BSA Compliance Analyst

Frustrations boil over as Gallaher group seeks to unlock Sonoma County opioid settlement funding for sober living homes. Cindy Gallaher and Brooke Ross were standing on a vacant lot on Doyle Park Drive in Santa Rosa, across the street from a funeral home, talking about lives that might be saved. They stood smack dab on the plot where vegetable gardens will be planted on the north side of a house envisioned to provide a structured, sober living environment for men in early recovery from substance abuse disorders. Four months after the Sonoma County Board of Supervisors dipped into its pool of opioid settlement funds to approve a $3.87 million grant to the nonprofit Buckelew Programs to build and manage four different sober living residences, the county is now pumping the brakes, citing concerns over legal safeguards for its investment if the facilities close. The two houses planned for the Doyle Park Drive parcel, just north of Sonoma Avenue, have been designed "so they can be switched" between sober living and residential treatment units, noted Cindy Gallaher. "Over the years the need may change." She is founding partner, with her husband, Bill, of their prominent Sonoma County-based development firm Gallaher Companies. The couple has spearheaded in recent years the rescue and rebuilding of Athena House and Hope Village, a residential treatment center and transitional housing facility in Rincon Valley. Right now, the need for such facilities is dire in Sonoma County, where, by its own estimate, an average of 12 people die each month from drug overdoses, the third-highest rate among all nine Bay Area counties. Help is on the way, in the form of money from the landmark nationwide lawsuit and settlement with pharmaceutical companies behind some of the most addictive and deadly painkillers. Sonoma County, one of thousands of plaintiffs, is due to receive $43 million in opioid settlement funds by 2038, $14 million of which it has already accepted. So it seemed to make great sense when Buckelew, the North Bay organization that specializes in services for homeless people and those undergoing substance abuse treatment, having secured a low-interest loan from Santa Rosa-based Poppy Bank - founded and chaired by Bill Gallaher - announced that it would match that $3.87 million county grant. That arrangement, supporters said, would allow Sonoma County to leverage the grant to Buckelew into construction of four sober living houses with a total of 68 beds - an "incredible, innovative public-private partnership to build something that will serve people for 40, 50, 60 years," said Ross, site acquisition specialist for Gallaher Companies, which is in line to build the houses at cost. In addition to doing all the architectural drawings, site plans and landscape design on the planned sober living houses, Gallaher Companies would deliver them fully furnished. "And we would do all our work at cost," Ross said. The homes would be owned and managed by Novato-based Buckelew, which runs numerous substance abuse services across the North Bay, and would continue to contract with the county. "We could turn a site out in six months," Ross said. "It would be great." But those best-laid plans have run aground, for now, stymied, according to Cindy and Bill Gallaher and their associates, by the county's risk-averse approach. Several weeks ago, according to Ross, the county inserted language into the funding agreement which, in the Gallahers' view, amounted to a poison pill for Poppy Bank. The sticking points are a deed restriction and a subordination clause, added by the county, which are so constraining, said Ross, "that no financial institution can lend on it." The deed restriction, requiring that the property remain a sober living house or treatment facility even if it goes belly-up under Buckelew, would tank its marketability "if, God forbid, there were a default," Ross said. County officials say they're just trying to come up with proposals that allow them to offload some of the risk on the project, should it fail as the result of some unforeseen circumstance. "We can't assume all the risk, as the county," said Board of Supervisors Chair Lynda Hopkins, who noted that the two sides are in ongoing negotiations. "These kinds of projects are absolutely critical to our communities, and we simply don't have enough of these beds in Sonoma County," she said. "At the same time we need to be careful stewards of taxpayer dollars, and ensure that if they're making a multimillion-dollar investment, there's a guarantee-of-service provision." She mentioned occasions when the county "didn't have adequate guardrails in place. The Press Democrat's 2023 investigation into that pandemic-era startup - and the more than $26 million it secured in no-bid county contracts to provide emergency housing and homeless services - uncovered questionable billing and financial irregularities, spurring