S.F. tran­sit cen­ter’s long, costly jour­ney

As ter­mi­nal nears com­ple­tion, rail re­mains un­cer­tain

San Francisco Chronicle - - FRONT PAGE - By John King

San Fran­cisco has never seen a de­vel­op­ment like the new Trans­bay Tran­sit Cen­ter, a 1,500-foot-long struc­ture that stretches across First and Fre­mont streets, perched on huge steel trunks and wrapped in a rip­pling, seethrough white me­tal veil.

Next spring, af­ter seven years of work that be­gan with the de­mo­li­tion of the aged Trans­bay Ter­mi­nal, the doors should fi­nally open. Visi­tors will be greeted by a sky-lit con­course adorned with color­ful art, be­low a third-level bus deck with a di­rect ramp to and from the Bay Bridge. A rooftop park will fea­ture 60 species of trees and a 1,000-foot-long foun­tain trig­gered by the ar­rival of buses be­low.

But the suave ar­chi­tec­ture masks for­mi­da­ble prob­lems. The bud­get for the huge com­plex has climbed from $1.6 bil­lion to $2.259 bil­lion. The sit­u­a­tion be­came so dire that San Fran­cisco stepped in last year to bail out the project, which is be­ing built by the re­gional Trans­bay Joint Pow­ers Author­ity.

Roughly 700 work­ers are on-site each day rush­ing to fin­ish the ter­mi­nal this win­ter so that bus ser­vice can be­gin in the spring. But even when that hap­pens, the enor­mous un­der­ground com­po­nent of the project will be dark — a con­crete box that’s 65 feet deep and 160 feet wide.

The sub­ter­ranean shell is de­signed to hold the con­course and plat­form for com­muter trains from the Pen-

in­sula and high-speed rail ser­vice from Los An­ge­les. The prob­lem is, it won’t be com­pleted un­til train tracks that now stop in Mis­sion Bay are ex­tended more than a mile north. And there’s no cer­tainty that all-im­por­tant se­cond phase will ever come to pass.

The cur­rent pres­sures are in­sep­a­ra­ble from the am­bi­tions that have been part of the project for more than a decade, when an in­ter­na­tional com­pe­ti­tion was held to se­lect a con­cep­tual de­sign for a fa­cil­ity to re­place the Trans­bay Ter­mi­nal at First and Mis­sion streets.

The aim wasn’t sim­ply an up­date of the bus ter­mi­nal, a con­crete hulk that opened in 1939, but the West Coast equiv­a­lent of New York City’s Grand Cen­tral Ter­mi­nal — “a world-class fa­cil­ity for the city and Bay Area to be proud of,” as Maria Ay­erdi-Ka­plan said in 2006 when the com­pe­ti­tion was an­nounced.

At the time, Ay­erdiKa­plan was ex­ec­u­tive di­rec­tor of the Trans­bay Joint Pow­ers Author­ity, a small re­gional agency formed in 2001 to do ex­actly one thing: Build a tran­sit ter­mi­nal in down­town San Fran­cisco. The idea had been de­bated for decades, but in 1999 the city’s vot­ers passed a mea­sure say­ing a new ter­mi­nal had to be built to ac­com­mo­date not only buses from the East Bay, but also pas­sen­ger trains from the Penin­sula.

Then-Mayor Willie Brown as­signed the task to Ay­erdi-Ka­plan. A novice in city gov­ern­ment, she had been an at­tor­ney at United Par­cel Ser­vice when she in­tro­duced her­self to Brown at one of his Satur­day morn­ing open houses. He hired her as a trans­porta­tion ad­viser and as­signed her to the tran­sit cen­ter, shrug­ging off her rel­a­tive lack of ex­pe­ri­ence.

“She was so fo­cused and driven,” Brown, now a Chron­i­cle colum­nist, said re­cently. “I be­came con­vinced she was tough enough that if I gave her the as­sign­ment she’d get it done.”

In the years that fol­lowed, Ay­erdiKa­plan and her small staff me­thod­i­cally built sup­port for the project, lob­by­ing ev­ery­one from Sacra­mento leg­is­la­tors to lo­cal tran­sit boost­ers.

The ef­fort to unite the var­ied in­ter­est groups be­hind a com­mon goal was cru­cial: With a bud­get sure to top $1 bil­lion, Ay­erdi-Ka­plan and oth­ers saw that ring­ing the ter­mi­nal with big build­ings could be a source of funds to make the project hap­pen. A ma­jor break­through came in 2004, when the state agreed to give the city 12 acres for­merly cov­ered by ramps that had con­nected the Bay Bridge to the Em­bar­cadero Free­way be­fore the free­way was de­mol­ished in 1991.

