the appointment that he cannot work his beat? >> your decision is finalized. the revocation of the appointment. all we're talking about is written findings to explain the decision consistent with your discussion. but the decision is final as of now. >> on behalf of mr. tachihara, [inaudible] >> your secretary will calendar the matter. >> ok. thank you. president mazzucco: the matter is concluded. i call line item number7.

public comment on all matters pertaining to item nine. closed session, including public comment on a vote whether to hold item nine in closed session. ladies and gentlemen, going into closed session, any public comment? any public comment on this item? on number seven? yes, sir. >> hello, commissioners. i wanted to make sure, sometimes these are routine and i wanted to make sure we are actually deciding this matter based upon not to the fact there is a criminal case decided on misconduct but whether we can reveal information regarding the settlements.

inspection 67 says we can only have these matters in closed session when it would likely prejudiced the city. i want to make sure that will actually be happening tonight in closed session. if not, i would appreciate it if it were open. president mazzucco: further public comment? item number8. >> whether to hold item nine in closed session, including whether to assert the attorney- client privilege with regard to item 9 a and b. >> before you take the vote, i want to see if the city attorney had a response to that question as it pertained to item 8? >> i do not have the actual

ordinance but i believe all is necessary is for the commission to decide to assert the attorney-client privilege. i think it has to do with whether you identify the case in name itself in the agenda. sometimes when the city is considering litigation, for example, or it has not been served, you would not identify the name of the case or the parties that are involved in order to maintain a litigation position. i do not believe there is any basis for not going into closed session based on the argument that was identified in the public comment. president mazzucco: we have a motion to move into closed session? >> so moved. president mama president mazzucco: commissioners, we are back in

open session. >> please call item number 10. president mazzucco: whether to disclose any on all discussion on item nine. san francisco administrative code six 7.12 a. >> i move not to disclose. >> i second. >> any public comment? >> item number 11, adjournment. >> i vote to adjourn. >> second.

>> good afternoon, everyone. welcome to the land use committee of the san francisco board of supervisors of july 9, 2012. i am the chair of the committee.

we are expecting supervisor cohen. >> please make sure to silence all cell phones and electronic devices. complete speaker cards to be submitted to the clerk. items will be on the july 17 board of supervisors agenda. supervisor mar: we have one short item. >> item number one, resolution authorizing the issuance and delivery of a multifamily housing revenue notes in the golden gate avenue senior community housing. [inaudible] supervisor kim: thank you.

thank you for hearing this item today. authorizing the issuance and delivery of the multifamily housing revenue notes in an amount not to exceed $25,370,000 for the purpose of providing financing for the acquisition and construction of a 90-unit multifamily rental housing project known as 121 golden gate avenue senior committee -- community. this is a project that is being jointly redevelop. as the rebuild of the st. anthony's dining room. very exciting news, and affordable senior housing units. the dining room will be built in its current location so it can continue to serve meals. mercy housing will develop eight floors of affordable senior

housing, expected to include around 90 units, 43 studios, 461-bedroom units. -- four -- 46 one-bedroom units. 18 of these units will serve formerly homeless seniors. this project will have a two- year construction period. it is scheduled for completion in the summer of 2014. the needs of our existing seniors, i think this is an exciting new development in terms of how we will continue to address this gap in need. at this time, i want to call up staff from the mayor's office of

housing. >> good afternoon. thank you for the great summary. this is mortgage revenue bond financing. it is conduit financing whereby the city and county of san francisco issues the bond. we're not responsible for the repayment of these bonds, but it is repaid to the revenue of the project. this is serving low income seniors, these bonds will be repaid from section 200 to a capital grants as well as a tax credit equity. that will be repaid as the -- at the construction completion. it is scheduled to begin in august, and take about two years. it is conduct financing. the city is not responsible for repayment. we do hope that you will repay -- approved bed. -- approve it. supervisor mar: i just want to

thank the director of the mayor's house is -- mayor's office of housing. i know 90 units is really important that there is a need for low-income seniors. this is a project that is above the st. anthony's dining room on golden gate and i am trying to remember the cross street. it is a block off of market street, is that right? during important project, especially for some of the formerly homeless seniors. thank you. if there are no other questions, let's open this up for public comment. is there anyone from the public who would like to speak for on this item? public comment is closed. colleagues, can we move this forward without objection? thank you.

