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Autonomous devices would be allowed only for testing and research, not commercial use.
After a contentious meeting on the controversial plan, SFMTA decided against further study.
CTA staff recommended using the funds to pay for infrastructure projects instead.
Delayed since early summer, the traffic diversion is set for installation next month.
Drivers can renew registrations and get new vehicle tags on the spot.
The area around the intersection at Pierce and Waller is currently closed.
The work will wrap up by the end of next week.
If the pilot isn't successful, Muni will install boarding islands and remove parking spaces along the corridor.
Neighbors have two weeks to offer feedback on three competing proposals for the plaza.
The service plans to launch in low-income communities, western and southern neighborhoods, and in tourist-heavy areas.
The city's only worker-owned cab company once had 19 vehicles, but now operates only 7 Priuses.
Water service in the area has been shut off until the leak is repaired.
The project aims to improve traffic conditions between Market and Sutter streets.
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