BILL ANALYSIS �
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|SENATE RULES COMMITTEE | SB 1545|
|Office of Senate Floor Analyses | |
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THIRD READING
Bill No: SB 1545
Author: DeSaulnier (D), et al.
Amended: As introduced
Vote: 27 - Urgency
SENATE TRANSPORTATION & HOUSING COMM. : 8-0, 3/27/12
AYES: DeSaulnier, Gaines, Harman, Kehoe, Pavley, Rubio,
Simitian, Wyland
NO VOTE RECORDED: Lowenthal
SENATE APPROPRIATIONS COMMITTEE : Senate Rule 28.8
SUBJECT : Bay Area regional agencies: building purchase
SOURCE : Author
DIGEST : This bill prohibits the Bay Area Headquarters
Authority (BAHA) from using public funds to develop or
improve a specific building in San Francisco for use as the
headquarters of the Metropolitan Transportation Commission
(MTC), Bay Area Toll Authority (BATA), and possibly other
regional agencies until MTC responds to a State Auditor's
report to be issued in June of this year.
ANALYSIS : MTC, the regional transportation planning
agency for the nine-county San Francisco Bay Area, has been
headquartered for nearly thirty years in Oakland, directly
across the street from BART's Lake Merritt station. MTC
and BATA acting through the BAHA, a joint powers agency
that they created, acquired a building for the headquarters
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of the two agencies at 390 Main Street in San Francisco
last October for $93 million.
The Joint Legislative Audit Committee at the request of
Senator DeSaulnier authorized the State Auditor to examine
the analysis underlying the decision to relocate MTC from
Oakland to San Francisco. The State Auditor's examination
will include an evaluation of the trade-offs between
acquiring a building in Oakland as opposed to moving to San
Francisco, the structure of the transaction and whether it
protects the public's interests, and other related
questions. The State Auditor expects to complete its work
by June of this year.
This bill:
1. Prohibits MTC from spending any public funds on the
development or improvement of an office building at 390
Main Street, San Francisco, until after the State
Auditor has completed the audit.
2. Requires MTC, upon completion of the audit, to submit a
report to the Legislature responding to any issues
raised by the State Auditor prior to expending any funds
on the rehabilitation of the building.
Comments
Purpose . MTC is currently located in a building jointly
owned by MTC, the Association of Bay Area Governments
(ABAG), and BART. Beginning in 2010, MTC, ABAG and the Bay
Area Air Quality Management District (BAAQMD) initiated a
process to find an office building in which all three
agencies could co-locate. The reasons for the joint effort
were at least three. First, the agencies had concluded
that their present facilities were in need of repair and
various upgrades. Second, the existing space did not allow
for anticipated growth in staff. Third, because of the
increasing need to coordinate regional policies and
programs, the agencies believe that co-location will
facilitate staff interaction. ABAG, because its regional
land use modeling supports MTC and BAAQMD planning efforts,
agreed to participate in the evaluation of alternative
office sites but has not made a commitment to relocate. In
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the meantime, the Bay Conservation and Development
Commission (BCDC), a state agency responsible for
regulating land uses on the shoreline of the bay, indicated
a willingness to locate in the new building. BCDC's
enabling legislation requires the organization to be
located in San Francisco. The state Department of General
Services is representing BCDC in the transaction.
The author believes that process of selecting a new
building and the structure of the transaction was not
transparent. He, therefore, requested a review of the
transaction by the State Auditor. The author wants MTC to
stop work on the new building until the report from the
State Auditor is published and MTC has an opportunity to
respond.
