Image courtesy of TJPA

Financing strategy lets transit-hub neighbors go taller, but they cannot exceed the 1,070-ft Salesforce Tower, planned as the city's tallest. Nineteen projects are underway.

Developing the Transbay Transit Center in San Francisco has been a nearly two-decade crusade for Maria Ayerdi-Kaplan, executive director of the Transbay Joint Powers Authority. She spearheaded the agency's method for funding the project, which, in turn, lifted real estate development in the so-called South of Market area.

The plan got a boost when the State Dept. of Transportation transferred 19 acres to the authority at no cost—including 12 developable acres and seven acres for the transit center. DOT's stipulation is that proceeds from property sales would fund Transbay's hard construction costs.

"We started selling our parcels, entering into public-private partnerships with developers and maximizing the value of the properties because of their proximity to the new station, thereby generating a significant amount of funding for the project," says Ayerdi-Kaplan. To date, real estate sales have brought in $266 million. In September, the authority will hold a public auction to sell the two remaining properties, including a parcel that will have a direct link via pedestrian bridge to Transbay's rooftop park.

Revenue also flows from the Mello-Roos Community Facilities District, which was created by the city to allow developers near the transit center to "upzone" the heights of their buildings to a limit of 1,070 ft, making the properties much more valuable. In return, developers pay a tax to fund the neighborhood's infrastructure needs. One such property, the planned 1,070-ft-tall Salesforce Tower—formerly known as the Transbay Tower—is slated to outrank the city's tallest, the 853-ft Transamerica Pyramid.

In addition, tax increment funds from the Transbay Redevelopment Plan will be collected through 2050. In total, these strategies are expected to bring in $2.7 billion to fund construction of the center, nearby affordable housing and public infrastructure.

In the area surrounding the transit center, there are 19 buildings that currently are under construction, says Scott Boule, the authority's community outreach manager.

Ironically, due to its own success, the authority must now pony up a bit more money for the terminal's construction. The $1.9-billion phase-one budget for the $4.5-billion transit hub will be revised upward in July "as a result of the very heated construction market that we created," Ayerdi-Kaplan says. "But that's just what happens, and we are actually proud of creating this new neighborhood."