Board endorses term sheet for CPMC rebuild after months of negotiation

San Francisco ' The Board of Supervisors voted unanimously on March 12 to endorse a nonbinding term sheet that revises the California Pacific Medical Center's (CPMC) long‑range development plan, directing staff to complete a formal development agreement for later review.

The agreement reduces the proposed Cathedral Hill hospital and increases the planned bed count at the St. Luke's campus while tying CPMC to a package of community benefits, including an innovation fund, workforce commitments, funding for affordable housing and pedestrian and transit improvements.

Why it matters: The term sheet ends months of intensive mediation among city officials, community groups and hospital leaders and is intended to preserve two seismically safe hospital campuses in San Francisco while offsetting impacts on neighborhoods and low‑income residents. The board's vote authorizes staff to draft a development agreement that will return to the Planning Commission and the board for final approval.

What the term sheet changes: Ken Rich of the Office of Economic and Workforce Development told the board the revised proposal reduces Cathedral Hill's initial bed buildout and increases St. Luke's to make the south‑of‑Market campus a larger, integral hospital. Rich summarized the practical effect as a smaller Cathedral Hill hospital and a substantially larger St. Luke's.

CPMC's chief medical officer, Dr. Warren Browner, described the rewrite as a step toward completing two earthquake‑safe hospitals. "We're here today to present an agreement that we hope will ensure quality health care for San Francisco's future," Browner said, adding the changes reflect both seismic requirements and changing patient demographics.

Community benefits and enforceability: The term sheet features roughly $70 million in community benefit payments (excluding certain housing‑displacement and in‑kind items) to support affordable housing, transportation, workforce training and neighborhood safety. Key elements discussed at the hearing included:

- A commitment to a baseline charity‑care/patient access level defined as a specified number of patients per year (approximately the citywide average from the prior three years) and an $8 million annual cash commitment for services to low‑income patients; - A $9 million health care innovation fund to be governed jointly by the San Francisco Foundation, CPMC and the city to expand primary‑care capacity in the Tenderloin and support community mental‑health programs; - Local‑hire goals for construction (30% local hire; 50% of new apprentice slots reserved for San Francisco residents) and a pledge of 40% local hire for entry‑level permanent jobs for 10 years; and - Transportation and streetscape funding including a fee in lieu for transportation impact, a contribution toward bus rapid transit facilities on Geary, and targeted street and pedestrian safety funding for neighborhoods around CPMC campuses.

Public health and monitoring: Director(s) of the Department of Public Health told the board the agreement includes an annual independent audit to verify commitments such as the Medi‑Cal beneficiary targets and other health obligations. Planning staff and the health department will share monitoring responsibilities and the development agreement will include enforcement mechanisms, including liquidated damages if specified healthcare obligations are not met.

Next steps: The board's endorsement is nonbinding and directs city staff to draft a formal development agreement. That draft must be approved by the Planning Commission before returning to the Board of Supervisors for final action. City staff said they expect Planning Commission consideration in May and a board vote in early summer, subject to the statutory review and any litigation deadlines.

Voices at the hearing: Negotiators, hospital executives, community organizations and labor groups spoke during the multi‑hour committee hearing. Supporters praised the negotiated benefits and the accommodation that keeps St. Luke's open and larger; nurses' groups emphasized that a contract with hospital nursing staff remained unresolved and urged expedited bargaining; community groups asked for stronger and earlier funding for workforce and housing programs.

What the board approved today: The board approved a resolution endorsing the negotiated term sheet by an 11‑0 vote and separately certified the project's final environmental impact report, also by an 11‑0 vote. Approval of the term sheet does not by itself authorize construction; it directs staff to proceed to draft the development agreement and to return with the legally required permits and findings for subsequent public review and votes.

Looking ahead: The action clears the way for a formal development agreement and a schedule that city staff presented to the board: Planning Commission review in May, followed by another return to the board in June or July. Community groups and labor organizations said they will continue to participate in the drafting and oversight for enforcement once the development agreement is finalized.