Marin County allocates $7 million to preserve and create affordable housing
By RICHARD HALSTEAD | rhalstead@marinij.com | Marin Independent Journal September 28, 2022 at 6:08 p.m.
Marin County is allocating over $7 million to preserve existing affordable rental housing in San Rafael and create new opportunities for affordable home ownership in West Marin.
County supervisors on Tuesday earmarked most of the money, $6.25 million, to Bridge Housing, a nonprofit developer and manager of affordable housing, to purchase existing apartment buildings at 101 Nova Albion Way and 845 Las Gallinas Ave. in San Rafael. The entire $6.5 million came from the county’s Affordable Housing Trust Fund.
“It’s the biggest investment the county has ever made into a project,” said Leelee Thomas, a county planning official.
Supervisors also approved funding for a project that will result in the creation of four prefabricated, three-bedroom houses in Bolinas. Two of the homes are located on Aspen Road near the intersection of Alder and Big Mesa streets. The other homes are located at 530 and 534 Overlook Drive.
Habitat for Humanity Greater San Francisco and the Bolinas Community Land Trust are collaborating to make the homes available to low-income households.
Bolinas Community Land Trust developed the homes and Habitat for Humanity will use the $800,000 from the county to cover part of the $2.4 million cost to buy the houses from the land trust.
Half of the $800,000 will come from the county’s affordable housing trust fund. The two separate allocations combined will put to work nearly half of the entire trust fund, leaving it with a balance of about $7.5 million. The other $400,000 going to Habitat for Humanity will come from revenue generated by Measure W.
In 2018, Marin voters approved Measure W, which increased the transient occupancy tax from 10% to 14% for guests at hotels and short-term rentals in West Marin. Half of the revenue from the tax is earmarked to support long-term housing development in West Marin while the remainder is reserved to enhance fire and emergency services in West Marin.
“I’m really pleased that we could team up the housing trust fund and Measure W funds to help finance this,” Supervisor Dennis Rodoni said Tuesday.
The two San Rafael apartment buildings house a combined 125 units. The Terra Linda Manor building at 101 Nova Albion Way, built in 1962, has 93 units, including 32 two-story townhomes and 61 apartments.
Northview Apartments at 845 Las Gallinas Ave., which was built in 1964 and is located adjacent to Terra Linda Manor, has 32 two-story garden style apartments. Bridge intends to convert the two buildings into a single, regulated affordable housing property.
Thomas said the existing apartments are considered to be “natural occurring affordable housing.”
“Most of the residents are low income and paying significantly below market-rate rents,” Thomas said.
The planning official said the current asking price for the two buildings is $48 million, which amounts to about $348,000 per unit, significantly less than the $800,000 per unit it would cost to build similar new apartments.
Thomas said the county’s allocation of trust fund dollars aligns with the county’s goal of preserving affordable housing to prevent displacement of low-income residents. She said the existing apartments are occupied primarily by low-income Latino families.
“This strategy of preservation is so important,” Robert Pendoley, a Marin Environmental Housing Collaborative board member, said during the public comment portion of the supervisors’ meeting. “It’s getting worse for renters as the COVID-19 protections begin to expire.”
Pat Langley, a founding member of the Marin Organizing Committee, said, “It’s in an ideal location. This site is within walking distance of an elementary school, high school, grocery shopping, employment opportunities, playing fields and public transportation.”
The county is loaning the $6.5 million to Bridge Housing, but Thomas told supervisors there is no deadline for Bridge to replay the money.
“It is what is called a residual receipts loan,” Thomas said.
She said that means Marin will be last in line to be repaid after private investors get their money and funds are set aside for ongoing maintenance.
“It will be more than 10 years at this point,” Thomas said.
One unknown factor that could affect how quickly Marin gets repaid is additional repairs to one or more of the buildings that Bridge has become aware of only recently. Thomas provided no detail on what the repairs involve or how much they may cost. Lyn Hikida, a spokeswoman for Bridge, wrote in an email, “It’s premature to go into further detail.”
In its application for the county funds, Bridge stated that it had already budgeted $3.6 million for repairs to balconies, elevators, water heaters, electrical panels, windows and the building envelope.
Thomas said the Marin Community Foundation also has pledged to contribute at least $2.5 million to the Bridge project. Supervisor Stephanie Moulton-Peters asked if the city of San Rafael was providing any funding, since the buildings are located in San Rafael. Thomas said no.
In an email, San Rafael Mayor Kate Colin said San Rafael accepts applications for funding from the city’s $1 million affordable housing trust fund at regular intervals.
“Through this Notice of Funding Available (NOFA) process, the city provides an open, transparent and competitive process for potential local affordable housing projects,” Colin wrote. “We anticipate another NOFA release by January 2023.”
The mayor said that while the San Rafael City Council has prioritized the creation of new housing stock with its previous allocations, it “also supports the preservation of existing units.”
Responding to a question from Clayton Smith during public comment, Thomas confirmed that the sale of the buildings to a nonprofit providing housing to low-income residents will result in a loss of property tax paid to the county and local schools.
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Brad Wiblin, a Bridge executive vice president, told the supervisors, “We would use that property tax savings to keep the rents at the modest level they’re at today.”
Thomas said state officials told the county its allocation of millions of dollars to preserve 125 units of affordable housing will not count towards meeting its state mandate to create 3,569 more residences in the unincorporated areas over eight years, beginning in 2023.
“Unfortunately, the way the Department of Housing and Community Development has it structured, the units can’t be occupied by low-income tenants in order to take credit for a conversion from market-rate to affordable,” Thomas said. “It seems to go against all of our goals around preventing displacement.”
Regarding the home purchases the county is helping to underwrite in Bolinas, Thomas said the county’s past practice has been to invest no more than $50,000 per unit in affordable housing projects. The county’s $800,000 allocation comes to $200,000 per house. In its application for funds, Habitat for Humanity projected its per-unit cost to be about $705,000.
“The per-unit cost is reflective of how much it costs to develop in the coastal zone,” Thomas told supervisors. “There are additional regulatory barriers as well as additional costs to do construction out there.”
Thomas said Habitat for Humanity will hold the mortgages on the homes. When they’re sold, the owners will get to keep a portion of the profit, but Habitat will ensure they’re kept affordable for the next owner.