Get Full Government Meeting Transcripts, Videos, & Alerts Forever!
Get email alerts on the Capital Infrastructure topic
No spam. Unsubscribe anytime.
Officials warn 2016 public health bond will not cover planned projects as bids come in far over estimates
Summary
DPH and project partners told the Health Commission that bid results for multiple Building 5 and clinic projects came in significantly above 2016 budget estimates—about a 39% delta on a recent package—citing COVID-era material and labor cost escalation, code changes and complex hospital logistics; philanthropic and other alternative financing is being pursued.
Department of Public Health and project teams told the Health Commission on June 15 that the citywill need additional financing beyond the 2016 public health and safety bond to complete planned Zuckerberg Building 5 and clinic projects.
Mark Primo and Terry Sauls presented the DPH portion of the 2016 bond program and explained that recent bids for three projects (a seismic upgrade, dialysis relocation and the public health laboratory) totaled approximately $57 million in construction costs versus about $41 million budgeted from bond proceeds — a delta of roughly 39%.
Terry Sauls attributed the higher bids to a combination of pandemic-era cost drivers and project-specific factors: unprecedented material-cost escalation (lumber, copper, steel), supply-chain constraints, a construction market shift toward lower-risk residential work, new seismic performance standards and hidden conditions uncovered during demolition in older occupied hospital buildings. Sauls noted that even after accounting for escalation, $2016 buys less construction in 2021 than anticipated.
DPH outlined mitigation steps including repackaging and rebidding trade packages, clarifying scopes, increasing subcontractor outreach and creating early-demolition packages to uncover hazardous materials before main construction. Those changes produced some savings (the presentation cited a $3.5 million reduction from an initial bid set to a rebid), but staff said experts forecast a slow recovery for the construction sector.
To bridge remaining shortfalls, Primo described multiple alternative funding sources being pursued, including FEMA grants, PUC funding for energy upgrades, state and federal funds, mayoral contributions, and philanthropic support. The San Francisco General Hospital Foundation committed $750,000 to hire consultants to design a fundraising plan targeted at Building 5, Primo said.
Commissioners pressed for more frequent updates and cautioned that deferred projects such as Chinatown clinics remain priorities. DPH committed to quarterly reporting and to continue exploring certificates of participation and other financing options to preserve essential projects.
Next steps: DPH and project teams will proceed with rebids and mitigation actions, pursue alternative financing, and return to the commission with updates on bids, funding gaps and project sequencing in regular quarterly reports.
