SFMTA board backs roughly $43 million in RM3 local support for Potrero Yard down payment

The San Francisco Municipal Transportation Agency Board voted to adopt a resolution of local support for Regional Measure 3 (RM3) funds to fund the initial down payment for the Potrero Yard Modernization Project.

Sean Kennedy, the agency's chief planning and delivery officer, told the board staff is requesting roughly $43,000,000 in RM3 bridge-toll allocations as an initial milestone payment toward the larger Potrero effort. Kennedy framed the request as a pragmatic step to secure a down payment that reduces later financing costs while the overall scope continues to be refined under active negotiations.

"We're asking for about $43,000,000 in RM3 funding" Kennedy said, adding that the agency has been adjusting the project's scope to respond to a changing financial environment.

Staff described several major changes to the originally entitled project intended to lower both upfront and recurring costs. The most significant structural change is removing the engineered "platform" that would have enabled housing or a paratransit fleet above the bus facility. Deleting that platform, Kennedy said, reduces the structural requirements and cost, but also means the yard itself will no longer support housing built directly on top of the facility. In response, the agency proposes decoupling the Bryant Street housing development from the Potrero construction program so housing can proceed as a separate, more feasible project.

Kennedy also said the agency is proposing to forgo a developer-led 30-year DBOM (design-build-operate-maintain) contract that would have bundled long-term O&M into the developer's payments. Instead, the MTA would assume operations and maintenance responsibility directly as it does for its other facilities; staff said this will reduce the agency's annual payments and give capital and operating flexibility.

Directors pressed staff on tradeoffs. Director Hemminger asked whether shifting O&M in-house eliminates a contractor's long-term performance incentive and how the agency will ensure construction and operational quality without that 30-year warranty. Kennedy and staff responded that the MTA's project-management and capital teams will actively oversee delivery, that the agency will require a multi-year warranty after completion, and that internal maintenance funding and standards will match other MTA facilities.

Rob Hawkes, director of capital budget and funding strategy, told the board RM3 funds are pooled with city short-term investments while held pending issuance. Board members also asked how much of the project can still include housing; staff answered that Bryant Street remains viable if decoupled and estimated preliminary housing yields "somewhere in the 100 or so unit range" but cautioned that exact unit counts remain subject to development progress.

The board approved the resolution by roll call (ayes from Directors Chen, Hemminger, Felder, Hinze and Chair Tarlo). Staff said they will return in the new year with more detailed financing and scope recommendations and asked for continued board feedback as the agency works through tradeoffs to keep the yard project on track.

Vote: 5-0 (Chen, Hemminger, Felder, Hinze, Chair Tarlo ' aye).