Warriors arena schedule lags, costs jump

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The Golden State Warriors' plan to build a waterfront arena in San Francisco is months behind its original schedule, and the repair cost for piers to hold the venue has increased by as much as $50 million, city documents show.

The team could miss its 2017 targeted opening, and the new figure - if it holds - raises the question of who would cover the bill.

The basketball franchise's representatives dispute the cost projection and downplay the delays as routine for a complex project. They maintain that the arena will be ready for the start of the 2017-18 NBA season but acknowledge their schedule is tight - and doesn't leave much room for unforeseen problems.

"When we began this project, we laid out a timeline that had a built-in cushion for the natural delays that occur on a project of this size," said Nathan Ballard, a Warriors spokesman on the arena plan. "We've got a lot of work to do in a short time frame, but we are confident we can complete it by 2017."

Mayor Ed Lee has called the arena "my legacy project." If successful, it would bring an 18,000-seat entertainment arena to the waterfront on Piers 30-32, just south of the Bay Bridge. The controversial proposal includes two parking garages, a hotel and a condominium tower on a 2.3-acre parking lot just across the Embarcadero, and more than 130,000 square feet of retail space spread across both sites.

The initial $1 billion price tag is now even higher, thanks to the escalating cost of rehabbing piers that have been a development graveyard.

At least five groups have given up on plans to build on Piers 30-32 since 1990, most recently billionaire Oracle co-founder Larry Ellison as part of the America's Cup regatta.

Rebuilding piers

Earlier renderings of the new Warriors arena. The venue will be located on Piers 30-32 on the waterfront in San Francisco. Earlier renderings of the new Warriors arena. The venue will be located on Piers 30-32 on the waterfront in San Francisco. Photo: Snøhetta & AECOM Photo: Snøhetta & AECOM Image 1 of / 3 Caption Close Warriors arena schedule lags, costs jump 1 / 3 Back to Gallery

A tentative financial framework between the Warriors and the city calls for the team to pay up front to rebuild the slowly crumbling piers, which the city would continue to own and lease to the team for 66 years.

The city would then reimburse the Warriors up to $120 million for the rehab work from revenue generated by the project.

A nonbinding term sheet is months from being finalized, but team and city officials said they are scrapping a contentious provision that would have entitled the Warriors to 13 percent interest on unreimbursed construction costs.

Opponents of the project - concerned about crowds, traffic, obstructed views and commercializing the waterfront - had seized on the interest rate, some calling it "criminal."

Cost projection disputed

The cost of improving the piers, though, is now up to $170 million, according to a city memo.

The Warriors' project manager for the arena, Jesse Blout, dismissed that figure as too high and said he was unaware of its source. Blout said he has seen a range of cost projections, but none as high as $170 million.

The memo, obtained by The Chronicle from the port's executive office through a public records request, summarized a meeting between engineers for the port and team. It didn't specify beyond "the Warriors" who attended.

Those working on the project said figures are still in flux depending on various designs under consideration, built-in contingency funds and other factors.

"It's a snapshot of an ongoing conversation that's continuing to evolve," said Jennifer Matz, the mayor's director of waterfront development. While the exact repair cost is still being determined, a Warriors representative said it was "clearly more than $120 million."

Still, the city's reimbursement would remain capped at $120 million, said P.J. Johnston, a team project spokesman, although he left open the possibility of other financial considerations.

A year ago, the team was projecting the repair costs at $100 million. The port memo indicates that figure had already risen to $130 million by July.

The Warriors replaced engineering and design firm AECOM last spring with Rutherford + Chekene, a structural and geotechnical engineering firm, for the substructure work. The new firm proposed a different design, including the types and number of reinforcing piles, which drove up costs to $170 million, the memo says.

Replacement firm

The Warriors also brought in Manica Architecture of Kansas City, Mo., this summer to replace AECOM for work on the arena itself and related buildings. The firm Snøhetta remains the lead architect, and AECOM will continue as a consultant on the project.

The Warriors insist that their engineering reshuffle won't delay a 2017 opening, but the team is months behind the project schedule set in November for financial agreements and completing environmental review.

Shifting dates is standard for big projects, Johnston noted, and they still have time to complete everything before fall 2017. But there is little margin for error in a project that could face lawsuits and is also waiting on legislation in Sacramento that would endorse it as a public benefit, a finding needed for waterfront development.

A draft of the state-required environmental impact report was supposed to be released in June, according to the project schedule from November. Instead, that draft report won't be ready until early next year, said Chris Kern, the senior city planner handling it. The Planning Commission was to vote on the final environmental report in December. That is not expected to happen until late 2014, Kern said. Construction and other permits, including from the Bay Conservation and Development Commission and the Army Corps of Engineers, can't be granted until the environmental report is certified. The team is planning on construction lasting about 2 1/2 years.

"What they're doing is refining the engineering, and it's an important detail for the environmental analysis," Kern said. "We need ... the number, size, type of piles, the schedule and the methods - all of that detail. We don't have it yet. We know they're working really hard on that."

Transportation issue

The lengthiest part of the environmental study involves perhaps the thorniest issue - transportation. That analysis has started, so the team contends that changes in other aspects - often in response to regulators, interest groups and others - won't impact the overall schedule as long as they're done before the transportation study.

An unforeseen complication, though, could force the team to play at least another year at Oracle Arena in Oakland or another venue.

That could be tricky for the Warriors, whose lease is up in June 2017 and whose decision to move to San Francisco has displeased East Bay officials.

Renegotiating that lease would involve striking a deal with the Oakland-Alameda County Coliseum Authority, which already wants the Warriors, if they leave as planned, to make up the difference on debt service payments for $140 million in bonds used to upgrade Oracle Arena that still have about $90 million in principal remaining.

Fine-tuning the arena project now, though, is the way to go, said Matz, the city's point person on the deal.

"With a project of this scope, if you're five degrees off where you need to be at the beginning, by the end, you're pretty far afield," Matz said. "It's important now to get the details right."