Newly appointed San Francisco Supervisor Beya Alcaraz resigned Thursday night at the request of Mayor Daniel Lurie following days of questions about her thin political qualifications and her rocky management of a pet store she owned until recently in the Sunset.
Lurie said he spoke with Alcaraz Thursday night and that she agreed the Sunset needed a supervisor who “is fully focused on serving the community.”
“In Supervisor Alcaraz, I saw someone with deep roots in the Sunset who cares deeply about healing a divided community,” Lurie said in a statement. “I admire her commitment and willingness to raise her hand to serve, just as much as I respect her decision to step aside in the best interest of her neighborhood. I regret that I didn’t do more to make sure she could succeed.”
Lurie will now need to find someone else to replace Alcaraz as the Sunset’s supervisor. He said his hopes for the neighborhood are unchanged and that it deserves a supervisor “who can be fully dedicated to representing them, advocating for their families, and bringing people together.”
Alcaraz came under fire almost immediately after her appointment when the new owner of her pet store, the Animal Connection, said the business had a rodent infestation that was worse than expected when she took over. The new owner, Julia Baran, said the store “smelled like death.” Financial records revealed that Alcaraz was often late on paying rent for her store and operated at a loss from 2020 to 2023.
On Thursday, Baran released text messages in which Alcaraz said she had paid employees of her pet store under the table and wrote off personal expenses such as “dinner and drinks” with her friends as business expenses to lower her taxes. The Chronicle obtained Alcaraz’s text messages after the news site Mission Local first published them.
Alcaraz’s resignation came as the Chronicle and other news organizations began reporting into her background.
Alcaraz defended how she ran the business Thursday, saying in a statement to the Chronicle about the newly unearthed text messages, “I don’t owe a dollar in taxes.” She released the statement prior to the news of her resignation.
Julia Baran, who in May took over ownership of a Sunset pet store, The Animal Connection, from Beya Alcaraz, feeds a guinea pig named Mumu in her store in San Francisco on Wednesday. (Gabrielle Lurie/S.F. Chronicle)
Lurie said in his statement Thursday that “we also agreed that the new information about her conduct while running her small business, which I learned today, would be a significant distraction from that work.”
The appointment of Alcaraz just one week ago rapidly became the biggest misstep of Lurie’s first year in office. Choosing the untested political newcomer to replace former Supervisor Joel Engardio, who lost his job in a recall election this fall, stunned City Hall.
Alcaraz, who was sworn into office last Thursday on her 29th birthday, does not have a college degree and had never attended a local government meeting, and she quickly came under scrutiny over whether she could adequately represent her constituents in the Sunset.
Lurie initially argued that her roots in the neighborhood made her the right choice for the role, but the revelations about her management of the small business that crowned her resume became too much.
Alcaraz said in a statement late Thursday that when she told Lurie she wanted to be supervisor, she said “it was time for someone who is from the Sunset to represent the Sunset.”
“I believe that my community deserves someone who will work 24/7 to advocate for us,” Alcaraz said. “And I understand that today’s news stories would distract me from doing that. As a result, I told Mayor Lurie this evening that I will resign from my position as District 4 supervisor.”
Alcaraz thanked Lurie for appointing her and other supervisors “for welcoming me, and to all of my neighbors who stood up to support me.” She said, “I have spent my life serving the Sunset, and I will keep doing exactly that.”
Supervisor Myrna Melgar said she was heartbroken by Alcaraz’s resignation. “It makes me feel sad – sad for her, sad for us,” she said. “I think it was maybe just a lack of experience by the new mayor. I don’t know.”
Melgar praised Lurie for expressing regret at having not set Alcaraz up for success, calling that line of his Thursday statement “the right thing to do.”
The ordeal appeared to expose gaps in the mayor’s office’s vetting of Alcaraz, even though the mayor said he knew about the financial hardships at her business before he appointed her to the high-profile seat.
In the March 28 text message exchange, Alcaraz wrote, “I live off a big portion of the non cash revenue. I spend expense (sic) a bit of money on my personal life so I can use it as a tax deduction. E.g. I pay for my dinner and drinks with my friends or ‘clients’ as a business expense and they may or may not pay me back in cash.”
Alcaraz ended the message with a grinning-face-with-sweat emoji.
