be up in a minute. commissioners, we wanted to go over the st. luke 0 -- with you again because it is such an important central part of the agreement. per the development agreement, if they open the new cathedral hill hospital, they must first open the new state with a hospital. excuse me. once they open six weeks, they must continue to operate it for 20 years as a general acute-care hospital with an emergency room. the on the way out of this is it operating margin goes below 1% for two successive fiscal years. please note that this is the operating margin as a whole, not just six weeks, and in a moment, greg will be showing you some historical data on that figure. the operating margin is simply the proportion of the company's revenue that exceeds its cost of doing business. in the case of cpmc, which as a nonprofit does not assure

holders, these are typically reinvested in the business. we will show you some historical data. the effect of this provision on the agreement as if their financial health were to start to decline, they would use savings elsewhere, so what i would like to do is call up the chief financial officer at the department of public health, gregg, to go over in more detail with you some of the aspects of this. >> good morning, commissioners. chief financial officer, department of public health. so as ken said, i have a little bit of data on the screen in response to a specific question from commissioner borden asking about the metric, but in addition, i will talk about responses to some other questions. you asked about what the context of these metrics is. as you can see from the chart on

the screen here, over the last 10 years, their operating margin as varied between 8.7% and 19.5%. it has been significantly above the 1% operating margin metric that is set forth in the development agreement. just to put that in a little bit of further context, one of the things that we wanted to do as we were developing this agreement and this metric was not just where they are now but to try to look at where the financial industry standards are for evaluating the financial health and organization. so as part of this process, we looked at quite a bit of data, and we brought in some outside help to try to provide some financial industry benchmarks. one of those benchmarks is illustrated a little bit on this slide, and it has to do with what the relationship is between the operating margin and the

credit rating of hospitals, so as part of the database which does credit rating, thousands of companies and governments around the country including hospitals, they have come up with a metric which is the average operating margin for institutions at various credit rating levels, including hospitals, so just to put these numbers and a little bit of further context, you can see there are two points here on the slide. the first is the average operating margin for a hospital rated aa, which is a very solid credit rating. it is not at the top of the range, but it is a highly stable rating. it is investment grade, so that is about 4%. there is room for their operating margin, a significant win for that metric to decline, in which they would still be in

that range of fairly stable financial condition. beyond that, and the second point on this slide, the average operating margin for a hospital is rated bbb, which, as you know, is at the low end of investment-grade ratings. that is actually the lowest investment grade class. once you go below that, you are in non investment grade, or some call it junk status, but at that level, bbb, because it is at the low end of the spectrum, that is an indication that the financial market is having some pretty substantial issues. on average in the movies data, the operating margin metric, on average for those types of hospitals is at about 0.9%, so that is right near the level

that we had agreed upon as part of the development agreement, so, again, the point of this is just to indicate that that 1% threshold is not simply pulled out of thin air, but we try to tie it to some financial industry benchmarks. the next slide, to talk about how the operating metric works, we talked a little bit about this last time, but just to add a little more detail, as part of this process, it was not simply to develop a metric and have that be the be all and all. the reasoning there is they did not want to have something where

there was a highly unusual event that would push them below that met and have them have these be triggered. we wanted to let the process that followed to give a longer enough time to work with them. this begins a process. there is essentially a two-year process for the city and them to address the situation together. the provisions would be that if they reach that margin in any year, they notify the city, and

that begins a process where the city and cpmc will meet to talk about that issue and what solutions will be mutually agreeable to address it. also in the agreement, there is a position that they must take commercially reasonable efforts to avoid meeting that benchmark. so there is a reason for them to in good faith negotiate. if those negotiations fail, and if in the second year again they have reached that 1% operating margin threshold, then they would be able to begin the process of closing st. luke's, and that process is spelled out in the development agreement, but as part of that process, if the city disputes the cpmc has

breached that, the city would have the ideas they could reach -- they could to arbitration. that is the process and the thinking behind the 1% operating margin metric. >> so moving on, i am happy to say we have reached an agreement for employees and retirees. this agreement will protect the city from unexpected rate increases for the employees to use these hospitals. the agreement has two main components. first, they agreed to cap their rate increases with the insurance companies that contract with them in years 133

and no more than the medical inflation rate plus 1.5% in year four through 10. as you see in this light, it has been about 4%. this portion of the agreement was already in place at the last hearing we had with you and has not changed. i will do a couple of explanatory points. this agreement does not mean, and i want to emphasize this, that the city is required to agree to wage increases at those levels. it just means that they may impose under this contract. the city retains all of the same ability to negotiate, as noted to negotiate below the cap. the best way to think of this provision is it adds another tool to the city arsenal, when we would not have had without the development agreement. i also want to point out that the negotiated cap to us is an appropriate level. we started talking to them

