California’s state auditor released a report this week that said the Metropolitan Transportation Commission’s use of toll revenues to purchase a building to serve as a new San Francisco headquarters was likely legal.
However, the auditor said the MTC and its tolling arm, the Bay Area Toll Authority could have done more to “articulate” the financial risks of the transaction with their board and the public.
The report said that the MTC’s cash-flow projections generated from renting out the building would fall $30 million short of repaying the toll money used to purchase the building.
The commission, the San Francisco Bay Area’s transportation and financing agency, voted to buy the downtown San Francisco building and move out of its Oakland headquarters despite criticism from several local politicians.
The MTC bought the building in October 2011 using $167 million in revenues from seven state-owned bridges in the Bay Area to pay the estimated $180 million cost to purchase and renovate the building for tenants to move in by fall 2013.
Most of the upfront funding came from BATA, which collects tolls on the seven bridges and issues bonds backed by the tolls, and operates as part of the MTC.
The transaction also involved creation of a new Bay Area Headquarters Authority.
The idea was to collocate the HQ of several local government agencies into the building. But the plan ran into criticism, especially by state Sen. Mark DeSaulnier, D-Concord. He has been leading a charge in the Legislature to stop the purchase of the building and bring the commission under tougher scrutiny.
DeSaulnier requested the audit of the MTC after its decision in July to pursue the purchase in the wake of recent toll hikes. The audit was approved by a unanimous vote by the California Joint Legislative Audit Committee in August 2011.
“All I wanted was an independent review,” he said in a statement issued Tuesday. “I commend the state auditor and her staff for all their hard work. I would like to hear from MTC/BAHA how they plan on reducing the risk to toll payers and ensure that the money is repaid.”
DeSaulnier, as chairman of the Senate Transportation and Housing Committee, has also authored legislation that would create a regionally elected board to oversee the operations of the MTC, which is now comprised of political appointees.
In May, legislative counsel Diane Boyer-Vine released an opinion that said the MTC’s decision to buy the building was “unauthorized by law.”
The “purchase would exceed the statutory authority of BATA and MTC, and would be an impermissible use of bridge toll revenue,” the counsel’s nonbinding opinion said.