Increase in Costs To Rebuild Laguna Honda Hospital Attributed to Rising Steel Prices

Preliminary estimates of the cost to rebuild city-owned Laguna Honda Hospital in San Francisco are increasing primarily because of rising steel prices, project manager Michael Lane told the city's Health Commission last week, the San Francisco Chronicle reports. The city is upgrading its oldest nursing home and rehabilitation center because of concerns from state and federal regulators that the facility is outdated and could not withstand a major earthquake. The proposed 1,200-bed facility originally was estimated to cost $401 million, but the price could eventually increase by $30 million to $40 million, Lane said. Lane has proposed lowering costs by making the new complex smaller and possibly eliminating entire floors, which would save the city as much as $8 million per floor. Each floor of the complex, which will be built in phases, is slated to hold 60 beds, and eliminating space for patients would "surely anger the health care workers union ... and also breach the will of San Francisco voters," 73% of whom in 1999 approved a $299 million bond measure to fund the new hospital, the Chronicle reports. The project's design team to date has proposed saving about $5 million through such measures as using less costly finishes and light fixtures.

Lane said, "No decision can be made on this until we get the (construction) bids." The request for the bids will be released in July and August. Mayor Gavin Newsom (D), who, along with the Board of Supervisors, has met in recent weeks with Lane, said it was too early in the process to discuss scaling back the project. Newsom said, "We haven't even started (building). It's a multiyear effort," adding that rising steel costs were "hardly the exclusive reason" for the projected budget hikes. "It's a little too convenient," he said. Lane said the new complex had been on budget prior to learning of the increase in steel prices. The first 780 beds of the facility will be available in 2007, with the remaining 420 expected to be available by 2009 (Gordon, San Francisco Chronicle, 6/4).