Officials warn of funding shortfall and supply‑chain pressures for 2016 Public Health & Safety Bond projects

City capital staff briefed the Commission on progress and risks for the 2016 Public Health & Safety Bond program, reporting completed clinics, continuing hospital campus work and a funding gap driven by construction‑market changes.

Mark Primo, DPH capital oversight advisor, and project leads summarized completed and near‑complete projects, including the recently opened Southeast Family Health Center (a 22,000 sq. ft. clinic that began seeing patients July 29) and the Castro Mission re‑occupancy planned for late August. They also described major cost drivers: post‑pandemic contractor availability, sharp increases in materials pricing and unusually long lead times for critical equipment such as network switches.

Terry Salk and Joe Chin presented analysis showing commodity price volatility and current inflation on materials (lumber, steel and other items) and lead times; they said the 2022 budget assumptions as currently configured show an $85,000,000 shortfall relative to accumulated project estimates. "We have a $85,000,000 gap that we don't have additional funding for," a project lead said, and explained that projects without secured funding will be deferred or value‑engineered.

Project managers described mitigation strategies: seeking state behavioral‑health regional funds, FEMA and energy grants where applicable, pursuing stimulus opportunities, applying value engineering to scopes and pressing prime contractors to expand subcontractor outreach. Chinatown Health Center received $2 million in pre‑bond funding and remains in geotechnical and schematic design with a planning horizon into 2023 for design and likely construction completion around 2025 unless additional funding is identified.

The project team contrasted the university‑led UCSF research building (built new, under a "best value" contract and contracted before shelter‑in‑place) to work on older, hospital campus buildings with hidden risks; the latter have more unknowns buried behind walls and therefore greater contingency exposure.

Next steps: staff said they will continue to pursue alternative funding sources, apply project controls and staging (delay or value‑engineer projects without secured funding), and return with updated cost and schedule analyses.