Housing project for Marin educators, employees still short on funds

The hunt is continuing for the money to make a housing project for Marin educators and county workers economically feasible.

The project, known as the Village at Oak Hill, envisions 135 apartments on a Larkspur site adjacent to San Quentin prison. The apartments would be priced to be affordable to households at 50% to 80% of the area median income. For a three-person household in Marin, the 50% level is $88,150 per year, while the 80% level is $141,000.

In January, the Marin County Public Financing Authority, which was created by county supervisors and the Marin County Office of Education in 2023 to finance and manage the project, announced a $17.4 million budget shortfall.

The authority proposed a plan to reduce the project’s cost by $10 million by having the county and school districts guarantee the rental income of the apartments in order to lower the interest rates on bonds to finance the project. Under the proposal, a certain number of apartments would be reserved for each entity. The entities would back up the rent of only those apartments.

That plan is moving forward, despite criticism from some who say it is too risky. However, at a meeting of the financing authority board on June 5, executive director Matthew Hymel said the bond guarantor program won’t be enough to save the day.

“If we are going to achieve a balanced budget,” he said, “it’s going to take additional grant resources.”

In an interview, Hymel said the authority is “working with Sen. Mike McGuire to see if there is money in the budget that could be used for the project to close the gap.”

The Legislature must pass the state budget by June 15 or face potential penalties. When Gov. Gavin Newsom released his revised budget in May, he said the state was facing a $12 billion deficit.

Hymel said the financing authority is looking at the possibility of other grants as well. It applied for a $1.5 million grant from the state’s Local Housing Trust Fund program.

“We are still waiting and we expect to hear back in mid-July,” said Leelee Thomas, deputy director of the Marin County Community Development Agency.

The financing authority has shaved off about $2.5 million in expenses by obtaining a lower-cost, short-term loan from the Marin Community Foundation worth $1.5 million, and deferring the $1 million fee being paid to the project developer, Bruce Dorfman.

However, Hymel said other expenses have come in higher than expected, so there is likely at least a $5 million budget gap at this point.

“We always knew that there was a remaining gap that we were going to need to solve, so we’re really in the place we expected to be,” said Hymel, who was the county administrator from 2005 to 2024.

Five entities have expressed interest in participating in the bond guarantor program: the county government, College of Marin, the Novato Unified School District, the Marin County Office of Education and the San Rafael Board of Education.

Hymel said the county and the schools are in the process of doing their due diligence. He expects to get a final decision from their boards in August or September.

Hymel said the college and the schools want representation on the financing authority board if they agree to the deal. The five-member board has three members appointed by the Marin County Board of Supervisors, including Supervisor Dennis Rodoni. The other two board members were appointed by the Marin County Office of Education.

At the June 5 meeting, Dorfman expressed a desire to begin site preparation work for the project in late August or early September before the rainy season begins.

“If we waited until the bonds were financed, it would likely be the winter,” Dorfman said, “which is not the best time to be doing significant earthwork.”

“We’re just exploring that,” Hymel said Wednesday. “That would potentially be done with the grant funds we’ve received as long as the granting agencies allow us to do that.”

The project is two to three months behind schedule. Hymel said the earliest the bonds could be issued at this point would be October or November.

“This is probably a best-case scenario,” he told the financing authority board. “We’ve got to get the budget balanced before we can go forward.”

Hymel has said previously that a last-ditch strategy might be to reduce the affordability of the apartments. On Wednesday, however, he said, “Our board and our partners have been really clear about how important that affordability goal is, so that’s not something we’re even considering at this point.”