SF Advances $195M Bond for Health Facilities, Plazas as $930M in Unspent Funds Draw Scrutiny

The San Francisco Budget & Finance Committee on May 20 unanimously advanced nearly $200 million in general obligation bond spending for health facilities, street safety, and downtown plazas — the second major issuance under the voter-approved 2024 Healthy Safe and Vibrant SF authorization. But the bigger revelation may have been what's sitting untouched: roughly $930 million in unspent medical reimbursement accounts, up to $274 million of which could transfer to the General Fund this August to help close the city's deficit.

• $195M GO bond issuance advances for Chinatown Public Health Center, ZSFG seismic work, Laguna Honda repairs, street safety, and downtown plazas including Powell Street, Harvey Milk Plaza, and Halliday Plaza
• $50M for homeless shelters remains unissued from the voter authorization, with HSH still determining how to spend it
• Chair Chan puts McLaren Park funding shift on the record, questioning whether $5M intended for the Jerry Garcia Amphitheater was redirected to the Embarcadero
• BLA flags untapped state revenue for school mental health: SFUSD only began billing California's CYBHI program in February, years behind 160 other districts
• $930M in unspent medical reimbursement accounts revealed during Healthy SF contract debate; up to $274M in dormant funds headed to the General Fund
• Two SFO restaurant leases terminated — Sushirito (bankruptcy) and Balboa Cafe (22% cost blowout) — freeing premium terminal space

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$195M in Bond Money Hits the Street

The committee advanced the second issuance under San Francisco's $390 million Healthy Safe and Vibrant SF bond authorization, sending $195 million in new spending to the full Board of Supervisors for final approval.

Why it matters: This round commits nearly half the total voter authorization to specific capital projects — many with imminent construction timelines and regulatory deadlines — while leaving roughly $117 million unissued and a conspicuous $50 million gap for homeless shelters.

Where things stand: The bond proceeds break down across three categories: $96.8 million for public health (including $45.6 million for the Chinatown Public Health Center retrofit, $20 million for ZSFG Building 3 seismic design, $4.1 million for City Clinic relocation to 1660 Mission Street, and critical repairs at ZSFG and Laguna Honda Hospital); $23.5 million for street safety projects on 5th, 11th, and Mission Streets; and $69.4 million for public spaces, headlined by Powell Street ($21.8 million), Harvey Milk Plaza ($23.9 million), and Halliday Plaza ($8.9 million).

The Budget and Legislative Analyst confirmed the issuance keeps the city's debt ratio at 0.8% — well within the 3% charter limit — at an estimated 4.86% true interest cost, adding roughly $15 million in annual debt service repaid by property taxes.

But BLA analyst Nick Minard flagged a notable omission: "There was $50 million as part of the voter authorization for this bond dedicated to homeless shelters. That has not been part of the prior or proposed bond issuance. HSH is still determining the best use of that money."

The prior year's authorization of $194 million yielded only $83.6 million in actual issuance due to project delays — a pattern that raises questions about the city's ability to deploy capital at the pace voters authorized.

Decisions: Approved 3-0 (For: Supervisor Chan, Supervisor Dorsey, Supervisor Sauter; Against: none; Absent: none). Referred to the full board.

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Chan Puts McLaren Park Funding Shift on the Record

Chair Connie Chan used the bond hearing to surface a transparency concern: whether $5 million originally discussed for electrical upgrades at the Jerry Garcia Amphitheater in McLaren Park — championed by former Supervisor Safai — had been quietly redirected to the Embarcadero Plaza and Sue Bierman Park project.

Why it matters: Bond categories with flexible legislative language give departments latitude to reallocate project-level funding without returning to voters — a practice that can diverge from public expectations about where their tax dollars go.

Where things stand: Chan pressed Rec Park Director of Capital and Planning Stacy Bradley on the shift. Bradley responded that the bond language was never site-specific: "I'm pretty sure the bond legislation explains that the funding may go to McLaren. I don't think it dedicated. It completely committed us to delivering everything at McLaren." The $5 million was ultimately split, with approximately $1 million plus funds from the 2020 Health and Recovery Bond going to McLaren, and the remainder going to Embarcadero.

Chan was direct: "I just wanted us to be on the record about where we're at, that we're making a decision as a body right now to support this and that we have taken money that was originally intended by the voters for McLaren, and that's inclusive of the electrical upgrade. And now we're putting it into Embarcadero."

Separately, Chan rescinded and re-voted on Item 1 after raising concerns about Halliday Plaza construction and its potential impact on a Jollibee restaurant about to open in a nearby lease. Deputy Director Bruce Robertson of Public Works confirmed the department is coordinating with the Real Estate Department to minimize impacts on the vendor. The re-vote passed 3-0.

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BLA Flags Millions in Untapped State Revenue for School Mental Health

The committee extended two behavioral health contracts with Richmond Area Multi Services (RAMS) — a two-year, $5.6 million increase for the high school wellness center program (to $15 million total) and a three-year, $19.1 million increase for peer specialist services (to $48.2 million total). But the real story was an overlooked state funding stream.

The basics: RAMS provides integrated behavioral health services at 15 SFUSD high school wellness centers. The program targets 750 students annually but has already served nearly 1,000 this year.

Why it matters: California's Children and Youth Behavioral Health Initiative (CYBHI) allows schools to bill the state for mental health services regardless of students' insurance status. About 160 California school districts already participate — but SFUSD only began billing in February 2026, years after the program launched statewide.