using inflation as the cap, which is clearly the common- sense approach to this. they were willing to agree to this but asked for a slight correction in order to lock this agreement down for 10 years. we looked at the idea of medical plus, and it did not seem like a large increase and the potential hit to the city was insignificant, so we decided it was a good agreement to make, and we are getting this lot down to 10 years, so the city now knows that those rates can only go up by that much for 10 years. the rate cap i described apply to patients that are in network,, meaning they have chosen one doctor through their city health insurance. this constitutes the majority of charges, as i mentioned, and the city will be protected by the cap in these cases. however, there are also times when a city employee is primary medical coverage is not with

them might end up in their facility. one common way is having to go to the emergency room, the ambulance takes you to the closest emergency room, and it is not your hospital. we negotiated an agreement for the charges in these cases. to be sure, this is a higher rate. they do not get the same rate if they are out of network ads in network patients get. they have agreed in the development agreement to limit these charges to out of network city patients to the same rate it gives blueshield, which is a large insurer, for all of the blueshield business, so we know we are getting that same type of customary rate. that is all i have to say about that, but what i would like to do now is handed over to greg from the planning department, and he is going to switch topics for us and begin going over the

transportation and circulation issues. >> good morning, commissioners. i am with the san francisco planning department. the transportation planner. i will show you a little slide show and give you an overview of the traffic circulation for the campus, and i will talk about construction as it relates to transportation at the campus, and then we will touch on the van ness area. so this live right here just shows an overview of the campus. at the bottom is geary. at the middle, bottom left, you

can see the hospital's debt, and on the bottom right is the office building site, and the upper left, the office building, so this is focused on this new building. i am going to zoom into each of these graphics and a second, so do not kill your eyes too hard on that, but one thing i'd like to point out is that there are no -- on van ness avenue, ok? so here is a zoom in to the hospital side. the blue eras indicate vehicular access in and out, and the purple arrows are pedestrian access, so you will notice that cars in bound to the hospital parking garage are going to enter geary, the area on the south, or they can enter on the top. those are the two access points into the parking garage, and

from there, you can see the passenger loading zone. all of that passenger pick-up and drop-off will be inside the hospital and not on the street. cars exiting the hospital are only going to exit on to post street on the north. there is a secondary egress point on to geary, and that will be used for an emergency situation. that every day exit will be closed, so the exit will only be on those two for traffic. on the west off of franklin street on the left side, you can see the loading dock. a large loading facility where trucks can pull in, maneuver inside the loading facility or back into their loading dock and then exit on franklin street as well. north of the loading dock, you can see the emergency drop-off area, so the emergency is going to be off of franklin street and not off of geary and post.

as you can see, it will be on post street. there is also a small ambulance parking area with access right next to the emergency room, and that is it. there is also a shuttle bus to -- shuttle bus loading zone for the buses to load, and also, you can see on geary street, on the ride, there is a new muini bus stop -- new muni stop. that will be better for the driveways, so that is the hospital. here is the medical office building. again, geary is on the bottom, van ness on the left. this parking garage will be either off of geary, you can see that blue area, or it will be over here, and the exit is going

to be only off of cedar. there will be no exit onto geary, and there is no emergency exit onto geary either. it is tw increases inthere is ag area accessed off of cedar street as well, to the left of the garage parking area. there is a passenger drop off zone on a street on a cedar. that is on the left or right next to van ness avenue. there will be additional loading inside the garage. there will be an intended to direct people into the garage for additional drop off. that is the medical office building, and that concludes the traffic circulation overview. i am going to talk about construction and how it relates to transportation. same orientation.

van ness again is in the middle. geary on the bottom. this is showing the truck route. trucks will be coming to and from, heading to the south primarily. they will be coming up van ness avenue. trucks that are servicing the hospital site will make a left onto geary. they will circle around in a clockwise fashion. you can see the door symbols. those are the construction dates. trucks will be stopping all along the perimeter, all four blocks around the hospital side. van ness, make a right on two- seater, and circle around the block. get back onto westbound geary to make a left turn onto van ness. that is hal trucks will come in and out. those trucks have to stop all along the perimeter. there will be some temporary lane closures as part of the construction. that is with the graphic the picks. all around the perimeter of both

projects is primarily a parking lane, and that will be removed. on most blogs, the parking lane functions as either. our -- either peak hour tow away zones. the transit line will be closed, some muni will have to operate general traffic during construction. franklin, you can see a blouson where there is also a lane closure, but that is peak hours. this is only during the excavation portion of the construction. this slide shows sidewalk closures. typically, the sidewalk will be closed to provide a construction staging area, but it pedestrian walkway will be conducted in what is normally the parking

lane. typical of most construction projects in the city. it is shown in purple where pedestrians will go to a wooden structure. also shown here is the pedestrian tunnel. it will be excavated underneath van ness avenue. that construction is about a 10- month time span when it they will have to cut open the van ness avenue. only after 7:00 p.m. there will close down two of the six lanes at a time at most. always having four lanes of traffic open. and always having one of the two sidewalks on been a 70 that could be closed. only during that tunnel construction time with any pedestrians be routed onto a different side of history. but there will always be at least one sidewalk lebanon of van ness avenue. that is construction. now i will talk about bus rapid transit.

