Audit Shows Solutions for Change Improperly Used Affordable Housing Reserve Funds for Operating Expenses

An independent audit of North County nonprofit Solutions for Change revealed multiple withdrawals from the organization’s reserves in 2023 and 2024 that went against county and state regulations. 

The audit, released last month by a Mission Valley accounting firm, comes amid major leadership changes at the social services organization.  

Longtime CEO and founder Chris Megison quietly left the organization last year, and the reason for his departure hasn’t been made public. The nonprofit’s board appointed Aaron Byzak as interim CEO, effective Jan. 5. Before Byzak’s appointment, board chair Chris Chen had been serving as acting CEO since July. 

The audit lists several instances where the organization withdrew varying amounts ranging from $8,700 to $180,000 from different replacement reserve accounts in 2023 and 2024 to “cover operating cash flow needs,” according to the audit. 

Solutions for Change provides behavioral health and other support services to underserved residents and homeless people, offering temporary and permanent housing, free or low-cost counseling, crisis intervention services, childcare and more.  

The organization has a handful of affordable housing projects it acquired through the Neighborhood Stabilization Program (NSP) and HOME Investment Partnerships Program. The programs provide grants to government agencies and nonprofit organizations to create affordable housing projects.  

Solutions for Change is required to maintain reserve accounts for each project. These are funds set aside in case there’s a problem with the project, like necessary repairs that may come up.  

But withdrawals “from the replacement reserve accounts may only be made to fund project expenses with the approval of the County,” the audit says. That’s the County Department of Housing and Community Development. The nonprofit also withdrew from reserve accounts tied to affordable housing projects it created through a similar state program called the Multifamily Housing Program, also without permission, according to the audit. 

In total, Solutions for Change withdrew around $550,000 from its reserves, Chen told Voice of San Diego. 

“As I understand it, there was no money left in those reserves,” Chen said. 

“There were withdrawals made from those reserves without permission from the County and they were used to cover operating expenses,” Chen said. “The board was unaware of the consequences of those withdrawals, and I would say it was inappropriate, and we just have to fix that.” 

Chen added that the board told county and state officials about the withdrawals as soon as they understood the scope of situation, which was last July, when Chen stepped in as interim CEO. 

They’re still waiting for the county’s response, he said. State officials have told them they need to replenish the reserves but have not provided a deadline. 

“The plan is to replenish the reserves through donations, funds raised or equity from the [Neighborhood Stabilization Program] properties,” Chen said.  

In October, the loans on the NSP properties will be forgiven, and Solutions for Change will own those properties outright.  

In 2023, Solutions for Change had a rocky year financially, the audit shows, with the organization’s expenses ($6.2 million) far exceeding its revenue ($4.1 million). Financials improved in 2024, with the nonprofit’s expenses decreasing to $4.6 million and revenue holding steady at $4.2 million. 

“When we moved away from Housing First, we went from receiving government funding, to no longer taking it and we had to go to a 100 percent donations model, so I would say we did not adjust quickly enough to that,” Chen said. “And when I took over as CEO, I realized we were spending too much money.” 

Housing First says the best first step to ending homelessness is by providing shelter without requiring sobriety, addiction treatment and program participation. Many experts agree that permanent supportive housing without strings attached is the answer for those experiencing chronic homelessness, behavioral health disorders and substance abuse disorders. Organizations that do have these requirements are ineligible for state and federal funds.  

That’s what happened to Solutions for Change. The nonprofit mandates sobriety from its clients. It also requires those who receive temporary or permanent housing to participate in its job-training and vocational programs. 

When federal agencies first adopted the Housing First policy, Megison and the nonprofit’s leaders walked away from almost $600,000 in federal homeless dollars because he didn’t want to change their model.  

Then in 2020, after a years-long dispute over Housing First requirements, Solutions for Change had to abandon its residential program. The program allowed 140 families to live across four affordable apartment complexes owned by Solutions for Change. 

And the organization has lost out on state and federal homeless dollars each year since. 

“It just wasn’t going to work for us,” Megison told Voice in 2024 about Housing First. Chen added that Solutions for Change had to cut its staff by about half sometime around early 2025. 

“Moving forward, our spending is going to be much more aligned with the revenue that we generate,” Chen said. 

Still, the nonprofit’s multi-million-dollar investment into Green Oak Ranch is “still a go,” new interim CEO Byzak told the Union-Tribune 

In 2024, the nonprofit signed a long-term lease of a 110-acre property called Green Oak Ranch in Vista, with the option to purchase it in the future, in hopes of turning the property into its new headquarters, as well as a place to significantly expand its services. But Solutions for Change can’t move in until tenants of an RV park on the property move out.  

The tenants received eviction notices and were supposed to move out by December 2024, but some tenants are contesting the evictions, and the matter is now tied up in litigation with Green Oak Ranch Ministry, which used to operate the ranch and is still the landlord of the RV park. Until the matter is resolved, Solutions for Change can’t take possession of the property, Byzak told Voice. 

Chen declined to comment on the reason for Megison’s departure.  

Megison did not respond to a request for comment. 

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