internal audits, investigations and a grand jury report and clouding the exit of top officials. The county cut ties last year with DEMA, and its California operations quickly collapsed. Those now on the other side of the negotiating table from the county find the DEMA parallel quite a stretch. On the one hand, DEMA was "an unknown (entity) that was awarded millions and millions of dollars without an RFP," Ross said, referring to a bidding process Gallaher Companies, on the other hand, "has built thousands of residential units." Poppy Bank is sitting on $7 billion in assets, while Buckelew is an operator that's been working in the North Bay for 55 years. "All known quantities," said Cindy Gallaher, who points out that the recovery housing now being proposed will cost the county nothing in operating expenses. "You'd think that would be enough to satisfy (the county's) risk aversion, their fear. So, it's curious," she said. Her husband, one of the region's most deep-pocketed and politically active developers, used more forceful language in a Dec. 8 letter to the Board of Supervisors, expressing his "disappointment and frustration" with the county's "intransigence." "Over the last 3 1/2 months staff has offered alternatives that make it unfeasible for any bank to loan under their terms," he wrote. As a result of the county's "unwillingness to find a path forward" despite "the minuscule risk," he continued, "we have reached the end of our willingness to engage in the never-ending, non-productive circular machinations thrown up to make this offer impossible to execute. "We assumed, apparently wrongfully so, that our three private parties... all with a long history of successful operation in Sonoma County - were offering the county a clear win by giving it the opportunity to leverage a portion of Opioid Settlement Funds into 3 or 4 times the number of beds, at a fraction of the price, and delivering them in a fraction of the time than if the county tried to do the same," the letter continued. Ross picked up from there in an interview: "This is an opportunity being handed to them on a silver platter," she said. "Just get out of the way." Assistant Sonoma County Administrator Jennifer Solito pushed back Friday against the notion that county officials had been intransigent, noting that they had offered multiple counterproposals, all of which had been rejected, with little or no explanation as to why. "So it's not clear to us. Is this a preference, a policy or an actual banking, regulatory limitation? "They've said they can't make loans under these terms, but we've given them at least three or four other specific loan term options that seem viable from our standpoint, that they have not responded to," Solito said. She raised a worst-case scenario in which the properties are purchased with settlement funds, "and then Buckelew defaults, for whatever reason, they go the way of SAY" - Social Advocates for Youth, the venerable 53-year-old Santa Rosa nonprofit that went bankrupt in early 2024 - "which is low-risk, but not zero-risk, particularly going forward in this new federal funding environment." In that case, Solito said, "We've given this money, they go under, we have no sober living environments, we have to report to the state that we gave this money with no restrictions, and lost it. We might have to repay part of it, or all of it, in addition to losing a super-valuable asset to the community." Deputy county counsel Jeremy Fonseca said that while Poppy Bank was looking at the financial agreement in terms of traditional home mortgage loans, "what we're used to doing, and what we're analogizing this to, is affordable housing projects" - where deed restrictions and subordination clauses happen "all the time," he said. "There are lenders that do that very thing, in the affordable housing context." Solito and other county representatives emphasized that negotiations were still ongoing. "I am sure we can get there," said Supervisor David Rabbitt, who added that "the Gallahers have been generous and we all want to see success in this endeavor." Those optimistic vibes weren't necessarily mutual. "We all live here and care deeply about our community's health," concluded Bill Gallaher, in his letter to the Board of Supervisors. "Sonoma County is the third highest in the Bay Area for opioid-related deaths. Lip service, of which we have heard much for this cause, does not bear out in action. Supervisors have both the ability and the responsibility to make this happen. Action is the true measure of compassion. We were hoping for just a little." You can reach Staff Writer Austin Murphy at [email protected] or on Twitter @ausmurph88. RevContent feed.

Each year, the Milk Bank WGL community comes together for Poppy's Dream Annual Candle Lighting Ceremony - a sacred gathering that honors the babies gone too soon and celebrates the incredible legacy they leave behind.