Marin housing projects get state financing help

Two major Marin County housing projects have received big financial boosts from the state.

The California Debt Limit Allocation Committee conferred both awards this month. One project is in Larkspur and the other is in Marinwood.

For the Larkspur project, the state agency granted Eden Housing permission to issue $30 million in tax-exempt bonds and awarded it $8.67 million in state tax credits and $3.9 million in federal tax credits. The awards will help finance Eden’s plan to build 115 affordable apartments on a parcel near San Quentin prison.

“It’s good news for the project,” said Tim Gorman, Eden Housing’s project developer.

Gorman said the project is now fully funded, and Eden expects to begin construction in the second quarter of 2026. The project is sharing a 5-acre parcel provided by the state at no cost with the Marin County Public Financing Authority, which plans to build 135 apartments for county and education workers there.

For the Marinwood project, the California Debt Limit Allocation Committee granted Impact Residential Development permission to issue more than $7.35 million in tax-exempt bonds and awarded it about $3 million in federal tax credits. The company intends to build 125 affordable apartments at Marinwood Plaza, a former shopping center.

“Great news and the Marinwood project is fully funded!” Leelee Thomas, deputy director of the Marin County Community Development Agency, wrote in an email.

Impact Residential Development is funded by the private family office of Barry Sternlicht, the chief executive officer and founder of Starwood Capital Group. Founded in 1991, Starwood is a global real estate investor with more than $125 billion worth of assets under management.

Will Sternlicht, an Impact Residential Development board member, said the company has no comment.

Because the interest earned on tax-exempt bonds is free from federal and sometimes state and local income taxes, Eden Housing and Impact Residential will be able to offer a lower yield on the bonds, which will reduce their borrowing costs. The bond allocations were paired with low-income housing tax credits, which the developers can sell to further subsidize their projects.

The estimated cost of Eden Housing’s project has increased to $100 million, up from $92 million in August when the state awarded it a $41.9 million loan.

“Construction costs have gone up,” Gorman said.

The state loan combined with the bond allocation and tax credits will provide the bulk of the financing for the project. California provides low-interest, long-term deferred-payment loans for construction of rental housing for lower-income households.

“The Multifamily Housing Program award of $42 million that we received in August is what made the project competitive for these tax credits,” Gorman wrote in an email.

He added that it also helped that H.R. 1, also known as the “One Big Beautiful Bill Act,” signed into law in July, reduced the minimum amount of funding that projects must get by issuing bonds to qualify for tax credits from 50% to 25%.

States have a federal limit on how many bonds they can issue annually, so the requirement to use bonds for 50% of a project’s costs previously capped the total number of developments that could qualify for credits.

Gorman said that because of the change, Eden Housing only needed to get approval to issue $30 million in bonds instead of $50 million to qualify for its tax credits.

“It made everything across the board less competitive,” he said. “Everybody could have fewer bonds, so there were more tax credits going out.”

In August, Marin County supervisors allocated $1.25 million to the Marinwood Plaza project, boosting the total county contribution to $7.5 million.

Jillian Zeiger, a county planner, said at the time that the additional allocation would ensure that the project would remain “financially viable and competitive for upcoming state funding opportunities.”

A county staff report at the time said several unanticipated factors had emerged that had “materially impacted the project’s financial structure.” The report stated that H.R. 1 had “resulted in a significant reduction in anticipated equity proceeds from tax credits.”

Gorman said it is possible that a project’s overall proceeds from tax credits might decline despite the increased availability of tax credits.

“Because there are so many more tax credits in the market, their price has gone down,” Gorman said. “You were anticipating an investor would give you 91 cents on the dollar for these credits, then the market’s flooded with them and you only got 85 cents on the dollar.”