The land came free of charge, but pro­ceeds from its sale could be used only for the new tran­sit en­ter. Lo­cal politicians and tran­sit ad­vo­cates bought in, even those who in the past had re­sisted the idea of rais­ing height lim­its. They agreed with the ar­gu­ment that ex­tra height meant ex­tra value for the land to be sold — and by ex­ten­sion, ex­tra money to pay the costs of con­struc­tion.

“To say Maria was per­sis­tent was an un­der­state­ment,” said John Bur­ton, a long­time po­lit­i­cal force in San Fran­cisco who made the case for the tran­sit cen­ter and the land swap to law­mak­ers in both Sacra­mento and Washington, D.C. “With­out her, none of this would have hap­pened. She was an ab­so­lute force, and that’s what got it done.”

When the ter­mi­nal’s ground­break­ing oc­curred in 2010, a cel­e­bra­tory af­fair that in­cluded Rep. Nancy Pelosi and thenSen. Bar­bara Boxer, the bud­get was $1.589 bil­lion for the above-ground fa­cil­ity and a sub­ter­ranean con­crete shell. The lat­ter would hold the train sta­tion, to be com­pleted in tan­dem with the rail ex­ten­sion in a se­cond phase.

By the time Ay­erdi-Ka­plan stepped down as ex­ec­u­tive di­rec­tor in 2016, the bud­get was $2.259 bil­lion — a 42 per­cent in­crease.

Cost in­creases are to be ex­pected in a seven-year con­struc­tion project. But the mag­ni­tude of the jump was ex­ac­er­bated by a se­ries of what one an­a­lyst later called “op­ti­mistic as­sump­tions,” as well as de­lays in putting ma­jor con­tracts out to bid.

“Too many things went through too many it­er­a­tions be­fore we would come to clo­sure on de­sign is­sues,” said Ed Reiskin, who heads San Fran­cisco’s Mu­nic­i­pal Trans­porta­tion Agency and has been on the Trans­bay board since 2011. “If we had man­aged the de­sign process more rig­or­ously, we could have hit the mar­ket sooner,” and po­ten­tially saved hun­dreds of mil­lions of dol­lars.

The big­gest ex­am­ple was in early 2013, when the lone bid to build the cen­ter’s huge struc­tural frame came in at $259 mil­lion — a daunt­ing $114 mil­lion above es­ti­mates. The Trans­bay Joint Pow­ers Author­ity put the con­tract on hold, break­ing it into smaller pieces, and the re­vised pack­age ap­proved in July to­taled $206 mil­lion — still $61 mil­lion higher than an­tic­i­pated.

At the same board meet­ing where the $259 mil­lion bid was re­viewed, author­ity staff called for a bud­get in­crease from $1.59 bil­lion to $1.89 bil­lion. The in­crease would be cov­ered by tap­ping into re­serves and draw­ing on more than $100 mil­lion that had been set aside for the project’s se­cond phase — the rail com­po­nent.

“How did we not fore­see any of this?” Reiskin asked at the author­ity’s March 2013 board meet­ing. “It seems there’s a pat­tern here . ... Again and again we’re be­ing sur­prised.”

Even af­ter the con­struc­tion draw­ings were com­pleted and the bud­get in­crease to $1.89 bil­lion was ap­proved, the ugly bids kept com­ing. The ramps con­nect­ing the tran­sit cen­ter to the Bay Bridge, bud­geted at $41 mil­lion, came in at $57 mil­lion. The win­ning bid for in­te­rior fin­ishes was $39 mil­lion, $18 mil­lion over bud­get.

One rea­son big-ticket items were vul­ner­a­ble to price changes is that early in 2011, when con­struc­tion draw­ings for the project were 95 per­cent com­plete, Ay­erdiKa­plan put the de­sign work on hold. While the huge site was ex­ca­vated to make room for the fu­ture train sta­tion, con­sul­tants an­a­lyzed ev­ery facet of the project to make sure that it would re­sist ev­ery pos­si­ble worst-case sce­nario, from ma­jor earthquakes to well-planned ter­ror­ist at­tacks.

The changes re­sult­ing from that re­view in­creased the project bud­get by $57 mil­lion. More costly, in hind­sight, the re­view took roughly 18 months. Con­struc­tion con­tracts couldn’t be put out to bid un­til changes were made and the fi­nal de­sign de­tails were up­dated, which meant the author­ity en­tered the bid­ding fray af­ter the Bay Area shook off the post-2008 re­ces­sion and as pri­vate de­vel­op­ers started clam­or­ing to build tow­ers.

“There’s no ques­tion we paid for it (in high bids) when all the pri­vate sec­tor projects came back to life,” said Fred Clarke of Pelli Clarke Pelli Ar­chi­tects, which de­signed the tran­sit cen­ter.

