSHH as an organization had privately started to struggle mightily.

Some people who look at SSHH’s collapse might say it was a victim of the COVID-19 pandemic, with the organization losing $1.2 million over the 2020 and 2021 tax years, more than all of its previous losses combined. Certainly, the pandemic hit the organization hard. But as early as 2019, there were signs of fissures.

Typically, SSHH provided housing by executing leases with open-minded landlords, rather than purchasing or building properties itself. In time, longtime SSHH board member Ron Javor set up a subordinate nonprofit, Housing Solutions, Inc. or HSI, so it could take ownership of donated properties that it would then lease to SSHH. Eventually, HSI owned six houses in Elk Grove and another in south Sacramento on La Mancha Way.

The challenge with SSHH primarily leasing properties was that landlords needed to be paid rent each month, even though SSHH’s funding entities, such as Sacramento County, could pay invoices after the fact. This risked creating cashflow issues.

So in March 2019, SSHH took two loans totaling $550,000 against the La Mancha Way property, with the loans helping to create a $750,000 reserve for SSHH, according to Javor. However, the money would ultimately come at a significant price, with the La Mancha Way house’s windows boarded and people illegally accessing the property as of September.

“Last night, I heard a lot of screaming over there, arguing,” neighbor Ben Constancio, 75, said.

Other problems can be traced to at least 2019, too. For many years, SSHH held a fundraiser, “Let Them Eat Cake.” Evans joined the board of SSHH in 2019. It quickly became clear to him that the organization needed to do more fundraising and that it lacked infrastructure for that crucial task.

“They didn’t have the right computer systems or software packages to get it done,” Evans said. “They didn’t have the expertise or staff capacity to be able to do a consistent job. They really relied on government contracts for, I mean, 90 percent of the budget.”

Meanwhile, Foley said, his auditor told him in the summer of 2019 that SSHH needed a more sophisticated accounting program than the version of QuickBooks that the company had been using. This transition was ultimately unsuccessful. In February 2020, the organization hired a chief financial officer, R. Miguel Ramirez. Ramirez suffered a stroke not long after he was hired, dying in September 2020.

SSHH’s most recent CFO, Cecilia Min was hired in May 2021 and didn’t respond to a request for comment.

The nonprofit was also lagging on audits in recent years.

“We had several things happen,” said former SSHH board chairman Ted Cobb, who served on the organization’s finance committee and is Foley’s cousin. “Our auditor moved to New York and we had trouble finding another one. And during COVID, it was even harder to get somebody out here, so we fell two years behind on our audits.”

The lack of audits would haunt SSHH when it went to the county for a lifeline in mid-2022, receiving approval for $1 million in American Rescue Plan Act funding – tentative approval, that is. The funds would never be disbursed, in part because SSHH had fallen three years behind on audits by this time.

“It's not just our auditing requirements, it's the federal government's,” said Sacramento County Board of Supervisors member Patrick Kennedy, who served on SSHH’s board in the mid-2000s, prior to being elected. “And if our contractors don't abide by the auditing requirements, the federal government can require us to pay back the money that we get.”

In response to an interview query, HUD provided a written statement in June 2023 noting that entities expending at least $750,000 in federal funding must conduct annual audits.

“Such audits provide the recipient an annual opportunity to review its financial picture and share key indicators about its financial health with a variety of stakeholders, including the [federal] government,” the statement noted. “These audits can identify deficiencies that can be addressed by the recipient promptly.”

County Oversight

In early 2022, the county began receiving emails from landlords who complained about being owed rent.

SSHH, which housed formerly homeless people through a variety of programs, had been leasing residences through its PRTS contract. However, the county had been receiving emails from landlords who claimed they weren’t being paid by SSHH, according to more than 100 pages of emails and other documents the county released in August in response to a public records request.

Other emails the county released show their concerns related to SSHH went back to at least late 2020.

