Special Notice / Hearing: None__
Vote Required: Majority
To: Honorable Board of Supervisors
From: Louise F. Rogers, Chief, San Mateo County Health
Jei Africa, Director, Behavioral Health and Recovery Services
Subject: Recommendation to Apply for Prop 1 Bond Funds to Construct the Wellness & Recovery Opioid Treatment Program Clinic (WROC)
RECOMMENDATION:
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Adopt a resolution authorizing Behavioral Health & Recovery Services (BHRS) to apply for Proposition 1 Bond Revenues through the Behavioral Health Continuum Infrastructure Program (BHCIP) to construct the Wellness and Recovery Opioid Treatment Program Clinic (WROC).
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BACKGROUND:
The passage of Proposition 1 on the March 2024 ballot authorized the Behavioral Health Infrastructure Bond Act of 2024 (BHIBA), which is a $6.38 billion general obligation bond to develop an array of behavioral health treatment, residential care settings, and supportive housing to help provide appropriate care facilities for Californians experiencing mental health conditions and substance use disorders. The California Department of Health Care Services (DHCS) was authorized to award up to $4.4 billion in BHIBA funds for BHCIP competitive grants.
There are two BHCIP application rounds: Round 1 - Shovel Ready ($3.3 billion) and Round 2 - Unmet Needs ($1.1 billion). The application deadlines for Round 1 and Round 2 are December 13, 2024 and December 12, 2025, respectively. The Round 1 application requires an authorizing resolution of the Board of Supervisors that permits submission of an application, participating in the BHCIP Round 1 Request for Applications, and naming the authorized signatory for the application and supporting documents.
DISCUSSION:
BHRS has developed two shovel ready proposals that it seeks to submit to the BHCIP Round 1 Request for Applications, one of which is the Wellness and Recovery Opioid Treatment Program Clinic (WROC). (We are bringing forward the other proposal separately, as each project requires its own application.)
In 2021, BHRS was awarded a planning grant that was used to create a public engagement process to identify behavioral health infrastructure needs. This process included surveys, community meetings, focus groups with staff and contractors, key stakeholder interviews, and engagement with the Behavioral Health Commission. Replacement of the existing methadone clinic was identified as a high priority, and the project went through the Mental Health Services Act (MHSA) Community Planning Process to be able to use MHSA funding for the local match.
The WROC will replace an existing, aging structure housing the current clinic at the historic federal Veteran's Administration (VA) Campus in Menlo Park, which is presently operated by BayMark Health Services. This facility was meant to be used only temporarily but has been in use for over 23 years because no other suitable site has been identified. The size and condition of the current facility limits the daily census to approximately 400 patients. In contrast, the new facility will be able to accommodate over 1,000 patients, which is the estimated need in the next several years.
The WROC will provide lifesaving medications for addiction treatment, including methadone, which is used to treat opioid use disorder. Methadone has been used for 75 years with numerous studies showing its effectiveness. Minimizing cravings and withdrawal symptoms, methadone reduces the risk of relapse and recurrence of active opioid use by over 50%, enabling people to manage other aspects of their lives, such as parenting, attending school, and working. Most clients obtain their medication through an in-person daily visit to their treatment facility. Methadone treatment remains highly stigmatized in the eyes of many, as evidenced by high levels of regulation of methadone and methadone treatment facilities, as well as difficulty siting new methadone treatment facilities. The existing site at the VA provides the only dedicated access in San Mateo County. Methadone and other opioid treatment services are required as part of the BHRS’ contract with DHCS, are considered an essential Drug Medi-Cal health benefit, and must be accessible within 15 miles of the patient to prevent relapse (per Medi-Cal). The facility remaining on the VA campus will assure its accessibility to existing patients, avoid the challenges of placing the operations in a new community, and offer a more streamlined approach to the approval process given federal ownership of the property. Without the VA clinic site, patients would travel significant distances to obtain essential medications on a daily basis, to the nearest clinics in San Francisco or San Jose.
BHRS and County leaders have worked extensively with the VA to gain acceptance of siting the new facility on the campus. In 2023, the VA released a letter of intent that states in part, “The VA Palo Alto Health Care System is pleased to continue to work collaboratively with BHRS to identify a VA site on which to construct a brand-new facility that will expand the capacity of the current program by 100% - from 500 to 1,000 patients. This project represents an unparalleled opportunity to meet a critical gap in the system of care through an innovative collaboration between two counties and the federal government.”
