Letters to the Editor                                       Return to "News Stories about LHH and SFGH" Index
San Francisco Bay Times
October 9, 2008

Note: Text set in red below is material initially submitted in this Letter to the Editor, but which the SF Bay Times chopped and didn't publish.

SFGH Rebuild Bond Measure Subverts Rent Control
by Patrick Monette-Shaw

As a tenant, I’m increasingly concerned that bond measures and utility rate increases approved by elected officials or are placed on municipal ballot elections are subverting rent control, given the increasing practice of passing on these costs from landlords to renters.

While tenants struggling to stay afloat face annual San Francisco rent increases that typically consume half of the Bay Area’s average annual wage increases, the proposed San Francisco General Hospital (SFGH) replacement project bond measure — Prop. A — has an intended consequence of increasing pass throughs onto tenants.

Within the past week, a battle has erupted between landlords and City officials to permit landlords to pass on sewage rate increases to tenants. Little mention has been made that the November 4 bond measure to re-build SFGH employs the same 50% pass through to tenants.

The sewage rate pass through, and the SFGH rebuild pass through, are but two of the many pass throughs previous ballot measures have authorized landlords to pass on to tenants. Each time they do this, it subverts rent control by saying “Oh, we’re not increasing your rent or ending rent control, we’re merely passing on costs of operating the building you live in.”

Yeah, right.

The sewage pass through has been stalled at the Board of Supervisors until October 21. The issue is extremely incendiary, and City Hall officials worried about passing the SFGH bond don’t want the sewage pass through to affect the November 4 election. They’ll punt the sewage pass through until after the November 4 election, and will likely implement it just after the election, leaving renters with two additional pass throughs.

The SFGH 50% pass through is a time bomb for tenants. If a tenant lives in a rent controlled, four-unit building with a current assessed property tax value of $500,000 they’ll pay approximately $37.00 per year in pass-through for Proposition A. But if that same building is resold for $5 million, the building’s property tax will be reassessed at $5 million. The same renter in the same rent-controlled apartment will then face a pass-through of $369 annually for the same apartment.

I’m reminded of Al Franken’s book, “Lies and the Lying Liars Who Tell Them.” San Francisco is replete with politicians and City officials who would rather lie to the public, than tell us the truth.

One example of truth-stretching is the City has claimed that in order to pass the SFGH bond measure, it will not raise property taxes rates above the rate in 2006. But a month ago, on September 10, the Board of Supervisors passed an ordinance increasing the property tax rate 4% higher for the current Fiscal Year 2008-2009 above the rate for FY 2007–2008.

A second example is that the City claims it needs to put $2.15 billion in new general obligations bonds before voters on the ballot in the City’s ten-year capital plan between 2008 and 2015, but the new bonds are already underestimated by $235 million. To obtain the new bonds, the City will have to remove $2.13 billion in other general obligation bonds already on the books; a handful will be retired, but the rest will be refinanced to get them off of the general obligation bond limit by using “re-funding” bonds, certificates of participation, and revenue bonds — alternate financing schemes that don’t require voter approval.

It is not yet known how many of the bond measures that will be presented to voters through 2015 will include a 50% pass through to renters. Now that the practice has become City Hall’s standard get-rich-quick funding scheme, surely many of the upcoming bonds will feature renter pass throughs to fund capital improvement projects.

Beyond the pass through to tenants, there are serious problems with the proposed SFGH rebuild, including wedging the new hospital in a risky location 40 feet or less between two non-retrofitted red brick buildings, in the fall zone of both buildings. A retired City safety employee knowledgeable about SFGH’s structural issues is concerned an earthquake stronger than, and lasting longer than, the 1989 Loma Prieta quake centered near Santa Cruz will topple both brick buildings, particularly if one strikes closer to San Francisco — potentially rendering SFGH’s new hospital inoperable.

Another problem involves projected costs for SFGH’s furniture, fixtures, and equipment (FFE). In September 2006, Anshen & Allen estimated FFE for SFGH ranged from $150 million to $234 million. SFGH has suddenly reduced the FFE estimate to $75 million, to bring in the bond at $887.4 million, claiming previous FFE estimates were based on square footage but are now based on actual equipment costs. The City is also “spinning” the story saying FFE will be leased, not purchased, ignoring that, in contrast, the Laguna Honda Hospital rebuild chose purchasing, rather than leasing, FFE to lessen LHH’s project expenses.

The largest problem is the cost of construction. In 2006, the proposed SFGH rebuild featured a rectangular building, estimated at $622 million. The City reconsidered the design, and chose a more aesthetic, oval-shaped glass-walled redesign, adding $265 million dollars to the cost. The City admits the $887.4 million price tag may be underfunded by at least $55.6 million, if the Department of Public Health’s estimate SFGH construction costs may reach $943 million proves accurate, even before typical project cost over-runs will occur.

SFGH’s proposed bed capacity is insufficient for future needs. The project only adds an additional 32 beds. The re-designed hospital was designed before the City-commissioned Lewin Report cited a shortage of 533 acute hospital beds citywide by 2030, 24% below the City’s future needs. The project is too expensive and delivers too few beds.

Last August, my sources indicated that Prop. A was polling support between 66% and 73% (less than the 66.67% margin required for passage). On September 24, Matier and Ross reported the City claimed polling stood at 75%.  But on October 4, the Chronicle reported Mitch Katz, Director of Public Health, claims polling is now “at about 72%.”  If polling has slipped 3% during the 11 days since September 24, polling may now stand at 63% to 70%, even before considering the standard margin of error.

Tenant organizations made the City pull the Laguna Honda Hospital general obligation bond off of the 1998 ballot. The LHH bond measure was reissued in 1999 and the 50% pass-through component for renters was taken out. It’s time for tenants to demand the same for the SFGH bond: The 50% pass through must go!

Before blindly voting, tenants should educate themselves by reading documented problems being aired by opponents at www.stopLHHdownsize.com, including the voter guide’s official opponents George Wooding and good-government advocate Mara Kopp.

The City must correct SFGH’s project flaws before construction, build the less expensive hospital, increase the number of beds, retrofit both red brick buildings beforehand, and adopt recent Civil Grand Jury accountability recommendations. Vote no on Prop. A!

Patrick Monette-Shaw
San Francisco Tenant

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