development agreement, cpmc may not open the new cathedral hill hospital until it first opens st. luke's hospital. the obligation begins when cpmc begins construction on cathedral hill. some obligations are triggered immediately on the effective date. others are triggered when legal challenges are resolved or when cpmc begins building. vesting of the development rights is a major obligation of the city to cpmc. approvals for the 5 near term projects are vested by the da as well as the impact fees that are frozen. what we call long-term projects, those identified in the long- range development plan, those do not have approval bested by the da. the city is obligated not to downzone the sites or create new

categories new categories of impact fees to apply to those sites. continuing quickly. they contemplate vacation and a portion of san jose avenue between 27th and cesar chavez. this is a portion of the street that has been closed for many years. cpmc will pay appraised market value of about $1 million. in terms of enforcement, there are a variety of strong enforcement mechanisms. we can talk about those in future hearings. if there's nonperformance of monetary obligations, the city has the right to terminate and sue for damages. the city has negotiated liquidated damages for non- performance of many of the health care related obligations including the obligation to open st. luke's before cathedral hill, operates it looks for 20 years, and other key health care obligations. really quickly, on monitoring,

it requires an annual report of compliance on all obligations and requires the director public help in planning certify each year cpmc is in compliance with the requirements. if the the director finds cpmc is out of compliance, they can begin the enforcement process with the city attorney. that is a general overview of the general terms. i will turn it over to barbara garcia who will go through the health care portions at an overview level. >> good morning. barbara garcia, director of health. i am pleased to be here with my deputy director to provide you with an overview of the health- related provisions in the cpmc development agreement and discuss some of the background that got us to where we are today. as you are aware, this is largely the result of state law that requires, for hospitals to

meet seismic safety standards. having seismically safe hospitals that can be ready to care for san franciscans when it they will need it the most common in an earthquake or other disaster, is a critical importance. all hospitals, including our own general hospital, are on their way to meeting stringent seismic safety standards. in addition to meeting our needs for seismic safety, we're also in the the need for our hospitals to meet the needs of the most vulnerable san franciscans. in advising of the health aspects of the deval agreement, i thought it was important to build upon the significance work already done over the past five years by the health commission and the blue ribbon panel at st. luke's, specifically the recommendations that these bodies highlighted three key priorities. first, ensuring a secure future of st. luke's. st. luke's is a valuable community asset with a long history in san francisco of serving the underserved. san francisco 6 hit -- san

franciscans in the mission and beyond rely heavily on st. luke's for hospital and outpatient care. the emergency room helps to meet the emergency medical needs of patients, sharing that responsibility with san francisco general hospital. the second priority was to ensure increased access to cpmc, specifically with the new cathedral hill campus, for charity care and medi-cal patients. we wanted to ensure that the new cathedral bell campus would be similarly accessible to san francisco most vulnerable population. with the passage of federal health care reform, it was important that these discussions have forward-thinking and are made in the context of this changing help the environment, regardless of the supreme court 's action that will be made on the next few days. last, the desire to focus cpmc's community benefits on the most vulnerable population. we believe nonprofit hospitals

have a social obligation to provide a broader benefit to the committees they serve. this has been long mandated by state law. since the passage of health care reform, it is now also federal law. we wanted to ensure that cpmc's community benefits are really focused on a disadvantage san franciscans with limited resources and limited access to health care resources they need. it is with these three key priorities that we approached discussions in cpmc on the development of this. i believe the provisions you'll hear about today and at your next hearing address these three key priorities. to go further into our health agreement, our deputy will provide an overview. thank you so much. supervisor mar: thank you, ms. garcia. can we get the microphone? >> and also the overhead, please. good morning.

today i will provide you with an overview of the health-related provisions of the cpmc developer agreement. i will go through these quickly, because and i more comprehensive review will be provided on june 25. this provides information on the specific provisions that relate to the first priority of ensuring a secure future for st. luke's. first, the proposed da requires that cpmc construct an open in new seismically safe seat looks hospital. second, the st. luke's hospital operating commitment. under this provision, cpmc would agree to operate st. luke's is a general acute-care hospital with an emergency room for it least 20 years, providing that the cpmc consistently remain financially solvent. the concept is measured by looking at operating margins, the percentages by which total revenues exceed total expenditures. as long as the operating margin for all cpmc's operations in san francisco, not just st. luke's, remains above 1%, c.p. -- cpmc

