San Francisco Zoo Asks for $8.5M Loan After Audit Reveals Millions in Unapproved Spending

San Francisco officials appear poised to award the city’s zoo a multimillion-dollar bailout days after a recent audit revealed millions of dollars in unauthorized spending.

The $8.5 million loan to the San Francisco Zoological Society, the nonprofit that manages the zoo, would keep the zoo open as it works to implement recommendations and improvements outlined in the recent audit by the city’s Budget and Legislative Analyst. It comes after years of turmoil for the nearly century-old San Francisco Zoo, which has weathered everything from drops in attendance and revenue to controversies over zoo management, worker safety and animal welfare.

“The zoo is a very important institution for San Francisco and for the economy for the west side. It brings visitors from the downtown core to the west side, they eat at our restaurants and engage with our residents,” Supervisor Myrna Melgar, whose district encompasses the zoo and who is spearheading the loan, said at a recent hearing to discuss the funds. “The audit is a really important roadmap to success.”

Supervisors at the city’s Budget and Finance Committee on Wednesday agreed to vote on the loan next week, and those in attendance appeared supportive.

The zoo has struggled with decreased attendance since the COVID-19 pandemic and costs of operation have meanwhile increased by roughly $3 million, according to the zoo’s new CEO, Cassandra Costello.

“Attendance is our main form of revenue. So when this is down, not only is our gate revenue down, our parking revenue is down. Our retail food and beverage is also down in sales,” said Costello, who took over in February after roles at the San Francisco Travel Association and the San Francisco Recreation and Park Department. She replaced former embattled director Tanya Peterson, who faced criticism for mismanagement, along with worker and animal safety. “At the same time, we have this attendance decrease, our cost of doing business also went up significantly.”

At Wednesday’s meeting, the CEO said the loan would allow the zoo to continue to care for its animals and remain open to visitors, field trips and summer camps, as well as proceed with other structural changes like a facilities assessment.

Costello said the loan would buy time to prepare for its next accreditation cycle in 2027, and continue efforts to bring giant pandas to the zoo with the aim of boosting tourism and membership.

“Of course, we are all hopeful for the pandas,” said Supervisor Danny Sauter. “It’s something we all support and want to help you get there.”

Melgar, along with Supervisor Connie Chan, urged zoo leadership to also revisit their agreement with workers, who raised concerns about safety conditions to zoo management for years.

“One of the things I think is really important out of the recommendations that we have from the [Budget and Legislative Analyst] is that the MOU that we had for the zoo dates back to the 1990s,” Melgar said. “It doesn’t meet our modern standards in terms of transparency and accountability.”

But the vote on the loan comes as critics like the activist group In Defense of Animals say the recent audit paints a scathing picture of a nonprofit that shouldn’t be trusted to manage more funds.

The more than 200-page audit highlights the many challenges the zoo has faced in recent years, including how the SF Zoological Society spent at least $12 million on unapproved capital improvement projects.

“SFZS lacks a current strategic plan, a current campus master plan, or an animal collection plan that articulates a strategic, forward-looking vision for SFZS’s animal collection. SFZS also does not have a capital budget or written plans, budgets, or timelines for its major capital projects,” the most recent audit reads.

Some residents and animal rights activists who spoke during public comment urged the city to consider alternative visions for the zoo space, such as an EcoPark.

“We acknowledge that the CEO has stepped down, but changing the captain does not salvage a sinking ship,” said Fleur Dawes, who is advocating against the loan with In Defense of Animals. “The city’s own audit proves that this operator fractured public trust. When accountability is raised, public money is laid to waste.”

If approved, the loan would be tied to specific milestones, including creating a five-year strategic plan, reducing expenses by at least 10%, reshaping the board of the SF Zoological Society and quarterly reporting on areas like attendance, membership and progress on giant pandas.

On Wednesday, supervisors agreed to deappropriate $2.5 million from the Open Space Acquisition Fund and appropriate that money toward the first loan payment. The overall $8.5 million loan is slated to go up for a vote with the budget committee next week.

If successful, the zoo would begin paying back the loan to the city by 2028.

A Budget and Legislative Analyst report in April found that issuing the loan to the SF Zoological Society would be more cost-effective than having the city manage and operate the zoo to keep it open. The city owns the zoo and its grounds, facilities and animals, but they are all managed by the SF Zoological Society. The Rec and Park Department pays the SF Zoological Society $4 million annually for management.

Still, officials from the Budget and Legislative Analysts warned of the risks involved, even as zoo leadership insisted their future is looking brighter.

“There’s no collateral to secure this loan. And the entire financial turnaround is premised on them getting pandas and the pandas juicing attendance to levels that they saw about 20 years ago,” said Nicolas Menard, of the Budget and Legislative Analyst’s Office. “There’s a lot of things that need to come together for it to happen. So I think that there’s a risk that the loan will not be paid back.”