Committee advances Baker Places repayment and property-transfer plan after lengthy review

The Budget and Finance Committee on March 27 advanced to the full Board a resolution that would formalize a multi-year repayment agreement between the City and Baker Places/PRC and a purchase-and-sale of property to reduce a city‑owed debt.

Vice Chair Rafael Mendelmann opened the item as "the bookend" on a multi‑year crisis for Baker Places, describing its role in residential behavioral-health treatment and noting a 2022 controller audit that found cash shortfalls and weaknesses in financial controls. DPH and other city staff presented a debt‑repayment proposal that would require Baker Places to repay approximately $7.7 million over roughly 22–23 years, inclusive of interest, and transfer title to 333 Seventh Street (appraised at $3,000,000) to the city in exchange for an equivalent credit toward the debt.

DPH staff emphasized a central goal: preserve continuity of services and avoid interruptions for existing clients while strengthening Baker’s financial controls. Nick Menard of the Budget and Legislative Analyst said the repayment schedule appears plausible but cautioned that acquiring and rehabilitating 333 Seventh Street may require significant additional general‑fund spending (BLA estimated about $7 million for renovations, mostly accessibility work).

Baker Places CEO Trent Tang described organizational reforms: new finance leadership, completed corrective action plans, program restructuring and the establishment of an operating reserve. Tang said FY2023 audits show no findings and that the organization seeks to maintain more than 200 residential treatment beds and repay the city.

Supervisors pressed DPH and Baker on multiple fronts: the assessed values and encumbrance status of several properties (214 Dolores Street and Grove Street among those discussed), whether transfers would eliminate critical revenue for the nonprofit, the city’s capacity to manage properties, and the timeline for departmental follow-up. MOHCD cautioned that transferring properties with Section 8 funding would add management responsibilities for the city and could negate repayable loans currently on Baker’s books. Baker and PRC representatives stressed client stability concerns and said the transfer proposal addresses real estate only, not program services.

The committee approved a series of amendments to the resolution's language and voted to forward the item to the full Board with a positive recommendation. Chair Chan also said she would send a letter inquiry to departments asking for a long‑term capitalization and asset‑assessment plan; the committee requested a report back by December 2024 (Department staff suggested an extended timeline to January if needed).