A model of a new plan to rebuild St. Luke's hospital on Cesar Chavez Street.

After many months of strained conversations between California Pacific Medical Center, city officials and neighborhood interest groups, Mayor Ed Lee announced that the parties have reached agreement on a deal to rebuild St. Luke’s Hospital at Cesar Chavez and Valencia streets.

The new, seismically safe hospital will be larger than originally planned and will account for about a quarter of CPMC’s beds in the city.

“St. Luke’s Hospital will now be an integral part of the CPMC system,” said Boudin Bakery co-owner and civic leader Lou Giraudo, who led mediations for the agreement.

The new St. Luke’s will hold 120 beds instead of the 80 first planned, and a second new hospital, on Cathedral Hill at Geary Boulevard and Van Ness Avenue, will support 274 beds with the potential to build an additional 30, rather than the 555 originally planned. The deal, Lee said, is part of a long-term vision for health care in San Francisco.

Last year Lee negotiated a deal between the city and CPMC, a Sutter Health affiliate, but when some members of the Board of Supervisors expressed major concerns with it, the plan had to be reworked.

“I was excited a year ago when I thought we had an agreement,” Lee said Tuesday. There were moments during the past year when negotiations were very strained, Lee said, adding, “The deal was very close to falling apart.”

Documents leaked last year showed that if St. Luke’s financial condition declined past a certain point, CPMC could prematurely close the facility. CPMC representatives said that those documents were not reflective of the original deal, but city supervisors requested greater transparency before moving forward.

Requirements of the new agreement, such as providing charity care to 30,000 low-income San Franciscans each year, will not be affected by CPMC’s financial condition, according to Supervisor Mark Farrell.

Farrell said that the two new hospital projects will bring up to 1,500 jobs to the city, although some will be temporary. Thirty percent of construction jobs will go to San Franciscans, and 40 percent of new entry-level permanent jobs will go to San Franciscans from lower-income neighborhoods in the city.

Several city officials acknowledged that negotiations have been difficult due to the variety of political perspectives and personalities at the table. Supervisor David Campos called himself, Farrell, and Board President David Chiu, who led negotiations for the city, the “three amigos,” saying they were an “unnatural trio” because they are rarely close allies.

“When we started this process, I was not hugely optimistic that we’d get to where we are today,” said Chiu. “What a great day.”

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