The plan to open up a navigation center in a long-vacant business on Post Street includes a $49 million, 20-year lease of a three-story building and a cost of $3.8 million annually to operate the homeless shelter, according to city documents.
The Board of Supervisors Budget and Finance Committee will vote Wednesday on a lease for the 33,970-square foot building at 888 Post St. after having concluded negotiating the terms with the building’s owner and after community meetings were held on locating a homeless shelter there in the lower Nob Hill area.
The vacant site, formerly the House of Fans business at Post and Hyde streets, would serve as a 75-bed navigation center for transitional-aged youth, those between 18 and 24.
“There is a citywide transitional-age youth homeless problem that we are all aware of and there is an acute homeless problem along the Polk Street corridor and in that area, and this is a direct way to address it,” said Supervisor Aaron Peskin, whose district includes the site.
The most recent homeless count found there were 1,091 transitional-age youth, of whom 83 percent were unsheltered. That’s a higher percentage than the 64 percent who were counted as unsheltered in the overall homeless count.
If everything goes according to plan, the shelter should open this fall, according to Department of Homelessness and Supportive Housing spokesperson Abigail Stewart-Kahn.
Most of the other navigation centers are only in operation for a few years before making way for development. But the intention at 888 Post St. is to keep the shelter there for the long-term, Stewart-Kahn said.
The lease proposal includes The City leasing the building from TC II 888 POST, LLC, for 20 years with an annual base rent of $1.5 million increasing by 3 percent each year to bring the total to $49 million, according to the budget analyst report. The deal also includes The City spending $5 million toward capital improvements.
The agreement does gives The City the option to buy the site for $29 million any time before Aug. 1, 2022.
‘The real and most important question is whether or not The City wants to step up and buy the thing,” Peskin said. “I am very interested in that. That would be cost savings to The City over time.”
The City is also expected to sublease the ground floor of the building to Goodwill Industries of San Francisco, San Mateo and Marin Counties. Goodwill would end up paying for a third of the total rent, offsetting a portion of The City’s costs.
Goodwill is expected to offer vocational classroom training at the site that could benefit the TAY youth staying in the shelter.
The second floor may also be leased, further reducing The City’s rent. “There is still ongoing conversations about who will rent the middle floor,” Peskin said.
The cost to run the shelter is $3.76 million a year, which includes $2.3 million in salaries and benefits, according to the budget analyst report. The average cost to operate the seven existing navigation centers is $4.2 million.
The money to pay for the proposal comes from two sources.
The Department of Homelessness and Supportive Housing plans to use state Homeless Emergency Aid Program funding to pay for the lease and shelter operation for the first two years and the $5 million in tenant improvements would come from the city’s budget for new navigation centers.
If approved by the committee Wednesday, the full board will vote on the deal Feb. 25. The full board does not meet next week.
The City has seven navigation centers currently in operation, but none are specifically for the TAY segment of the homeless population.
The shelters, which comprise 804 beds, are located in three of the 11 supervisorial districts, Districts 6, 9 and 10. The proposed new one at 888 Post St. is in District 3.
A vote on a proposal introduced by Supervisor Matt Haney to require these homeless shelters to open in all districts within 30 months was postponed in a board committee last week.