continue. >> so there is no repetition, what i would like to see is what kind of due diligence you have done. did you look at the projected revenues? the next 10 years? and if you did the due diligence, then on the day of this presentation, you seem surprised by numbers, which is the vetting were very thorough, this would not be there. >> we did look at projections, and the message i'm trying to give you is the message we looked at a while ago that formed the basis. the revised projections give us more concern, which is why we are here. supervisor campos: before we go into what he has to say, was this based on recommendations given to you by cpmc sutter? >> yes, they were. supervisor campos: was there

someone to verify that? >> yes. there was someone who looked at the information provided, and to the extent based on that, they were able to tell us that the assumptions were valid. obviously, they did not look at all of the data. when you are looking at the availability, you have an audit that is done. was there a third party audit with what was given to you? >> and we did not do a formal audit. supervisor campos: why is that?

the old expression why not? you are surprised by numbers that were different from what was given to you. >> it was pretty clear to us, the reason the numbers changed is the certain top level assumptions, and i think you should asked -- ask cpmc, the assumption was that the rates would not go up as much as we thought. >> what i want to know is what independent analysis and

verification the city negotiating team has done to make sure the information provided to you is as accurate as possible? given that there is a change in these numbers, we do agree that an independent third-party audit would be warranted to make sure we are not surprised by future numbers? >> i think we are, again, talking to cpmc about an agreement that would make the concern go away for being able to close st. lukes. projections are guesses. we cannot ever promise that they are right. the first time that we looked at them, they were very far from being a problem. we were very comfortable. when we looked again, they were comfortable. what we are looking is a different approach. we do not have to worry about those numbers being correct.

i do not think we can stand up here and say that those projections were going to be correct. supervisor campos: maybe we can hear from the cfo to get some more assurance? >> sure. >> thank you, supervisors. greg wagner. as was pointed out, part of the reason we were having this discussion is we want to make sure that our concerns are addressed, and that is why we are revisiting this discussion. but just to give you a little bit of background on what we have done, we have spent a lot of time looking at the financial data and projections, and as was said, we have a consultant on board to advise us on the drafting of the agreement and work through these numbers with us. a couple of things that we have done, we have looked

retroactively at the official numbers. these are reported, and we have audits of these numbers. these numbers are clear. they are verifiable. there are other things that we have done to take a look at some industry benchmark, and one of the things is the threshold that was not plucked out of thin air, but we did do that based on some analysis that we asked our consultants to do, where they looked at hospital financial data to give us some summary information about this based on the credit rating. hospitals that are not doing as well.

we did look at some of that industry benchmark data. in terms of the actual projections themselves, cpmc has walked us through their projections on a number of occasions. as he said, we did have our third party consultant there to look at our projections for us. on the concept of an audit, it is difficult to see how you can audit projections. what we tried to do is the latter. supervisor? supervisor campos: do you have something that you can share?

>> these are confidential numbers. we negotiated that we needed to see them. that is part of what we insisted on in drafting the agreement. since these are proprietary numbers, for sharing those with us, the condition was that we would report on the conclusions but that we could not share those numbers with you. supervisor: we are here to provide oversight to the deal which the branch is recommending. how can we in good conscience conclude that what you are proposing is corrected your abasing part of your recommendation on numbers that we have not seen? so are you telling me that we are supposed to take a leap of faith year and assumed that the

numbers you see are correct? >> this is part of the reason that we are doing this. we want to revisit that and provide protection so you do not have to take that on. >> do they believe the board of supervisors should have access? >> all i can say, supervisors, is we have done the best that we can.

supervisor: to the board of supervisors? >> it is really not our call. and i think the speaker that comes next could probably do that. we did the best that we could. supervisor: they are not allowed to access this? >> i am with the council. an interesting question. the entity that is -- supervisor: i do not think that is interesting. it is very basic information.

