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David W, Skinner
Attorney at Law

August 19, 2004

San Francisco County Transportation Authority
100 Van Ness Avenue, 25th Floor
San Francisco, CA 94102

Re: Transbay Terminal Project

Dear Commissioners:

This office represents the Transbay Joint Powers Authority ("TJPA"). The purpose of this letter is to reiterate the TJPA's objections to the actions taken on Tuesday, August 17, 2004 by the San Francisco County Transportation Authority "(SFCTA") regarding the Transbay Terminal Project. We believe SFCTA's appropriation of $10 million in Proposition K funds to itself (for a new engineering study on a project that is different than that which was approved by the TJPA on April 22, 2004, Res. No. 04-004, based on a certified FEIS/EIR) violates Proposition K. We further believe SFCTA does not have the jurisdiction or authority to take these actions; that they are beyond the scope of the Joint Powers Agreement between the Members of the TJPA; and that they violate state law, which mandates that the TJPA has primary jurisdiction over the financing, design and construction of the Transbay Terminal Project.

In the event SFCTA proceeds with the actions identified in the Resolution, the TJPA demands that (between now and September 21, 2004) it and its expert engineering consultants be afforded an opportunity to take an immediate, hands-on, active role in the review of any engineering studies relating to the feasibility of changing an approved Project for which there is an approved and certified EIS/EIR. The TJPA demands that the SFCTA indemnify and hold the TJPA harmless from any and all claims which may arise out of a change in the Project description. The TJPA also demands that the need for any deeds and/or agreements relating to a proposed "easement" to be conveyed by the owner of 80 Natoma be reviewed, processed and approved by the TJPA prior to execution.


Under the Resolution adopted Tuesday, August 17, 2004, the SFCTA proposes to do the following:

• “SFCTA appropriates $10 million in Proposition K funds [to itself] for implementation of an engineering solution to the right of way conflict involving the 80 Natoma Project and the Transbay Terminal Project;"

• "[T]he Executive Director [of SFCTA] is authorized to use a reasonable portion of the appropriated funds over the next 30 days to advance the design of the proposed engineering solution to a level at which staff can demonstrate, to the satisfaction of the [SFCTA] Authority Board, the future constructability and safety of the tunnels under the building to enable funding of the implementation of the engineering solution; and to structure an easement agreement with Myers Natoma Venture."

• "[T]he Executive Director is directed to report back at the September 21, 2004 meeting of the Authority Board with results of these efforts and recommendations for further Board action . . .."


SFCTA Improperly Appropriated Proposition K Funds to Itself

Proposition K was approved by a majority of the voters who voted at the November 4, 2003 special election in San Francisco. The voters continued the one-half cent sales tax, and replaced the then existing transportation spending plan with a new, 30-year plan.

Proposition K specifically earmarked $270 million for the new Transbay Terminal Project. As set forth below, the TJPA - - and the TJPA alone - - has the contractual and statutory authority relating to the "financing" and "design" of the Project. Absent the consent of the TJPA, SFCTA does not have the authority to appropriate Proposition K funds to itself for the purported purpose of "implementing" an "engineering solution."

State Law requires that funds allocated by Proposition K be consistent with the voter-approved expenditure plan. Public Utilities Code §131101 provides that:

All allocations of revenues derived from the adoption of a retail transaction and use tax ordinance in a county shall be consistent with the priorities established by its county transportation expenditure plan.

The expenditure plan approved as part of Proposition K names the TJPA as "Sponsoring Agency" for the Transbay Terminal Project. 1

SFCTA is Not a Member of the TJPA, and Cannot Unilaterally and Arbitrarily Assume the Contractual and Statutory Powers Which are Expressly Conferred Upon the TJPA

The Joint Powers Agreement creating the Transbay Joint Powers Authority lists the “Members" of the TJPA as: (1) the City and County of San Francisco, (2) the Alameda-Contra Costa Transit District, and (3) the Peninsula Corridor Joint Powers Board. 2

When the Members created the TJPA, it was because "[t]he Members desire to jointly participate in the construction, development and operation of a new regional transit hub and related structures and ramps....” (Emphasis added.) The Members, collectively, expressly agreed on the "purpose" of the TJPA: "the Authority will develop, design, construct, renovate, rehabilitate, improve, operate, manage and maintain a new regional transit terminal....” (Emphasis added.)

To accomplish this purpose, the California Legislature enacted special legislation in 2003. The Historic and Statutory Notes to Public Resources Code §5027.1 explains the Legislature's intent with regard to the Transbay Terminal Project as follows:

Section 2 of Stats. 2003, c. 99 (A.B. 812) provides:

"SEC. 2. The Legislature finds and declares that a special law is necessary and that a general law cannot be made applicable within the meaning of Section 16 of Article IV of the California Constitution because of unique circumstances applicable only to the Transbay Terminal building." (Emphasis added.)

Under the "special law" attributable to the "unique circumstances applicable only to the Transbay Terminal building," the Legislature specifically provided that “[t]he Transbay Joint Powers Authority shall have primary jurisdiction with respect to all matters concerning the financing, design, development, construction, and operation of the new terminal." (Emphasis added, Public Resources Code §5027.1(a).)

