SAN FRANCISCO (CBS SF) — San Francisco city officials announced a $260 million bailout loan and increased oversight for the troubled Transbay Transit Center project on Monday.
The proposed loan will provide interim financing for the completion of the project after cost overruns increased the budget from $1.6 billion in 2010 to $2.3 billion. The climbing costs have created a cash flow problem that threatens to halt construction.
The city of San Francisco will issue variable rate certificates to finance the loan, backed by the city’s own credit, $100 million of which will be purchased by the Metropolitan Transportation Commission and $160 million by Wells Fargo.
The certificates are expected to be paid back through project revenues including taxes and special assessments levied on property owners and developers in the area over the next five to 10 years.
The financing package will be introduced to the Board of Supervisors and the MTC this week and must be approved by both boards, officials said.
Construction began on the first phase of the Transbay Transit Center, a six-story building and hub for Bay Area bus systems at First and Mission streets, in 2010. A second phase, which is not yet fully funded, is expected to eventually extend both Caltrain and the California High Speed Rail system from Fourth and King streets to the station.
“The Transbay Transit Center will be a nationally renowned, 21st Century transportation hub that will serve our growing City and the region for generations,” Mayor Ed Lee said in a statement Monday. “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 project is managed by a joint powers authority that includes representatives of San Francisco, Caltrain and AC Transit. However, as part of the bailout package, the city and MTC will increase oversight over the project, with the city’s Department of Public Works taking over construction management.
San Francisco officials and the MTC will also create a new Cost Review Committee to oversee the project’s budget and contracts.