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Rebuild Bond: Con Argument
by George Wooding
The City of San Francisco is rapidly losing the trust of the
San Francisco Voters.
Ask yourself, when was the last time San Francisco did a good job on a bond measure? How many Laguna Honda Hospital rebuilds do you want to be taxed for?
According to the 6/26/08 Civil Grand Jury report, Accountability in San Francisco Government, San Franciscos bond measures are averaging between 35% to 67% in cost overruns. The Jurys report documents horrendous City bond oversight, concluding: The ultimate response to the lack of accountability and oversight is for the voters to demand better governance from City officials. In the meantime, there are no standard operating procedures to hold departments and commissions accountable [for bonds] and, by extension, no accountability by The Board of Supervisors, [the Controller], or the Mayors office.
The City desperately needs sound financial bond oversight, yet has irresponsibly failed to adopt or apply any of the Civil Grand Jurys bond oversight recommendations that were prepared in anticipation of the SFGH rebuild.
San Francisco charges the voters for steak and we always seem to end up eating hotdogs without a bun. Take a good look at this months $198 parcel tax increase in your property taxes. Proposition As $887.4 million cost is so expensive that San Franciscans can no longer afford to indulge the Citys business as usual cost overruns on bond projects.
The City has had 14 years to plan the SFGH rebuild and has waited until the absolute last moment to present the SFGH rebuild to the public. San Francisco is falsely claiming that SFGH will not be rebuilt if the voters fail to pass Proposition A. This claim by the City is an emotional, scare tactic designed to trick voters. SFGH will NOT be closing if Proposition A is not passed. A new law, SB306 will allow San Francisco to complete SFGH by 2020. Responsible Citys such as San Mateo finished the seismic retrofit of their hospital by 2002.
Many of Proposition As current design problems and cost
overruns could have been avoided if San Francisco had been more
responsible to its voters.
What was the Department of Public Health (DPH) thinking when they spent $30 million planning Proposition A?
Construction is supposed to cost $887.4 million. By the Citys own admission construction may actually cost $943 million. This $55.6 million increase is open ended.
Furniture, fixtures and equipment (FFE) are supposed to cost $75 million. In 2006, Anshen and Allens SFGH feasibility study predicted that FFE would cost between $157 million and $234 million. Its interesting to note that the price of medical equipment has dropped so dramatically, while the costs of everything else continues to rise.
The debt service on the bond is predicted to be $640 million. The sub-prime mortgage melt-down is paralyzing municipal government financing. San Francisco may face unprecedented delays in selling Proposition A bonds since the market for bonds has dried up. If the current economy conditions persist, the real story may simply be that the City will not be able to find buyer for its bonds. Incredibly, there is no cap on Proposition As bond interest rate and the bonds debt service may be underestimated by at least $100 million or more. Bond interest rates will certainly increase and debt service will skyrocket.
The recent history of inflation for California hospital construction between 20032006 of 18.5% should also make voters wonder why the SFGH rebuild is planning for only 7% annual cost increases.
Cost estimates to rebuild the hospital have already increased by 30% or $265.4 million in just two years. In 2006, San Francisco was planning to build a rectangular hospital for $622 million. The hospital being presented to the voters now is an oval, glass-walled structure featuring private rooms and $7 million worth of artwork. The less expensive rectangular hospital would have worked just as well, but may not have looked as nice. Just like the voters, San Francisco needs to start tightening its belt.
The City will also be spending hundreds of millions retrofitting the non-seismically retrofitted red brick buildings on the SFGH campus. Unfortunately, the new hospital will be located in the fall-zone of two of these antiquated buildings. San Francisco admits that the red brick buildings need to be retrofitted, but has arbitrarily decided not to retrofit the buildings until sometime after 2015. Voters can only wonder why the City is willing to risk the safety of the new $1.6 billion dollar hospital that we will be paying for over the next 23 years. Common sense dictates that he red brick buildings need to be retrofitted before the hospital is built, not after.
San Francisco needs to create an independent body, staffed by professionals dedicated to responsible bond planning and management. Voters can no longer trust the City to monitor themselves.
The City should also give the taxpayer a break by applying the available Tobacco Settlement Revenue (TSR) to the cost of the SFGH rebuild. By 2015, San Francisco will have earned $257.4 million in TSR funds. The City has already appropriated $148 million in TSR funds to finance replacing Laguna Honda Hospital, leaving the City with $109 million in TSR funds it could apply to rebuilding SFGH. The funds would help lower the cost of the SFGH rebuild to the voter. The City has never stated what they are going to use the TSR money for.
The City government has to do a better job representing the interests of the voters. Promises to voters must be kept, and voters tax dollars must be spent wisely and intelligently. San Francisco voters are kind-hearted and giving, but we cant afford to see the City waste our tax dollars on another failed bond project. Lets wait and fix Proposition As bond problems that the Citys irresponsibility to the voters has created. Before voting, ask yourself if you believe that the City has been responsible with the taxes they are currently spending.
Without responsible governance and the required changes to the Proposition A bond: Vote No on Proposition A.
Vice President, West of Twin Peaks Central Council
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