The Joint Powers Agreement sets forth specific "powers" of the TJPA. Some of these "powers" are stated as follows:

5. Powers. The Authority is authorized, in its own name, to do all acts necessary to fulfill the purposes of this Agreement, including, but not limited to, each of the following:

(a) Make and enter into contracts;

(b) Incur debts, liabilities and obligations....;

(c) Acquire, hold, construct, manage, maintain, sell or otherwise dispose of real and personal property by appropriate means....”

The SFCTA is not a "Member" of the TJPA. Without the TJPA's consent, the SFCTA does not have the power to unilaterally and arbitrarily take actions relating to the Transbay Terminal Project that are expressly delegated to and reserved for the TJPA. In particular, the SFCTA cannot commit Proposition K funds to itself and use such funds in an attempt to become the lead or sponsoring agency as to the "design" of the Project. SFCTA cannot independently enter into “contracts" with engineering consultants for the "design" of a new project. SFCTA cannot incur any "debts, liabilities and obligations" relating to those contracts. SFCTA cannot make any decisions relating to the "design" or "construction" of the Transbay Terminal Project. And, SFCTA cannot enter into any agreements to “acquire" real property, including easements.

Because SFCTA does not have the authority to take these actions, the TJPA requests that SFCTA immediately rescind its Resolution.


As previously explained, state law and the Joint Powers Agreement mandate that the TJPA act as the lead agency with regard to the design, or construction and financing of the Project. If SFCTA attempts to consider and possibly approve alternative design for the Project (actions which TJPA strongly oppose), TJPA must play a key role. TJPA has expert engineering consultants. TJPA's engineering consultants must be allowed to (1) review any engineering studies prepared at the request of SFCTA, (2) discuss such studies with SFCTA's engineers, and ask SFCTA's engineers questions about assumptions, analyses, methodologies, and other pertinent information relating to design feasibility, and (3) convey their comments, opinions and/or conclusions to SFCTA before SFCTA makes any decision relating to the feasibility of an alternative design.

Obviously, given the September 21, 2004 deadline for the SFCTA Executive Director to "report back,” time is of the essence. The TJPA's engineering consultants must be afforded immediate and open access to SFCTA's engineers. An honest and open information sharing process is vital.


SFCTA is not the lead or sponsoring agency on the Transbay Terminal Project, and has no authority to approve a design that is different than the project that was certified in the EIS/EIR. If SFCTA is somehow successful in having a different project approved (which can only be accomplished by subsequent TJPA action), the TJPA will demand an indemnity and hold harmless agreement.

There are a myriad of potential risks associated with having a 52-story residential high rise constructed at 80 Natoma, and then attempting to build a tunnel or series of tunnels for rail lines under the high rise. The alternative design proposes to construct tunnels that would extend over fifty percent (50%) of the area beneath the structure. The interaction between the building, its foundation and the tunnels has the potential to exacerbate settlement, impact the stability and performance of both the budding and the tunnels under normal service as well as seismic loads. Consequently, there could be claims for damage brought by the owners and occupants of the high rise and other parties affected by such performance problems, especially in the event of significant damage that could occur as a result of an earthquake.

The ability to obtain adequate insurance coverage to construct, operate and maintain rail tunnels beneath the building must be addressed. The insurance coverage issues and potential liability issues would be extremely complex and substantial.

Since the TJPA does not support the alternative design, the TJPA cannot assume the risks associated with the potential liability issues. The TJPA would demand that the SFCTA and/or the developer of the site indemnify and hold the TJPA harmless from any and all claims arising out of the new project.


Once again, the TJPA does not believe the SFCTA has authority to prepare, "structure" or accept an easement relating to the design and construction of the Project. The Joint Powers Agreement gives the TJPA authority to "acquire, hold, construct, manage, maintain, sell or otherwise dispose of real and personal property by appropriate means."

If SFCTA refuses to rescind its Resolution and proceeds to "structure" an easement, the TJPA must play the lead role in determining the necessity of the easement before commencement of any negotiations, and in negotiating the terms of the easement.

During the next thirty (30) days, it the SFCTA will not rescind its resolution, we urge you to use non-Transbay Terminal Project funds to perform any engineering studies. All funds used for your engineering design work must be from a segregated account with detailed accountings of how the funds are spent. The accounting must be available to the public and to the TJPA.

I look forward to your response.

Very truly yours,


David W. Skinner

cc: Jake McGoldrick, Chair
Michela Alioto-Pier, Vice-Chair
Tom Ammiano, Commissioner
Chris Daly, Commissioner
Bevan Dufty, Commissioner
Matt Gonzalez, Commissioner
Tony Hall, Commissioner
Fiona Ma, Commissioner
Sophie Maxwell, Commissioner
Aaron Peskin, Commissioner
Gerardo Sandoval, Commissioner
Andrew W. Schwartz, Deputy City Attorney
Metropolitan Transportation Commission
Transbay Joint Powers Authority Board Members

Letter TJPA1709266

1 Proposition K also requires the SFCTA to designate a “lead agency” to conduct public outreach, to make general plan referrals and to identify project performance measures. The SFCTA is not the lead agency for the Project. Lead agency functions are performed by the TJPA and its members.

2 The Peninsula Corridor Joint Powers Board is a joint exercise of powers agency comprised of the City and County of San Francisco, San Mateo Transit District, and Santa Clara Valley Transportation Authority.