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Work to transform the former Warrack Hospital into transitional housing for disadvantaged young adults is entering the crucial construction phase, a milestone that dozens of supporters of the Dream Center project gathered to mark Wednesday afternoon.

The interior demolition work that began in December on the Summerfield Road facility is nearly complete, with interior and exterior renovations expected to move forward next week, said Rick Freeman, president of Codding Construction.

If all goes smoothly, the first of up to 63 units of affordable housing are expected to be available by November for 18- to 24-year-olds who are former foster children or at risk of homelessness. Social Advocates for Youth offices and services including health care, counseling and job training will also be integrated into the building, which was donated to SAY by Sutter Health.

Fundraising for the project has gone extremely well, with $7.6 million raised to date, said SAY board president John Meislahn. Connie Codding, co-chairwoman of the project’s capital campaign, said donations still are needed to complete the project.

“We still need more than $1 million in gifts to make the Dream Center all that it can be,” said Codding, representing one of several prominent local families who have made major contributions to the project.

Others include families or trusts of Bill Friedman, the late Henry Trione, Ernest and Ruth Finley, Barbara Banke and the late Jess Jackson, John Jordan, Ken and Donna Martin, G.K. Hardt and Belinda and Dean Soiland.

Supervisor Susan Gorin said the facility will serve a crucial need in a county that has seen a staggering 320 percent increase in youth homelessness over the past five years. On a per capita basis, the rate is the highest in the nation, she said.

“(The Dream Center) is here to serve the needs of our kids, and we know that our kids countywide and throughout the Bay Area need our help more than ever,” she said.

Supervisor Shirlee Zane, who said she began her social service career as a SAY counselor, became emotional describing the challenges that many young people face today.

“Somewhere along the line, through no fault of their own, they lose that opportunity to dream because of the hardness of life and the unfairness of it,” Zane said, her voice cracking. “And we as a community have a moral and ethical responsibility to give those dreams back to those kids and that is what this building is.”

Little was mentioned during the event of the fierce controversy that the project initially stirred in the Bennett Valley neighborhood.

Many residents of the peaceful suburban corner of the city fiercely opposed the project, worrying it would make the area a housing hub for young people from troubled backgrounds. SAY scaled back the size of the project and instituted numerous measures meant to address neighbors’ concerns. A lawsuit over the environmental study performed by the city was dismissed in January.

Mayor John Sawyer made only a passing reference to the opposition as he recalled speaking with SAY Executive Director Matt Martin when he was first considering taking on the project. Sawyer said he and Martin were batting around a variety of questions.

“Is this something that we should pursue? Is this going to work? Are we going to get support? Are the neighbors going to come unglued?” Sawyer recalled. “Yes to it all.”

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