Budget for the relocation . MTC is using toll revenues
collected by BATA to acquire the building. MTC established
the budget for the acquisition and improvements to a
building at $179,776,515. Since the acquisition of the
building, the budget has decreased to $167,026,515. The
components of the budget area as follows:
-----------------------------------------
|Building |$|93,000,000|
|Building Improvements | | |
|Tenant Improvements | |25,160,723|
| | | |
| | |23,865,792|
| | | |
|----------------------------+-+----------|
| | | |
|Building Total |$|142,026,51|
| | | 5|
| | | |
| | | |
|----------------------------+-+----------|
|Project contingency |$|15,000,000|
|Optional exterior | | |
|enhancements | | 8,300,000|
|Staff cost | | 1,700,000|
|----------------------------+-+----------|
|Total project costs |$|167,026,51|
| | | 5|
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|----------------------------+-+----------|
|Source: MTC | | |
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MTC set goals to relocate into the new facility twenty-four
months after the close of escrow and to have at least
350,000 square feet in the new building. In addition, MTC
preferred to own a new building rather than lease space.
Search for an office building . The search for office
buildings resulted in four candidates, three in Oakland and
one in San Francisco, including the building ultimately
selected, a former Post Office building. Two of the
buildings exceeded the amount budgeted for improvements.
One of the buildings in downtown Oakland was located at the
City Center, which is a BART station, but was available
only for lease.
MTC selected the former postal facility at 390 Main Street
in San Francisco. The eight story building has nearly
500,000 square feet. The asking price was $108.3 million.
MTC acquired it for $93 million. Escrow on the acquisition
closed last October.
In December, MTC awarded a million dollar contract to begin
the design work necessary for rehabilitation, seismic and
air conditioning upgrades, and providing for disabled
access. In addition, MTC awarded a $240,000 contract for
property management services.
An additional relocation cost will be an increase in the
transit subsidy benefit that MTC offers its employees. 70
percent of its staff commutes by public transit. For 60
percent of MTC's employees, the move to San Francisco will
increase the length of the commute. MTC intends to
increase its transit subsidy benefit from $119 to $161 per
month, a 35 percent increase.
Community issues . Led by Oakland, East Bay communities
have been strongly opposed to the relocation. They argue
that it takes jobs out of Oakland and that the San
Francisco site lacks easy accessibility, because it is a
half-mile from the nearest BART station. Oakland officials
also believe that MTC did not fully vet the Oakland sites.
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The new site has also been a concern to the disabled
community because of its poor accessibility. MTC intends
to mitigate the accessibility issue by operating a shuttle
service to the new building from the BART station.
Who's in charge? In addressing the relocation issue it is
difficult to determine who is in charge. Although MTC and
BATA are independent public agencies, they have the same
governing board and many of MTC's staff work both for BATA
and MTC. The joint powers agreement establishing the legal
entity that actually acquired and manages the building is
BAHA. Neither party to the formation of BAHA and the
actual purchase of the building is operating independently
or at arms-length. This organizational structure may have
prevented different points of view from being fairly
considered.
In addition, BATA is the financial "partner" for the
acquisition. It is funding the acquisition of the
building, is providing financing to BAAQMD for its share of
the building, and has proposed a financing strategy to
allow ABAG to move into the building.
BATA has broad authority to acquire facilities with its
toll revenue. Because tolls are a user fee, the purposes
for which they are used must benefit the toll payers. To
this end, it is unclear if toll payers benefit from BATA's
use of toll revenues to acquire a building that exceeds its
space requirements so that other regional agencies may
co-locate. The audit will address this issue.
ABAG has not committed to relocating . Although ABAG
participated in the vetting of office buildings, its board
for the time being has decided not to relocate to San
Francisco. Because ABAG has limited resources, BATA has
proposed that ABAG transfer its rights to the commercial
space in the building to BAHA and the revenues generated
from the space be used to pay down ABAG's share of the
buildings cost.
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: Yes
SUPPORT : (Verified 5/9/12)
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Mayor Jean Quan, City of Oakland
California Trucking Association
Oakland Metropolitan Chamber of Commerce
OPPOSITION : (Verified 5/9/12)
Bay Area Air Quality Management District
McCarthy Building Companies, Inc.
Metropolitan Transportation Commission
JJA:kcm 5/9/12 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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