Those of you paying attention will remember that there was some major brouhaha between downtown developers and City Hall after the Board of Supervisors voted to approve a previously agreed-upon special-assessment tax for the Transbay District last fall in what some developers were calling a bait-and-switch. There was talk of a potential lawsuit, and that is still a possibility, stemming from the fact that three of the big developers Boston Properties, Hines, and Golub & Co. are pissed about how much they're on the hook for now that their land values have skyrocketed, and therefore so have their taxes. As the Business Times reports, the latest development is that eight other Transbay property owners voted to approve the Mello-Roos tax as-is in an election held by the Transbay Community Benefit District (CBD). Those developers included Jay Paul Co. and Kilroy Co. and the city and state agencies that own several large properties.
Boston Properties and Hines, however, are the developers working on the biggest project in the district, the 1,070-foot Salesforce Tower, and they're on the hook for the largest bill of the lot, which will be assessed at 0.55 percent of land value. (Hines also has two other projects in the area as well.) They're threatening a lawsuit saying that they were led by the city to believe that their land value for the assessment was locked in two years ago, and would not be based on 2014/2015 values which are much higher.
The city, though, needs the money to build the rooftop park on the Transbay Terminal and the associated infrastructure, like connecting CalTrain and the eventual high-speed rail to the terminal. The park, meanwhile, is being used as an amenity for marketing purposes for the leasing team of Salesforce Tower, which has branded the lower floors of the building as the "Park" floors.
What developers knew, or believed, about what they'd be assessed when all was said and done remains unclear. What is clear is that these two developers are either determined to delay their own projects until the city gives in to their demand for lower tax bills, or they're bluffing in the hopes that the city will come up with the money elsewhere for fear of the tower and Transbay Terminal projects getting delayed.
Stay tuned as this situation continues to unfold, and as construction on Salesforce Tower continues. It's supposed to open, if all goes well, in 2017.
