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City withholds Salesforce Transit Center funding as allegations of mismanagement mount

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Barricades block entry to the closed Salesforce Transit Center near Fremont Street after the discovery of a second cracked steel beam on Sept. 26, 2018. (Kevin N. Hume/S.F. Examiner)

San Francisco city officials are withholding $9.6 million meant to fund expansion planning for the Salesforce Transit Center, in a bid to hold its leadership accountable for alleged mismanagement of the $2.2 billion project.

The move to delay the funding Tuesday came the same day as a lawsuit filed by a major contractor, and amid new revelations that the transit center may lose hundreds of thousands of dollars in advertising revenue due to its closure following the discovery of two cracked beams holding up its rooftop park in late September.

Transbay buses have been rerouted to the Temporary Transbay Terminal until the problem is resolved.

Supervisor Aaron Peskin, chair of the San Francisco County Transportation Authority board, authorized the move to withhold $9.6 million bound for the Transbay Joint Powers Authority over the next nine months, the San Francisco Examiner has learned.

That funding was aimed toward design and engineering of a planned future phase of the transit center, in which the basement floor will be converted to accommodate California High Speed Rail and a soon-to-be electrified Caltrain.

“We are taking a little ‘time out,’” Peskin told the Examiner Tuesday.

At a transportation authority board meeting that same day, he told his fellow supervisors he’s “thinking about new governance structures” that may be regional or state controlled for the transit center, which right now is overseen by the Transbay Joint Powers Authority. “In the meantime I think we need to reconsider the money we’ve been advancing to (the authority) for phase two,” Peskin said.

He added, “We have to restore public faith and confidence to deliver this project.”

Mark Zabaneh, director of the Transbay Joint Powers Authority, was not immediately available for response.

Zabaneh may have his hands full, however, as a lawsuit filed by the lead contractor on the transit center project, Webcor/Obayashi Joint Venture, took aim at the Transbay Joint Powers Authority on Tuesday. In the suit, Webcor/Obayashi alleges the Transbay Joint Powers Authority failed to extend the contract when its own design team created delays, submitted design drawings “over 37 months late,” among myriad other delays that also “delayed the start of structural steel construction,” according to the suit.

Sam Singer, a spokesperson for Webcor/Obayashi, said inexperienced leadership led the project astray.

“In some instances it took nearly a year for TJPA to respond to those requests for information which delayed the project,” Singer told the Examiner. “The TJPA management was not experienced enough to manage a project of this size and scope. Instead of paying contractors who try to make up deficiencies, they witheld payment to Webcor/Obayashi and some of the (subcontractors).”

The Transbay Joint Powers Authority Board of Directors did ultimately oust Maria Ayerdi-Kaplan, who led the authority during much of the lawsuit’s scope, but was publicly criticized when the transit center ran roughly $1 billion over budget. Zabaneh was her replacement.

In a statement, Mohammed Nuru, chair of the Transbay Joint Powers Authority Board of Directors, said in a statement that the body will hold Webcor/Obayashi “responsible” for their contractual commitment to deliver the project to the Bay Area.

“At first glance, many of the accusations that deal with delays to the project pre-date Webcor’s repeated commitments to deliver the transit center on time,” Nuru said.

While the transit center remains closed, the question of just who will bear the ultimate cost of repairing the steel beams remains open, Zabaneh previously told the Examiner. Meanwhile, a review of financial documents and public statements by Zabaneh reveal the transit center is not only incurring costs to repair the steel beams, but also losing out on planned advertising revenue.

During an Oct. 11 Transbay Joint Powers Authority board meeting, Ed Reiskin, a board member who also leads the San Francisco Municipal Transportation Agency, asked if Zabaneh was tracking the incurred costs.

“We know that there’s a lot of different entities incurring lots of costs, and the TJPA also has foregone revenue during this period,” Reiskin said.

Zabaneh then revealed that costs are not the only issue at hand, but foregone revenue.

“We had expectations of ramping up revenue,” Zabaneh said. “Monday we started advertisements in the center, Tuesday we closed the transit center. We lost some advertising revenue that was already committed.”

The transit center had planned $500,000 in digital advertising for the fourth quarter of the year alone, which was slated to start September 24, a day before the cracked steel beams were found and the transit center was closed.

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