could you please call item is 2-13 together? >> 2-14. legislation package related to the california pacific medical center, cathedral hill and at st. albans campuses. -- and st. luke's campuses. changing the official sidewalk list and approving a street encroachment, plans -- land transfer agreement, and development agreement. supervisor mar: i know we have a number of people from the public who would like to speak. before that, we have presentations from city departments. before the office of economic and workforce development and the department of public health and department of public help speak, we will be followed by a presentation by kathrin dodd, our director of health and human services in the city. we are calling all these items

together. this is the third of four major hearings on this item. the third hearing today, we were scheduled to discuss a number of items from housing to traffic impacts to neighborhood impacts. but because of the different developments that occurred at the last hearing, we are going to focus on the health care aspects. the office of economic development and stakeholders agreed upon this that we will try to focus on health care to understand this complex system. next monday, on july 16, we will resume but those other topics. i also wanted to say that we are trying to encourage maximum dialogue at the board level, especially given the financial information that was revealed at the last meeting. our expectation was even

stronger transparency on behalf of all parties to move forward with a commitment to keep st. luke's open for 20 years and strong enforceability, but said all parties would be transparent and allow as much dialogue to move forward with a common solution. i wanted to say from the letter that we received today from dr. browner, i still have concerns that this transparency is going to move it forward. i know a number of colleagues have raised issues from the last hearing that we had until now, questions of whether we can move forward without that sharing the financial information. i note that we will hear a lot about that at this meeting. i am hopeful that we will have more information from all stakeholders said that we can move this forward. with that, i will ask if my colleagues have in the opening comments to make before we go to the speakers. supervisor kim: thank you.

i want to speak briefly because i was not here for the previous land use committee meeting when we learned about the new production numbers. it actually put cpmc dangerously close to the trigger point that we had been discussing previously as something that was very hypothetical and almost impossible for this entity to reach. i wanted to say a couple of things since i did miss that announcement. i do want to appreciate the mayor's office for all of your work on this development deal. i really do appreciate your best intentions on this project. i further appreciate that the mayor's office is taking such a strong position on the continued opening of st. luke's. it is an incredibly important hospital in san francisco. i do not think any of us can discount how important the future and stability of that

hospital is. everyone on the board of supervisors agrees and shares this as a priority. i just want to thank you for alerting us and continuing to work on ensuring that if we move forward, the stability of st. luke's and the future of st. luke's is insured and that development agreement. i just wanted to say that i was very appreciative of our committee members on that day for standing up strongly and loudly on behalf of our community, particularly our most vulnerable communities. in terms of wanting to ensure that it is available and we do get to see any projection numbers that there is no way we can make a decision on this deal without having the full sets of data and information available. i was out of town when there was a whistle-blower clique of what could be those numbers.

-- leak of what could be those numbers. i was very disappointed to see some of that come out. as we move forward, there is going to need -- there will be a lot of questions that need to be answered. the last thing i will say, over the last couple of weeks, we think a very deeply about this very complicated and controversial development agreement that is coming before the board. i am happy to sit today for the shf presentation. there are some different pieces to this, whether it is affordable housing, charity care, work force. what has continued to emerge to me as the larger and even more important issue is this issue of the future of health care. cpmc's role as a very large entity in this industry in terms

of how they will impact that. i look forward to this presentation, but i do think this is a key piece that i beekeeping a close eye on. thank you. -- that i will be keeping a close eye on. thank you. supervisor cohen: there has been a lot of discussion and media attention in the last few weeks about the operating commitment to st. luke's and the provision that would allow cpmc to be relieved of its obligation to operate a hospital of its operating margin. as i articulated a few weeks ago, and given the unwillingness of cpmc to share any financial information to allow us to make informed decisions on this one issue, we need unlimited obligation from cpmc to operate st. louis for 20 years, not one that is dependent upon -- st. luke's for 20 years, not one that is dependent on financial assumptions that we are not able

to review. i believe that all of us on the board and myself want this development agreement to ensure not only that st. luke's is open and operating for 20 years, but that it is meeting the needs of the patients in the southeast portion of the city. while we have recently focused on the operating commitment, it is my goal today that we focus on some of the other aspects of st. luke's that i find concerning. there are two. the removal of the skilled nursing facility beds and the resources, staffing and focus of the centers of excellence. additionally, as i have previously mentioned, this project will significantly change the health care system and markets for years to come. i have heard very little around impact of that.

