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Update: Mayor Ed Lee signed the Transit Center District Plan into passage on August 8, after unanimous approval by the San Francisco Board of Supervisors.

Things are heating up again for San Francisco's Transit Center District Plan. On May 24, the SF Planning Commission voted 5-1 to certify the final draft of the environment impact report that will move the plan forward to the Board of Supervisors’ Land Use and Economic Development Committee. In addition, the commission voted to approve amendments to the general plan, planning code and zoning code that will be necessary to implement the plan. It will go before the Board of Supervisors for adoption sometime in July. SPUR has long supported this plan, recognizing its potential to transform San Francisco and the region.

What Is the Transit Center District Plan?

The Transit Center District consists of approximately 145 acres surrounding the new Transbay Transit Center, currently under construction on Mission Street between First and Fremont.

The plan aims to create a new downtown neighborhood made up primarily of office and retail space, with a notable amount of residential space as well. The plan will enhance the area’s established patterns of land use, urban form and public space, creating a vibrant new neighborhood.The Transbay Joint Powers Authority (TJPA) selected Pelli Clarke Pelli Architects and developer Hines to design and build a high-rise tower next to the new terminal. The team has proposed a 1,070-foot tower, the tallest in the city. There are several shorter towers proposed for the district, ranging in height from 150 to 850 feet. These towers will provide major sources of new job space and housing over the coming decades.The Transbay Transit Center, the centerpiece of the plan, will not only provideexpanded bus facilities, itwill also include an underground rail station to serve as the San Francisco terminus for Caltrain and California high-speed rail. Because the project is not fully funded, the TJPA has divided its construction into two phases: the above ground terminal and the undergroundextension of Caltrainfrom its current station at 4^th and King streets. (Note: Gabriel Metcalf, SPUR’s executive director, is a member of the Transbay Joint Powers Authority, the governing body for the transit station construction project.)

Why Downtown?

The downtown core can, and should, absorb more jobs and housing. Since the California Legislature adopted Assembly Bill 32, which mandates statewide reductions in greenhouse gas emissions, and Senate Bill 375, which requires regions to adopt land use plans that will bring about these reductions, there has been increasing momentum to encourage transit-oriented development around the state. San Francisco had already designated a redevelopment area adjacent to the Transit Center that calls for 2,700 units of housing (with 35 percent of it affordable). The new Transit Center District Plan, which overlaps some with the redevelopment area, will add zoning for a total of about 9 million square feet of space, of which about 6 million is anticipated to be office space. That’s an increase of about 33 percent and enough to provide nearly 35,000 jobs. As highlighted in SPUR’s report The Future of Downtown San Francisco, downtown is the logical place for dense employment near transit. The Transit Center District Plan brings these principles to life.

Costs and Public Benefits

 To achieve the plan’s objectives and create the district envisioned, a broad range of public improvements and related programs are needed. The budget for the entire Transit Center and district are projected at $4.2 billion.

Approval of the Transit Center District Plan will provide much needed funding for the extension of regional rail to downtown San Francisco and other public infrastructure improvements. The Transit Center District Plan will also provide $590 million through a new neighborhood that has been zoned to generate fees for the city. To achieve the plan’s vision, development projects must generate enough funding to pay for infrastructure and public improvements proposed in the plan. Two proposed funding mechanisms are intended to strike the balance to achieve these requisites. First the city assessed new impact fees to be paid by developers who build in the district. Second, the area will establish a Mello-Roos Community Facilities District for new development projects, which will levy additional property taxes to pay for neighborhood improvements. Of the revenues projected to be raised from building out the plan, up to $420 million would be available for the Transit Center and rail extension, and $170 million would go to street and open space improvements to support growth in the district. Currently, a 5.4-acre park is planned atop the Transbay Transit Center. Making this park publically accessible is a critical element of the plan’s objectives for increasing open space. The plan also calls for more pedestrian and bike improvements, as well as sidewalk and street improvements to further solidify this as a viable neighborhood and jobs center.  

This plan area has long been one of SPUR’s top priorities. It will be a national model of transit-oriented development. For urban design reasons, environmental reasons and economic reasons, we think this is the right plan in the right location.

As the deadline rapidly approaches to submit measures for the November ballot, the City and County of San Francisco is moving ahead aggressively with its effort to reform the city’s business tax. While the city has made significant progress in recent weeks, there are some signs that the complexity and commitment to reform are being further complicated by increasing calls for a tax that would not just replace revenue from the existing payroll tax but bring the city additional funds.

