San Francisco Announces New Transbay Transit Center Financing Plan
Mayor Edwin M. Lee along with Supervisor and Metropolitan Transportation Commissioner Scott Wiener, Supervisor and Transbay Joint Powers Authority (TJPA) Director Jane Kim, and TJPA Board Chair Greg Harper today announced a proposed financing package to allow completion of the Transbay Transit Center, Phase One. The Transbay Transit Center is a key to the Bay Area’s continued economic vitality for the coming century, acting as the future northern terminus for Caltrain and the California High Speed Rail system within the multi-modal facility that will accommodate 11 transit operators and serve more than 45 million passengers a year.
“Working together, we have developed a new financing plan to keep the Transbay Transit Center on schedule while protecting taxpayers,” said Mayor Lee. “The Transbay Transit Center will be a nationally renowned, 21st Century transportation hub that will serve our growing City and the region for generations. It is an investment in our infrastructure, in good paying construction jobs and in the future of transportation in the San Francisco Bay Area.”
“The Transbay Transit Center is an absolutely critical part of the future of our regional transportation system, and we need this project to succeed,” said Supervisor Scott Wiener, who is also a MTC Commissioner. “The City and the MTC are stepping in with this loan because if we allow this project to fail, we will pay a far higher price in the long-term. This funding comes with much stricter oversight, due to past mismanagement, and I’m confident that working together, we can deliver a Transbay Transit Center that will be the heart of the Bay Area’s transportation system.”
“This is an investment in a transit-friendly future. It’s been a long hard road but we’re nearing the finish line and I think that we’re going to look back with pride when this is done,” said Supervisor Jane Kim, who is also a TJPA Director and former Chair.
“This support from San Francisco and the MTC will ensure the completion of the first phase of the project on time, so combined attention can now focus to getting the trains into the station,” said TJPA Board Chair Greg Harper.
The first phase of the center, the bus facility, has had challenges, including rising construction costs, and the overall project budget has increased from $1.6 billion in 2010 to $2.3 billion, according to a recent cost review performed by the Metropolitan Transportation Commission.
These first phase costs have outpaced revenues, and while significant tax increment and other special assessment revenue will be generated by the development of the surrounding area to pay for project costs, the timing of this development won’t occur in time to meet first phase costs.
The City and County of San Francisco and the MTC have proposed to address this timing gap by providing interim financing of $260 million to complete the first phase, the bus facility. The City will issue short-term variable rate certificates at times and in amounts necessary to meet the needs of the project’s construction, a portion of which would be purchased by MTC and a portion of which would be privately placed with Wells Fargo Bank, for a term of five and three years, respectively, with an option to renew. The short-term certificates will be repaid by special taxes and net tax increment generated within the district. Given the timing of development within the district, this short-term financing, secured by the City’s General Fund, is anticipated to be repaid in approximately five to ten years.
As part of this proposed financing package, and in order to successfully deliver this first phase of the project, the City and MTC have proposed a set of measures to improve oversite and management of the project going forward, including the Department of Public Works assuming construction management responsibility for the project. Additionally, the City and MTC propose the creation of a new Cost Review Committee that is responsible for reviewing budgets and contracts and performing audits and reviews to perform their work. This three-member board consists of the Executive Director of the TJPA Board, the Executive Director of the MTC, and the City Controller.