Clarke, asked if it is typ­i­cal for such an ex­ten­sive vul­ner­a­bil­ity re­view to be done so late in the de­sign process, said: “I’ve never seen it be­fore. We al­ready had a very safe build­ing. Now we prob­a­bly have one of the safest build­ings in the world.”

Board mem­bers ques­tioned the ex­tent of the de­sign changes. But, as Ay­erdiKa­plan stressed is­sues such as safety and in­sur­ance li­a­bil­ity, they went along.

“It’s a very dif­fi­cult con­ver­sa­tion to have, how much se­cu­rity you need,” said San Fran­cisco Su­per­vi­sor Jane Kim, who joined the author­ity board in 2012. “You don’t want to be the one to say, ‘We don’t need to do all that.’ ”

In an in­ter­view last month, Ay­erdi-

Ka­plan said the re­view was es­sen­tial — even though the author­ity had con­ducted a thor­ough vul­ner­a­bil­ity assess­ment in 2009.

“It would have been neg­li­gent not to up­date it,” Ay­erdi-Ka­plan said. “In my mind, if we weren’t go­ing to make the cen­ter safe and se­cure for the pub­lic, it was not worth build­ing at all.”

Ay­erdi-Ka­plan has long sin­gled out our ro­bust econ­omy as the pri­mary cause of cost over­runs. She points to “a huge build­ing boom in the Bay Area” and, in the case of the con­tract for the struc­tural steel frame, “a spike in steel prices dur­ing this time pe­riod that no one could have pre­dicted.”

Some ob­servers, though, sug­gest Ay­erdi-Ka­plan was out of her depth once the tran­sit cen­ter moved from con­cept to a project.

“She was a great fundraiser and ad­vo­cate,” said Steven Heminger, ex­ec­u­tive di­rec­tor of the Metropoli­tan Trans­porta­tion Com­mis­sion, which has pro­vided fi­nan­cial and plan­ning re­sources to the tran­sit cen­ter dat­ing to 2001. “She wasn’t real ex­pe­ri­enced at con­struc­tion man­age­ment.”

Ay­erdi-Ka­plan sees things dif­fer­ently.

“I don’t feel con­struc­tion over­whelmed us,” she said last month. As for de­lays in seek­ing bids or mak­ing fi­nal de­ci­sions on de­sign, “You don’t want to rush things that are im­por­tant. I was al­ways keen on think­ing through things very care­fully.”

What’s in­dis­putable is that the cen­ter’s fi­nances con­tin­ued to worsen. Ef­forts to fill the gap with new sources of fund­ing — such as a search for cor­po­rate spon­sor­ship of the fa­cil­ity — came up short.

By the end of 2015, the bud­get es­ti­mate for the first phase had bal­looned to $2.1 bil­lion. Nearly all con­tin­gency funds were de­pleted, and all money ear­marked for the se­cond phase was used up as well.

The only re­course was a $250 mil­lion line of credit from San Fran­cisco City Hall, to be drawn from as nec­es­sary and paid back us­ing fu­ture tax rev­enue from the sur­round­ing tow­ers.

The bailout was paired with an MTC anal­y­sis fault­ing the author­ity for “in­ac­cu­rate es­ti­mates” and “op­ti­mistic as­sump­tions,” as well as a “com­plex de­sign caus­ing a lack of qual­i­fied bid­ders.” The author­ity’s board of di­rec­tors also agreed to the city’s re­quest that a new post be cre­ated “to over­see all as­pects of the de­sign, project con­trols and con­struc­tion.”

“It be­came clear we needed to fo­cus and to make de­ci­sions,” Mo­hammed Nuru, the di­rec­tor of the city’s Pub­lic Works Depart­ment who chairs the board, said re­cently.

The tran­sit author­ity board ap­proved the loan on April 14, 2016, and the re­vised bud­get for the first phase grew to $2.259 bil­lion. At the same meet­ing, Ay­erdi-Ka­plan stepped down as ex­ec­u­tive di­rec­tor. The board ap­proved a res­o­lu­tion ex­press­ing its “ut­most sin­cere ap­pre­ci­a­tion ... (for her) tire­less and ded­i­cated ser­vice.” But it was clear that she had not left by choice.

The ques­tion now is what comes next.

At the time of the 2010 ground­break­ing, the author­ity es­ti­mated the cost of the project’s two phases at $4.2 bil­lion, and said train ser­vice would be­gin by 2020. No longer. The most op­ti­mistic sce­nario has trains ar­riv­ing un­der­ground in 2027, and $4 bil­lion is the rough es­ti­mate solely for the rail ex­ten­sion from Mis­sion Bay, for a to­tal of more than $6 bil­lion.