is required to operate st. louis for the full 20 years. st. luke's can only be closed if the operating margins fall below 1% for two consecutive years and after public notice and an extensive meeting process. there, the developer agreement includes several provisions to ensure that st. luke's is meeting the needs of its surrounding community. these provisions build upon the blue ribbon panel recommendation and require that st. luke's be operated as a full-service, general acute-care hospital with an emergency room which will be 50% bigger than the existing emergency room. it will have centers of excellence in senior and community health. the final provision related to st. luke's relates to the new medical office building. the proposed of all the agreement requires cpmc to a tunnel in new office building as part of this process and would require that the process of constructing the medical office building begin within four years of the opening of st. luke's hospital. it that does not happen, the

city does not have the right to lease the property for a nominal amount of work with the developer to build the office building. in addition to providing for a secure future for sale luke's, and in accordance with the second priority, the proposed bill would agreement ensures cpmc access for medi-cal and charity care patients in two ways. first, requiring the continuation of the baseline level of care for these a vulnerable populations for the next 10 years. cpmc will continue to spend at least $86 million each year on care for vulnerable populations. there are three components that comprise this baseline level of care. the first is charity care, the provision of health care for uninsured people without the expectation of reimbursement. the second is medi-cal shortfall, the u.n. reimbursed costs for caring for medi-cal patients. third, grants that also provide care for these low-income

populations. the base line of $86 million was set by averaging cpmc's last three years of expenditures in this area and will adjust each year by medical inflation. the base line commitment will be limited to 40% of cpmc's ebidta. it is a measure of income that was used here because it excludes the effects of capital projects. using that ensures that the cost of rebuilding these two hospitals cannot, in and of itself, affect cpmc's baseline obligations. finally, cpmc will provide a $20 million back stock fund to supplement the baseline commitment should the cost exceed 40% of ebitda. one less important point, every other provision in the development agreement is over and above this continuing commitment and cannot be counted as part of the $86 million base line.

earlier, director garcia told you that we approached the discussions on access to cpmc for medi-cal and charity care patients with an eye toward health reform. under health reform, an estimated 30,000 low-income san franciscans are currently uninsured will become eligible for minikel. the proposed avella agreement would require cpmc to provide care for 10,000 of its 30,000 newly eligible medi-cal beneficiaries. but they would partner with at least two primary care providers, one of mitch must be located in the tenderloin, to provide hospital care to the cathedral hill campus. it accounts for one-third of the anticipated new medi-cal beneficiaries of the same proportion as cpmc's hospital care in san francisco. this provision was crafted specifically in response to the health reform, and the 30,000 individuals being transitioning

from uninsured and relied on charity care services to becoming ensured and participating in medi-cal managed care to the cost of caring is seeds the reimbursement by medi-cal, and the development agreement limits cpmc's and reimbursed costs for seven to 10,000 but a fair share is to $9.5 billion per year, adjusted annually for medical inflation. the city conducted actuarial analysis and predicted rates of service utilization by these new to those of patients and is confident that the $9.5 million of parliament will be sufficient to ensure that all 10,000 beneficiaries can be cared for in this managed care system. i mentioned that this provision was specifically crafted in response to health reform and will move health care into the future. although health reform will reduce the number of uninsured who rely on charity care services, it will not eliminated. the need for charity care and other care for san francisco's

low-income populations will remain, which is why the maintenance of the baseline commitment was an important element in the development agreement. as director garcia mentioned, the supreme court is currently reviewing health reform and is expected to render its decision this month. it is unclear how the court will rule. however, even if it is wholly or partially start them, the state can implement many of the provisions of health reform and have stated its intent to do so. the development agreement does include a provision that requires that the city and cpmc meet and confer a there is a change in the law that renders any portion of the development agreement unachievable. if it comes to that, i suspect we would discuss a range of alternatives depending on how the court rules, but i imagine our discussions that address increasing levels of charity care and other services for low- income san franciscans. in accordance with the third goal the director garcia

mentioned, focusing cpmc's community benefits on san francisco's most vulnerable populations, $20 million community care innovation fund will be established under this a deval agreement and will help the san francisco community- based clinics develop the capacity to thrive under reform. this will develop the infrastructure and capacity of the existing primary care provider serving tenderloin residence, to enable them to participate in medi-cal managed care. this will help clinics to be partners with cpmc if they strive to meet their obligations, but also the clinics can participate more broadly in managed care. in addition, the community care innovation fund will support other community-based health and human services providers with a particular focus on san francisco's lowest income and highest need it neighborhoods. the da requires cpmc to maintain 100 skilled nursing