Over the last year, BHRS has worked with the VA to identify a site that relocates the clinic to an exterior lot facing Willow Road. The WROC will be a new construction, three-story, 10,900 square foot project with 70 parking spaces serving beneficiaries seeking opioid and narcotic treatment from San Mateo and Santa Clara Counties, including veterans. It will be a state-of-the-art clinic designed to meet the needs of the whole person, with on-site primary care and lab services provided by the vendor selected to operate the clinic, plus special facilities for youth that are separated from the adult population, perinatal programs, group counseling and conference space, and expanded space to minimize waiting in line for daily medications.
The VA has proposed to give the County exclusive and full use of the site through a long-term lease. The lease program at the VA is called the Enhanced-Use Lease Program (EUL). The EUL program allows the VA to manage underutilized property through leasing arrangements with state or local governments or private sector organizations. Title 38, U.S.C. Sections 8161-8169, EULs of Real Property, as amended, authorizes the VA to lease real property under the VA’s control or jurisdiction to other public and private entities on a long-term basis (up to 99 years). The statute permits EULs for supportive housing or for the direct or indirect benefit of veterans. The properties are leased to entities that finance, design, develop, construct, or rehabilitate, operate, and maintain the property. The lessee assumes all financial obligations and risks associated with the development. Existing lessees have utilized various sources of financing, including but not limited to low-income housing tax credits, state and local government funding, grants, commercial loans, and public issue bonds. The lease will come before this Board at a later date, as today’s request is only for the authority to submit the application to the State DHCS grant program.
At a future date, if the application is approved, BHRS will return with further details on the project, seek authority to execute the lease with the VA and to construct the facility. This will also include financing details that are dependent upon the success of the application. The project is currently budgeted at $28,000,000, of which $2,800,000 is required County match that will be funded by BHRS MHSA funds that have already been programmed for this specific use and project. A reserve will be established to address cost overruns and a 5-year pro forma financial statement is currently under development that will demonstrate the long-term viability of the project by identifying the operational expenses and anticipated Medi-Cal revenue generated by the services performed at the new facility. Significant effort has gone into assuring the project is viable and will not burden local funding. BHRS proposes to continue to contract for the operations of the clinic through a competitively selected vendor as it has for several years.
An architect under contract with the Department of Public Works (DPW) professionally designed the project, and DPW has been involved with the project since its inception. DPW identified and calculated the initial estimated costs associated with the project, which was reviewed by Sierra-West, a professional estimating service that set the total cost of construction project. It is anticipated that DPW or the Project Development Unit will provide project management or manage a contract for project management to assure the project meets budget projections, avoids cost overruns, and results in a successful, on time, and on budget construction project.
The attached resolution allows BHRS to submit the application for funding. The resolution is based on a template required by the State DHCS. It authorizes the submission of the application and identifies the individuals authorized to submit the application and execute the various documents associated with the application. The resolution also requires that the County acknowledge the terms and conditions of the Program Funding Agreement and the distribution activities allowed by the grant. A draft Program Funding Agreement is not available, but the Request for Applications identifies the requirements that will be included in the Agreement: the Agreement must be executed within 90 days of the award notice; funding to be expended within 5 years of the award notice; the proposed use must operate for 30 years; a 10% local match; follow regulations for Public Works Projects and prevailing wage; ADA, CEQA and NEPA compliance; reporting and change notice requirements; funding distribution requirements (cost reimbursement); review of change orders, schedules, and contingency expenses; and promotion of the funding award through media, letters to publications, and videos describing the organization and the project.
The application and associated documents are due on December 13, 2024, and award letters will be issued in July 2025. If an award letter is received for this project, BHRS will return to the Board for additional approvals.
Equity Impact:
This project addresses special needs of the County’s most vulnerable populations by meeting the needs of those impacted by the opioid epidemic, mitigating inequities, and reducing stigmatization and discrimination of the substance use disorder population. The current clinic serves a diverse population, with 9% Black patients, 27% Latin, 1% Asian and Pacific Islander, 1% American Indian/Alaskan Native, and 18% other/unknown. Ten percent of the clinic patients are veterans. The clinic also provides daily medications to individuals incarcerated in San Mateo County. Although San Mateo County reports overdose death rates lower than state and national levels, significant disparities exist by race and gender. The opioid overdose death rate for Black residents exceeds the County average by 526%, Whites exceed the average by 116%, and men exceed the average by 77%. The project removes programs from an undersized, dilapidated building and replaces it with a state-of-the-art clinic that is welcoming and will expand access to life-saving medications. The new clinic doubles the size of the program capacity today, assuring timely and safe access to medications that allow individuals to live safe, healthy, and productive lives.
FISCAL IMPACT:
The total cost of the WROC is approximately $28 million, with a $2.8 million local match that will be funded 100% by MHSA funds and $25.2 million funded 100% by the Prop 1 revenue bond. There is No Net County Cost associate with this Plan.