This time, the de­lays aren’t the fault of Trans­bay: High-speed rail has been un­der at­tack al­most since state vot­ers ap­proved it in 2008, whether from mu­nic­i­pal­i­ties up­set about the route or Repub­li­can law­mak­ers who say the plan is a boon­dog­gle. The first stretch, a 119-mile path be­tween Madera and the Bak­ers­field area, only broke ground in 2015.

But even if high-speed rail was be­ing rolled out smoothly, the San Fran­cisco stretch would be at a loss for funds.

Tax rev­enue tied to new tow­ers near the tran­sit cen­ter will be a source of money. So would an in­crease to Bay Area bridge tolls that — if placed on the bal­lot next year and ap­proved by vot­ers — would gen­er­ate $350 mil­lion. Be­yond that there are no ob­vi­ous fund­ing sources on the near hori­zon, es­pe­cially given the cur­rent fed­eral at­mos­phere.

Not only are the fi­nances up in the air, so is the rail route. De­spite hav­ing an ap­proved path from Fourth and King streets to the tran­sit cen­ter, San Fran­cisco is study­ing an op­tion that would send the line un­der­ground up Third Street in­stead, past the Golden State War­riors arena and through the heart of the Mis­sion Bay de­vel­op­ment.

The study is be­ing funded largely by the MTC. The goal at City Hall is to de­cide whether to change the route by the end of this year. Do­ing so would re­quire an en­tire new set of en­vi­ron­men­tal reviews, prob­a­bly slow­ing things down.

“We, as the city and the re­gion, need to fig­ure out the best path to get the trains to the sta­tion,” Reiskin said. “Then the work is build­ing the case to get the money to do it.”

In the short term, the tran­sit cen­ter’s fi­nances are sta­ble. Soft­ware gi­ant Sales­force, which will oc­cupy more than half of the 61-story tower next door, has agreed to a 25-year spon­sor­ship deal that in­cludes nam­ing rights val­ued at $110 mil­lion. The project’s fi­nal batch of bids came in as es­ti­mated un­der the 2016 bud­get, which could leave roughly $100 mil­lion for phase two.

As for the $500 mil­lion or so in over­runs be­tween 2012 and 2015, most of that will be cov­ered by the money that had been ear­marked for the rail ex­ten­sion. Tax­pay­ers won’t be asked to cover the ex­tra costs.

But that so­lu­tion means money in­tended to help get the se­cond phase rolling is gone — which makes the chal­lenge of bring­ing rail down­town even tougher.

“Ev­ery fund­ing part­ner en­vi­sioned that some of their (com­mit­ted) money would go for phase two,” Heminger said. “In­stead, we are bor­row­ing money from phase two to pay for phase one.”

Ay­erdi-Ka­plan’s for­mer se­cond-in­com­mand, Mark Za­baneh, is now the author­ity’s ex­ec­u­tive di­rec­tor. He puts a de­ter­mined face on what lies ahead.

“There are a lot of mov­ing parts re­gard­ing the se­cond phase, but I don’t want that to stop us from work­ing to make it hap­pen,” Za­baneh said. “It’s im­por­tant we keep on pro­gress­ing and that the mo­men­tum con­tin­ues.”

Yet even in the worst-case sce­nario, where the rail ex­ten­sion re­mains stalled, the tran­sit cen­ter’s im­pact on cen­tral San Fran­cisco al­ready has been pro­found.

You see it in the of­fice and res­i­den­tial tow­ers that have sprouted on nearby blocks. In the work­ers that crowd the side­walks at lunch and fill the at­mo­spheric bars af­ter 5 p.m.

Four of those tow­ers, two built and two planned, in­clude bridges to the rooftop space. A fifth high-rise go­ing up across the way on Beale Street bills it­self as Park Tower at Trans­bay.

In short, the train has left the sta­tion — even if it never ar­rives.

Michael Short / Spe­cial to The Chron­i­cle

Sales­force Tower, the tallest build­ing in S.F., rises be­hind the tran­sit hub that will be re­named Sales­force Tran­sit Cen­ter.

Source: Trans­bay Joint Pow­ers Author­ity John Blan­chard / The Chron­i­cle

San­ti­ago Me­jia / The Chron­i­cle

The Trans­bay Tran­sit Cen­ter, San Fran­cisco’s an­swer to New York City’s Grand Cen­tral Ter­mi­nal with its stun­ning de­sign fea­tures and many ameni­ties, in­clud­ing a rooftop park, is ex­pected to become a civic des­ti­na­tion.

Photos by Car­los Avila Gon­za­lez / The Chron­i­cle

Look­ing up at the Ocu­lus, a ma­jor light source, among the tran­sit cen­ter’s many spec­tac­u­lar de­sign fea­tures.

The view from above the unique, 1,500-foot-long Trans­bay Tran­sit Cen­ter, which will be longer than any build­ing in San Fran­cisco is tall.

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