Special Notice / Hearing: None__
Vote Required: Majority
To: Honorable Board of Supervisors
From: Colleen Chawla, Chief, San Mateo County Health
Jei Africa, Director, Behavioral Health and Recovery Services
Subject: Assignment and Assumption Agreement with Front Street, Inc. and Drake House Center, LLC for Residential Services
RECOMMENDATION:
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Adopt a resolution authorizing an Assignment and Assumption Agreement with Front Street, Inc. and Drake House Center, LLC for residential board and care services for the term starting on the effective date of the Drake House Center, LLC State license for the provision of residential services through June 30, 2028, in an amount not to exceed $1,727,510.
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BACKGROUND:
Behavioral Health and Recovery Services (BHRS) currently has an agreement with Front Street, Inc. for the provision of 10 dedicated beds for San Mateo County older adult residents with serious and persistent mental illness for the term of July 1, 2025 through June 30, 2028 in an amount not to exceed $1,757,510 (Agreement). BHRS has contracted with Front Street, Inc. for these 24-hour residential care services since 2008, and Front Street, Inc. was selected under the B-1 Administrative Memorandum waiver exception for Housing Services and Related Supports.
DISCUSSION:
On July 31, 2025, Front Street, Inc.’s parent company, Front Street Administrative Services, LLC (Front Street), informed BHRS that it had contracted with PacifiCare Health Management, LLC (PacifiCare) for the sale of Front Street’s mental health treatment facilities, including Front Street, Inc. PacifiCare was to assume the provision of services under the terms of the current Agreement. However, in order to do so, PacifiCare had to first obtain appropriate licensure from the California Department of Social Services (CDSS).
On October 28, 2025, BHRS executed an executive assignment letter with Front Street, Inc., agreeing that Front Street could assign to PacifiCare the management of services obligated by the Agreement and that such services would continue to be provided under Front Street, Inc.’s CDSS license. The approved assignment required that Front Street, Inc. retain full responsibility for the performance and quality of the work provided under the Agreement and that the assigned work be subject to all terms and conditions of the Agreement, including compliance with all confidentiality, data protection, and security obligations. That initial assignment arrangement was to continue until such time as PacifiCare received its own CDSS license for the 24-hour residential care services provided under the Agreement.
PacifiCare has applied for a license from CDSS to provide 24-hour residential care services at the Front Street, Inc. facility under the name Drake House Center, LLC (Drake House), a PacifiCare subsidiary, and expects that license to be granted on or about November 1, 2026. Only one entity may have a CDSS license for provision of residential services per service location. Therefore, as soon as Drake House obtains the requisite licensure for the specific facility, Front Street Inc.’s license becomes nonoperative.
BHRS is recommending approval of an Assignment and Assumption Agreement with the attached Novation Agreement. This Assignment and Assumption Agreement allows Front Street to assign all rights and obligations of the Agreement to Drake House. There is no change to the term, the services, or the cost of services of the Agreement through the execution of this Assignment and Assumption Agreement. The Assignment and Assumption Agreement will go into effect on the effective date for the State license for Drake House to provide 24-hour residential care services in order to ensure a seamless transfer of all contractual obligations.
The Assignment and Assumption Agreement and resolution have been reviewed and approved by the County Attorney as to form.
It is anticipated that 75% of clients who receive locked psychiatric care will be maintained at the current level of care or discharged to a lower level of care.
PERFORMANCE MEASURE:
|
Measure |
FY 2025-26 Actual |
FY 2026-27 Estimated |
|
Percentage of clients who receive locked psychiatric care that will be maintained at the current level of care or discharged to a lower level of care |
75% 10 clients |
75% 10 clients |
COMMUNITY IMPACT:
The Assignment and Assumption Agreement will positively impact a critically underserved community of older adult behavioral health clients who have severe mental illness and need a residential placement. Residential providers such as Front Street and Drake House are a vital resource for housing such individuals. The Assignment and Assumption Agreement affords these individuals the ability to step down from higher acute, more costly levels of care to a community placement. This provider is committed to serving this population and supporting them with being successful while living in a community setting.
FISCAL IMPACT:
The term of the Agreement remains July 1, 2025 through June 30, 2028, and the maximum fiscal liability of the Agreement remains $1,727,510 for the three-year term. Funds in the amount of $556,151 are included in the BHRS FY 2026-27 Adopted Budget. Of that amount, it is anticipated that 100%, or $556,151, will be funded by 1991 Realignment funds. There is no Net County Cost. Similar arrangements will be made for future years. There is no change in the cost or funding with the Assignment and Assumption Agreement.