Baran then asked Alcaraz about the “$35k for taxes and licenses,” she saw in the books. “Yeah so that’s usually all the taxes we pay,” Alcaraz responded. “It will be less, since I pay people under the table now, but that’s payroll taxes and sales tax mostly.”
Paying employees under the table to avoid tax liabilities is illegal under both California and federal law and can lead to criminal charges. Employers sometimes do so to avoid payroll taxes, which include federal social security and Medicare taxes, and California unemployment insurance and employment training tax.
Cristian Borcan, a San Francisco certified public accountant, told the Chronicle that the behavior described in the messages was “pretty serious” and that Alcaraz could potentially face “big penalties” from the IRS. But it would depend on the details of her tax return and whether she gets audited by the agency, he said.
Borcan said using personal expenses as business tax deductions is “not OK.”
“If they’re related to the business, that’s fine, but if they’re not related to the business, they shouldn’t be deducted,” he said.
The Chronicle verified that the texts were sent from Alcaraz’s cell phone number.
“I paid the young people who came to work in my store because I believe in my core that young people in my community and every community deserve to be paid for their work,” Alcaraz told the Chronicle in the statement before her resignation. “I worked seven days a week to keep my business open through the pandemic and always ensure that my employees were paid, and I’m going to use that experience every day as I work to make life easier for small businesses and families in the Sunset.”
Alcaraz did not immediately respond to more specific questions about the content of the texts.
Lurie told reporters Wednesday that he was “absolutely” aware the Animal Connection had struggled financially before he appointed Alcaraz. The mayor said that “every small business in this city struggled during COVID” and Alcaraz “gets it more than just about anybody else gets it.” He said he thought Alcaraz would “do a great job” as supervisor.
But his office has otherwise declined to comment on how it vetted Alcaraz. Before asking Alcaraz to resign, Lurie’s spokesperson Charles Lutvak did not answer questions about whether Lurie knew about the tax issue or had concerns about it.
Prior to her resignation, city supervisors were critical of what the text messages showed.
Board of Supervisors President Rafael Mandelman told the Chronicle, “All that I would say, without having looked at it, is that it sounds not great.”
Melgar said she sympathized with Alcaraz but questioned “how much care went into” Lurie’s vetting process. To have a series of critical news stories about Alcaraz’s background so soon after her appointment was “embarrassing for the Board of Supervisors,” Melgar said.
“I really feel for her, because she is young, and when people look at your stuff so negatively, it’s not pleasant. It’s not nice,” Melgar said. “I am empathetic, and I think this situation could have been avoided.”
Asked about the text messages, Supervisor Shamann Walton said he thought his aide, Natalie Gee, who Alcaraz was expected to run against in June, was better suited for the job.
“I think Natalie Gee is the best person to represent the people of District 4,” Walton said. Sunset business owner Albert Chow and civic education nonprofit director David Lee are also expected to run for the position.
Jamie Hughes, the lead organizer of the Engardio recall, said Lurie “owes San Franciscans an honest explanation what happened” that led to the supervisor being appointed without proper vetting.
“I think Lurie needs to reevaluate the community leaders that were willing to step up and work in favor of the district and not his interest,” Hughes said.
Lurie faced challenges in filling the seat. Mandelman told the Chronicle on Thursday that he heard from “at least one” person who was considered for the appointment but declined to move forward with the process. He did not provide further details.
“There were a lot of conversations about who would be a good appointment,” Mandelman said. “I think it was hard for them to find a good choice … they were looking for a unicorn, and I think it was a hard position to fill.”
In deciding who should replace Alcaraz, Lurie will face the same set of fraught political considerations he weighed when he chose her, believing she could win election.
The mayor knows that many Sunset residents remain outraged over last year’s ballot measure, supported by Engardio, that permanently banned cars on the oceanfront Great Highway. But Lurie is also trying to secure supervisors’ approval of his “Family Zoning” plan to allow taller and denser housing on the west side of the city, including the Sunset.
Many of the same people who opposed the road closure are also concerned about the mayor’s housing plan. Both issues are likely to feature prominently in the June election to fill the remainder of Engardio’s term.
This article originally published at San Francisco’s newest supervisor resigns amid pet store controversies.