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 7th Avenue Center, LLC for Psychiatric Care Services
RECOMMENDATION:
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Adopt a resolution authorizing an Assignment and Assumption agreement with 7th Avenue Center, LLC for locked psychiatric care services, for the term of July 1, 2023 through June 30, 2026, in an amount not to exceed $5,632,787.
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BACKGROUND:
Behavioral Health and Recovery Services (BHRS) has an agreement with 7th Avenue Center, LLC (7th Avenue) for locked psychiatric Mental Health Rehabilitation Center (MHRC) services. The parent company for 7th Avenue is Front Street Administrative Services, LLC (Front Street). This agreement is for the provision of 18 beds for San Mateo County residents with complex behavioral health needs, including clients coming directly from state hospital placements, and is for the term July 1, 2023 through June 30, 2026. This provider was selected under the B-1 Administrative Memo waiver exception for Housing Services and Related Supports. BHRS has contracted with 7th Avenue for services at their facility since 2002.
DISCUSSION:
On July 31, 2025, Front Street informed BHRS that it had contracted with PacifiCare Health Management, LLC (PacifiCare) for the sale of its mental health treatment facilities, including 7th Avenue. PacifiCare was to assume the provision of services under the terms of the current agreement with 7th Avenue. In order to do so, PacifiCare had to obtain appropriate licensure from the State.
On August 26, 2025, BHRS executed an executive assignment letter to 7th Avenue, agreeing that 7th Avenue could assign to PacifiCare the management of services obligated by our agreement, and that such services would continue to be provided under the 7th Avenue State license. The approved assignment required that 7th Avenue 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 current 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 State license for those services.
PacifiCare has now obtained a license from the California Department of Health Care Services to operate an MHRC at the 7th Avenue facility under the name 7th Ave Care Center, LLC, a new PacifiCare subsidiary.
BHRS is recommending approval of an Assignment and Assumption agreement with the attached Novation agreement. This new agreement allows 7th Avenue to assign all rights and obligations of the 7th Avenue agreement to 7th Ave Care Center, LLC. There is no change to the term, the services, or the cost of services of the original agreement through the execution of this Assumption and Assignment agreement. The Assignment and Assumption agreement will go into effect on May 5, 2026.
BHRS also has a separate agreement with 7th Avenue’s parent company, Front Street, for the provision of residential services for older adults with serious and persistent mental illness. An executive letter agreement has been executed, allowing Front Street to assign the management of the latter contracted services to PacifiCare. An Assignment and Assumption agreement with Front Street for the full contract assignment to PacifiCare will be separately brought to this Board.
The 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 2024-25 Actual |
FY 2025-26 Estimated |
|
Percentage of clients who receive locked psychiatric care that are maintained at the current level of care or discharged to a lower level of care |
75% 15 of 20 clients |
75% 13 of 18 clients |
COMMUNITY IMPACT:
This agreement will positively impact a critically underserved community of adult behavioral health clients who have severe mental illness and need MHRC placement. MHRC providers such as 7th Avenue are a vital resource for supporting such individuals in their recovery journey. This agreement affords these individuals the ability to step down from an inpatient acute setting to MHRC. This provider is committed to serving this population and supporting them in their recovery journey while working to stabilize these clients with the goal of them being able to step down to a less restrictive setting in the future.
FISCAL IMPACT:
The term of the agreement remains July 1, 2023 through June 30, 2026, and the amount of the agreement is not to exceed $5,632,787 for the three-year term. Funds in the amount of $1,817,151 have been included in the BHRS FY 2025-26 Adopted Budget. Of that amount, it is anticipated that $1,635,976 will be funded by sales tax through Realignment, and $181,775 will be Net County Cost. There is no change in the cost or funding with the Assignment and Assumption agreement.