Monette-Shaw

Introduction

This is an appeal from the trial court’s denial of a petition for writ of mandate seeking to prevent the City and County of San Francisco (City) from diverting tobacco settlement revenues away from the project to replace Laguna Honda Hospital and to require the City to maintain Laguna Honda as a 1,200-bed skilled nursing facility. We affirm.

Factual Background and Procedural History

Laguna Honda Hospital, founded in 1866, has long been a fixture in the City, providing continuing care services to the City’s elderly and chronically disabled population without regard to ability to pay. As of 1999, the City operated Laguna Honda as a 1,200-bed skilled nursing facility. By the late 1990’s, its physical condition was seriously deteriorating, it suffered damage from the 1989 earthquake, and its open-ward structure was outmoded, leaving it at risk to lose federal funding that was critical to its survival. Also, in 1998, the City settled litigation it had brought against the tobacco industry. As of 1999, the City was projecting that it would receive more than $580 million in settlement payments over the next 37 years. The proceeds of this settlement gave the City a…