Board fails to approve $300,000 county match for Service First hotel-to-treatment project

The San Joaquin County Board of Supervisors voted against a motion to allocate $300,000 to Service First of Northern California as part of a required local match to secure $8.2 million in state behavioral-health funds for the Eaton Hotel redevelopment.

Service First Chief Executive Vernell Hill, accompanied by project materials, asked the board to approve a $300,000 county contribution that would be matched by the City of Stockton and by Service First's own funds to meet the state's 10% local-match requirement. Hill said the project would refurbish the nearly vacant Eaton Hotel into a 92-room facility providing treatment, counseling space and activity areas, with at least 16 social-rehab beds and four respite beds certified to state standards. "We expect to have a kitchen, group rooms and private counseling rooms," Hill said, urging supervisors to act quickly because the state set a deadline to secure the match.

Healthcare Services Director Genevieve Valentine and Human Services Director Chris Woods told the board the state award stipulated programmatic requirements and certifications that Service First must satisfy. Valentine said behavioral-health staff had provided a letter of support and offered technical assistance, but that county staff had previously told applicants the county would not provide fiscal matches to outside projects unless the county became an explicit partner.

Supervisors expressed split views. Supervisor Sunny Dhaliwal and Supervisor Guardia stressed the leverage: $300,000 to unlock roughly $8.2 million in state funds and a prospective 92-bed campus. "If we don't invest $300,000 we risk losing $8.4 million and those beds could go elsewhere," Supervisor Guardia said.

Opponents raised process and fairness concerns. Supervisor Steve Dang questioned why the board was asked to make a discretionary match now after multiple nonprofit projects had been reviewed through established HAP/Housing Allocation processes. "We had over 20 applicants told there would be no county match; we need consistency and fairness," Dang said. Supervisor Rickman echoed concerns about whether the project met state program priorities and whether it would have qualified in the earlier HAP round.

Board members also pressed the applicant on certification and reimbursement limits: county staff explained that 16 of the 92 rooms must be social-rehab beds certified to provide continuous mental-health services, four must be pure respite, and the remainder would be supportive housing or other uses that require additional approvals and funding strategies.

The motion on the floor included explicit contingencies: the city of Stockton also had to commit $300,000 and Service First had to obtain the remaining match required to access state funds. On a roll call the votes were: Supervisor Guardia Yes; Vice Chair Dhaliwal Yes; Supervisor Dean No; Supervisor Rickman No; Chair Paul Canapa Yes. Because state guidance and the board letter required a four-fifths vote for this funding commitment, the measure failed to achieve the required supermajority and the chair announced the motion did not carry.

The board directed staff to continue coordination with behavioral-health officials and noted that Service First can seek other local or philanthropic matches, while human-services and behavioral-health departments said they would provide technical support as appropriate.

Next steps: the state indicated a firm deadline for the match, and the project proponents said they would pursue other avenues to preserve the award. The board did not adopt the requested allocation at the Nov. 18 meeting.