Audit: S.F. Zoo spent $12 million without required approval

A scathing audit released Friday shows the San Francisco Zoo violated city rules by spending $12 million on projects without required approval, amid financial instability and a toxic workplace zoo leaders allowed to fester.

The examination of the zoo's operations and financial decisions from 2019 to 2025 found widespread failures in management, oversight and financial planning, while the zoo operated at a deficit for years, misrepresented its financial situation and failed to raise the alarm.

Only once over the past six years did the zoo seek approval of an improvement project, as required, the audit found.

The findings come as the city is set to finalize up to $8.5 million in loans to revamp operations.

The audit by the city's Budget and Legislative Analyst found that the zoo did not submit work plans or seek approval from the city's Recreation and Parks Department before making "alterations" to the landscape, between 2019 and 2025. A lease and management agreement with the city requires they do so for any work that could cost above $50,000.

The list of projects includes the Madagascar Center, which cost about $7.5 million, according to the audit of the zoo and its nonprofit operator, the San Francisco Zoological Society.

"What is apparent to me is that this was a very poorly run nonprofit organization that didn't have modern accounting controls in the way that we expect our contractors to have as a city," Supervisor Myrna Melgar told the Chronicle.

In a statement, Zoo CEO Cassandra Costello said she "welcomes recommendations that will strengthen the Zoo's operations and long-term sustainability."

"Many improvements are already underway, and we are committed to implementing the remaining recommendations," she said. "We are grateful to the Mayor, Supervisor Melgar, and Rec and Park for working with us on a responsible loan structure that gives the Zoo the ability to continue this progress and fully deliver on the audit's recommendations."

The audit also found that there was widespread dissatisfaction among workers, many of whom were interviewed and claimed the workplace culture was "toxic" and raised serious allegations of misconduct, such as the high number of instances of "favoritism, retaliation and discrimination."

Leadership, meanwhile, failed to act to fix these problems, the audit says, including when it received external warnings that its financial and workplace practices were improper. The audit says that despite clear communication of a culture problem, "there is no evidence that… leadership took meaningful action" between 2022 and 2025.

That allowed "workplace culture and leadership communication issues" to persist for years, according to the audit. A lack of city oversight - the zoo's last audit was 20 years ago - and the lack of enforcement of provisions in a 1993 management agreement with the city added to the institutional failure.

The audit was commissioned by Melgar, the District 7 supervisor, following an investigation by the Chronicle that revealed repeated animal safety incidents, worker safety concerns - in one instance, a zookeeper was nearly attacked by a grizzly bear - and high turnover blamed on poor management.

The fallout led to the departure of eight members of the San Francisco Zoological Society board, the nonprofit which operates the zoo, as well as the near-outster of then-CEO Tanya Peterson. Peterson stepped down in June 2025, and was replaced by Cassandra Costello, a City Hall veteran. Since then, the zoo's new leadership has sought to rehab the zoo's brand, with plans to use a recently approved $6.5 million loan from the city to revamp operations.

In an interview on Friday, Melgar said she found it encouraging that the audit did not find any safety concerns at the zoo.

"I was most worried about that, so I'm glad the animals are okay," she said.

Melgar said she's also optimistic that new leadership is fixing the culture problem identified in the audit.

"Workers are much happier or feeling like there's hope, so there's hope for me too and I'm excited about that," Melgar said, referring to recent employee survey results in the audit.

Melgar added that the zoo's new leadership "received all the recommendations before it was published, and they've agreed to do all of it."

"It's a collaborative relationship, it's not contentious," she said. "They admit they need to do all these things and are committed to doing it. So I think we're in good shape."

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