The terminal is nearing completion and a new neighborhood has arisen, but ambitions are only partially realized with the future of rail uncertain

San Francisco has never seen a development like the new Transbay Transit Center, a 1,500-foot-long structure that stretches across First and Fremont streets, perched on huge steel trunks and wrapped in a rippling, see-through white metal veil.

The second installment, on how Salesforce Tower staked its claim as San Francisco’s tallest building, is here . Still to come: What the new South of Market landscape says about the city’s future.

The Chronicle is exploring the changes reshaping the blocks between the Embarcadero and the Yerba Buena district, where a transit center will anchor San Francisco’s new high-rise neighborhood.

Next spring, after seven years of work that began with the demolition of the aged Transbay Terminal, the doors should finally open. Visitors will be greeted by a sky-lit concourse adorned with colorful art, below a third-level bus deck with a direct ramp to and from the Bay Bridge. A rooftop park will feature 60 species of trees and a 1,000-foot-long fountain triggered by the arrival of buses below.

But the suave architecture masks formidable problems. The budget for the huge complex has climbed from $1.6 billion to $2.259 billion. The situation became so dire that San Francisco stepped in last year to bail out the project, which is being built by the regional Transbay Joint Powers Authority.

Roughly 700 workers are on-site each day rushing to finish the terminal this winter so that bus service can begin in the spring. But even when that happens, the enormous underground component of the project will be dark — a concrete box that’s 65 feet deep and 160 feet wide.

The subterranean shell is designed to hold the concourse and platform for commuter trains from the Peninsula and high-speed rail service from Los Angeles. The problem is, it won’t be completed until train tracks that now stop in Mission Bay are extended more than a mile north. And there’s no certainty that all-important second phase will ever come to pass.

Timeline but always a destination Transbay Transit Center — many changes, Click to read timeline. How the Transbay Transit Center has evolved from a utilitarian train station to the centerpiece of a new neighborhood. 1939 2017 Close timeline X Librarian: Bill Van Niekerken Interactive producer: Emma O'Neill Producer: Kimberly Chua

The current pressures are inseparable from the ambitions that have been part of the project for more than a decade, when an international competition was held to select a conceptual design for a facility to replace the Transbay Terminal at First and Mission streets.

The aim wasn’t simply an update of the bus terminal, a concrete hulk that opened in 1939, but the West Coast equivalent of New York City’s Grand Central Terminal — “a world-class facility for the city and Bay Area to be proud of,” as Maria Ayerdi-Kaplan said in 2006 when the competition was announced.

At the time, Ayerdi-Kaplan was executive director of the Transbay Joint Powers Authority, a small regional agency formed in 2001 to do exactly one thing: Build a transit terminal in downtown San Francisco. The idea had been debated for decades, but in 1999 the city’s voters passed a measure saying a new terminal had to be built to accommodate not only buses from the East Bay but also passenger trains from the Peninsula.

Then-Mayor Willie Brown assigned the task to Ayerdi-Kaplan. A novice in city government, she had been an attorney at United Parcel Service when she introduced herself to Brown at one of his Saturday morning open houses. He hired her as a transportation adviser and assigned her to the transit center, shrugging off her relative lack of experience.

“She was so focused and driven,” Brown said recently. “I became convinced she was tough enough that if I gave her the assignment she’d get it done.”

In the years that followed, Ayerdi-Kaplan and her small staff methodically built support for the project, lobbying everyone from Sacramento legislators to local transit boosters.

The effort to unite the varied interest groups behind a common goal was crucial: With a budget sure to top $1 billion, Ayerdi-Kaplan and others saw that ringing the terminal with big buildings could be a source of funds to make the project happen. A major breakthrough came in 2004, when the state agreed to give the city 12 acres formerly covered by ramps that had connected the Bay Bridge to the Embarcadero Freeway before the freeway was demolished in 1991.

The land came free of charge, but proceeds from its sale could be used only for the new transit center. Local politicians and transit advocates bought in, even those who in the past had resisted the idea of raising height limits. They agreed with the argument that extra height meant extra value for the land to be sold — and by extension, extra money to pay the costs of construction.

“To say Maria was persistent was an understatement,” said John Burton, a longtime political force in San Francisco who made the case for the transit center and the land swap to lawmakers in both Sacramento and Washington, D.C. “Without her, none of this would have happened. She was an absolute force, and that’s what got it done.”

When the terminal’s groundbreaking occurred in 2010, a celebratory affair that included Rep. Nancy Pelosi and then-Sen. Barbara Boxer, the budget was $1.589 billion for the above-ground facility and a subterranean concrete shell. The latter would hold the train station, to be completed in tandem with the rail extension in a second phase.

By the time Ayerdi-Kaplan stepped down as executive director in 2016, the budget was $2.259 billion — a 42 percent increase.