i would think that the elected members of the body would have access to the information that the mayor had access to. >> i heard your speech a moment ago, and i am trying to respond to it. the question is what is it about the negotiations that creates the need for protection of proprietary information, and the way that that is traditionally done, and the way it is provided for in the sunshine ordinance and under the brown act is to provide the opportunity to review the documents that are otherwise proprietary in confidence, and that is what happened here, too very accomplished people that work for you. that is the answer to the question. it is not a question of people withholding information, but actually this is being provided with the information, which they were. supervisor: does that mean that

this is not about the supervisors >> i think you're asking a legitimate and fair question. supervisor: i think i am, too. >> in an artful way, and i will try not to be artful in my response. there is one i thought you had a response to. i thought you wanted to have an answer to a more legitimate question, which is whether or not cpmc was willing to provide proprietary information to you, and we have done that in context of the sunshine ordinance and the brown act in a way that is normal in the negotiations that you have done every major public-private partnership, much less one where they do not have an interest, so nothing unusual or untoward has occurred here. i think it is unfair to the people involved. this is a very important

project, with very import purposes, and our staff says they are looking to resolve this, so the question is no longer there. >> will they allow him to look at the information that you never provided to the negotiating team? >> the information that is the basis for the projections provided comes from two or different, and this is what they engage in. secondly, it is important to recognize what mr. wagoner said. this is public information to the attorneys general office. so the question is whether or not that information needs to be provided in a public way in order to preclude the proprietary information from being proprietary.

and this is about looking at the protections in state and local law. i think the information has been provided in a more than adequate way. supervisor: ok, i have a question. i think they will now give it to the board of supervisors. if i kit -- could through the chair, do we have a right to ask for that information as we are making a decision on whether or not to approve this project? >> certainly, we have the right to ask for any information that we deem necessary to about in a project that is before you. supervisor: ok, thank you. thank you. i want to see a project move forward.

this goes to the heart of a key question as to whether or not we're going to see this hospital operating at st. luke's for 20 years, so how can we as members of this board look at our constituents and say on this very important matter that we guarantee you we have done everything we can to assure that a hospital will operate for 20 years of we are not allowed to look at the information on which that analysis and that decision is being made. i do not understand how we do that. i have other questions, but i will turn over to other colleagues. that this is not being reported to the colleagues are members of the board. supervisor mar: we have been

very respectful towards you and the cpmc team, and i think some of the comments you have said where it discourteous to the board, and i am not sure i have heard that before. >> that was not my attention, and to the extent that it was construed that way, i apologize. supervisor wiener? supervisor wiener: thank you, mr. chair. i have to say, unless i missed something, and i am hearing this new issue, which i find surprising, i am looking forward to hearing in the coming weeks and how this unfolds, because obviously this is a pretty critical piece of information. i think for those of us for whom it is extremely important that

st. luke's remain open and a viable hospital, this is pretty critical. we have been led to believe that the 1% was very theoretical because it was so far from what the reality was of any projection for what the margins remain in the coming years, so that may not be adequate. i think it is very, very important that this issue be resolved. and if the measures stays the same, we will obviously have to know what those are, and if there is a renegotiation and a different metric that is going to be used, i guess my question

will be when is that negotiation going to happen, and i know everyone is sort of an awkward place here, given whatever confidentiality restrictions exist, but i hope everyone from cpmc and the mayor's office and dph can understand that st. luke's remains open and a viable hospital, not to even know that can happen, so when do you anticipate that there will ever be adequate or complete information or if there is a renegotiation, when that will be presented. >> supervisor, i regret this. we only have had the information for a short while, and when we got it, our first action was to do that.

we believe that the exact terms do not work anymore, and we need to negotiate them. we are doing that, and we expect to negotiate. we do not know the exact letter of it, but this will come out during the period of a hospital, which is the period of closest danger, which is when this is being discharged, that we would have this for a number of years, and that is what we are driving for. i think certainly, absolutely, before the next hearing of this board, and i think potentially before that, we would be able to brief you before that, but at the latest, the next time we are before you. >> this would still be based on the projection would they be

released to us. for years one through four, the metric is in place. we would not have this without the actual projections? >> it is up to cpmc to do that. supervisor mar: thank you. supervisor chiu? supervisor chiu: this is shocking on a number of levels. i had a meeting with the cpmc

management, and i was not given any idea that this was the case, so, first, you describe what has changed in the last week as to why these numbers are different? can you explain that again? just explain to us what has changed such that we need to renegotiate this deal. >> the cpmc projections are shown coming closer than the last time we saw projections, which were far away. what was represented to us is that actually the only substantial difference between the new projection and the old is that the assumptions on the revenue side, what they are and how much they will increase, and the patient volume, they were taken down to be more conservative, so as you can imagine, costs are projected about the same as they were.

