Special Notice / Hearing: None__
Vote Required: Majority
To: Honorable Board of Supervisors
From: Michael Callagy, County Executive
Subject: Ground Lease with Horizon Treatment Services, Inc. for real property located at 826 Mahler Road, Burlingame
RECOMMENDATION:
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Adopt a resolution authorizing the President of the Board of Supervisors to execute a ground lease with Horizon Treatment Services, Inc. for the real property located at 826 Mahler Road, Burlingame, California.
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BACKGROUND:
San Mateo County Behavioral Health and Recovery Services (BHRS) is required under state law to ensure access to a full range of substance use disorder services in the County, including early intervention, outpatient care, sobering services, withdrawal management, residential treatment, medications for addiction treatment, and care coordination for people who are eligible for Medi-Cal, Medicare, members of the Health Plan of San Mateo, and in some instances, individuals with private insurance.
In 2024, California voters approved Proposition 1, which authorized $6.4 billion in general obligation bonds to fund construction of behavioral health treatment facilities and supportive housing across California.
In May of 2025, a 14-bed sobering center in the County closed permanently, creating a significant gap in the local substance use continuum of care, particularly for people who need short-term stabilization and a pathway into ongoing care.
On May 30, 2025, the California Department of Health Care Services (DHCS) released a Request for Applications (RFA) for more than $800 million in Proposition 1 funds through the Bond Behavioral Health Continuum Infrastructure Program (BHCIP) Round 2: Unmet Needs program. BHCIP Round 2 funding will fund 66 infrastructure projects to support 130 mental health and/or substance use disorder facilities, creating 2,554 new treatment beds and 4,273 new outpatient treatment slots.
On October 21, 2025, the Board of Supervisors unanimously voted to allocate a $2 million local match for Horizon Treatment Services’ (Horizon’s) BHCIP application, supported through Opioid Settlement funds. Notifications of awards were subsequently released on March 11, 2026. Horizon Services’ proposal was selected and awarded $25,499,281 in state BHCIP funding with a project completion date of September 2028. State funding was initially tied to a site identified in Horizon’s proposal at 101 N. El Camino Real in San Mateo.
The Recovery Center project is led by Horizon Treatment Services, Inc., a 501(c)(3) nonprofit organization. Horizon is responsible for all aspects of project development and operations - from site selection and financing to design, construction management, and securing the necessary permits and licenses for the levels of care provided at the facility. Once open, Horizon will manage all day-to-day operations, including staffing, security, and parking management.
Following significant concerns expressed regarding the possible neighborhood impacts of locating the Recovery Center at 101 N. El Camino Real, the County identified an opportunity to acquire a site at 1501-1521 Bayshore Highway, 1533-1545 Bayshore Highway, and 818-826 Mahler Road in Burlingame, identified as Assessor’s Parcel Number 026-321-440, for a total purchase price of $13 million. While the Burlingame site is large and could accommodate a number of County programs, one of the buildings on the site (Building C) was formerly used as the 14-bed Sobering Center before it closed. The Board held a public hearing on April 7, 2026 at which members of the public generally praised the Burlingame site as superior to 101 N. El Camino Real for use as the Recovery Center, although some opposition was stated to the new site. The Board ultimately approved a Purchase & Sale Agreement on May 5, 2026. Escrow closed on June 12, 2026 and the County now owns the property.
The County received on June 17, 2026 a written proposal by Horizon to ultimately acquire a portion of the site for its use in effectuating the programs funded by the BHCIP grant.
DISCUSSION:
On July 7, 2026, this Board approved a framework for granting Horizon Treatment Services control of a portion of the County-owned site at 826 Mahler Road, Burlingame for use as a Recovery Center providing safe, high-quality, integrated behavioral health treatment capacity for the community and directed staff to prepare documents to effectuate such a transaction. Staff has negotiated a form of ground lease with Horizon and has worked to include the relevant terms referenced in the framework approved on July 7. The ground lease incorporates an option for Horizon to purchase the portion of the property subject to the ground lease, and to that end, the ground lease documents include a draft form of purchase and sale agreement.
Most importantly, the attached form of ground lease allows Horizon to begin controlling the site for purposes of the BHCIP grant and to begin planning for future work needed to make the site suitable for use as a Recovery Center.
The County Attorney has reviewed the ground lease, form of purchase and sale agreement and resolution as to form and content.
COMMUNITY IMPACT:
The proposed Burlingame location can restore a centrally located sobering resource used by emergency departments and law enforcement while connecting clients to withdrawal management, residential treatment, medications for addiction treatment, and ongoing recovery supports. The project is intended to reduce avoidable emergency department and jail use, lower overdose risk, and improve continuity of care.
FISCAL IMPACT:
The proposed action would result in additional County revenue in the form of lease payments and ultimately payment of the purchase price of $2.74 million to the County.