Funding elusive

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.

Economy strengthens

"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.
But if those efforts fail, Heminger said, the authority may ask the commission to borrow toll money. He said the agency would consider that request but is unlikely to give any additional grants to the transit center project. The terminal is expected to open, without the downtown extension, in late 2017.

Design changes

Alberti said the Transbay authority has made design changes to hold the costs down, including replacing the glass covering of the curvaceous center with a perforated metal skin. It's also adjusted estimated costs of future construction contracts upward to reflect the change in the economy.
The authority also hopes to win new state and federal grants. But the biggest hope is that the project is awarded $650 million or more from the federal New Starts program, a competitive grant program that has helped fund major Bay Area transit projects, including the Central Subway, the San Jose BART extension and the BART extension to San Francisco International Airport.