Cost hikes are to be expected in a seven-year construction project. But the magnitude of the jump was exacerbated by a series of what one analyst later called “optimistic assumptions,” as well as delays in putting major contracts out to bid.

“Too many things went through too many iterations before we would come to closure on design issues,” said Ed Reiskin, who heads San Francisco’s Municipal Transportation Agency and has been on the Transbay board since 2011. “If we had managed the design process more rigorously, we could have hit the market sooner,” and potentially saved hundreds of millions of dollars.

The biggest example was in early 2013, when the lone bid to build the center’s huge structural frame came in at $259 million — a daunting $114 million above estimates. The Transbay Joint Powers Authority put the contract on hold, breaking it into smaller pieces, and the revised package approved in July totaled $206 million — still $61 million higher than anticipated.

At the same board meeting where the $259 million bid was reviewed, authority staff called for a budget increase from $1.59 billion to $1.89 billion. The increase would be covered by tapping into reserves and drawing on more than $100 million that had been set aside for the project’s second phase — the rail component.

“How did we not foresee any of this?” Reiskin asked at the authority’s March 2013 board meeting. “It seems there’s a pattern here. ... Again and again we’re being surprised.”

Even after the construction drawings were completed and the budget increase to $1.89 billion was approved, the ugly bids kept coming. The ramps connecting the transit center to the Bay Bridge, budgeted at $41 million, came in $57 million. The winning bid for interior finishes was $39 million, $18 million over budget.

Transbay center finances Hover over chart to see dollar breakdowns. Click on chart to see dollar breakdowns. $2.259 Billion Sources Expenditures Interactive producer: Emma O'Neill Source: Transbay Joint Powers Authority

One reason big-ticket items were vulnerable to price changes is that early in 2011, when construction drawings for the project were 95 percent complete, Ayerdi-Kaplan put the design work on hold. While the huge site was excavated to make room for the future train station, consultants analyzed every facet of the project to make sure that it would resist every possible worst-case scenario, from major earthquakes to well-planned terrorist attacks.

The changes resulting from that review increased the project budget by $57 million. More costly, in hindsight, the review took roughly 18 months. Construction contracts couldn’t be put out to bid until changes were made and the final design details were updated, which meant the authority entered the bidding fray after the Bay Area shook off the post-2008 recession and as private developers started clamoring to build towers.

“There’s no question we paid for it (in high bids) when all the private sector projects came back to life,” said Fred Clarke of Pelli Clarke Pelli Architects, which designed the transit center.

Clarke, a fan of Ayerdi-Kaplan's emphasis on design quality, was asked if it is typical for an extensive vulnerability review to be done so late in the process.

“I’ve never seen it before,” he responded. “We already had a very safe building. Now we probably have one of the safest buildings in the world.”

Board members questioned the extent of the design changes. But, as Ayerdi-Kaplan stressed issues such as safety and insurance liability, they went along.

“It’s a very difficult conversation to have, how much security you need,” said San Francisco Supervisor Jane Kim, who joined the authority board in 2012. “You don’t want to be the one to say, ‘We don’t need to do all that.’ ”

In an interview last month, Ayerdi-Kaplan said the review was essential — even though the authority had conducted a thorough vulnerability assessment in 2009.

“It would have been negligent not to update it,” Ayerdi-Kaplan said. “In my mind, if we weren’t going to make the center safe and secure for the public, it was not worth building at all.”

Ayerdi-Kaplan has long singled out our robust economy as the primary cause of cost overruns. She points to “a huge building boom in the Bay Area” and, in the case of the contract for the structural steel frame, “a spike in steel prices during this time period that no one could have predicted.”

Some observers, though, suggest Ayerdi-Kaplan was out of her depth once the transit center moved from concept to a project.

“She was a great fundraiser and advocate,” said Steven Heminger, executive director of the Metropolitan Transportation Commission, which has provided financial and planning resources to the transit center dating to 2001. “She wasn’t real experienced at construction management.”

Ayerdi-Kaplan sees things differently.

“I don’t feel construction overwhelmed us,” she said last month. As for delays in seeking bids or making final decisions on design, “You don’t want to rush things that are important. I was always keen on thinking through things very carefully.”

What’s indisputable is that the center’s finances continued to worsen. Efforts to fill the gap with new sources of funding — such as a search for corporate sponsorship of the facility — came up short.

By the end of 2015, the budget estimate for the first phase had ballooned to $2.1 billion. Nearly all contingency funds were depleted, and all money earmarked for the second phase was used up as well.

The only recourse was a $250 million line of credit from San Francisco City Hall, to be drawn from as necessary and paid back using future tax revenue from the surrounding towers.

The bailout was paired with an MTC analysis faulting the authority for “inaccurate estimates” and “optimistic assumptions,” as well as a “complex design causing a lack of qualified bidders.” The authority’s board of directors also agreed to the city’s request that a new post be created “to oversee all aspects of the design, project controls and construction.”