facility beds in san francisco for 10 years. cpmc currently provides skilled nursing care for approximately 100 patients. 38 beds at the davies campus. approximately 60 patients receiving skilled nursing care at st. luke's. cpmc will maintain 38 beds at the campus, but they're not proposing to include skilled nursing beds at the new st. luke's hospital, but there will add 62 new beds in san francisco. all 100 will accept patients with medi-cal, medicare, and/or private insurance. finally, the da would require that cpmc provide a range of other health benefits. these include working with dph and other hospitals to develop proposals for subacute care in san francisco, which occurred about earlier. continuing efforts to integrate the medical staff of all of its campuses. continuing to active phillippe partner in the community partnership, a coalition of

hospitals, clinics, dph, and others. there will continue to provide certain specialty services to chinese hospital patients in accordance with their agreement with chinese hospital. they will deliver culturally and linguistically appropriate services. supervisor mar: did you explain with the san francisco community benefits partnership is? >> a coalition of hospital, clinics, and other partners that came together several years ago under state law that requires nonprofit hospitals in san francisco -- in the state to conduct a community-needs assessment and develop community benefits plan to meet the needs of those communities. underlying that is the assumption that nonprofit hospitals have an obligation to serve the needs of the communities that they are in. under health reform, it is now federal law that they do this. supervisor mar: thank you. >> this concludes our overview

of the proposed development agreement. a more detailed discussion in da the is scheduled for your june 25 hearing. i will end my presentation at this point. supervisor mar: thank you. >> i am going to take about 67 minutes to go through the rest of the overview. then we will be on to the detail work force discussion. -- six or seven minutes. very quickly, we will go over this again in detail at a future hearing. the goals are to protect the city from unexpected premium increases for hhs covered patients in network with the cpmc p -. it cannot raise premiums by more than 5% per year for the first three years, and medical inflation rate plus 1.5%. for patients out of network but

who end using cpmc facilities, they will receive the same out of network rate as other employers that contract with blue shield. obviously, this is a very complex subject. the director of the health service system will be here to discuss an answer questions on july 9. work force, really quick, because you're going to hear more about it. three things. local hire for construction, agreements around permanent jobs, and a $2 million grant to support workforce training. on housing, we're talking about an agreement to spend about the $4.5 million from cpmc to replace 25 displaced units, displaced by the actual construction, as you see there on the slide. relocation benefits we are engaged in with cpmc and the tenants are resulting in a relocation packages and

agreements with all of the affected tenants. the meat of the housing part is the affordable housing funding, which adds up, as you see, to $29 million to the mayor's office of housing for 100% of portable development. $29 million to the mayor's office for a downpayment assistance loan program for cpmc employees that make up to 100% of area median income. to the extent that money is not used within a certain number of years, it flows back to the mayor's office for things like affordable housing. of the entire down payment program is used, when that money is paid back, when units are sold, put together with some appreciation that the city gets, there will be another $35 million flowing into the city from that. moving to transportation, and again, we will get to all of these in detail at later hearings. the meat of its transportation

board is providing funding to mta for transit facilities and service. the location of a major new medical facility in the center of the city at a location well- served by transit is generally a good thing. not surprisingly, additional investment in muni service will be required to carry these additional passengers. this is reflected in the first two funding obligations on the slide. $5 million toward the van ness and geary brt projects, and $10.5 million will be paid by cpmc to mta in lieu of the transit effective element feet, the tidf, which is not required by law of a nonprofit. in addition, cpmc will impose a parking surcharge of 50 cents off peak and 75 cents on peak for all entries and exits to the cathedral built garages. this will serve as an incentive to use the non-automobile modes of arriving at the hospital for those who can, and it will raise an estimated additional $500,000

per year or $5 million over the 10 years for mta service. last but not least, cpmc will provide a one-time payment of $400,000 to mta for planning for improved bicycle access around and between cpmc's campuses. moving to the related issue a pedestrian safety and streetscape improvements. around cathedral, the agreement is that cpmc will provide $9.35 million in cash to the city, which will then go ahead and make the improvements that you see on at this live here. the bulk of these, about $8 million, will go to the first three items on the list. pedestrian lighting in the tenderloin, the conversion of one-way to two-way streets which is a traffic safety issue, and some additional pedestrian safety things. cpmc will fund a tenderloin safe

passage pilot program. and then, is a partner the lowerpolk cbd should it be established, and the seed grant of $1 million. that $1 million, in cbd does not establish, flows to the city instead for similar types of improvements. around the other two campuses, starting with davies, the structure here is different. we agreed on a list of pedestrian improvement projects that cpmc will build along with the hospital project. these are over and above the things that are physically part of the project. so the things that cpmc does in conjunction with building a building, like lightening the sidewalks and things like that, are not on this list. but in addition to those things, cpmc has agreed to do what we estimate to be4 $75,000 worth of improvements. $475,000 estimate is for our

