Transbay project in $300 million hole
San Francisco’s Transbay Transit Center, the so-called Grand Central station of the West that’s now just a deep hole in the ground, will cost $300 million more than anticipated, Bay Area transportation officials were told Wednesday.
And that financial hole could grow deeper, cautioned Steve Heminger, executive director of the Metropolitan Transportation Commission, the Bay Area transportation planning and financing agency.
“We may not have seen the end of it,” he said. “This is a very costly project.”
The commission learned of the nearly 19 percent cost overrun as it agreed to let the Transbay Joint Powers Authority building the downtown transit center shift $47.8 million in toll bridge funds for future expenses to help cover the cost of a structural steel contract that came in over budget.
The construction cost for the first phase of the transportation hub at First and Mission streets, which will initially serve buses from seven transit agencies and eventually electric trains from Caltrain and high-speed rail, has risen from $1.6 billion to $1.9 billion in the revised budget the authority adopted on July 11. The project’s first phase includes demolishing the old Transbay Terminal, building and operating a temporary terminal and building the five-story terminal, including bus decks and ramps, retail spaces, two below-ground rail levels and a rooftop park.
To cover the hefty cost increase, Heminger said, the authority will use some of the money that had been dedicated to the second phase of the project – the downtown extension that would carry trains from Fourth and King streets to the Transbay center. That portion of the project had never been fully funded, and is a key Bay Area project competing for major federal funding. But the soaring cost of the first phase means it will be an even bigger challenge to find the funding to lay rails to the new transit center.
“There’s not enough money to deliver the full project – not before the increases and not after,” said Adam Alberti, a spokesman for the authority. “The fact that the cost increased by $300 million means that a bigger hole needs to be plugged.”
San Francisco Supervisor Scott Wiener, a commissioner and Transbay center supporter, said after the meeting that the cost increase was disappointing but not a serious setback for the downtown extension.
‘We’ll get it done’
“I don’t think it will have a meaningful impact,” he said. “We have always known that getting the downtown extension done would take a lot of work over a number of years, and this doesn’t change that. We’ll get it done.”
Alberti blamed the cost spike on increased and unanticipated federal security requirements for the transit center, whose prominence will make it a potential target for terrorist attacks. A federal vulnerability analysis identified an additional $56.8 million in detection, communications and protection systems needed for the project.
The resurgent economy and construction industry also contributed, pushing bids on the last major contract – structural steel – 75 to 80 percent over estimates. The authority received a single bid, rejected it and repackaged the work into three separate contracts to attract more bidders. It worked, resulting in lower bids, but they were still $95 million more than budgeted.
“It’s largely reflective of the fact that the economy, and especially the construction economy, is heating up,” Alberti said.
While construction costs are rising, so are land values, and that will help the authority cover the $300 million overrun. To take advantage of the boom, some of the land sales funding the center will be accelerated so that money is available sooner, Alberti said. The authority also hopes to win additional Proposition K transportation sales tax funds in San Francisco, transit center impact fees and grants from the MTC. It also hopes to refinance a federal infrastructure loan.