A mediator is being brought in to revive an ailing development deal with California Pacific Medical Center for its planned $2.5 billion rebuild of St. Luke’s Hospital and the construction of a new hospital on Cathedral Hill.
The need for a neutral third party to help smooth out a compromise stands in sharp contrast to the optimism that surrounded the project back in March, when Mayor Ed Lee announced a deal with CPMC.
This appears to be the first time The City will have turned to a mediator to help shepherd a development deal through the approval process. The mediator has yet to be selected.
The future of the 555-bed Cathedral Hill hospital and rebuild of St. Luke’s Hospital in the Mission district looked bleak on July 17, when supervisors failed to cast a key vote in favor of the project and indicated they would oppose it. The vote was then postponed.
On Tuesday, the board again postponed the vote, this time until Nov. 20, and board President David Chiu announced that, “CPMC Sutter has agreed to engage a mutually agreeable mediator as we move forward on discussions around their long-range development plan.”
Project spokesman Sam Singer said that CPMC would have preferred approval Tuesday with groundbreaking in September, but remains optimistic that the project ultimately will go forward. “This project is too important for public safety to not happen,” Singer said.
Supervisor David Campos, one of the most vocal critics of the current proposal, said, “We certainly look forward to continuing to negotiate in good faith. The agreement to a mediator is a good move and it’s a good step in the right direction.”
The main concern revolves around the future of St. Luke’s. The CPMC deal includes an escape clause in which St. Luke’s could be closed based on weak financial performance by the company. Financial information leaked to the board before the initial board vote suggested that CPMC could close St. Luke’s in 2020, just five years into a 20-year development deal. Campos has called for more financial transparency and greater assurances that St. Luke’s will remain open.
It appears that CPMC may agree to allow more access to its books.
“If the Mayor or the Board of Supervisors are of the view that the acceptability of a negotiated term in the development agreement depends on CPMC’s financial information, CPMC agrees to consider a request for such information with an open mind and in good faith, with the goal of agreeing to share relevant financial information with a mutually agreed third-party expert, so long as proprietary information can be protected,” said a July 23 letter sent to Lee and Chiu by CPMC’s legal counsel.
Other board concerns include the hospital company’s commitment to charitable giving, affordable housing, traffic mitigation and a possible rise in health care costs.