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Profitable transportation agency votes to leave Oakland

on October 14, 2011

The Bay Area Toll Authority, an affiliate of the Metropolitan Transportation Commission (MTC), defied state lawmakers Wednesday when commissioners voted 8-6 to purchase a building in San Francisco to serve as a regional headquarters for MTC and other public agencies. The move would require MTC to move the headquarters from its longstanding Oakland location. The deeply divided toll authority also voted to use bridge toll money to fund the $167 million purchase and renovation of the building, located at 390 Main Street.

The decision comes at a time when state legislators have expressed concerns about whether the multimillion dollar purchase is a responsible use of public funds and the state auditor is weighing whether toll revenues can legally be used to buy the building.

MTC has outgrown its current building in Jack London Square and has been on the hunt for a larger property that will allow the agency to expand its operations. While the commissioners considered a few Oakland sites, a chief concern was finding a building large enough to house other public agencies as well, in a bid to foster inter-agency collaboration and generate revenue from leased office spaces.

City officials, including Oakland Mayor Jean Quan, had hoped to keep MTC—which is one of the most profitable entities in Oakland and employs more than 100 people—within city limits. At the commission’s September 28 meeting, Quan said MTC’s presence in Oakland was a boon to the local economy, and she encouraged the agency to either relocate to another Oakland site or to build a new structure downtown.

Other groups, including disability and sustainability advocates, opposed the move for their own reasons, namely that the San Francisco building is not wheelchair accessible, sits a half mile from a BART station and is not seismically sound.

At the meeting Wednesday, Councilmember-at-large Rebecca Kaplan criticized commissioners for failing to complete a promised evaluation comparing the San Francisco site to at least one alternative location. While MTC briefly considered 1100 Broadway in downtown Oakland as a possible site, the building was not included in MTC’s final recommendation, which only contained the Main Street property.

“It’s mind-boggling to see a public agency acting against good government advocates and disability advocates to enter the speculative commercial real estate market,” said Kaplan’s communications director, Jason Overman, after the meeting. “And of all agencies, the region’s transportation agency chooses to move to a site that is over half a mile from the nearest BART station?”

Other speakers noted that many of MTC’s employees live in the East Bay and commuting to a site in San Francisco that is not near a BART station would be not only be ironic, but a logistical hardship for many.

Jack Broadbent, the CEO of the San Francisco-headquartered Bay Area Air Quality Management District, which plans to lease office space in the new MTC building, also spoke at the meeting, thanking the agency for its efforts to secure the San Francisco site and reiterating his own agency’s commitment to relocating there.

Ultimately, commissioners decided to move forward with the purchase, which is expected to close by Friday, despite that fact that the state auditor is still investigating whether or not the agency can legally use toll bridge money to fund the acquisition.

State Senator Mark DeSaulnier (D-Concord), the chair of the Senate Transportation and Housing Committee, requested the audit in September, in response to MTC’s proposal to use bridge toll funds to purchase commercial real estate. “Spending $179 million on acquisition and improvements of an office building in San Francisco is an irresponsible use of toll payer funds,” he said in a statement.

DeSaulnier’s district director, Lupe Schoenberger, attended the meeting Wednesday and read a letter from DeSaulnier to MTC chair Adrienne Tissier, who this week published an op-ed in The Contra Costa Times entitled “MTC is moving, deal with it.” DeSaulnier’s letter reiterated his oft-cited concerns, and advised MTC to “consider how [the purchase] may erode the trust of the toll payers that elected us to serve their needs.”

After the meeting, DeSaulnier’s communications director, Michael Miller, said that MTC could have trouble gaining public support for future bridge toll increases and other projects if this purchase is later deemed by citizens to be an irresponsible use of public funds.

Also at issue is MTC’s plan to turn a profit by leasing out office space in the 5,000 square-foot building, which opponents, including DeSaulnier, Quan and Kaplan, say is tantamount to using public funds for real estate speculation. The commission plans to lease office space in the new building to the Bay Area Air Quality Management District and the San Francisco Bay Conservation and Development Commission, both of which are already located in San Francisco.

Initially, the commissioners had hoped that the Oakland-based Association of Bay Area Governments would also relocate to the new San Francisco site but the agency eventually declined, citing concerns over both financing the building and its location. The association issued a memo in July noting that 80 percent of its employees live in the East Bay and that “an employee survey found that many of them consider the Main Street location a significant hardship.”

MTC’s spokesperson Randy Rentschler said that the agency’s isn’t trying to make “a real estate play” but is, instead, trying to make the best financial decision possible while securing a location large enough for several public agencies to coexist under one roof.  “It’s not an enjoyable thing to go through, but if we are going to get these public agencies together, two of them are in San Francisco and two are in Oakland so someone has to move,” Rentschler said. “It’s not about the money.”

It makes sense for the commission, of all of the involved agencies, to handle the building’s purchase, Rentschler added, because “the commission has one of the highest credit ratings among agencies in the state, and a higher credit rating than the state of California.”

Rentschler attributed much of the controversy over the purchase to public officials’ desire to keep MTC in Oakland. “We have an understandable competition, and even division, between the East and West Bay. These cities compete not only for public agencies but for lots of things,” Rentschler said. The commission picked San Francisco, he said, “because that’s where the big buildings are.”

But Kaplan’s communications director, Jason Overman, said that the issue is “absolutely not a tale of two cities.”

“If the perfect site were in San Francisco, we wouldn’t necessarily be opposed to that,” Overman said. “But obviously [the commissioners] have been pushing for this site in San Francisco without the full open public process and a fair evaluation of the two sites side by side, as they should have.”

The state audit is expected to be completed by early next year. If at that time the state auditor concludes that MTC did not have the authority to use toll funds for the purchase, the agency may have to find another way to finance the venture. In the meantime, the California Senate Transportation and Housing Committee will hold two hearings this fall examining both MTC’s decision and the scope of its authority.

Corrections: A version of this article published at 8:39 am on Friday, October 14 incorrectly stated Jason Overman’s title as chief of staff to Councilmember-at-large Rebecca Kaplan. The article has been changed to state Overman’s title correctly as communications director to Councilmember Kaplan.


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