Committee recommends lease, $19.5M property‑management plan for 1321 Mission (the Margo)

The Budget & Finance Committee unanimously voted Nov. 9 to forward a resolution authorizing the Department of Homelessness and Supportive Housing (HSH) and the Director of Property to enter into a lease and property management agreement for 1321 Mission Street, the newly acquired supportive housing building the department will call “the Margo.”

HSH Deputy Director Emily Cohen told the committee the property in the SOMA district includes 120 studio units for adults and 40 multi‑bedroom units for families, each with private bathrooms and kitchens. The tenant/operator will be Delivering Innovation Supportive Housing (DISH) under the fiscal sponsorship of Tides; DISH will manage property operations under a master lease. Cohen said the term is five years with an option to extend another five years, the base rent to the tenant is $1 per year, and the not‑to‑exceed amount for property management and operating services for the initial five years is $19,500,000.

The Budget and Legislative Analyst (BLA) noted the agreement’s cost structure is based on the five‑year term and includes a $2.2 million reserve; BLA recommended approval but identified the per‑unit agreement cost as roughly $6,000 higher than earlier department estimates, largely because city‑owned properties carry additional non‑personnel expenses such as insurance and security.

Committee members asked how the Homekey funds and Prop C operating dollars will flow over the term. Gigi Whitley of HSH explained the state Homekey allocation (just over $6 million referenced in the BLA report) is a one‑time amount that can be spent over the five‑year budget and that Prop C housing money will begin to support operations in year four. Supervisors also discussed the building’s mixed adult and family model and ongoing plans to integrate services provided by UCSF and Compass Family Services.

Public comment included testimony from Lauren Hall of DISH, who said the organization welcomed the opportunity to build capacity by operating a newer facility with modern systems.

What’s next: The committee forwarded the item to the full Board with a positive recommendation; the full Board will consider contract authorization and any related budget appropriations.