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City and UCSF near agreement on SFGH research building; key sovereignty, parking and indemnity issues remain

San Francisco Health Commission · August 16, 2016
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Summary

City real-estate staff and DPH updated the commission on protracted negotiations with UC San Francisco for a ground lease and development agreement on the BC lot at Zuckerberg San Francisco General Hospital; unresolved issues include indemnity language, possessory-interest tax treatment, parking displacement and First Source hiring commitments.

Real-estate staff updated commissioners on months of negotiations with the University of California over a proposed UCSF research building and a long-term ground lease of the BC lot at Zuckerberg San Francisco General Hospital.

John Updike and Mark Primo described the complexity: the project requires a lengthy ground lease (a 74-year term with options that could approach a century), a Lease-Disposal-and-Development Agreement (LDDA), utility easements, and a companion lease for Building 3. Key legal and operational questions they said remain include indemnity and negligence standards appropriate between sovereign entities; the treatment of possessory interests (a state-assessor issue) to avoid city liability; remedy and default provisions; and carefully crafted conditions to avoid interrupting hospital operations during construction.

Staff said CEQA and an EIR process are advancing, with the EIR scheduled to be finalized in September (subject to appeals), which would permit entitlement and movement toward construction. Commissioners noted the projects potential to preserve research-hospital proximity valued for recruitment and retention of clinical faculty and urged protecting hospital operations and local-hire benefits.

Director Garcia and hospital CEO Dr. Ehrlich both stressed the clinical and academic importance of maintaining a research presence adjacent to the trauma center; Garcia emphasized preserving sovereignty-driven protections for both the city and UC while seeking workable compromises on local-hire and operational protections.

Staff said they were making rapid progress and continuing mayoral and regental conversations; they expected further negotiating milestones and asked to return with final ground-lease terms for commission review before regents and the board of supervisors take final actions.

Ending: Negotiations remain active; commissioners and staff signaled broad support for a deal conditioned on carefully drafted indemnity, possessory-interest and local-hire terms to protect hospital operations and community benefits.