Mission Language and Vocational School (MLVS), which has been integral in providing Mission District residents with English classes and vocational training since 1968, is in the midst of a complicated legal battle that could potentially threaten its existence.
Huckleberry Friends, LLC (HF) filed a lawsuit against MLVS for a breach of contract in July 2016, stemming from a 2013 lease agreement. In 2013, MLVS was in a severe financial situation, which prompted its Board of Directors and then Executive Director Rosario Anaya to sign the lease agreement, which also gave HF the “option to purchase” the part of the building it was leasing.
The building, located at 2929 19th St., sits on land that under the terms of the lease would be divided into two parcels if HF decided to exercise its option to purchase: Parcel One, the section facing 19th Street and Florida Street, and Parcel Two the section facing Alabama Street. HF rented the first two floors on what would be Parcel Two. In order to be able to purchase the land for $3 million, the terms stipulated that HF would need to let MLVS know before the 73rd month of its lease arrived (approximately six years and one month), which HF did, according to court documents.
Current MLVS Board Chair Tony Fazio shared at a community meeting on May 11 that MLVS was in financial trouble back in 2013.
“Ask any of the community members, board members, or staff that were around at the time and they will tell you that MLVS was in danger of closing its doors because of failure to meet payroll and pay its bills,” said Fazio.
At the same meeting, Ray Sloan, current board member and former chair, gave some context, explaining the school’s dire financial situation.
MLVS had a $2.5 million mortgage with Wells Fargo, which was concerned about MLVS’s ratio of cash flow, and afraid that it may have to foreclose. This prompted the bank to back out. Sloan went to six different banks, all of which turned MLVS down for a loan.
Sloan was able to find a private loan, but payments were $18,000 a month. As Sloan continued to look for another solution, developers were making weekly requests to purchase the school because they knew about MLVS’s desperate situation.
“We had to get out from underneath this hard money loan. That’s when Saul Griffith [managing member of HF] had heard about our plight and approached Rosario with a deal that he wanted to buy part of the building,” Sloan said. “And with [former board chair] Jose Chapa, we entered into an agreement with Saul Griffith and HF that he would get the Alabama side and make certain improvements that the school would benefit from as well. For example, he was going to replace the roof.”
The agreement with Griffith allowed MLVS to secure the private loan.
According to Sloan, Griffith brought in his architects and proposed a lot split. When HF decided to exercise its option to purchase the building, MLVS would receive $3 million in exchange for Griffith receiving the Alabama side, or Parcel Two. The $3 million would have left MLVS with approximately $700,000 after paying off the loan. (But the purchase was never made.)
“I recognized it for what it was. We were having to give up an important piece of our property to save our school,” said Sloan. “It was a shrewd deal. I told Rosario, ‘Saul Griffith is not our friend.’”
In August 2015, Anaya died unexpectedly, unbeknownst to the community she had been battling lung cancer.
“We were saddled without having our leader of over 40 years. It was a very difficult time [in] making decisions,” said Sloan.
Before her death, Anaya brought Daniel Brajkovich to the board. Having first met Anaya when he became the school’s program manager in the late 1990s, Brajkovich served as the interim director of MLVS after Anaya’s death. MLVS’s Board of Directors was unaware at the time, but Brajkovich had stopped paying the mortgage around March of 2015.
“The executive director who followed Rosario when she passed away failed to keep making payments on the loan that she got after signing the 2013 lease. That lease was guaranteed by HF. MLVS ended up owing over $300,000 to HF who was continuing to make payments to avoid going into default,” said Fazio. “Otherwise the school would have gone into default and the bank [would have] foreclose[ed] on the building.”
Sloan explained that Brajkovich allowed the board to believe that MLVS’s finances were in good shape, but in reality, $205,000 was owed. The board only became aware of the situation when Griffith informed them that the mortgage wasn’t being paid. Griffith was paying $18,000 in rent ($12,000 of that going towards the mortgage, and $6,000 for MLVS) and an additional $12,000 to keep the loan from defaulting.
The lease money that was paying off the mortgage was being deposited into a joint account opened by Griffith and MLVS at First Republic Bank. However, once the mortgage stopped being paid, First Republic started debting Griffith for the lack of payments. MLVS only learned of the situation after being sued by Griffith. Several of the board members went to First Republic and asked that the $205,000 owed be added to the end of the loan. (MLVS believed that the bank did not have the right to be taking money from Griffith.) They went through a long period of discussion with the bank to see if MLVS could pay the amount owed, and eventually MLVS found a second loaner to help, but still faced the breach of contract lawsuit with Griffith.
On April 24, 2017, MLVS and Griffith met to negotiate a settlement, with Griffith proposing to give part of the building back. Attorneys for both parties are currently working to draw up an agreement.
“We’re in the middle of mediation and we basically agreed on a situation that I believe we will both be happy [with],” Griffith said. “I’m waiting to see when we will meet. The ball’s not in my court.”
At the May 11 meeting community members discussed the situation and possible solutions. Attendees came from all areas—from other nonprofits to people who live in the neighborhood, to a representative from Assemblymember David Chiu’s office. They asked questions, made recommendations and proposed next steps.
“I am concerned about some community members,” Griffith said. “If the community has concerns, they should come directly to talk to me. I have had some people reach out to me, but anonymously.”
Mission Economic Development Agency (MEDA) made an offer to provide real estate technical support. Assemblymember Chiu also offered to help mediate discussions if the Board of Directors is open to the idea.
As of press time, the city has yet to get involved, but the community mentioned that Joaquin Torres in the Mayor’s office has been helpful.
“MLVS is a Mission asset and institution … particularly because there are so many changes in our community like gentrification,” said Valerie Tulier-Laiwa of Mission Peace Collaborative. “As a community we need to fight this business person and his shrewd dealings. We need to maintain MLVS and keep it as part of the Mission.”
El Tecolote contacted MLVS’s interim Executive Director Natalie Hopner for comment.
“MLVS’s position is no comment until the matter is resolved in its entirety,” Hopner said.
MLVS’s Board of Directors host its regular meeting at MLVS (2929 19th St. between Florida and Alabama streets) at 6 p.m. on Thursday, May 18. The meeting is open to the public. Community members will meet before at 5:30 p.m. at Altas Café (3049 20th St. between Florida and Alabama). Everyone from the community is welcome to attend.