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Supes, Mayor Get Developers to Pay Nearly Full Tax for Transbay Rail

Developers agreed to pay nearly the full property assessment rates to help fund transportation projects in the Transbay Transit Center District, under an agreement announced by the Board of Supervisors yesterday. Supervisors and Mayor Ed Lee stood their ground against the developers, who hired former mayor Willie Brown as a lobbyist to try to lower the rates on the special infrastructure tax district, known as a Mello-Roos District. The move threatened to cut funds from the extension of Caltrain and high-speed rail downtown into the Transbay Center under construction.

A rendering of the Transbay Transit Center and surrounding high-rise development to come, via
A rendering of the Transbay Transit Center and surrounding high-rise development to come, via

The SF Chronicle reports:

Under the agreement, the city will still collect up to $1.4 billion in taxes from property owners around the new transit center for the Caltrain, and possibly high-speed rail, connection. But the revenue would come in over 37 years instead of 30 after city officials agreed to extend the life of the tax district to make it more palatable for the property owners.

Even though the rates hadn't changed from 0.55 percent of property values, developers complained that the skyrocketing value of real estate in downtown had increased the maximum project revenues in the district from $400 million to $1.4 billion.

The Board of Supervisors won't vote on final approval of the agreement for another two weeks while the details are worked out, but members said it looks solid at first glance. Supervisors Scott Wiener and Jane Kim lauded the agreement, and credited Mayor Lee for standing firm against the developers' attempts.

"I'm not referring to this as a compromise, because the [Transbay Joint Powers Authority] is getting all the money that we were seeking," said Wiener.

Mayoral spokesperson Christine Falvey told the Chronicle on Monday, "The city believes that the special tax rates that the developers are being asked to pay are more than fair considering they are taking advantage of a very significant increase in height limits for their buildings offered under the transit center district plan."

The developers apparently backed down on their threats to sue the city if it didn't assess the property values at their 2007 rates rather than current ones. Before the agreement was reached in a closed session, Wiener said, "If [a lawsuit is] what has to happen, so be it. I don't think we should cave in."

"I don't think much of the legal claim that's being asserted," said Wiener. "I think it's pretty clear that the valuation was not going to be at the bottom of the recession."

As former D6 Supervisor Chris Daly recalled in an SF Examiner op-ed this week, one of the biggest developers, Hines, previously pulled a "bait-and-switch" in the bidding process to build the Transbay Transit Center and tower:

In September 2007, a jury evaluated a collection of international proposals to design and build the Transbay Transit Center and the then-associated tower, now named the Salesforce Tower. The unanimous winner, the team of Hines and Pelli Clarke Pelli, was chosen based on two defining characteristics -- the inclusion of the rooftop park and the highest financial offer of $350 million ($50 million of which was to be dedicated to the park).

During the TJPA board of directors' selection of Hines, the losing bidders -- including Boston Properties, which has since partnered with Hines on the Salesforce Tower -- warned the board that Hines' offer was a bait-and-switch. When I pressed Paul Paradis of Hines on this issue, he assured us that this was not the case.

Much to our disappointment, during a difficult negotiation, Hines pulled that bait-and-switch -- lowering the bid by $75 million and eliminating the capital contribution to the rooftop park, the distinguishing factor in its selection.

Wiener noted that in more recent years, transit advocates have stepped up to hold Transbay developers and City Hall officials accountable. Since Streetsblog broke the story about the latest battle on Friday, it gained coverage in other major media outlets, and transit advocates organized supporters to urge the board not to give in on the deal.

"I've been very impressed...  with the activation of our transit advocacy community," said Wiener. It has "really come into its own in really holding policymakers accountable for our decisions."

More than a dozen people spoke at yesterday's hearing to put pressure on the board to uphold the original Mello-Roos agreement, including representatives from labor groups, the SF Transit Riders Union, Livable City, Friends of Caltrain, the SF Bicycle Coalition, as well as east SoMa residents involved in the planning of Transbay projects.

No representatives of the developers spoke at the hearing, but reps from the Chamber of Commerce and the Building Owners and Managers Association called for a delay on the vote.

"This is a bellwether of what's going to happen in the future to San Francisco private-public partnerships," said Thea Selby of SFTRU before the agreement was announced. "This is a contract that cannot be broken."

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