Hong Lun Yu, the county’s audit manager said in a July 2021 email to Foley, an SSHH representative named Anne-Marie Hooper and county staff that the county had initiated fiscal monitoring of SSHH in late 2020, but was still waiting on info from SSHH.

In January 2022, the county produced an internal audit report, noting that SSHH “was assessed as a high risk subrecipient.” The report “noted concerns regarding internal controls, audit reports, claim submission and insufficient supporting documentation for claimed expenditures.”

At some point, the county became slow to accept SSHH’s invoices.

“Many of the invoices that were submitted were rejected and sent back, sometimes multiple times,” Javor said. “So it’d be five or six months sometimes before an invoice would get paid.”

Sacramento County Department of Homeless Services and Housing Director Emily Halcon noted issues with SSHH’s invoicing practices as well.

“I think that Sac Self-Help did, especially towards the latter parts of our contracts, really struggle with providing sufficient documentation,” Halcon said. 

Halcon added that the issues with documentation led to payment delays.

All the same, few voices on SSHH’s board raised concerns about the organization’s finances during the years leading up to its collapse. “I was generally the only one on the board that would question the balance sheets and the finance reports,” Javor said.

Of particular concern to Javor was the status of the $750,000 internal reserve SSHH created in part by refinancing the La Mancha Way house. Eventually, the situation would spur Javor to quit SSHH’s board in frustration in January 2022, He has also left HSI’s board and has since acted as an unpaid consultant to HSI’s board. In a June 7 filing in its bankruptcy case, SSHH noted it still owed about $465,000 on the loans it had taken against the La Mancha Way house. 

“Whatever became of that $750,000, it just got eaten up,” Javor said. The house sold in January, for $398,000 according to Redfin.

Cobb admitted SSHH had cash management issues.

“When we got so far behind, what was happening there was we were effectively robbing Peter to pay Paul,” Cobb said. “Any money that came in went out immediately.”

Foley acknowledged SSHH used county funds that were intended for housing to instead pay salaries for his staff. “We had to make payroll every two weeks, so whatever money we had went to payroll from whatever source,” Foley said.

Foley said he wasn’t aware of anyone at SSHH ever submitting an invoice for services the organization never performed and that he never directed staff to do this.

Foley also said no one from SSHH ever took money for personal use. Cobb offered similar thoughts. “There's nobody that's sitting on a bank account that's flush with money from this,” Cobb said.

Breach of Contract

It was time for Ethan Dye to write a scathing letter.

Dye, who didn’t respond to an interview request, is controversial in some circles locally. A social justice group decried Dye’s 2021 appointment as director of the Sacramento County Department of Human Assistance, noting he’d been deputy sheriff of Sacramento County. A Change.org petition called for Dye’s removal from his DHA position, though it drew just 11 signatures.

Dye wrote on June 28, 2022 to Foley wrote that SSHH was in breach of contract for property related tenant services, or PRTS, which SSHH provided through the county’s flexible housing pool.

DHA staff, Foley and other SSHH executives had had a Zoom meeting four days prior “to discuss the increasing number of customers who were receiving three-day notices to pay rent or quit and/or utility shut off warnings,” as Dye noted in his letter. 

Foley replied in a June 30, 2022 letter to Dye that “the housing stability of our clients has been an issue which began in March when DHA, stating the funds were depleted, directed our staff to send program termination notices to all clients and landlords. The notice prepared by DHA staff indicated the rent support program was ending May 31, 2022.”

Dye and Foley soon resolved the PRTS contract breach. The county also extended its contract with SSHH through Dec. 31, 2022 to allow time to transition to a new provider. Jeremy Baird, who worked for SSHH for about a decade, said the PRTS extension “gave us essentially six months to try to divest ourselves from those properties.” 

SSHH’s hope was to be able to get through the end of the PRTS contract with minimal impacts to people who had their housing through the program.

“John Foley just emphatically stated he wasn't going to evict anyone,” Baird said. “And that became a problem.”

Coming next week: The Beginning of the End for Sacramento Self-Help Housing