this is what makes the bottom line go lower. >> and those have changed because >> well, that might be a better question for cpmc than me. my understanding is that they decided to be more conservative based on the last year or so. we saw, just to reiterate, we saw projections about six months ago, and those were the latest. the 2012 became available and were just approved by the board, so we saw them, it we saw that there was this difference, and that is what caused us to take this course of action. supervisor chiu: i was told i would receive the information to understand what are the assumptions in the documents, so we look at this with the

legislative body. that has changed. can i assume that is the case from cpmc? doctor? supervisor mar: actually, supervisor chiu, i think they are coming up, so we can ask them. i know we still have malia cohen and supervisor campos on the list. supervisor chiu: i actually have some comments, that i agree with supervisors mar and campos. this is troubling, and this is not the way to bring the trusted think we need to move this forward. we were provided with the financial information that showed that profit margins were

going to be high. and yet, we are not receiving information that shows that the net operation margin -- operating margin is different. i do not understand why we would get this in one case and not another. >> i do not know what they provided to you. i just know what they provided to us. this shows the operating margin comfortably above the 1% and began 12 days or so, this shows them getting a lot closer. i apologize. that is the only information we have ever seen and never acted on. >> let me just end with one last comment. i know this could be confusing for some members of the public, and unfortunately, at least thus far, i do not think the press has covered it. i think everybody wants to make sure that it stays open.

we understand that it will be there for 20 years. the problem is in this agreement, there is an states -- an escape hatch. this is over a two-year period, and they could shut st. luke's down. and part of what i have that a concern is we have had many successful companies in san francisco, in california, in the united states has had exactly this track record. this is below this 1%, and yet they proceed. i think we are all concerned about is within a short period of time, this allows st. luke's and what they represent to the city to not be operational, so this is an important question.

frankly, this is our obligation. this is what we are supposed to do. for one, i am going to need to see this information. i hope we have the time to make sure that this happens. we need to do this together. >> -- supervisor mar: thank you. supervisor cohen. supervisor cohen: thank you. have you begun the renegotiation process? >> yes, absolutely. as soon as within a day or so of seeing the new numbers. supervisor cohen: yes, sir, and what day was that? >> i believe it was 12 days ago. supervisor cohen: 12 days ago. i think what is important to the

members here is backed cpmc has an interesting corporate culture and also a relationship with the larger sutter health being disingenuous when it is doing its negotiations, not only with discussions i have heard with community members but with each one of our individual offices, and i cannot wait for them to come up here and offer some explanation, some acknowledgement, some kind of accountability, not just to the board of supervisors but to the people that are here that are taking time out from school and from work to invest themselves in this particular process, so, mr. chair, i would like to -- >> supervisor, i would also say we would vastly apple for to come here today with the solution in hand. we regret we did not do that, but that would be our best preference. >> -- supervisor cohen: you have

had this information for 12 days. you have all of our cell phone numbers and our contact information. this is so significant that it is definitely worth a call or someone to reach out to our office to say there has been a major change in this deal, in this negotiation, and let me brief you as we are coming to the board. pardon the expression, i guess you could peel off a band-aid inch by inch, or you could rip off, and clearly you just chose to rip off. >> again, we were really trying to come to you with the answer in the submission. we know this will not go forward until there is a solution that takes care of this problem, and that is what we were trying to get to. i am very frustrated that i had to come to you with a problem and not a solution.

that is not the way we have been taught to do. if there is a problem, we want to bring a solution. i wish we had one. then it would be your job to evaluate if that solution is acceptable, but that is what we are trying to do. supervisor mar: thank you for your efforts. supervisor campos: i want to go on what supervisor cohen said. you knew of this 12 days ago, and st. luke's is in my district. i have personally gone to six weeks there. i had to take my mother to the e.r. at st. luke's two years ago. my experience with mayor lee, the first thing they do is notify the supervisor whose district is impacted by any thing, and that you would not tell me when you knew 12 days

ago is mindboggling to me. and what am i supposed to say to my constituents when they asked me how is this process going, when you sat on information for 12 days and did not even pick up the phone? you have my cell phone to call me. it is just unbelievable. i have to say i feel really bad for mayor lee, because i think the statements that cannot from negotiating team are pretty embarrassing. you have just said that the exact terms do not work anymore. that is what you said. and yet you are here presenting on the specifics of a development agreement, and you as one of the chief presenters on behalf of the mayor say that in front of the committee, that is pretty embarrassing for the mayor. >> supervisor, first, i want to make sure