“It became clear we needed to focus and to make decisions,” Mohammed Nuru, the director of the city’s Public Works Department who chairs the board, said recently.

The transit authority board approved the loan on April 14, 2016, and the revised budget for the first phase grew to $2.259 billion. At the same meeting, Ayerdi-Kaplan stepped down as executive director. The board approved a resolution expressing its “utmost sincere appreciation ... (for her) tireless and dedicated service.” But it was clear that she had not left by choice.

Story continues below.

A 21st century transit center — floor by floor The replacement for the old Transbay Terminal is designed to function as both a bus station and a civic destination. Another twist? The name will be Salesforce Transit Center, after the local software firm, which signed a 25-year sponsorship agreement valued at $110 million. Scroll down for a tour. Blue arrows show escalator movement. Red arrows show elevator access. The transit center’s main entrance will be behind a new plaza at Mission and Fremont streets, beneath a domed skylight and adorned with public art. But there will be activity elsewhere as well. Blue arrows show escalator movement. Red arrows show elevator access. Three distinct pods, two connected by an open-air bridge, will hold retail space and a lobby for bus riders. But things might be quiet at first — a leasing agent came on board only in May. Green arrows show bus movement. Blue arrows show escalator movement. Red arrows show elevator access. The third level will hold 37 bus bays and mainly serve AC Transit. Unlike the old terminal, this waiting area will be naturally lit and ventilated. Blue arrows show escalator movement. Red arrows show elevator access. The 5.4-acre rooftop park was conceived by Berkeley’s PWP Landscape Architecture as an interlocked set of spaces — with a 1,000-foot-long line of water jets triggered by bus movements below. Graphic artist: John Blanchard Interactive producer: Emma O'Neill Source: Pelli Clarke Pelli Architects, except for mezzanine image from Colliers International

The question now is what comes next.

At the time of the 2010 groundbreaking, the authority estimated the cost of the project’s two phases at $4.2 billion, and said train service would begin by 2020. No longer. The most optimistic scenario has trains arriving underground in 2027, and $4 billion is the rough estimate solely for the rail extension from Mission Bay, for a total of more than $6 billion.

This time, the delays aren’t the fault of Transbay: High-speed rail has been under attack almost since state voters approved it in 2008, whether from municipalities upset about the route or Republican lawmakers who say the plan is a boondoggle. The first stretch, a 119-mile path between Madera and the Bakersfield area, only broke ground in 2015.

But even if high-speed rail was being rolled out smoothly, the San Francisco stretch would be at a loss for funds.

Tax revenue tied to new towers near the transit center will be a source of money. So would an increase to Bay Area bridge tolls that — if placed on the ballot next June and approved by voters — would generate $325 million. Beyond that there are no obvious funding sources on the near horizon, especially given the current federal atmosphere.

Not only are the finances up in the air, so is the rail route. Despite having an approved path from Fourth and King streets to the transit center, San Francisco is studying an option that would send the line underground up Third Street instead, past the Golden State Warriors arena and through the heart of the Mission Bay development.

The study is being funded largely by the MTC. The goal at City Hall is to decide whether to change the route by the end of this year. Doing so would require an entire new set of environmental reviews, probably slowing things down.

“We, as the city and the region, need to figure out the best path to get the trains to the station,” Reiskin said. “Then the work is building the case to get the money to do it.”

In the short term, the transit center’s finances are stable. Software giant Salesforce, which will occupy more than half of the 61-story tower next door, has agreed to a 25-year sponsorship deal that includes naming rights valued at $110 million. The project’s final batch of bids came in as estimated under the 2016 budget, which could leave roughly $100 million for phase two.

As for the $500 million or so in overruns between 2012 and 2015, most of that will be covered by the money that had been earmarked for the rail extension. Taxpayers won’t be asked to cover the extra costs.

But that solution means money intended to help get the second phase rolling is gone — which makes the challenge of bringing rail downtown even tougher.

“Every funding partner envisioned that some of their (committed) money would go for phase two,” Heminger said. “Instead, we are borrowing money from phase two to pay for phase one.”

Ayerdi-Kaplan’s former second-in-command, Mark Zabaneh, is now the authority’s executive director. He puts a determined face on what lies ahead.

“There are a lot of moving parts regarding the second phase, but I don’t want that to stop us from working to make it happen,” Zabaneh said. “It’s important we keep on progressing and that the momentum continues.”

Yet even in the worst-case scenario, where the rail extension remains stalled, the transit center’s impact on central San Francisco already has been profound.

You see it in the office and residential towers that have sprouted on nearby blocks. In the workers that crowd the sidewalks at lunch and fill the atmospheric bars after 5 p.m.

Four of those towers, two built and two planned, include bridges to the rooftop space. A fifth high-rise going up across the way on Beale Street bills itself as Park Tower at Transbay.

In short, the train has left the station — even if it never arrives.