When Saint John’s Health Center came up with its plans for a $270 million renovation and expansion of its facility, the hospital’s president, Sister Marie Madeleine Shonka, thought the project would be a shoo-in for approval in Santa Monica.

A nonprofit health-care facility, Saint John’s is the largest private employer in the city. Residents have shown overwhelming support for the place. And it contributes $618,000 a year to local health-care programs such as the Venice Family Clinic.

Nor was Shonka content to let her expansion plans ride on Saint John’s reputation. The hospital spent $11 million to design and market the project, hired a top-gun Santa Monica development attorney and retained a high-priced public-relations firm to put the best spin on the proposal. The ducks were in order.

So imagine Shonka’s dismay when a majority of the Santa Monica City Council took a ruler to the hospital’s knuckles at a meeting last month, treating Saint John’s like a real developer. The council gave preliminary approval to a development agreement that would clear the way for 17 years of construction along Santa Monica Boulevard, but only if Saint John’s returned millions of dollars more than the hospital had planned on in community benefits to Santa Monica.

A tug of war has ensued. On the one side are some city officials concerned about the impact of such a major development, who criticize Saint John’s for being autocratic and headstrong. On the other side, hospital executives consider the council’s request unfair and have refused to sign the agreement as is.

“I never thought it would be as difficult to move ahead with a project in this city,” Shonka said in an interview. Complaining that the hospital was blindsided by a City Council that had not done its homework, Shonka is asking Santa Monica to ease up when the agreement comes back to the council for final approval May 26.

The way most of the City Council members see it, Saint John’s owes something to Santa Monica for the right to build on a swath of property along a traffic-snarled throughway, over a longer construction period than has been given any other developer in the city. Taking into account the hospital’s nonprofit status and acknowledging its 56-year history in the city, Santa Monica waived expensive infrastructure improvements that it would have required from other developers.

“We’re trying to bend over backwards,” said Councilman Ken Genser. “We’re bestowing on them millions of dollars of value to their property. It’s beaucoup value. And this is a decision we’re making today that’s binding the community for years.”

Topping the City Council’s wish list is that the hospital provide a greater amount of child care than under the current plan, most of it for hospital employees, as well as two nurses for Santa Monica’s school system. The council also has asked for a guarantee that the community benefits remain in place for a full 55 years, even if Saint John’s sells to a for-profit institution, a growing concern in light of the proposed buyout of Queen of Angels–Hollywood Presbyterian Medical Center by Tenet Healthcare Corp.

Shonka balked at the $15 million it would cost over the life of the agreement for the hospital to provide the additional child care and school nurses and the other community benefits the City Council has requested. She rejected the notion that the hospital ought to be locked into these obligations when other issues — elder care, for example — may be the funding priorities of the future. And she said the city’s contingencies could make it impossible for Saint John’s to be sold — although she repeatedly denies any plans to sell.

“People think we have a lot of money, gold bricks in the basement,” Shonka said. “There are no gold bricks.”

Some on the council believe her and fear the hospital will move elsewhere. Mayor Robert Holbrook, for one, is outraged that the city is requiring a religious hospital to fund nurses to work in Santa Monica’s public school system, crossing the line between church and state. “I wouldn’t dare ask the city to put money into St. Monica’s school, because it’s Catholic,” Holbrook said. “If Saint John’s decides to go somewhere else, we’d lose more than the hospital. We’d lose a big chunk of health care.”

If Saint John’s is to keep operating in Santa Monica, it has no choice but to rebuild. Severely damaged by the Northridge earthquake, the hospital is required by state regulators to renovate its current facility during the next 10 years, a mandate the hospital has seized as an opportunity to expand and modernize.

Shonka paints a bleak picture of the hospital’s finances. Reimbursements the hospital collects for medical services have been shrinking for years, and many employees have not had raises in several years. Shonka said a $100 million fund-raising campaign is the best hope Saint John’s has to pay for the first phase of the project.

Yet Saint John’s has spared no expense when it comes to playing politics for its planned expansion. Forget that the hospital is run by the Sisters of Charity of Leavenworth Health Services Corp. in Kansas — this project has all the political wrangling of a big-city development deal, with Shonka sitting at the head of the table.

She is a no-nonsense nun known simply as “Sister,” described by some as one of the toughest and brightest executives in the city. But she is a nun, after all, and does not let you forget it, ending a meeting with one member of the City Council by reminding him to do what is “just and moral.”

The hospital has hired the polling firm Fairbank, Maslin, Maullin & Associates to survey residents about Saint John’s, asking for opinions about the hospital, the development project and certain council members. And during public hearings on the project last year, Saint John’s rented buses, packed them with employees and supporters, and drove them to City Hall.

The politics of the project went on public display at last month’s City Council meeting. Two council members vowed to vote against the entire development unless Saint John’s followed a city-charter formula for replacing housing units located on the site of the planned expansion.

Saint John’s answered with an expensive counterproposal, offering to pay roughly a million dollars extra and provide more affordable units if the City Council agreed to bypass the charter and give the hospital an option to build the units somewhere else. Arguing that Saint John’s could achieve the same goal by following the law, the council rejected the offer and each side accused the other of playing political hardball.

Such head butting has marked the project from the start.

Critics accuse Saint John’s of taking a how-dare-you-ask-questions stance and refusing to openly discuss issues such as how many child-care slots the hospital should provide. However, in the weeks since the City Council voted, Shonka and hospital CEO Bruce Lamoureux have been meeting one-on-one with council members and have reached an informal agreement with the city on child care.

Neighbors of the hospital say Saint John’s stopped listening to them a long time ago, as soon as they protested the plan to move the emergency room from Santa Monica Boulevard to a quieter residential street on the opposite side of the building. David Cole, who lives across the street, attended the first community meeting the hospital had to explain the project.

Things, he said, went downhill from there and have not improved since.

“They pretty quickly backed up, became defensive, entrenched themselves, and they haven’t budged since,” Cole said. “I can see their dilemma. They had spent $11 million designing the hospital, and then they had a community meeting. At that point, it was too late. There was no ability for give and take.”

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