Bad news, San Francisco taxpayers: The Chronicle reports that you’re going to be shelling out an extra $37 million to pay off a loan to Goldman Sachs for the increasingly costly Transbay Transit Center.
The good news is, that loan probably keeps you from having to dole out even more later. However, even the good news in this situation is probably cold comfort, but that's because the city has quite literally dug themselves into a hole on this one.
Costs are steadily rising on the high-profile effort to replace the derelict Transbay Terminal (knocked down in 2010) with a glorious, sky-high, World of Tomorrow-like structure, crowned by what will be the tallest building in the city. It’s supposed to be the defining statement on San Francisco’s new cultural and architectural identity—if only we can get it built.
This latest, $171 million loan is meant to keep the ball rolling. Now that we’re so deep into the process, pausing for lack of funds would cost even more, as construction costs continue to climb in the city—construction costs, of course, being a big part of what put them over budget to begin with. CBRE (Commercial Real Estate Services) calculated that it cost $400 per square foot to build in San Francisco at the end of Q3 2015. By most accounts, that’s still an upward trend. Building is like taking a cab: The meter keeps running even when you stop.
That puts the Transbay Joint Powers Authority (TBJPA) in a sticky spot when the project goes over budget. Jane Kim, who represents the Transbay neighborhood on the San Francisco Board of Supervisors and also sits on the TBJPA, called the Goldman loan a "difficult decision." A project spokesperson told the Chronicle that they plan to get the loan paid off within six months, which would at least cushion the blow in terms of interest.
This is not the first time the Transbay Center has run into budget woes. Originally slated at $1.9 billion, it’s now estimated at $2.3 billion, not counting the second-phase rail project that will cost almost twice as much in its own right. More than once there has been danger of a construction halt, although the city has thus far managed to keep the coffers full.
Much of the funding comes from the sale of surrounding properties, which were formerly occupied by freeway ramps and overpasses torn down in the wake of the Loma Prieta earthquake. A gaggle of high-rises are in the works for those parcels, but the dividends have not stretched as far as predicted.