Op Ed
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Westside Observer
October 2008
General Hospital
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 Francisco’s bond measures
are averaging between 35% to 67% in cost overruns. The Jury’s
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 Mayor’s office.”
The City desperately needs sound financial bond oversight, yet
has irresponsibly failed to adopt or apply any of the Civil Grand
Jury’s 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
month’s $198 parcel tax increase in your property taxes.
Proposition A’s $887.4 million cost is so expensive that
San Franciscans can no longer afford to indulge the City’s
“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 City’s such as San Mateo finished the seismic
retrofit of their hospital by 2002.
Many of Proposition A’s 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 City’s
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 Allen’s SFGH feasibility study
predicted that FFE would cost between $157 million and $234 million.
It’s 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 it’s
bonds. Incredibly, there is no cap on Proposition A’s 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 2003–2006 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 voter’s
tax dollars must be spent wisely and intelligently. San Francisco
voters are kind-hearted and giving, but we can’t afford to
see the City waste our tax dollars on another failed bond project.
Let’s wait and fix Proposition A’s bond problems that
the City’s 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.
George Wooding
Vice President, West of Twin Peaks Central Council
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