Public Works reports steady progress, COVID-related costs and holdbacks on $350 million public health and safety bond program

Joe Chin, program manager in the Department of Public Works, told the Citizens' General Obligation Bond Oversight Committee on Dec. 12 that the Public Health and Safety bond program (PHS) has $350,000,000 in authorized bonds and remains substantially funded but faces cost and schedule risks tied to the COVID-19 pandemic and complex conditions at the ZSFG Building 5 site.

Chin said the bond package supports three client departments — the Department of Public Health, the San Francisco Fire Department and the Department of Homelessness and Supportive Housing — across six components. "The total approved bond authorization amount for the public health and safety bond program is 350,000,000," he said. He reported that $272,000,000 has been allocated to three DPH components and noted completed flagship projects including the community health center, Southeast Health Center and the ambulance deployment facility.

Why it matters: the PHS program funds health-care and emergency facilities that provide direct services to San Francisco residents. Delays and cost escalations at the ZSFG Building 5 work could affect timelines for clinical improvements and seismic upgrades needed for ongoing care operations.

Key details and status

- ZSFG Building 5: revised budget $205,200,000; expenditures plus encumbrances approximately $178,000,000. Chin said Building 5 is an active hospital over 50 years old and "contains significant amounts of hazardous material and unforeseen conditions," which complicates construction.

- Completed components: community health center and Southeast Health Center reached substantial completion and clinics have reopened to patients; the ambulance deployment facility achieved substantial completion and has been occupied since May 2021.

- Fire projects: $58,000,000 allocated to two SFFD components (ambulance deployment facility and neighborhood fire station). Several host tower removal projects are done; Fire Station 15 remains and will be bid as a standalone project in 2023.

- Homeless service sites: $20,000,000 allocated. Several shelter improvement projects are in design or closeout, and 1064-1068 Mission Street is completed and in use.

COVID-19 impacts and contractor claims

Committee members asked whether Public Works has received formal contractor claims tied to COVID-19 delays and costs. Chin said the city has accepted certain pandemic-related costs that can be documented — for example, costs for safety managers and additional sanitizing — and has rejected other claims such as contractor-requested compensation for COVID-19 testing that were not required by health ordinances. "The short answer, yes," Chin said when asked whether the city has seen COVID-related claims. He added that some denied claims could reappear later as formal claims and that the city is in continuing discussions with contractors.

Risks and next steps

Chin highlighted ongoing risks: unprecedented material cost escalation across the construction industry, supply-chain impacts, and technical challenges from hazardous materials and post-tensioned slabs at Building 5. He said several Building 5 projects are on hold while the Department of Public Health seeks alternative funding sources. Upcoming milestones include final completion for several health-center projects and planned bidding or construction starts for psychiatric emergency services and other Building 5 projects once HCAI approval and funding gaps are resolved.

Committee follow-up

Committee members pressed staff to track contractor claims and return with updates as claims evolve. Chin and his team offered to provide more granular financial and schedule updates in forthcoming liaison reports and project trackers.

Ending

Public Works concluded the update and took committee questions; no public commenters spoke on this item. The committee moved on to subsequent agenda items.