San Francisco Receives $100 Million Proposition 1 Windfall to Expand Treatment Beds

As San Francisco faces a looming budget deficit, city leaders are breathing a momentary sigh of relief thanks to around $100 million in new state funding that will go toward expanding local psychiatric and addiction treatment beds.

The latest funding comes from Proposition 1, a $6.4 billion bond that California voters passed in 2024, and will specifically fund additional beds at three different locations in San Francisco.

It comes as the city is also proposing to cut millions of dollars across departments, including public health, to close a nearly $900 million budget shortfall and amid federal funding cuts.

“These investments strengthen our city’s ability to respond with compassion and accountability. Facing a serious budget deficit as we are here in the city, we are leveraging every possible funding source,” Lurie said as he announced the funding on Thursday. “We’re not simply pouring money into something that’s broken, but investing in solutions that get people off the streets, into treatment and on a path to recovery.”

Already, California has distributed nearly $4.17 billion across the state in one-time Proposition 1 dollars to support nearly 7,000 residential treatment beds and 27,500 outpatient treatment slots, although some projects have been delayed.

San Francisco received funding for 73 new locked and dual diagnosis treatment beds through the bond program last year.

In this latest funding round, local health officials plan to put $70.2 million toward 50 sub-acute beds and six acute psychiatric beds at UCSF Hyde Hospital, $14.2 million toward 44 treatment beds on Treasure Island and $11.2 million toward opening a sobering center in an unused city property at 1660 Mission St.

Health Director Daniel Tsai said the funding is desperately needed. The city has a dearth of adequate and available beds, which means that people who are ready for treatment must often leave the city.

The move can pull them away from their support network, making their recovery even more difficult, or it can deter them from treatment entirely. “There are simply not enough beds. We are sending people as far as Santa Barbara for this level of care,” Tsai said on Thursday. “In many cases, folks are left on the street because there is no appropriate level of care.”

Construction for the new beds on Treasure Island is slated to begin in winter of 2026 at a 64,000-square-foot, six-story building located at Tradewinds Avenue and Mackey Lane. About 172 existing recovery beds on Treasure Island will also be relocated from the former U.S. Navy housing on the island to the site that is slated to be redeveloped.

Timelines for the other two projects were not specified, but Tsai said they will begin “as fast as humanely possible.”

City officials added that the vision for the site at 1660 Mission St. includes a sobering center that also serves as a hub for other public health care services, like pharmacy pick-ups, case worker meetings and other health assessments.

It would be the second sobering center that Lurie’s administration has attempted, after the city recently announced the upcoming opening of the so-called RESET Center, where police are expected to drop off people they arrest for outdoor drug use, rather than taking them to jail for booking.

However, if someone has an outstanding warrant or other reason for arrest along with drug use, they could still be booked into jail. Some studies have shown that the risk of fatal and non-fatal overdose dramatically increases following a release from jail or prison. That, along with Lurie’s controversial decision to scale back many of the city’s harm reduction public health programs, has alarmed some addiction experts and advocates.

The new funding comes almost a year after Lurie opened a mental health crisis center at 822 Geary St., also intended for first responders to drop off people struggling on the street. Individuals can also walk in themselves for a quiet space to relax and get connected with medical professionals.

“These programs will provide much-needed mental health services to some of our most vulnerable individuals in the community and support them on their road to recovery,” Crestwood CEO Patty Bloom said in a statement.

The health organization will operate the new 50 locked beds at Hyde Hospital for people under mental health conservatorship, and it currently oversees the stabilization center at 822 Geary St.

Lurie’s police-friendly triage center on Sixth Street, however, did not have the same success and has quietly tapered off services such as offering a place to sit and get a hot coffee on the often-hectic South of Market neighborhood stretch, or sign up for social services.

Meanwhile, overdose rates have fluctuated on a month-to-month basis but remain high in San Francisco, with fentanyl still one of the most common substances involved in accidental overdose death.

On Thursday, the mayor touted the progress the city has made on street-level conditions, one of the key issues he campaigned on before entering office. Last month, the city saw a drop in tent encampments and more people participating in Journey Home, a program that covers transportation out of the city for unhoused people.

“We know that we have challenges on our streets, but with this momentum, we will continue to push for results for the people of San Francisco,” Lurie said. “We must keep going.”