South Bay officials marked the beginning of the end of their long struggle to build a BART extension to San Jose by receiving a $900 million federal funding agreement that will allow construction to start next month.

"This is a celebration," said Michael Burns, CEO of the Santa Clara Valley Transportation Authority, as dozens of Silicon Valley leaders gathered in the glass rotunda of San Jose City Hall to see Burns and Therese McMillan, deputy administrator of the Federal Transit Administration, sign a document guaranteeing the federal contribution to the $2.3 billion project.

"For years, many doubted we could bring BART to the Silicon Valley," Burns said. "They said it was too hard. They said it was too expensive. They said it would never happen. But we're well on our way to delivering the impossible."

The 10-mile extension will bring BART from the Warm Springs extension under construction in Fremont across the Santa Clara County line to the Berryessa neighborhood. Stations will be built in Milpitas and at the end of the line in northeast San Jose. It could be completed by the end of 2016.

A second phase, which has not yet been funded, would take BART six miles farther - through a tunnel into downtown San Jose and then at street level to Santa Clara.

The idea of connecting the South Bay to the rest of the region by rail has existed since the 1950s, but plans for a BART extension south from Fremont started in 2000, when then-Gov. Gray Davis steered $760 million in state funds toward the project and Santa Clara County voters approved a half-cent sales tax to fund much of the rest of construction. They hoped the tax would also entice federal funding for the full extension to Santa Clara.

But in 2004, federal officials balked, saying the estimated $6.1 billion cost of going downtown and beyond was too much and that it wouldn't cover operating costs. So county officials, with the support of the Silicon Valley Leadership Group, a technology industry group, went back to the ballot, and got voters to narrowly approve an extra one-eighth-of-a-cent sales tax in 2008. A year later, the Valley Transportation Authority sliced the project into two phases to make it more affordable.

The efforts paid off with the official award of the multiple-year funding guarantee Monday. The first allotment - $100 million - was to be electronically delivered Monday afternoon. In addition to the federal money, $1.2 billion in county sales taxes will go toward the first phase, and $251 million in state funds.

Elected officials praised the project and county voters for supporting tax measures to bring BART south.

"We're here because our voters said this is something we can make happen. Instead of abandoning ship, we retooled," said Rep. Zoe Lofgren, D-San Jose. "We are the 'Yes we can' county."