Dear Potrero Yard Neighbor,
The Potrero Yard Modernization Project is continuing to work towards replacing Muni’s 110-year-old bus yard with a modern, earthquake-safe facility to house and maintain Muni’s electric trolly bus fleet.
In this Update
As one-time pandemic relief funds run out, Muni faces a budget deficit of about $307 million. We are making cost saving reductions across the SFMTA to avoid devastating cuts to Muni service. That means making hard choices to be able to move essential Muni infrastructure projects forward.
Building a modern bus yard is the primary goal of the Potrero Yard Modernization Project. This will make it faster and easier for crews to maintain buses that communities across the city rely on every day. Unfortunately, the current scope of the project is beyond what we can afford. The SFMTA and the Potrero Neighborhood Collective (PNC) developer team are looking for a path to make this project feasible. The challenge is to build the new Potrero Yard at a cost the SFMTA can afford today.
To move forward with this critical investment in Muni service, we have to make very difficult decisions to lower costs. We are proposing changes that would reduce the amount of housing that could be built at the new yard. This approach would help us keep Muni reliable for the long haul while still preserving up to 100 units of proposed affordable housing at the project site.
To learn more, please join us at an upcoming community meeting.
- Date: Wednesday, October 15, 2025
- Time: 5:30–7:30 p.m.
- Location: Mission Arts Center – 745 Treat Ave, San Francisco, CA 94110
- Childcare and dinner provided
- Date: Thursday, October 16, 2025
- Time: 5:30–7:30 p.m.
- Register for meeting details and link
Our teams at Potrero Yard help 30 Stockton buses run smoothly to Chinatown and back.
Facing Difficult Challenges
- Financial crisis: The SFMTA faces a projected $307M operating shortfall starting in FY26-27. This shortfall grows over time. This project must be affordable to the SFMTA given these fiscal challenges.
- Increasing development costs: Construction costs, interest rates and market volatility have all escalated since the project started.
- Cost inflation: Costs will continue increasing. More delays would jeopardize the entire project.
The SFMTA’s partnership with the PNC developer team is one of the reasons we can move the project forward, even with financial challenges facing transit. PNC will pay the upfront costs to build the bus yard. The SFMTA will then repay them over time, spreading the costs over a 30-year period.
However, the construction cost and these annual payments must be affordable to the SFMTA. And a key deadline is approaching. Our predevelopment agreement with PNC expires on March 31, 2026. If the deal expires, it would be hard to find a new deal that offers similar financing options.
Housing development also faces challenging conditions
Local housing development also faces the same increases in construction costs as the bus yard. The proposed housing program has always been dependent on available funding sources and market feasibility.
- Existing local support only goes so far: The Mayor’s Office of Housing and Community Development (MOHCD) is committed to supporting the proposed 100 units of affordable housing along Bryant Street. However, for the proposed housing above the bus yard, no city or other local subsidies have been identified at this point.
- Competitive funding sources: Affordable housing funds are competitive. Affordable housing is not competitive for state funding or federal low-income housing tax credits without a significant local subsidy.
To keep the project moving, our teams got to work identifying the most effective ways to cut costs.
Cost Savings: Doing everything possible to meet local needs
The top priority: find cost savings for the project that do not endanger our ability to support Muni service. The SFMTA and the developer team found initial savings with alternatives for materials, building systems and equipment that don’t compromise quality of performance.
In addition, we must consider other project changes. The SFMTA and the developer team have identified the following areas for savings to create a path to feasibility for the project.
- Removing the podium
- Reducing the size of the basement and mezzanine level
- Eliminating the roof
- Removing operations and maintenance from the deal structure
Removing the podium
Among these proposed changes, removing the podium would be the toughest choice. A podium would allow developers to build housing or paratransit above the new yard. It requires a five-foot concrete pad over the bus yard roof. To carry the weight of this podium, additional structural building elements would need to be designed and built now.
This is a significant cost that the project’s housing developers are unable to fund prior to the start of bus yard construction. The SFMTA tried to find a way to shoulder this cost. Now, we cannot afford to fund it. Removing the podium would eliminate the opportunity to construct housing or paratransit above the bus yard.
However, we are still committed to preserving as much proposed housing as possible as we make a significant investment in the future of Muni. To that end, these changes would not impact the approximately 100 units of proposed affordable housing along Bryant Street, next to the new bus yard.
Reducing size of the basement & mezzanine and eliminating the roof
The excavation depth and basement size makes it the most expensive part to construct on a per square foot basis. Reducing the size of the basement and the mezzanine level and removing the roof would significantly decrease construction costs. We would move SFMTA systems from the basement to other parts of the building and remove the housing services.
Removing operations and maintenance from the deal structure
The SFMTA can save money by having our own facilities staff operate and maintain the building systems. We would do this in-house instead of paying the developer to do the work. This would be a major cost savings on the annual payments we need to pay to finance the project.
Draft rendering aerial view of Potrero Yard from 17th and Bryant streets perspective, September 2025. (Arcadis)
Not every idea to lower costs works. For example, we considered eliminating a level of the bus yard. This would have reduced construction costs. It also reduces bus capacity by more than a third, negatively impacting transit service and bus operations.
Hard Decisions
The SFMTA and PNC are working to determine a firm, fixed price to build the new yard. We need to ensure the cost savings do not endanger Muni’s ability to support quality transit service. We are doing everything we can to explore creative solutions.
By making these changes, we can get closer to an affordable and responsible price for the bus yard. Plus we can preserve the opportunity to develop approximately 100 units of affordable housing on the site.
Upcoming Community Meetings
For additional information, we invite you to join the team at an upcoming community meeting.
- Date: Wednesday, October 15, 2025
- Time: 5:30–7:30 p.m.
- Location: Mission Arts Center – 745 Treat Ave, San Francisco, CA 94110
- Childcare and dinner provided
- Date: Thursday, October 16, 2025
- Time: 5:30–7:30 p.m.
- Register for meeting details and link
Visit our main project page at SFMTA.com/PotreroYard for more information.