City Controller Ben Rosenfield and Chief Economist Ted Egan have for the last few months been hard at work designing a replacement for San Francisco’s payroll tax. The controller’s office originally modeled two different proposals to replace the city’s current payroll tax: a modified payroll tax that would lower rates and broaden the base of payers, and a gross receipts tax based on rate schedules defined by industry. In the last month, however, that process has narrowed to focus solely on a gross receipts tax proposal. (Read the controller’s latest report on that effort.)

Gross receipts taxes are widespread in California, but they all have one important thing in common: They are extremely complicated. The tax must address dozens of different industries, as well as companies’ differing abilities to pay — and their varying ability to move to other places to conduct business. All this means there are many more levers than with a simple payroll tax. (San Francisco’s existing payroll tax is a straight 1.5 percent of all payrolls over $250,000 per year.)

But with a multitude of levers also comes significantly more flexibility. For example, the controller’s current proposed structure consists of six separate schedules. These schedules group companies that have comparable ratios between payroll (an expense) and gross receipts (how much money a company makes). For example, a real estate management firm may have few employees and high gross receipts from rent and other fees paid by tenants. Conversely, a restaurant might have a large number of employees and lower overall receipts. These two very different operating models are treated identically under the city’s existing payroll tax, but a gross receipts tax would provide different schedules for types of companies with different cost structures.

Another goal of the controller’s effort is to attempt to make the tax structure progressive in order to encourage job growth in small businesses and start-ups. Within these schedules there are a number of different rates (see sample schedule below) so that companies generating more revenue within each category would pay marginally higher rates. Likewise, start-up businesses that are not yet generating revenue — but may have significant payroll as they build products or services — would have more breathing room than they do in the current structure.

While the process to date has been one of the most inclusive in memory — with dozens of industry meetings and numerous iterations — the devil will ultimately be in the details for any proposal submitted to voters. There will be many winners and losers in any transition to a new tax (see below), which means achieving some form of consensus could determine a measure’s success or failure.

The eventual success or failure of business tax reform in San Francisco is only partially dependent on the structure of the proposal itself. The other side of this coin has to do with revenue. By design, all proposals to date have taken a “revenue neutral” approach; they attempt to simply replace revenue from the payroll tax and not generate additional funds for the city. However, that original intent is increasingly in doubt as the June deadlines for the ballot approach. Supervisor John Avalos, officials from Service Employees International Union 1021 and others have indicated their desire for any changes to the tax to generate additional funds. Whether or not those hopes are eventually included in the mayor’s tax reform proposal, it is increasingly likely that a separate measure to increase revenues could also be on the ballot in November. Could the controller’s measure include some additional revenue in order to neutralize these efforts?

The final stretch of negotiations will be critical to the success of the city’s business tax reform efforts. With the multitude of different moving pieces — both within the negotiations over rates and financial impacts, and apart from the negotiations around new revenues — this is still a fragile coalition. We hope a balance can be struck that will allow for the city to successfully transition to the gross receipts tax currently on the table. It would allow for greater stability over time, more equity and built-in incentives for new companies and industries to grow and thrive in San Francisco. But we must be mindful of the delicate balancing act required to get there.

Have you been to Hetch Hetchy Reservoir in Yosemite? Everyone who drinks water or takes a shower in San Francisco should go. It is spectacular: a miles-long placid blue lake nested within towering granite cliffs, from which waterfalls cascade. To visit the waterfalls or Yosemite’s northern backcountry, you walk across O’Shaughnessy Dam. It marks the first catchment in a 160-mile long water system that brings high quality, superb-tasting water to 2.6 million residents of the Bay Area every day.

Standing upon it will give you the chance to appreciate the sublimity of both nature and human achievement. O’Shaughnessy Dam and the waterworks that connect it to the Bay Area are a marvel of engineering. The water shunted through them — about 218 million gallons a day — arrives in most city taps by gravity alone. This is also a place imbued with history: San Francisco’s congressional delegation won the right to build the dam in 1913, to secure a reliable source of water in the wake of the 1906 earthquake. This effort was famously and vociferously fought by John Muir and was the subject of a national debate for years; the loss later galvanized the Sierra Club to successfully oppose large dams in Dinosaur National Monument and Grand Canyon National Park.

It would be almost impossible to build a new dam there today. (In fact partially because it is so difficult and destructive to build large dams, we are running out of new supplies of water in California.) But tearing O’Shaughnessy Dam down now in order to restore Hetch Hetchy Valley would be a disaster.

