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Supervisors approve Health Service System lease at 1145 Market with conditions tied to wellness study
Summary
The committee authorized a 10-year lease for the city's Health Service System at 1145 Market, including space for a proposed wellness center; the budget analyst urged clarity on appropriations and the controller said a wellness study will report in the fall, so the committee adopted language directing the director of real estate to find alternative uses if the study doesn't support HSS space needs.
The Budget & Finance Committee on June 5 approved a resolution authorizing a 10-year lease of approximately 19,560 square feet at 1145 Market Street for the Health Service System (HSS), subject to appropriation and with amendments directing contingency planning for the proposed wellness center space.
John Updike (real estate) explained the lease terms: base rate of $38 per square foot (net of electricity), a tenant improvement allowance of $1,036,680, two months rent abatement, and an early termination right for the city after 2.5 years. Updike said the layout separates confidential HIPAA functions from open-enrollment and wellness areas and that the First Floor would contain a wellness center roughly 4,005 sq ft.
Budget analyst Mr. Rose reported first-year costs to HSS of about $643,002.63 and recommended amending the resolution to make clear the lease is potential and subject to appropriation and to direct the director of real estate to identify alternative uses for First Floor space if the controller's strategic wellness study or budget approvals do not support it.
Monique Samuda of the Controller's office said a wellness technical assistance project is underway and that a report with recommendations will be released in the fall; HSS acting chief operating officer Lisa Gopi said the space is important for HIPAA compliance and program delivery. The committee adopted the recommended amendments and approved the item as amended.
Next steps: City staff will proceed with the lease subject to appropriation; the controller will issue a wellness study in the fall that may inform final occupancy and use of the First Floor wellness space.