i look forward to a robust discussion about pricing today. without further ado, mr. terra, take it away. -- mr. chair, take it away. president chiu: i am not going to repeat the comments that were just made. we have learned a lot of information over the last two weeks that i think have been surprising to all of us. i associate myself with the comments of supervisor cohen around st. luke's. i want to think the mayor and his staff for understanding this with a comment he has made around that issue. that being said, i do hope that with this hearing, we can all take a step back and take a deep breath and understand that everybody wants to see the long- term health of the city be down

the right way. not only do we want to get a few of dates on some of these issues, but we are about to delve into another very important topic. how are city can get a handle on cost containment efforts while maintaining health care quality. this is a very important question that has not been covered before. i look forward to hearing the presentations because i do think we really have to wrap ourselves around these questions and resolve them in a way that is going to work for all parties in this discussion. i am still and will continue to be committed to working with all parties to see if we can get to a place that will work. supervisor mar: i just wanted to remind everyone, these items before us, we are not taking action on at the end of the meeting. we will likely continue this to monday, july 16.

we have july 17 as the day to hear the appeal of the eir on the project. all of this is moving forward very quickly, but today we are focusing on health care. let me introduce ken rich. >> good afternoon. if i could have the overhead, at the request of the committee, we are returning back to the subject of health care today. on your screen is a brief outline of what we propose to present. we will go back over the five key pieces of the presentation from last time. the st. luke's operating commitment, the baseline health care commitment, the beneficiaries, the skilled nursing facility bed commitment, and the health care innovation. they will hit those anymore summarized fashion for you. we will also do an update on the supreme court decision.

we will do a full presentation on the health services system, which we did not hit last time. to remind you of the three priorities that our negotiations were based on -- the first priority is st. luke's. as you remember, the operating commitment to construct a new hospital on the st. luke's campus and operated for 20 years, we want to reiterate the direction we have received directly from the mayor is that we now would like to see an operating commitment, which is stronger and more absolute than the one that we originally negotiated. we have communicated that to cpmc. we're continuing to talk to them.

we hope that even though we have not gotten there yet, we're optimistic and convinced that over the next few weeks, we will get to a place where the mayor can be satisfied. president chiu: i know what the last hearing, you stated that there would be ongoing conversations around the newer productions that have been proposed and new ideas that would go back and forth. if scientists and what you just said, it does not seem as if their art -- if i understood what you decide, it does not seem there is agreement. >> there is not agreement on this issue. i am here to make clear what the mayor has directed us to ask for. i am here to make clear that we are here to talk on here to find a way to get there. as of today, there is not an agreement. president chiu: we appreciate the mayor's perspective on this

issue. >> thank you. one more thing on this, and this has not been so much in debate, but to finish the piece. the development agreement requires the hospitals be constructed simultaneously. that is the new cathedral hospital and the st. luke's hospital. just to finish up on that. to continue going through our review -- >> good afternoon, supervisors. greg wagner, department of public health. i will review the contents of this portion of the development agreement. as you have heard, the development agreement provides

for a baseline level of funding by cpmc on care for vulnerable populations. it is a 10-year time frame and the value of the commitment is $86 million adjusted annually by the medical rate of inflation. the purpose of this provision is to establish consistent baseline above which the other elements of the development agreement for negotiated. care for vulnerable populations as defined in the agreement includes three things. charity care, it is the shortfall for treating medi-cal clients, and this other services to the poor and underserved. it was developed by taking the

average of those actual expenditures over the last three years. you can see those numbers on a slide in front of you. the average is 86. cpmc will be required to make at least that level of expenditure. the one provision that allows them not to spend at that level is if cpmc's earnings before taxes, interest, depreciation reaches a certain level and 40% of that value is less than the base line commitment, cpmc is no longer obligated to spend at the level that it otherwise would. a 40% of that value is a cap on the amount they are required to spend under the development

agreement. however, there is an additional provision of $20 million, the backstop commitment, such that in any year the 40% comes into effect, at cpmc has a $20 million cost of funds available. it is a one time pot of funds that would be applied to get them to their obligation. was that $20 million is exhausted, it is no longer available. -- once that $20 million is exhausted, it is no longer available. we have three charts. the orange bars are the base line commitment, negotiated in the development agreement assuming a 3% rate of inflation. that is the amount they would be

required to spend on this base and commitment. over the 10 years of the agreement. the black line is the 40%. and this assumes that it grows at the rate of inflation. the ebitda cap is growing. if it stays at exactly flat over the 10 years of the agreement. this would be a scenario where inflation is growing at a 3%. that would suggest a pretty substantial deterioration in the financial conditions since it is not keeping pace with inflation.

if it stays flat, they would make it through the 10 years of the development agreement and only be required to dip into the backstop for about $200,000 in the last year of the agreement. in that relatively pessimistic scenario, we would be fine on the cap. the last scenario is just to get a sense of what would happen if there was a significant decline in cpmc's ebitda. this depicts a 3% reduction in each year over the course of the development agreement. there is 3% medical inflation. there would be regular inflation happening in the world while cpmc is experiencing a consistent d