Santa Clara mayor’s company earned six-figures off teacher housing fees

It’s been 114 days since high school biology teacher Goldie Malone last saw her students.

Luckily, the Santa Clara biology teacher at New Valley High School stays connected with other educators living at Casa del Maestro, an affordable housing complex dedicated solely to Santa Clara Unified School District teachers.

But as rents continue to increase to cover the building’s debts and expenses – including charges from Santa Clara Mayor Lisa Gillmor’s real estate business – Malone is making sacrifices to stay afloat during the ongoing COVID-19 pandemic.

Casa del Maestro, located on Lochinvar Avenue, is a-first-of-its-kind effort to provide affordable housing to teachers, even in the increasingly expensive Bay Area, with the goal of maintaining teachers in the district. The teacher housing is so needed that there’s been a 78-person wait list to snag one of the 70 units.

Since 2002, Gillmor’s company has served as the property manager for the Santa Clara teacher housing complex. While the mayor’s business manages collecting rent and handling repairs, the building is operated by the Santa Clara Teacher Housing Foundation, a nonprofit that appears to be struggling financially, has no website and doesn’t disclose its donors or board of directors online. Internet searches show the nonprofit sharing an address with Gillmor’s office at Franklin Mall.

A records review also showed Gillmor failed to disclose earnings from managing the teacher housing complex on financial disclosure forms until 2019.

Rising rents

When she landed an apartment in June 2019, Malone paid just $2,295 a month for a 2-bedroom unit shared with her 7-year-old daughter.

“What’s cool is that this is a tight knit community, and we all share in the same experience of being teachers, which is very unique and something that other districts don’t have,” Malone said.

The homes stay affordable, in part, because Casa del Maestro sits on Santa Clara Unified School District-owned land, with rents ranging from $1,300 to $2,395 across the property’s 1- and 2-bedroom units.

But just 30 days after moving in, Malone’s monthly rent rose $100. The foundation made the decision to raise rents by $100 each year starting in 2018, according to a district employee.

Dozens of teachers are petitioning against this year’s rent increase.

During a time of record unemployment and reduced work opportunities, Malone said the rent hike hurts single parents, like herself, and makes it hard to save up for a home after the 7-year tenure at Casa del Maestro runs out.

“This is supposed to be subsidized housing for teachers, which is great, but if they’re going to be raising the rent during this time with everything going on, it doesn’t seem very considerate,” Malone said. “I’m already not going to be able to buy a house after I’m living here.”

The rising costs of living at Casa del Maestro include property management fees from Public Property Advisors, a division of Gillmor’s family real estate business. The mayor serves as the company’s president.

Gillmor has worked for 30 years as a real estate broker and consultant, where she specializes in representing school districts sell, lease or buy property. Gillmor said responsibilities such as rent collection, maintenance repairs and vacancy oversight at Casa del Maestro are handled by her husband, Demitri Cacoyannis.

The address for the Teacher Housing Foundation, which oversees the property, is listed online as 1201 Franklin Mall – the Gillmor & Associates office in downtown Santa Clara. Gillmor said that’s because that’s where her company handles checks and similar responsibilities.

According to documents obtained by this publication, Gillmor & Associates charged 7% for its property management fee, totaling $140,369 from July 2017 to June 2018.

Gillmor said the Teacher Housing Foundation’s board raised property management fees over the years – not her company. According to other South Bay property management firms, average property management fees in Silicon Valley range from 5 to 10 percent.

The nonprofit appears to be a sinking ship financially. For at least the last five years, the Teacher Housing Foundation has been running in the red, according to its IRS tax filings, with its net assets and fund balance at a negative $76,150 in 2018 and negative $60,805 the year prior.

But Teacher Housing Foundation President and former Santa Clara Police Chief Steve Lodge disputed Gillmor’s assertion that the foundation raised property management rates.

The deficits, however, contribute to the rise in rents, Lodge said.

“You want to make sure that the foundation stays in a good financial position, but the only way to do that is to raise rents on the teachers that you’re so dearly trying to help and maintain in the district,” Lodge said. “If our expenses call for it, that’s what we’re going to do.”

A longtime contract

Gillmor’s company has held the contract for managing Casa del Maestro for the past 18 years.

In 2018, the Teacher Housing Foundation solicited bids for a new management company to obtain “more realistic fees from several property management firms to get a sense of what we should be paying,” according to documents obtained by this publication.

After Cacoyannis, Gillmor’s husband, attended the foundation’s board meeting in June 2018, the company was awarded the contract for another three years.

Documents show Lodge signed another agreement with Gillmor’s company on June 22, 2018 – just nine days after the meeting. Gillmor signed off as the broker, green-lighting another three years of 7% property management fees.

The contract went out to bid again in April of this year – and was once again awarded to Public Property Advisors, one of only two applicants. Gillmor said her company has since lowered its fee to 5% to help the foundation.

“Part of our philosophy in my office is that we like to give back,” Gillmor told San José Spotlight. “We want to make sure that the project is successful, because I think it’s a really great project to retain teachers in the school district, and it’s done what it’s supposed to do.”

But the revelation that Gillmor’s company is profiting off affordable teacher housing – charging a total amount that could’ve paid for four additional apartments – has raised eyebrows for some tenants, especially as teachers and their families adjust to life during the COVID-19 pandemic.

Disclosure allegations

A review of public documents shows Gillmor failed to disclose income generated from property management fees paid by teachers on her Form 700s until 2019. The timing of the disclosure lines up with when Gillmor was sued by Brian Exline, a Santa Clara law student at the time, for failing to disclose income from Public Property Advisors from 2011 to 2016.

Form 700s are state-required disclosure documents that require elected officials to list their income, earnings and assets.

The lawsuit also claims Gillmor failed to disclose income stemming from her role as a consultant for Alum Rock School District, Gilroy Unified School District, Evergreen Community College District and Pleasanton Unified School District.

Gillmor claims fees from Casa del Maestro weren’t part of her income before last year.

“I didn’t own my real estate office, my father still owned it,” she said. “I did not own the office so it wasn’t a disclosure for me.”

Ethicists say there’s nothing wrong with the mayor holding a private-sector job or earning money off the teacher housing, but the key is public disclosure to avoid the appearance of any conflicts of interest.

“In a perfect world, you would like people to draw within their own lines and stay in one neat little box, but it doesn’t always work out like that,” said Ann Skeet, senior director of leadership ethics at the Markkula Center for Applied Ethics. “People want to have some degree of confidence that people are looking out for the right interests.”

Casa del Maestro tenant and kindergarten teacher Joanna Julin said she’s grateful to have an apartment near her school in pricey Silicon Valley, but questioned where the higher rents and fees really end up.

“I feel like the overall feeling is that you’re lucky to live here – just deal with it,” Julin said. “Yes, this housing is pretty great: it’s cheaper, it’s close to my school, I know my neighbors. But where’s that money going?”

Contact Katie Lauer at [email protected] or follow @_katielauer on Twitter.