Will the taxpayers bail out the Millennium Tower developer?

It appears that a big part of the settlement deal over the Leaning Tower of Soma will involve public money.

In all the talk of the pending settlement of the lawsuits over the Great Leaning Tower of Soma, a key fact has been largely buried:

It appears that a significant part of the large sum of money that will pay to fix the building and compensate the wealthy condo owners for their loss of value will come from the taxpayers.

The Millennium Tower may get a huge public bailout.

Nobody is talking, because the settlement isn’t final yet. But lawyers for the condo owners have told both the Chron and the Guardian that the Transbay Joint Powers Authority – a public agency, funded with public money – will pay a good portion of the more than $100 million settlement.

From the Chron (buried deep in the story):

David Casselman, who represents other tower residents, said the Transbay Joint Powers Authority, which built and operates the Transbay Transit Center next door to the Millennium, will pay “a big part of the settlement” but said he couldn’t disclose the amount or share.

From The Guardian:

Details of the settlement remained under wraps as they were reached during confidential mediation, but it would require Millennium Partners and Transbay Joint Powers Authority (TJPA) to pay for the $100m plan to fix the building. The settlement would also require the defendants pay every homeowner in the building for their estimated losses caused by the notoriety, McCarthy said, but it is unknown how much each resident will receive.

This is a remarkable twist in the story.

Millennium Partners built the 58-story tower at 301 Mission on a concrete slab supported by pilings drilled into the loose mud and sand under that part of Soma. The pilings didn’t go all the way to bedrock, which saved the developer money.

I am not a civil engineer, but I know that when you build a highrise in a city, you need to expect that other people will want to build other things next to you. And in this case, 301 Mission was next to what everyone knew would be the new Transbay Terminal.

I would assume (again, I am not an engineer or a developer or a construction lawyer) that everyone knew that at some point the builders of the Transbay Terminal would be digging holes next door and pumping out water.

But Millennium Partners, looking for ways to deflect the blame, has claimed that “dewatering” at the Transbay Terminal undermined the foundation of 301 Mission and caused the alarming level of settling and tilting.

The Transbay Joint Powers Board, a public agency using public money that operates the terminal, has always insisted that it did nothing wrong and that the problems at Millennium Towers were not the fault of the project.

So why is the TJPB paying what could be more than $100 million of public money to settle this case?

Why is public money going not just to fix Millennium’s problems but to compensate the very wealthy condo owners for the potential decline in value of their property?

All parties to the case are pretty cautious about talking, but one person who knows what is going on told me that I am “not wrong” in my understanding that taxpayer money is going to be a major part of the settlement.

It won’t be money from the SF General Fund – the TJPB has mostly federal money behind it. Still, San Francisco in 2016 loaned the agency $260 million, most of which still has to be repaid. So money that could be paying back the city could wind up paying rich condo owners and, in a sense, bailing out a huge developer.

Sup. Matt Haney, who sits on the TJPB, told me he hasn’t been briefed on the issue and didn’t know the terms of the settlement. But he made clear that the agency has always said the dewatering issue was bogus and that it wasn’t at fault.

Sup. Aaron Peskin, who has held hearings and been very involved in this Leaning Tower mess, told me that he knows nothing about the deal, either.

But he did say that moving forward, “this Joint Power Board is not the answer, and any future projects at this site need to be under a different structure and different management.”