there are, i believe, three alternatives being studied as part of the van ness avenue brt project. one is side-running, and two are center-running. i will first talk about side- running and in the two center- running together. i was going to point out -- the cathedral hill campus -- and van ness avenue north this to the right. south is to the left. this graphic is rotated 90 degrees. the cathedral hill campus site is the second block over to the right, and there is a little sign that says van ness avenue. you can see the current drop-off area. the current qr line, not the proposed one for the cathedral hill project. there will be no driveways for either the hospital or the medical office building on van ness avenue. whether it is the site-running alternative like this were the

southbound and northbound trains at lanes will be operating in the curb lanes adjacent to on- street parking, there would be no interference with the cathedral hill driveways because they're not located on van ness or even a near van ness. that is the side-running alternative. this is center-running with the doors on the the right, but there is another alternative with the doors on the left. either way, the transit lane would be in the median of the roadway in steady curb. there is no entered in it -- instead of the curb. there will be access to the bus stops with the existing crosswalks. there are full crosswalks on these intersections pedestrian access from the hospital to the nearest bus stop would be quick, just one block away or on the same block. like i said, there is no driveways on van ness. even if it is side-running, it

would not interfere. that concludes my presentation on cathedral hill campus. i will turn it back over to our colleagues. thank you. >> good morning. i am from the mta. nice to see you this morning. i want to talk a little bit more about the brt project. yes representing both the ta and mta. the ta is the lead agency for both the van ness and geary brt projects. this slide shows that in november and december, the draft dieis-eir was released. we're just finalizing one of the alternatives. it will be presented to the ta cac next tuesday, and it will be before you on may 10. the planning commission will hear a presentation from the ta.

construction for the van ness brt starts the timber 2015 and projected to end late 2016, early 2017. the funding is in the range of $90 million to $130, but we believe it will be $120 million or less. we're getting $75 million from a small program, and $18.5 million from prop k, and an additional underpin state and regional brands -- a grants. the geary dr -- brt, we are finalizing the recommendation and expected to be done in may. in fall 2013, the draft eis-eir will be circulated. construction is expected to start in 2017 and end in 2019. geary brt is about $245 million. $75 million from the fta small

start program, another $28 million from prop k, and funding from other sources to fill in the gap. let me talk a little bit about the transportation improvement strategies that we're getting from this project. as you know, cpmc is providing funding for four types of uses. first there offering $5 million for two brt projects. then there is an additional $5 million from the transit -- to be used for transit use in support of transit services, and that is a 50 cent off-peak surcharge on parking entry and exit, and 75 cent. for each entry and exit for the cathedral hill hospital and medical office building garages. we're expecting to use these funds to improve transit services around that because of the impact of the cars entering and exiting at those facilities. they have pledged another $10.4

million to address the delays. we use these funds mostly in the cargo or is like on 14 mission and 48 geary. we want to do improvements on the muni rapid network. and tsp on the rapid network. we're expected to use some funds to provide e equipment, for example, on cameras to enhance the system. the last area providing funding, 4, 00,000, for planning efforts -- $400,000 for planning efforts. with that, i will turn it over to -- we will be able to answer any questions. >> next, rhonda simmons from the work force department.

>> good morning. rhonda simmons from the office of economic and workforce development. i am going to speak on the in- use a portion of the work force agreement. essentially, the job prius in an ant -- christian for anticipation for cpmc is 1500 new jobs over 10 years. roughly 22 of those jobs every year with an entry level definition as defined by two years are less of college, so the focus is not so much on the professional service cider higher-end, higher-skilled jobs. 6200 jobs will remain in san francisco, and there are roughly about 100 vacant entry-level jobs that are refilled every year. there vacated through attrition, promotion, or retirement. we have talked about 40 entry-

level jobs a year over the next five years as it relates to in- use, and this is focused on the health care academy side of the work that we do, which is really dealing with that population that has the two-year or less degree. i will stop. if there are any other questions -- >> thank you. we're going to open it up after all the presentations for questions. thank you. >> good morning, commissioners. director of the mayor's office of housing. the housing component of this transaction is based upon the van ness sud. there were questions from the prior hearing about how consistent the result is with the mayor's original ask. and the mayor's request was

based upon the van ness sud. it was based upon the number of bmr units that would be produced based upon the sud. that number of bmr units was 220. this agreement provides for the creation of at least that amount, not more, based upon the two pieces of the housing component. the $29 million that is provided directly to the mayor's office of housing for the development of what some call the traditional affordable housing production of the mayor's office of housing. and the other component, $29 million, also proposed in the mayor's office of housing to administer the down payment assistance program. initially for the cpmc employees, and those proceeds are recycled for future

affordable housing development. in combination, these two pieces create approximately 260 to 320 permanently affordable units. not all at once but over time. that estimate of the number of units is based upon our ability to leverage outside funding sources, and it is based upon subsidies between $200,000 and $250,000 per unit. it varies based upon our ability to leverage outside funding and based upon the population to be served. sometimes we are able to put less money into a particular project. there were a number of questions raised about the time payment -- about the down payment assistan