by ADAM BRUNS adam.bruns bounce@conway.com

The new Longs Drug Stores Corp. distribution center in Patterson, Calif., represents a $60- million investment, as well as the creative use of a 1031 reverse exchange.

T

he Bay Area can explain: High costs sometimes just come with aiming high.
   In addition to having attracted the state's nascent US$3- billion Stem Cell Institute and aiming to provide universal health care to all its residents, the City of San Francisco is taking a crack at the 2016 Summer Olympic Games. Among the leading corporations headquartered in the city is none other than the leading global infrastructure firm, Bechtel Corp., which itself is no shirker of large projects.
   Asked if the firm has in recent times considered joining the wave of other California- based companies leaving for less costly and less regulatory home bases, Jonathan Marshall, media relations manager for Bechtel, writes in an e- mail, "Depending on the status of our leases and business needs, Bechtel periodically reviews its facilities locations, including that of its headquarters. We have been based in the Bay Area for many years and have built many significant projects here. This area is an international hub and has an excellent talent pool. And whatever one thinks of the regulatory climate, you can't beat the natural climate!"
   Lighthearted asides aside, Bechtel headquarters has been shrinking, with between 600 and 700 on site. Marshall cites two main reasons: the shift of jobs to job sites and locations nearer to them, and a particular decline since 2004 attributable to the move of people in the firm's government company (Bechtel National, Inc.) to the company's Frederick, Md., office, to be closer to their customer, the federal government.
   Meanwhile, Bechtel and San Francisco's infrastructure continue to travel hand- in- hand, as they have for decades. Bechtel helped build the world's first automated transit system in San Francisco's Bay Area Rapid Transit (BART) system in 1972, and is currently working on a $1.5- billion seismic retrofit program for BART, just as it did for area highways following the 1989 earthquake. Such improvements are appropriate for an area where 35 percent of 600 polled residents identified transportation as the region's top concern, according to the 2006 Bay Area Council Poll.
   The area's transit vision is by no means transitory. In May, San Francisco Mayor Gavin Newsom convened a press conference to rally support for state legislation that would push a HighSpeed Rail bond to 2008 and include $116 million for bridge funds to keep a CalTrain high- speed rail project on schedule by allowing for complete engineering and right- of- way protection. The first portion of the high- speed rail system is intended to connect San Francisco to Los Angeles.
   "The decisions we make now on how we prioritize state transportation funding will have a huge impact on California's future," said Newsom. "We must look forward by investing in a truly effective system of mass transit, not backwards by repeating the mistakes of the past and building more highways that drive development into our precious green spaces."
   It will take a lot of precious green to build: The California High Speed Rail project, stretching over 700 miles (1,126 kilometers) and with 30 potential stations, is projected to cost $40 billion.
   No word on whether Bechtel will be involved. But back in its hometown Bechtel in 2003 completed a $2.7- billion BART extension program that included track to San Francisco International Airport in Burlingame. That facility is growing itself, in addition to having been one of three airports that just received a $15- million federal grant for a cargo- screening pilot program. It's also where you'll find the new 42,000- sq.- ft. (3,902- sq.- m.) headquarters of upstart low- fare airline Virgin America Inc., led by CEO and former Delta executive Fred Reid. Virgin America's application to begin operations as a domestic carrier is now under review by the U.S. Dept. of Transportation with a decision expected this fall.
   The startup marketing of the airline turned out to be a crucial plank in the $15 million incentive package offered it by the State of California, San Mateo County and the City of San Francisco, helping the West Coast location beat out options at Washington Dulles in the nation's capital and Logan Airport in Boston, Mass.