Controller finds DBI permitting and inspections vulnerable to preferential treatment; auditors propose independent compliance unit

The San Francisco Controller's Office told the Ethics Commission on Oct. 28 that its public‑integrity assessment of the Department of Building Inspections (DBI) identified systemic weaknesses that have allowed improper preferential treatment and gaps in data controls.

"Tone at the top" and weak internal controls at DBI, the Controller's audit director said, contributed to expedited permit reviews and inspections that were not supported by complete records. Mark De La Rosa, audit director, said the office examined two case studies — a large downtown project and a multi‑lot property on San Bruno Avenue — and found "unusually expeditious" plan review, incomplete permit‑tracking data, and instances where final approvals lacked evidence of actual final inspections.

The report cited examples related to 555 Fulton Street and the San Bruno Avenue project and identified four broad problem areas: leadership and ethical culture, improper preferential treatment of certain permit holders, incomplete or alterable records in the permit‑tracking system (PTS), and fees or penalties that may be insufficient to deter large‑scale noncompliance. The Controller's office recommended creating an independent compliance function within DBI, requiring regular supervisory quality assurance reviews, conducting annual risk assessments, electronically locking inspection records until closed, and reviewing fee structures and public information about DBI processes.

Commissioners pressed auditors on whether organizational reforms being considered elsewhere — including a new oversight commission and recruitment for a new DBI director — would change the recommendations. De La Rosa said the report focused on internal controls implicated by the federal investigation and that reforms such as selecting a new director and other structural changes could complement the report's recommendations.

Public commenters urged stronger remedies. Dennis Richards, who said he is suing the city over alleged DBI retaliation, called the assessment "way overdue" and warned that entrenched structural problems would persist unless governance changes are made. Stephanie Peek, speaking for an outside analyst, urged that the Controller's office or an outside audit firm perform a comprehensive risk assessment and noted DBI's continued use of paper job cards that can disappear.

Commissioners and staff said the Controller's office will follow up. De La Rosa noted his office already tracks implementation of prior recommendations and will monitor remediation. The Ethics Commission thanked the audit team and signaled interest in coordinating oversight work, including referrals to the commission's enforcement or policy teams where appropriate.

The Controller said the assessment is part of a wider public‑integrity series and that additional audits are forthcoming. The commission took no direct enforcement action from the presentation but planned to use the findings to inform later policy work and closer oversight.