New cost estimates for transforming Diridon Station into a “world-class” transportation hub range from $3 billion to $10 billion. A joint advisory committee with representatives from four transit agencies and the city of San Jose has narrowed its vision for the area to two concepts before launching a public campaign to gain support for the major project.

Diridon Station is central to the economic vitality of western downtown San Jose as BART expands into the South Bay, while Google’s ambitious vision of a transit village nearby could create millions of square feet of office and retail space, as well as thousands of apartments.

Although Google remains committed to further development, the company temporarily paused last year to review the project’s schedule.

The larger Diridon Station area covers 250 acres and has space for over 12,000 additional apartments and tens of millions of square feet of office space around the SAP Center and the station, which would serve as a central hub for all transportation methods, including the future BART line and the planned high-speed rail linking San Jose to the Central Valley.

The advisory committee, which includes representatives from the city of San Jose, the Santa Clara Valley Transportation Authority, Caltrain, the Metropolitan Transportation Commission and the California High-Speed ​​​​Rail Authority, initially considered three alternatives but rejected an option that would have relocated the tracks at a much higher cost of up to $13 billion.

If the rails are built at ground level, the project costs between $3 billion and $6 billion. If the rails are built at elevated level, the economic losses are even greater, at $5 billion to $10 billion. Planners said the ground-level option would be cheaper because building higher tracks would be expensive and less material would be needed.

“The goal is to build on the extensive outreach that has been done throughout the (Diridon Integrated Station Concept) process, raise awareness and gather feedback that will help us select a recommended alternative by next summer,” said Melissa Reggiardo, Caltrain planning manager.

High-Speed ​​Rail Authority board member Jim Ghielmetti said while he’s eager to hear the public’s opinion, he favors the ground-level option. “I think the cost is something we have to keep an eye on,” he said.

Regardless of the design chosen next year, those responsible are clear that a number of funding sources will be needed to make the project a reality.

Some form of federal grant will be crucial to the project, but to achieve that goal, agencies will need local, regional or state funding, says Amitabh Barthakur, partner at HR&A Advisors.

Barthakur said that while federal funding for capital projects typically requires at least 20% local participation, in most cases it is closer to 50%.

“That doesn’t mean it’s all local funding, but probably other non-federal sources as well,” Barthakur said. “We’re going to have to get really creative to cobble together that pile of funding.”

Local authorities faced similar challenges in financing the $12.8 billion BART extension, with costs and completion dates escalating throughout the planning phase.

Although the BART project – which is separate from the Diridon Station reconstruction – recently received a $5.1 billion commitment from the Federal Transit Administration, it left a $700 million funding gap that transit authorities are still trying to close.

Agency officials could not answer whether FTA’s significant financial commitment to BART could affect the ability of future local projects to compete for additional funds.

In addition to direct contributions from local authorities and transit agencies, there will likely be discussions about new or expanded tax measures in the future, said VTA consultant Kim Walesh.

While public-private partnerships could generate revenue for the maintenance and operations phases, they are probably not an option for the construction phase, she said.

One of the most likely ways to finance part of the project is through the creation of an Enhanced Infrastructure Financing District.

The hypothetical district would freeze property tax revenue for a specific region around the station and send it to the city and county. Any taxes collected above that amount would be diverted to the government agency responsible for redevelopment.

Barthakur said that despite the current weakness in the market, a financing district within a mile of Diridon Station could generate significant future revenue and allow the redevelopment project to issue $200 million to $400 million in bonds.

To form tax-financing districts, local governments must hold three public hearings and either receive at least 75% of the votes from property owners or receive a majority vote in a “protest vote.”

As the advisory board considers design and financing options, it must also decide on a management option to oversee construction after project consultants ruled out appointing one of the partner transit agencies to manage it.

Walesh recommended that the state legislature create a new entity that would be dissolved upon completion after evaluating 10 transportation and development projects, including the Salesforce Transit Center, Denver’s Union Station and the LA Metro Gold Line.