Posted by:
Steve Dubb
Public Health Dept. leads unique public-private partnership
Since we began C-W.org in 2005, we have had a section on municipal enterprise. While city (and county and special district)-owned businesses rarely get press attention, as noted on our site city owned enterprise is prevalent in the United States. For example, 2,000 publicly owned utilities currently provide electricity to over 45 million Americans, according to the American Public Power Association.
But municipal enterprise can have much broader application than public utilities, as is illustrated by a 12-year experiment of the San Francisco Department of Public Health. As noted by the Corporation of Supportive Housing, the San Francisco Department of Public Health is not just a public agency with a one-billion-dollar budget, but also runs a large number of public health businesses, including “operating a large public hospital, the largest publicly funded skilled nursing facility in the country (1,200 beds), 26 primary care and mental health clinics, and contracts for a broad array of services through community-based providers.” In 1998, the Department of Public Housing also decided to become a property manager, because it was both more humane—and less expensive—to “master lease” properties and convert them into supportive housing than have to cover the cost of the large public health expenditures associated with homelessness. According to the Corporation for Supportive Housing, the program has reduced emergency room use by 58 percent. At present, the City’s Department of Public Health is master lessor of ten buildings, providing 623 units of permanent supportive housing in nine Single Room Occupancy (SRO) hotels and one licensed residential care facility (“board and care"). The stories of ten residents of one of these ten buildings is featured in the Empress Hotel, co-produced by Bay Area film-makers Allie Light and Irving Saraf and building manager Roberta Goodman. (Movie clips are available here and ordering information for the film is available here).
Additional details of the program (courtesy of the Corporation of Supportive Housing):
• Buildings leased range in size from 33 to 92 units. The majority of the units have private baths and shared cooking facilities. At the residential care facility, three meals per day are prepared for the residents.
• The Department of Public Health acquires the facilities through “master leasing”. The main benefits of this approach include the ability to rapidly bring units on-line and the reliance on private capital for the upfront renovation costs. In addition, the renovated buildings combined with on-site services stabilize properties that have often been problematic for the surrounding neighborhood.
Three key steps in the master leasing process are:
a) Identifying privately-owned buildings that are vacant or nearly vacant where the building’s owners are interested in entering into a long-term lease with SFDPH. These are triple net leases with the owner retaining responsibility only for large capital improvements.
b) Negotiating improvements to the residential and common areas of the building prior to executing the lease. It is the owner’s responsibility to deliver the building with improvements completed and in compliance with all health and safety codes. Improvements typically include build-out of supportive service and property management offices, community meeting rooms, community kitchens, and additional bathrooms. All rooms are fully furnished prior to occupancy.
c) Contracting with one or more organizations to provide on-site support services and property management. For most buildings, the SF Department of Public Health contracts with a collaborative of two or more entities.