Today from J.K. Dineen and the San Francisco Business Journal:
Hines, Boston Properties lock horns with city over Transbay Tower park costs
J.K. Dineen, Reporter- San Francisco Business Times
Jul 29, 2013, 3:23pm
A dispute is brewing over who will pay to maintain Rooftop Park, the $28 million, 4.5-acre public green space that will be built atop the $1.9 billion Transbay Transit Center.
Hines and Boston Properties, the developers of the 1,050-foot Transbay Tower at 101 Mission St., have told city officials that they should not have to pay for the maintenance of the park, which will be directly connected to their tower. City officials strongly disagree, arguing that the park — with its curving paths, vegetated hills, and fountains — will boost the value of the Transbay Tower, luring tenants to the highrise and allowing Hines and Boston Properties to charge higher rents.
The park spat comes as the city and area property owners are working to finalize a proposed community benefit district, known as a CBD, which would provide supplemental services such as safety patrols, sidewalk cleaning and park maintenance in the fast-growing downtown highrise district. The CBD would cover the area between Mission and Bryant Streets to the north and south, and the Embarcadero and Second Street to the east and west.
Mike Grisso, senior project manager at San Francisco Office of Community Investment and Infrastructure, said “everybody is extremely disappointed with the position Hines and Boston Properties are taking.”
“I think it is surprising,” said Grisso. “The park is going to primarily be a benefit to the property owners who are adjacent to it. That is who is going to use the park. Every new park in San Francisco operates on the (CBD) model. All the parks in Mission Bay and Transbay are maintained by the adjacent property owners. The city doesn’t maintain any of the new parks. It makes sense from a fairness standpoint. These parks are a huge amenity for the adjacent property owners and don’t cost that much to maintain.”
Hines spokeswoman Kim Jagger said “Hines and Boston Properties decline to comment.” Grisso and others who have spoken to Hines and Boston Properties say the developers feel they contributed enough to the district when they paid the Transbay Joint Powers Authority $192 million for the development site.
Grisso said the Transbay developers paid “fair market value for the land.”
“They didn’t pay any more than that — they have not paid anything for the maintenance of the park,” he said.
While the numbers are still in flux, Grisso said Hines and Boston Properties would pay about 28 cents per square foot of owned space, about $450,000 a year. Other nearby major landlords that would be shelling out for the park maintenance include Tishman Speyer, Kilroy Realty Corp., Emerald Fund, and the Jay Paul Co. Oz Erickson, the chairman of Emerald Fund, which owns 333 Harrison St., said “there is no alternative.” Emerald Fund recently gave a half-acre park to the city and set up a trust to pay for its maintenance, which will be handled by the San Francisco Parks Alliance and will cost $45,000 a year.
“Somebody has to pay for the Rooftop Park,” said Erickson. “The people who use the park should pay for the park. We have our own parks, which we are paying for.”
TJPA spokesman Adam Alberti said nothing legally requires Hines and Boston Properties to pay for the park upkeep, but that “the reality is that somebody is going to have to maintain the park and it’s not going to be the city.”
Advocates of the CBD say there is an additional incentive to get the CBD is place. The Board of Supervisors will allocate $15.5 million for capital improvements in the CBD area for several new parks, better sidewalks, and landscaping. But only if there is a dedicate private source of maintenance funding.
The Assessment would be paid for not just by large commercial landlords but also residents of the new towers springing up across the downtown. Lauren Post, a CBD steering committee member who lives at Millennium Tower, said owners in her building are likely to pay between $150 and $300 a year, depending on unit size.
“The park will be a lovely amenity for us, we just want to make sure we are not paying more than our fair share,” said Post. “The heaviest use of the park, the real wear and tear, will be from the office workers on weekdays, so the commercial property owners should carry a large assessment.”
Post said she has attended meetings with Hines Executive Vice President Paul Paradis, who she said has been “very pleasant to deal with.”
“They have not been belligerent or rude,” she said. “They have been nice and professional in voicing their views. We just don’t like what is coming out of their mouths.”
Grisso said the cost of maintaining the park would be negligible in the context of a $1 billion tower.
“There is no question they are going to be able to charge higher rents because of the amenities. They will have operating costs of $30 a square foot — the assessment will be less than 1 percent of that,” he said. “Does anyone really believe they are not going to be able to extract another 20 cents per square foot to their tenants who are going to be paying $60 or $70 or $80 a square foot?”
Grisso said that the topic of park maintenance arose in 2007 when Hines and architect Pelli Clarke Pelli beat out Forest City and the Rockefeller Group for the project. “We asked them how are going to maintain the park. They said they would lead the formation of a CBD that includes the surrounding properties.”
He said the vast majority of area property owners support the CBD and that Transbay Tower landlords would have no choice but to go along with it if it is approved.
The quarter-mile long park will feature walking trails, gardens, lily ponds, cafes, children’s play gardens and an outdoor amphitheater. In a profile last year, PWP partner Adam Greenspan said “what we wanted to do with the park was create a lush green space in the middle of one of the densest parts of the city.” The park will have a 70-foot wide skylight where visitors can look down into the grand hall of the terminal. Visitors will be able to take a funicular tram ride from a street-level plaza in front of the terminal up through a grove of redwoods to the northern edge, where there will be more redwoods.
“The interior spaces will be rolling meadows and lawns with live oaks, redwoods, California buckeyes,” he said. “You go through episodes as you move down it. It’s not one big singular open space. It’s a lot of medium open spaces. Some will be urban open spaces like the plaza, some will be rolling hills with oaks and lawns. Others will be very planted garden areas.”