convenience. they are of filled -- obligated to do the list whether that is the cost or not. that is just what we think will be the cost. it is the same structure around st. luke's campus. the total cost is assumed to be around $3.3 million. the items in front of you are the items that cpmc has agreed to do along with the construction project. that is over and above the things that have been directly with the hospital building. again, almost at the end here, we tried to take a very complicated subject and make it as simple as we could. with the timing of the public benefit flowing into the city. at the the best thing to do in terms of right now is to look at the bottom of this table. we would be happy to go over it in more detail at a later time. but what this shows you, with respect to the cash obligations, this does not try to deal with the ongoing health care, but just the cash obligations, that

the majority of those come in in the sort of near-term, with the bulk of them coming as soon as any litigation on the project is resolved, and then some of them coming a little bit later. basically, all of the cash support for affordable housing and all the cash support for transportation is basically into the city by the time the hospital opens in 2017. just in a summary, i want to summarize that we think this provides two new seismically safe hospitals. it prepares the city for federal health care reform, as you'll hear a lot more about. it has accused the future of st. luke's hospital. it provides strong local hire for construction and other jobs. and more than $1 billion worth of bagram health care services, it also provides a commitment of $117 million in one-time community benefits, including any count the cash recovery on

the affordable housing, $93 million worth of affordable housing. this concludes my overview of the da. we will get back to these subjects in the future. now i will have rhonda simmons come up into it is through detailed the job creation part. supervisor mar: thank you so much. ms. simmons. >> at thank you, supervisors. i am from oewd. i am going to talk a little bit more in detail on the work force portion of this agreement, as i have been working closely with all the parties involved. so the first caveat for me is to clarify a few things around the work force policy that we have used on this project. this project does not fall under local hire, so that is actually

a mistake. it falls under our first source policy could a it is considered a first source, which is all are privately funded projects fit in terms of the legislation and the laws that we used to get san franciscans employed. it is chapter 83 in our code, and it really speaks to economically disadvantaged residents. so that is sort of the framework, if you will, that we have said our work force program under. ideally, we are trying to create career pathways for san franciscans that may not otherwise have those jobs that are much more entry-level focused. we have tried to strengthen some partnerships with the city through our training academies, with our partnerships with cbo's, there isan an lbe bill that will be in the gsa's

office. that is local business enterprises. i will talk about that at the end. does a little background on cpmc, and you have heard this already earlier in the presentation. cpmc is the second-largest private employer in san francisco, the fourth largest employer, including but -- public agencies. the rebuild has two components in terms of jobs. it will create 1500 construction jobs over the life of the project, and there will be 1500 permanent jobs added over a 10- year time span, so that is about 150 roughly a year. they hope to retain 622 jobs in -- 6200 jobs in san francisco, and these are jobs that exist. 45% of that number are san francisco residence. and you can see the average wage of employment compensation. this is a cross their whole

spectrum of jobs. according to cpmc, their projected job growth is broken down as follows. this is pretty self-explanatory. starting with management positions, registered nurses positions, and then it goes from there. within the last, say, four or five buckets, there are intermixed the number of entry- level jobs, which has been my focus. we define entry-level last two years of education or less. so within those licensed vocational nurses, some of the technical positions, the aids and the orderly's, some of the clerical and administration, and environmental food services. that definition that i mentioned applies. >> i was looking at a section da of the -- of the da, and it

seems to state that entry-level is less than two years. is it two years or less or less than two years? >> for us, it is two years or less, roughly. when i look at my placements out of the health care academy, they follow little bit more under less than two years, but we changed periodically in terms of our certification. it is across all hospitals, not just cpmc. >> i am looking at, say, section a-2e. it refers to less than two years. is that a mistake? it should be two years or less. >> yeah, i think that the time we were doing that -- we have been working on this now for a couple years, and our academy had started. so it was at that two years or less. it may be a little different. when i look at the data, which you'll see a little bit more

about the health care sort of data that i have, probably keeping it less than two years is fine. i mean, you can get into a lot of semantics about this stuff. it is going to change based on the market is going to tell you about these positions anyway. i mean, i do not know, it is a new ones question. but i think the way it is in the da is fine, for my purposes. >> the intent was two years or less. i ask that because rn's are not included. can you explain why that was the case? >> for my health care academy, i do not have a training program for rn's. gender 83 really focuses more on a set of folks that are not at that skills that -- chapter 83. so for my office and what we do, i do not have any programs necessarily for rn's, and that is how this was set