SAN FRANCISCO—On August 16, San Francisco City Attorney Dennis Herrera revealed that he filed suit against developer Michael E. Johnson for breach of contract over Johnson’s failure to repay a $5.5 million city loan used to help construct the Fillmore Heritage Center.
According to a press release from the City Attorney’s Office, the lawsuit filed in San Francisco Superior Court seeks repayment of the loan balance plus interest and late charges. That total of the loan was over $6.5 million as of July 15, 2018. The lawsuit names Johnson individually, and 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 is seeking 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,” said Herrera. “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 commercial space at the Fillmore Heritage Center, a mixed-use development with a large housing component in San Francisco’s Fillmore Jazz Preservation District. The commercial space was part of the project and was intended to provide a San Francisco location for the Oakland jazz club Yoshi’s, as well as a separate restaurant space that became 1300 on Fillmore, and the Jazz Heritage Center, a non-profit with a 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 (HUD). The city’s loan from HUD was backed by San Francisco’s allocation of the federal Community Development Block Grant. The grants fund community programs to assist low-and middle income individuals, eliminate slums and blight and the grants fund projects aiming to 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.”
Written By Casey Jacobs
