BART extension: It’s complicated Riders have waited decades for BART to roll into Silicon Valley. Now, an ongoing financial negotiation stands in the way of the opening.

BART extension: It’s complicated Riders have waited decades for BART to roll into Silicon Valley. Now, an ongoing financial negotiation stands in the way of the opening.

The blue Milpitas sign gleams over 19 acres of former industrial hinterland — once a truck yard and storage facility, now a vacant steel-and-glass BART station waiting for trains to roll in.

It’s the first stop in a Silicon Valley extension that Bay Area residents have wanted for decades, connecting the East Bay to tech jobs and cutting through downtown San Jose, where Google is planning a huge new campus. Sixteen miles of track would loop west and then north to wind up in Santa Clara, fulfilling BART’s long-standing dream of building out its map in the South Bay.

But the project, already a year overdue, is facing a complication: BART and the Santa Clara transit agency developing the extension haven’t agreed on how to fund the line once a sales tax expires in 23 years.

“Beyond that — well, that’s what the conversation is,” said BART Board President Bevan Dufty. He abruptly canceled a joint meeting of the two agencies last month because they were still bickering over financial details.

BART Assistant General Manager Carl Holmes, who is participating in the discussions, said “we think we’re very close” to resolving the issue.

Talks between BART and the Santa Clara Valley Transportation Authority have dragged on for weeks, as staff craft an operating and maintenance agreement their board directors must sign before opening the first phase — from Warm Springs to Milpitas and on to San Jose’s Berryessa neighborhood. During a recent board meeting, officials said it could begin service as soon as November, but now both agencies say it will open by the end of the year.

“The two primary challenges in any negotiation are about money and control,” said San Jose Mayor Sam Liccardo. “We’re working hard, and we’re hugging it out.”

Meanwhile, BART is waiting for Valley Transportation Authority to finish testing the system and turn over the keys so that BART can begin its own tests. That has to happen by June for the stations to open on time, Holmes said.

Commuters are getting restless.

“The day before yesterday, I was in downtown San Jose, and my next meeting was in Oakland,” said Adina Levin, a Menlo Park resident who heads the advocacy group Friends of Caltrain. Levin spent an hour and a half taking a bus from the South Bay to Warm Springs BART, then riding the train to Oakland — the speed and seamlessness of a single train would have been helpful, she said.

The marriage between the two agencies sometimes looks like a collaboration, and at other times resembles a battle of egos. It’s a territorial expansion for BART and a point of pride for VTA, as reflected in the architecture. Stained glass glimmers from Milpitas Station, designed in a curved pattern to resemble the Diablo Foothills. Berryessa Station includes a “contemplative” garden.

Because Santa Clara County decided not to join the BART district when it formed in 1965, the county was left on its own to build the new track and stations and then pay BART to operate them. Officials would rely on a combination of fares and an eighth-of-a-cent sales tax that the county began collecting in 2012. Yet the tax expires in 2042, and it’s impossible to predict whether voters will approve a replacement.

The discussions have an eerie precedent that nobody wants to repeat. In the late 1990s, BART partnered with the San Mateo County Transit District to build a five-stop line down the Peninsula to San Francisco International Airport. SamTrans agreed to pay for operating costs, predicting the agency would recoup all the money in fares. Yet when the airport line opened in 2003, it drew only about half of the 50,000 anticipated daily customers, leaving a deficit of $18.4 million that first year. And the costs kept piling up.

In 2007, BART and SamTrans parted ways. Their divorce settlement gave BART custody of the line, plus $56 million in state infrastructure bond money and 2% of the annual proceeds from San Mateo County’s half-cent sales tax, which helped pay for the track to Warm Springs in the East Bay.

That bad memory hovers over the current negotiations to stretch BART into San Jose, said Santa Clara City Councilwoman Teresa O’Neill. As chair of the VTA, she’s closely monitored the discussions.

“I heard BART had a divorce with San Mateo County, and I’m told that may be coloring this a bit,” O’Neill said. “And we don’t want that. We want a long, happy marriage.”

One thing that BART and Santa Clara have going is a better prenuptial agreement. Unlike its Peninsula neighbor, Santa Clara built the tracks and stations itself. It assumed all financial risk — if the extension flops, the only harm BART would suffer is to its public image, because its logo is painted on the train cars. Another factor that could boost the project’s success is Google, which could add up to 20,000 jobs — the company encourages workers to use trains and buses, rather than drive. Whereas the San Mateo County line vastly underperformed, some consultants say that the Silicon Valley BART line could exceed ridership expectations.

A native of Santa Clara, O’Neill has waited an entire lifetime for BART to reach the South Bay, reversing the urban planning decisions of the 1960s, when San Mateo and Santa Clara counties opted to build expressways instead of mass transit.

“The decision was made not to join the BART district, and then the county built an expressway system,” she said.

The new BART line would accelerate the next transformation, which is already under way in Milpitas. Developers will add 7,500 housing units around the still-empty station, where mammoth structures of wood and rebar line a once-empty skyline. It adjoins the Great Mall — a shopping and transit center on the site of a former Ford assembly plant — as well as the VTA’s light-rail line.

With so much of the region’s future hanging in the balance, officials are tiptoeing around the contract talks. Santa Clara transit officials say they are confident that one-eighth cent sales tax, combined with fares from an anticipated 23,000 weekday riders, will be enough to cover the cost of operating the extension. Yet they’ve also offered to supplement that money with funding the county receives from the state Transportation Development Act, which would otherwise go to road maintenance and regional mass transit in Silicon Valley.

Even so, uncertainty clouds the negotiations. BART hasn’t yet worked out a fare structure for the new line or decided whether to add a surcharge when riders cross the border between Alameda and Santa Clara counties — similar to the fee BART charges to enter San Mateo County or to travel through the Transbay Tube. Eventually, both transit boards will have to approve the operating and maintenance agreement, and some directors won’t sign on until they’ve read the document and can stand by every line.

“I wouldn’t sign an agreement unless I was given ample opportunity to read it,” said BART Director Debora Allen, who represents central Contra Costa County.

During a recent tour of Milpitas Station, officials from BART and the VTA bowed their heads when asked about the operating agreement. Some financial issues still have to be resolved, said Valley Transportation Authority spokesman Jim Lawson, but Holmes declined to provide specifics. Both said the agencies are building consensus around the sales tax funding plan, with Transportation Development Act funds as a backup.

Other challenges loom in the second phase of the project, expected to break ground next year with opening targeted for 2026. Chief among them is the tunnel design beneath downtown San Jose. While the first 10-mile segment is either elevated or at street level, the second segment will burrow underground. The two agencies agreed to a single-bore construction method, rather than the more invasive twin bore with tracks running side by side.

The single-bore plan presupposes that trains would run one atop the other — similar to a double-decker freeway — but several board directors insist on laying tracks side by side anyway. That places a heavy engineering demand on the VTA.

It’s “in the early stages of being studied for feasibility,” said project spokeswoman Bernice Alaniz.

O’Neill was optimistic, standing on a pedestrian bridge that crosses Capitol Avenue, connecting the empty BART station to the VTA light rail.

“We certainly don’t want to tell the public we aren’t going to open because we can’t agree on operating things —” she started, until Lawson cut her off.

“— And that’s not going to happen,” he said.

Rachel Swan is a San Francisco Chronicle staff writer. Email: rswan@sfchronicle.com Twitter: @rachelswan