Where things stand: BLA analyst Nick Minard highlighted the missed opportunity: "There's this new state program that's just been implemented a couple years ago. It allows schools to basically bill the state with this new fee schedule for things like not just individualized therapy, but mental health promotion group work."

Vice Chair Matt Dorsey pushed for accountability, asking whether an interim report could come before the scheduled June 2027 deadline: "Are we waiting too long to have a report from June to June of next year? Should we be looking at something sort of an interim?" DPH agreed to provide an update by the end of the calendar year.

Dorsey also raised a federal question, asking whether forthcoming Medicaid changes could affect CYBHI billing. DPH staff Kameya Wong indicated the program's state funding structure is distinct from Medicaid, though federal policy shifts could create indirect pressure.

The BLA additionally noted that DPH's program monitoring for the prior fiscal year was incomplete — RAMS had changed its internal database, creating accounting discrepancies and gaps in service-mode tracking. The substance use disorder portion of the RAMS contract will be reduced next year as part of a $1.3 million overall cut across DPH-RAMS contracts.

Decisions: Both items approved 3-0 (For: Supervisor Chan, Supervisor Dorsey, Supervisor Sauter). Referred to the full board.

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$930M Sitting Idle: Healthy SF Contracts Expose Unspent Funds and Bidding Gap

The committee approved two four-year contracts with the San Francisco Community Health Authority (doing business as SF Health Plan) totaling roughly $94 million — but not before sustained questioning about administrative costs, competitive bidding, and a massive pool of dormant funds.

Why it matters: Up to $274 million in unclaimed medical reimbursement account funds are scheduled to transfer to the General Fund this August, offering a significant — if one-time — offset to the city's projected deficit. Meanwhile, a contract that hasn't been competitively bid in a decade is growing fast.

Where things stand: Item 7 ($41.6 million, General Fund) pays private network providers for Healthy San Francisco care across 15 non-DPH clinics, Kaiser, UCSF, and pharmacies. The budget represents a 170% increase over the prior contract, driven by rising Medi-Cal disenrollment pushing more people into the city's safety-net program and higher provider reimbursement rates.

Item 8 ($52.8 million) covers third-party administration of SF City Option medical reimbursement accounts — funded not by the General Fund but by interest earned on approximately $930 million in unspent MRA funds.

BLA analyst Nick Minard laid out the scope: "There's about $930 million of unspent medical reimbursement account funds. About $600 million are accounts that have been established and about $300 million are money that's been deposited into the health authority because of the requirements to do so under the health care security ordinance, but that no one has claimed yet."

The other side: Vice Chair Matt Dorsey zeroed in on the cost structure: "It irks me a bit to see that we're spending more on the administrative functions in Item 8 than we are in the providers itself in Item 7. The large administrative cost — I'm just curious about that."

Chair Chan noted the competitive bidding gap: "I do appreciate the intent that you clarify the intent for both to actually go to an RFI for request for information. Just because it has not been for the last 10 years, it has not been a competitive bidding process for this contract." DPH committed to issuing an RFI for the MRA vendor subcontract (Health Equity, formerly WageWorks) and, if interest exists, a full RFQ by June 2027.

DPH Chief Operating and Strategy Officer Tangerine Brigham offered some reassurance on the dormant fund transfer: "Our latest figures are that individuals are using the accounts. At least my last look of it is about $205 million. So it's gone down considerably as we have increased our communication to individuals and they've wanted to use those dollars to pay for expenses that they might have."

Both resolutions were amended to add a six-year extension option and correct a descriptive error, then approved.

Decisions: Both items approved as amended 3-0 (For: Supervisor Chan, Supervisor Dorsey, Supervisor Sauter). Referred to the full board.

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Laguna Honda Kitchen Repairs Race a 2030 Deadline

Bond proceeds will also fund urgent regulatory-driven repairs at Laguna Honda Hospital, where a 100,000-square-foot kitchen serving 630 residents and 1,000 staff needs major work — including floor replacement driven by a regulatory finding about trapped moisture, and equipment replacements for end-of-life systems.

Executive Director of Capital Planning and Engineering Oleg Korsunski described the challenge: "The kitchen is, I think, up to 100,000 square feet. It is massive. It is a huge operation supporting 630 residents and thousand staff at this time."

The hospital also faces a new state sewage containment requirement (NPC 5) with a 2030 compliance deadline. HVAC assessments are underway, and at ZSFG, a Building 5 fire alarm upgrade and chiller/cooling tower replacement will receive remaining bond allocations.

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Minor Items

• SFO lease terminations: The committee approved the termination of two airport restaurant leases with no payment to either party. Gate 74 Inc.'s Sushirito lease in Terminal 3 ended after the franchisor filed for bankruptcy in March 2026. HFF SFO TW LLC surrendered the Balboa Cafe lease in Harvey Milk Terminal 1 after construction costs rose an estimated 22% and labor costs 10–15% since the 2021 award, making the deal unviable. Airport staff said the terminations provide an opportunity for higher-and-better-use tenants. Both approved 3-0.

• RAMS peer specialist contract: A three-year extension of the peer employment and mental health certificate program was approved alongside the high school wellness item, increasing the contract by $19.1 million to $48.2 million total. The program builds the city's behavioral health workforce pipeline. Approved 3-0.