If their signature-gathering campaign is successful, a small group of environmental advocates, led by Restore Hetch Hetchy, will give you the opportunity this November to vote on a measure that would require the San Francisco Public Utilities Commission (SFPUC) to develop a plan to drain Hetch Hetchy Reservoir. The proposed ballot measure calls for the creation of a task force that would spend $8 million to develop a long-term plan for improving water quality and reliability, remediating environmental damages caused by the water supply system, and identifying new water and renewable energy supplies so that Hetch Hetchy Valley could be returned to the National Park Service.

This ballot measure is so problematic that SPUR has taken early action to oppose it.

SPUR wholeheartedly agrees that planning for water quality and reliability is important. In fact, this is so obviously a good idea that the SFPUC and other end users of Hetch Hetchy water have been doing it for years. In 2007, in approving the environmental impact report for the Water System Improvement Program — an investment of more than $4 billion to shore up the seismic reliability of the Hetch Hetchy water system — the SFPUC gave itself, and its wholesale customers on the peninsula, ten years to develop a plan that would identify reliable alternative sources of water to meet the region’s future growth in demand, rather than diverting more water from the Tuolumne River. The SFPUC and other Hetch Hetchy users are currently implementing plans to meet this demand through recycled water, groundwater and conservation. (Read SPUR’s analysis of this plan.) So the idea of planning for new water supplies need not be on the ballot.

In terms of quality, Hetch Hetchy water is so pristine that it is one of only a handful of water supplies in the country that doesn’t need to be filtered, a process that is expensive and energy intensive. The SFPUC tests its quality more than 100,000 times a year to ensure that it exceeds all safe drinking water standards.

The main problem with the measure is that in spite of appearing to be about studying best options or planning for future water supplies, it has pre-determined the solution: draining Hetch Hetchy Reservoir.

The idea of punching a hole in or removing the dam and allowing the valley to be restored to its pre-development conditions has been around since the late 1980s. Over the last 35 years, the idea has been studied by the Environmental Defense Fund, the U.S. Bureau of Reclamation, the National Park Service, UC Davis, and several state agencies. Some of these studies determined that the idea of draining the reservoir was technically feasible but incredibly costly.

In 2006, the California State Department of Water Resources (DWR) and Department of Parks and Recreation evaluated the cost estimates of multiple feasibility studies conducted between 1988 and 2005. DWR’s meta-study found a range of costs from $3 billion to $10 billion for restoration and replacement of water and power sources. Restore Hetch Hetchy and the Environmental Defense Fund’s own studies support a lower cost estimate, ranging from $1 billion to $2 billion. DWR also found that the planning studies necessary to refine the costs and benefits of restoration would cost $65 million alone.

Even if we could obtain the several billion dollars necessary to carry out this endeavor (neither private nor public sources have yet been identified) some of the tasks involved may not even be possible. Here are just some of the hurdles we would need to cross:

• Identify water supplies to meet about 18 percent of the region’s water demand in dry years (which occur about 20 percent of the time)

• Permit and build 40 to 90 megawatts of renewable power to supply almost all municipal demand in San Francisco

• Build and operate a water-filtration plant, because water stored further downstream than Hetch Hetchy will have to be filtered

• Engineer and design a series of expensive and complicated infrastructure projects to re-engineer major components of the regional water system, then get those changes through the environmental review process

• Somehow convince senior water-right holders like the Modesto and Turlock Irrigation Districts on the Tuolumne River to let us store our drinking water in their reservoirs

• Also convince them it would be a good idea to raise the heights of their dams so we can enlarge these reservoirs with our extra water, flooding anew many miles of the Tuolumne River and acres of currently dry land.

Yes, the plan to drain Hetch Hetchy involves causing new ecological damage. We would be trading flooded acres in one place for flooded acres in another.

At SPUR, we have done a lot of work on climate change adaptation. From this work, we have concluded that it is not wise to reduce water storage facilities considering the realities of a growing population and climate change. A bigger population will increase demand, meanwhile climate change could significantly reduce supply through drought and hydrological cycle changes. Hetch Hetchy, unlike other water storage facilities in California, is relatively buffered from near-term climate change because of its high elevation. And it is the largest single source of water supply for the Bay Area. In the future, we will certainly need diverse supplies to rely on in a prolonged drought, but we will also need Hetch Hetchy more than ever.

Loss of the reservoir would decrease the Bay Area’s water and energy security, requiring new water storage (possibly in reservoirs not owned by San Francisco) and the development of new water and energy supplies. Such new supplies are not guaranteed to have the low greenhouse gas emissions profile that Hetch Hetchy water and power do — and they could worsen climate change while increasing our vulnerability to it.

