Marin education office plans $8.5M reserve for workforce housing

The Marin County Office of Education will set aside $8.5 million in a reserve fund to offset potential financial risks from an emerging workforce housing project.

The office plans to be the guarantor for the rental income of 74 apartments for educators at the Oak Hill development between Larkspur and San Quentin prison. The 135-apartment site would include affordable apartments for education employees and county workers.

The reserve fund would cover up to three years of lost rental income if educator apartments are vacant, said John Carroll, the Marin County superintendent of schools. He announced the plan at the Marin County Board of Education meeting on Tuesday.

“If nobody moves in for three years, we’ve got it covered,” Carroll said.

The county education office had originally been assigned 20 apartments. Later it also decided to be guarantor for apartments designated for employees of the Novato Unified School District and San Rafael City Schools to provide financial relief for the two districts.

The 74 apartments backed by the county office will become available to employees at all 17 public K-12 school districts in Marin. Of the remaining apartments, 43 will be allocated for county public workers and 18 for College of Marin employees.

Breean Brown, an assistant superintendent at the county education office, said the agency is being “incredibly conservative” by allocating $8.5 million to cover rental vacancies for three years.

“It would really only take about a year, or maybe two years, to come up with a solution if that happened,” Brown said.

Matthew Hymel, director of the Marin County Public Financing Authority, which is spearheading the development, said the reserve fund would ease public concerns that Oak Hill or the guarantor program “would affect existing school programs.”

“It’s going to be more than adequate,” Hymel said. “We’re fortunate to have MCOE in such a strong position to be able to do it.”

Hymel told the Marin County Board of Education that the project is still on track to move ahead despite a preconstruction delay of about three months. The delay is to clean up lead contamination from expended bullets or other projectiles in the soil at the Oak Hill site, state-owned land that used to have a gun range.

The state Department of Toxic Substances Control has advised the county that an expedited cleanup could be completed by June.

“All the contaminated soil will be removed,” Hymel said. “No contaminated soil will ever touch a human being.”

Bruce Dorfman, principal of Education Housing Partners, the developer of Oak Hill, said environmental cleanup is a frequent step in housing construction projects in the Bay Area.

“There is a very technical and quantitative process to go through that’s prescribed by the state,” he said. “That’s what we’re doing.”

Mimi Willard, president of the Coalition of Sensible Taxpayers, said it is “unclear” whether the county education office has the authority to set up a reserve fund for Oak Hill. She said it amounts to “using its balance sheet” to back bonds issued by the Marin County Public Financing Authority.

Willard said any excess reserves held by the county education office “would be put to far better use helping Marin’s financially struggling school districts with additional support.”

She suggested that such support could be “with English language learners, students who are not reading at grade level, special education and other costly programs that benefit students more directly than affordable housing guarantees.”

Hymel said the next step in the Oak Hill development will be “working with the various guarantor partners in drafting the legal documents, and then coming back to them in the spring for more formal approval.”

After that, the authority will seek “a bond rating and everything else that’s involved in issuing a bond,” Hymel said.

The estimated cost of the Oak Hill development is about $124 million. That does not include a second project at the site, a 115-apartment complex being developed by Eden Housing for low-income and extremely-low-income households.