Larry Mateo, 59, once operated five board-and-care homes in San Francisco. By the end of last year, he’d closed them all. Now one is for sale and two others are being rented to young people—“they call them millennials”—who can pay the high rates commanded in the city.

“That’s an easy no-brainer decision,” Mateo said. “I don’t have payroll, I don’t have to go buy groceries, I don’t have to deal with clientele.”

There were residents, however, who initially refused to leave.

“Some said, ‘I have no place to go. I love this place,’” Mateo said. “We had to call the sheriff to move them out because they just didn’t want to move. I’m not sure if it was part of their mental illness, but they didn’t want to adapt to change. They said, ‘This is my home. Why are you moving me out?’ ”

About a third of homeless individuals have serious mental illness, according to the Treatment Advocacy Center, a nonprofit that advocates for expanded psychiatric services. With California’s homeless population nearing 130,000, an estimated 43,000 of them may be suffering from serious mental illness. As tent encampments proliferate, efforts to house these people have gained traction. Last fall, voters passed the No Place Like Home Act, allowing the state to borrow $2 billion to increase the supply of permanent supportive housing, which pairs affordable housing with mental health services.

But not everyone with a serious mental illness is independent enough to thrive in permanent supportive housing. Some still need help with meals and laundry and medications. The disappearance of board-and-cares leaves these vulnerable people without an option, said Ruelas of The Steinberg Institute.

“The folks we’re talking about, they’re not ready to be successful in supportive housing,” she said. “And they need to start somewhere.”

After landing in hospitals due to psychosis, paranoia, and hallucinations in his early 20s, Tristan Scremin was discharged to board-and-care homes. Without this option, Scremin, now 45, speculates he might have ended up on the streets. Instead, he was able to stabilize and now works as a community liaison for Painted Brain, an arts-based mental health agency in Los Angeles.

“I see a lot of seriously mentally ill people on the street who are obviously having difficulty figuring out basic things,” he said. “If I had lost my chance to be in a board-and-care home, if I’d become homeless, I think it would have been very difficult.”

“We’re just really failing this population,” says Molly Davies, Los Angeles County’s long-term care ombudsman. She worries that funding gaps are not only forcing closures, but worsening conditions at board-and-cares that can be “inhumane.”

She’s seen bedbug and rat infestations, and a typhus outbreak.

Regulators are sometimes lenient, she said, because they don’t want to lose more beds. They know that as licensed homes close, unlicensed ones proliferate—with no oversight whatsoever.

At Carmen Palarca’s board-and-care, residents now face the possibility of being relocated to Central Valley communities they’ve never visited.

“I’m settled here. I’m used to it here,” said Setsuko Letchford, 70, who has frizzy gray hair and is missing teeth, and who says she hears voices that constantly badger her. “I don’t have any place to go,” she said. “They should find me some place to go.”

Palarca, 77, and her husband, Domingo, 87, bought the seven-bedroom home for $96,000 in 1976, after they moved to San Francisco from the Philippines. Carmen was working as a benefits eligibility worker for the city of San Francisco; Domingo was a mechanic for United Airlines. They wanted additional income to pay for their kids’ college educations.

Now, they want to relax and travel. Still, Palarca worries for Letchford and Gray and the home’s seven other residents. Clients in the home she closed in 2016 were farmed out to other facilities, some outside of the city.

“They didn’t have a choice,” she said.

Kelly Hiramoto, director of transitions for the San Francisco Health Network, says the city is aware closures can be stressful for residents, although she wouldn’t label it a crisis because she said the city is generally able to find alternative placements.

The city subsidizes board-and-care beds for about 500 individuals, she said, starting at an additional $22 a day on top of the SSI rate, with half of those located outside of the county.

Benson Nadell, San Francisco’s long-term care ombudsman, says he expects the city’s remaining board-and-care homes to disappear in the next 15 years, if not sooner, given the current funding model. But he says he’d like to see new models, ones that prioritize programming and independence for the residents, while also addressing the squalor and neglect endemic in many facilities.

Ruelas of the Steinberg Institute also would like to see a dynamic system that provides life skills and activities, not just medication, laundry and food. She thinks Progress Foundation, which offers residential treatment options in San Francisco, Napa and Sonoma, is one model to consider.

Steve Fields, the nonprofit’s executive director, says board-and-care homes should be saved—and transformed into something better. Otherwise, he said, “counties without any imagination go back and reinvent the thing we don’t need anymore.”

Across the city from Palarca’s closing home, Aurora Concepción is trying to keep hers open.

She’s closed two homes in recent years because of staffing costs, but still has three others.

Brightly lit, with immaculate blonde wood floors and big windows that look out on the Financial District, the homes, perched on a hill in the Portola neighborhood, are much nicer than most board-and-cares, says city ombudsman Nadell.

Concepción, 70, lives among her clients and says she feels driven by a mission.

“What I have is what they have; what I eat is what they eat,” she said. “I always tell them, we are a family here.”

Arriving from the Philippines in 1972, she took a bank job doing data entry. After her daughter was born with multiple sclerosis, she decided to stay home to care for her. She opened her first board-and-care in 1978, then another, then another. At her peak, she cared for 30 people. With the closures, she’s down to 16.