The big problems with Mayor Lee's CPMC deal

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Oh, how pretty. But who gets to work there, and where do they live?

The mayor announced a deal for the largest private hospital construction project in San Francisco history with great fanfare, and the folks at Beyond Chron seem to think that it's pretty much dandy.

But there's a lot -- a whole lot -- wrong with this deal, and the San Francisco supervisors need to give it a very hard look before they just roll over and do what the mayor wants.

The centerpiece of this goes to one of the biggest issues in this crowded city: Jobs and housing costs.

The mayor talks about jobs all the time -- he's the "jobs mayor, jobs jobs jobs." Which is popular when unemployment remains stubbornly high. But there's a flip side: If you create a lot of jobs that attract new residents to the city, and you don't build housing that's affordable to those workers, you put additional pressure on the existing housing stock, driving up costs for everyone.

The big winners are the landlords and speculators.

In this case, CPMC says that the project will create 1,500 permanent jobs in San Francisco. But the deal only guarantees a tiny portion -- about 5 percent -- of the new jobs will go to existing San Francisco residents. Not many jobs for Lee's unemployed consitituents.

And there's nowhere near enough housing money in the deal to handle a workforce that won't be primarily existing residents.

For most of the long negotiations, CPMC took the position that it wasn't responsible for any housing at all, and the mayor was demanding more than $70 million. In the end, Lee accepted a promise for $33 million -- but only about $3 million will be up front and the rest will be paid out as the project is built. That's if nobody sues; if any organization goes to court to block the deal, the housing money goes away.

At least half of the workforce at the new hospital will be people who make less than astronomical salaries -- nurses, orderlies, cooks, janitors, clerical staff, support staff etc. Based on the city's existing figures, only about 10 percent of them will be able to afford market rent in San Francisco. And the money CPMC is promising will account for less than half of the affordable housing need it's creating with this project.

Oh, but it gets better: CPMC is counting as part of its affordable housing contribution a $29 million fund to help its employees make down payments on houses. What does that do? It drives up the cost of a house in San Francisco by adding a pool of bidders who have down-payment assistance. And most of them probably won't be buying million-dollar condos -- which seems to be what the city is building these days. So the average San Franciscan who wants to buy a house will be up against not only the Facebook millionaires but the CPMC employees who -- in the absurd name of affordable housing -- will have a subsidized down payment.

"So the new CPMC employees can outbid existing residents," Calvin Welch, a critic of the project, told me. "At the very best, we might have a deal that might possibly meet half of the housing impact."

Oh, and the delayed payments on the housing money will mean that affordable housing won't be built until well after the new jobs begin.

That really helps the housing crisis.

Then there's the commitment to treatment for the medically indigent. What CPMC has agreed to do, in essence, is to provide the same level of charity care the big Sutter Health chain does today -- and that's laughably, shockingly low. The commuity health advocates wanted CPMC to agree to a charity care level that's the average of what other big hospital groups provide; no go, says CPMC.

A key provision of any deal has to involve the future of St. Luke's, the only full-service hospital (outisde of SF General) on the south side of town. It's a crucial part of the city's health infrastructure, and for years, Sutter has been looking for a way to close it down.

The deal preserves St. Luke's -- but cuts it down from 200 beds to 80. The hospital will remain open for 20 years -- as long as CPMC's system-wide operating margin doesn't drop below 1 percent. That's actually a significant way out -- particularly since CMPC/Sutter controls its own books and could potentially do all sorts of things to change the reported operating margin.

Emily Lee, who has been working on the health-care part of this deal for the Chinese Progressive Association, told me that she's glad St. Luke's will be preserved. "But we have to ask, will it be sustainable as an 80-bed hospital?"

The neighborhood hospital is also a key bargaining chip -- and the CPMC folks, I am told, are using it to pressure supervisors and community groups to accept the deal. "I'm hearing, 'you better support this or St. Luke's will die,'" one source told me.

Then there's the labor problem.

CPMC is having serious problems with its unionized workforce, particularly because the health-care outfit won't guarantee that people who currently work in the hospitals that will be demolished will get jobs at the new site. "Nobody's guaranteed a job," said California Nurses Association representative Joanne Jung. "We're talking about some people with 30 years seniority. And if they do get jobs at the new hospital, they will very likely lose that seniority. It's a lightening-rod issue."

The draft development agreement says nothing about ensuring workplace protections for union members. "They're trying to pit the building trades unions against us," Jung said. "This is the deep, dark secret of this deal."

Now: By law, city officials say they can't tie a land-use decision to the resolution of a labor dispute. But there's no way this is going forward if the construction jobs aren't fully unionized. And so far, the nurses say, Mayor Lee isn't even addressing the concern.

Could the mayor say to CPMC: Look, you solve your labor issues -- not my business, but you and the unions work it out -- then come to me and we'll talk about a deal? It's certainly happened in the past, with previous mayors and previous projects. Not here.

Of course, the biggest problem is that all of this was done in secret, without any input from the wide range of community groups involved in and watching this project. "The community has no role in the development agreement,"  Emily Lee told me. "It's unfortunate that the Mayor's Office did this without community involvement."

Why did Mayor Lee -- the consensus builder -- craft a deal that so many people are going to oppose and that will set off a pitched battle at the Board of Supervisors and pass, if it passes, by a very narrow margin? I can't read his mind, but let me speculate for a moment.

Over the past few months, Lee has been taking a fairly tough line with CPMC, and by some accounts, was unwilling to settle for the type of limited housing mitigation the hospital chain is offering. But Salesforce just abandoned a major construction project in the city, the America's Cup is being downsized -- and the Chamber of Commerce types really, really want this hospital. You add it up.