So visit Hetch Hetchy. Stand on O’Shaughnessy Dam and feel the cool updraft. Appreciate what nature created and what the city built there long ago. Dams, including this one, don’t last forever, and perhaps in a few generations the conversation about a different future for the Hetch Hetchy Valley may be worthwhile. Then, we’ll need to weigh our options for other new large water supplies, all of which will have enormous environmental tradeoffs: think of building a desalination plant, fighting with Los Angeles over the Sacramento Delta, building a peripheral canal or siting new large dams in presently undammed Sierra mountains and foothills.

Fortunately, that time has not yet come, so this November, vote “no” on the “Water Sustainability and Environmental Restoration Planning Act of 2012.” Let’s keep Hetch Hetchy around for the forseeable future.

Earlier this spring, high-speed rail in California took two very significant steps. First Bay Area leaders announced a plan to electrify Caltrain, which would make it possible for Caltrain and high-speed rail to share the same tracks between San Jose and San Francisco. Second the California High-Speed Rail Authority released an updated business plan that cuts the cost of the train system by a third.

The new business plan (download the official summary here) still assumes an electrified train system that will travel between San Francisco and Los Angeles in 2 hours and 40 minutes (at 220 m.p.h.) and will operate without any ongoing subsidy.

There are four key changes in this updated business plan:

1. It lowers the cost of the high-speed rail system by $30 billion to $68.4 billion by adopting a “blended” approach. This focuses investment on upgrading existing regional and commuter rail systems, not building an entirely new statewide system. The blended approach is realistic and allows for the system to be built incrementally. In the 2011 business plan, the blended approach was estimated to cost $78 billion. It is now estimated to be $68.4 billion. The savings are primarily due to updated assumptions about inflation and faster construction time. This approach has greater political support in adjacent communities (namely on the Peninsula) and has successful precedents around the world, including France’s popular TGV.

2. While starting construction in the Central Valley, it includes early investments in the Bay Area and Los Angeles (the “bookends” of the system). This includes the decision to help fund the electrification of Caltrain with a $700 million statewide investment in addition to $800 million in local and regional funds to help electrify Caltrain by 2020. Electrifying Caltrain will speed service (since electric trains can stop and start faster than diesel ones) and will reduce emissions by 90 percent. The new business plan also includes investment in upgrading the rail systems in the Los Angeles area. Overall, $3.5 billion will go into the urban systems over the next eight years.

3. It proposes that the initial operating segment will connect from the Central Valley to Southern California.The 2011 business plan proposed that the initial construction section would run from Madera (south of Merced) to Bakersfield. This business plan assumes that the system will begin with passenger service from Merced to a station in the San Fernando Valley. To connect from the Central Valley to Southern California requires investment in building passenger rail tracks over the Tehachapi Mountains to connect Bakersfield and Palmdale. This business plan assumes that this segment will have sufficient ridership and revenue to exceed its cost and will be self-sustaining without need for operating subsidy.

4. It makes high-speed trains part of an integrated statewide transportation system in California, where each investment has immediate benefits to its respective region. While the initial construction and operating segments will be to the south, the California High-Speed Rail Authority is proposing improvements to the existing regional rail system between the Central Valley and the Bay Area, namely the Altamont Commuter Express from Stockton to San Jose and Amtrak’s San Joaquin line from the East Bay to Stockton or Sacramento via Contra Costa County.

While we commend Bay Area leaders and the California High-Speed Rail Authority for taking these important steps to move the project forward, SPUR remains concerned that high-speed rail’s initial operating segment runs from the Central Valley to Southern California and will not connect to the Bay Area. We are also concerned that there is not yet funding to extend Caltrain’s service from the current San Francisco station at 4th and King to the new Transbay Transit Center in downtown. This raises a few questions:

· When will be there be a one-seat ride from San Francisco to Los Angeles?

· If there is funding to upgrade the Altamont Commuter Express over the Altamont Pass, does this mean a rider from San Francisco would take Caltrain to San Jose and then ACE to Stockton before connecting to the trunk line to Los Angeles?

· Does this mean that we should rethink Dumbarton Rail as an electrified service that could bring upgrades and electrified ACE trains to meet up with Caltrain on the Peninsula?

· What will it take to fully fund high-speed service over the Pacheco Pass south of San Jose?

The new plan puts the onus on the Bay Area as a region — and SPUR as a civic voice — to find the money to both bring Caltrain and high-speed service to San Francisco’s key transit hub and connect that service to the initial high-speed operating segment in the Central Valley.

Despite our concerns about the initial focus on the connection to Southern California, we at SPUR (like the mayors of California’s major cities) remain strong supporters of high-speed rail. The blended approach takes a pragmatic tack — without sacrificing true high-speed service.