Breed’s two-year budget proposal, which has not yet been finalized, allocates another $5 million for upgrades and repairs in some of the city’s most troubled buildings. The funds target the aging single-room-occupancy hotels, or SROs, that make up the bulk of the city’s supportive-housing program.

While the mayor’s proposed investment would constitute a fraction of the city’s overall budget for homelessness services, it is the most significant funding increase to the system since Breed took office in 2018.

“We know that housing connected to resources is the solution to homelessness,” the mayor said in a statement. “These investments allow us to maintain the critical infrastructure and staffing needed to help keep our vulnerable residents off the street and in housing.”

Through a spokesperson, Breed declined to answer questions from The Chronicle about the budget proposal.

The Chronicle investigation published last month found that San Francisco leaders — including Breed — have long underfunded the city’s SROs, the cornerstone of the city’s housing stock for the homeless. Reporters found that some case managers oversaw as many as 85 residents, five times higher than federal standards, and that staff turnover was frequent. Breed’s proposal would lower caseloads to 25 in SROs and raise salaries from as low as $43,000 to $58,000.

“The revolving door of staff is the real issue,” Shireen McSpadden, director of the city’s Department of Homelessness and Supportive Housing, or HSH, said in an interview. “This is a really exciting investment, and something our providers have been desperate for.”

HSH typically pays nonprofit groups to lease the buildings from private landlords. The nonprofits handle the day-to-day management of the hotels, including mental health services for residents.

But the Chronicle’s review of tens of thousands of pages of incident reports, inspection records and public data showed that chronic underfunding and understaffing — paired with a lack of oversight and accountability — has led to dangerous and unhealthy conditions in many of the city’s century-old hotels.

Broken elevators trap elderly and disabled people in their rooms, vermin infestations overwhelm buildings, and plumbing issues flood bathrooms and cause ceilings to collapse. Meanwhile, at least 166 people died in city-funded SROs of drug overdoses in 2020 and 2021 — 14% of all overdose deaths in San Francisco, though the buildings housed less than 1% of the city’s population.

The investigation also found that San Francisco leaders and HSH have failed to meaningfully regulate the nonprofits that oversee the hotels; comprehensive performance measures that were supposed to be in place more than two years ago still do not exist. In 2019, Breed lobbied against a proposed ballot measure to create an oversight commission for HSH, the largest city agency without a supervisory body. The effort died.

Now, in response to The Chronicle investigation, the Board of Supervisors is considering a November ballot measure that would create such a commission over HSH. The mayor said last month that she is open to supporting it.

Over the past year, Breed had a record $1.1 billion budget to spend on homelessness, thanks in large part to Prop. C, a 2018 business tax. Even so, Breed allocated less than 2% of her budget toward boosting services in these SROs and other existing supportive-housing sites, The Chronicle’s investigation found.

It’s unclear how large the total budget for homelessness services will be in the next fiscal year: Both Breed’s office and HSH declined to comment, though it will likely be far less than last year’s historic investment. The mayor will formally propose her budget to the Board of Supervisors on June 1.

According to a spokesperson for HSH, Breed wants to pull $32.4 million, or about half of the funds for her proposal, from Prop. C. The rest of the money would come from local, state and federal sources.

Breed’s desire to use Prop. C money to boost investments in the older housing stock will likely cause tension with the Our City Our Home committee, which oversees the funds and has previously said the money is intended only for new homelessness services — not to boost existing housing.

Shanell Williams, the committee chair, said she would like for Breed to instead pull more money from her general fund and leave Prop. C for new services aimed at those currently living on the streets.

“I’m concerned about what the trade-off is going to be in terms of really moving the needle of getting folks off the street and inside,” Williams said.

Last month, HSH requested about $16 million from the committee to increase support services for adults who live in permanent supportive housing. The committee rejected the request, but its decision was advisory — not binding.

“The mayor has decided that this is how she would like to use this funding,” McSpadden said of the new proposal. “Everyone agrees that this is an important issue. It’s really just a disagreement on what the funding source should be.”

The Board of Supervisors’ Budget and Finance committee will hold a series of hearings on the mayor’s spending plan before voting on the proposal this summer. The supervisors will then return the budget to the mayor for her signature around Aug. 1.