Educators that do not educate are now running housing developments. They are total failures at this as well.
“I firmly believe that the proposed 135-unit Village at Oak Hill housing project for educators and county employees near San Quentin doesn’t cut it. Contrary to initial reassurances there would be no fiscal impact on the county, the forecast has eroded sharply. The new plan has participating school districts and the county guaranteeing money for vacancy-related rental shortfalls, theoretically lowering bond interest rates by shifting liability.
The risk would be contractually allocated in proportion to the number of units each employer commits to occupy, with 25% going to the county and 75% to be divided among school districts that opt in.
In other words, they know it will lose money and want the taxpayers to double subsidize these facilities. The county and the school districy is already running deficits—now they want to take education money and public safety money to make up for the losses. Could this be why school enrollment is down and families are fleeing?
Marin Voice: Don’t ask school districts to guarantee rent shortfalls for educator housing
By Mary Stompe, Marin Independent Journal, 3/5/25 https://www.marinij.com/2025/03/05/marin-voice-dont-ask-school-districts-to-guarantee-rent-shortfalls-for-educator-housing/
Building affordable housing is essential. In my nearly two decades as executive director at the PEP Housing nonprofit organization, I learned that, while everyone deserves a place to call home, projects must be financially viable.
I firmly believe that the proposed 135-unit Village at Oak Hill housing project for educators and county employees near San Quentin doesn’t cut it. Contrary to initial reassurances there would be no fiscal impact on the county, the forecast has eroded sharply. The new plan has participating school districts and the county guaranteeing money for vacancy-related rental shortfalls, theoretically lowering bond interest rates by shifting liability.
The risk would be contractually allocated in proportion to the number of units each employer commits to occupy, with 25% going to the county and 75% to be divided among school districts that opt in.
From my perspective, it poses a significant risk, particularly for school districts struggling with budget constraints and long-term uncertainty. Some specifics have yet to be presented, but districts have been told they must commit to participate this month – that’s insufficient time for an informed decision of this magnitude.
Several issues led to this ill-conceived decision. The estimated cost per unit is very high ($911,000 for mostly one-bedroom apartments on land donated by the state). Project construction costs exceed sources by between $11 million and $16.4 million. Even with financial commitments from the county ($4.57 million) and the Marin Community Foundation ($700,000), a significant funding gap persists.
The project is built by a “turnkey” developer who will walk away with $5.9 million and no risk, rather than being an owner/operator with the usual financial incentives. Accordingly, a joint powers authority was established to own the project – an unprecedented move in California. This necessitates higher rents to cover third-party management fees and JPA overhead.
I think high hopes and sunk costs are a problem. After so much initial buzz around the project, current reality is biting these planners. All need to examine this new plan, because going forward with the latest proposal could make things much worse.
The experience of Sonoma State University and the apartment it managed in Petaluma is a cautionary tale. Initially intended for faculty and staff, the project struggled to fill units: Two years after opening, almost half the units were vacant, as SSU employees chose to live elsewhere. Leadership then opted to fill apartments with non-SSU renters. Today, less than 20% of the units are occupied by SSU faculty and staff. The current vacancy rate is financially devastating 14%. Sonoma State is backstopping losses.
Similar occupancy challenges could occur at Oak Hill. Will Novato school teachers prefer San Quentin over living in Sonoma County? Vacancies could result in substantial costs for school districts and the county, making the guarantor financing program a risky proposition.
To address these issues, officials should start by reassessing funding options. They should seek alternative funding sources and eliminate reliance on risky financing programs that burden schools and the county. School districts are already facing significant fiscal challenges.
They should reduce developer fees. When a project doesn’t pencil, the developer fee is often the first thing to address. Officials should eliminate the JPA. Removing it could save $150,000 annually, allowing for lower rents and increased affordability.
Leaders should cut project development costs and use the standard affordable housing model. They should tap available tax credits available to the general public, like the officials for the nearby Eden Housing Project did.
The Oak Hill project presents an opportunity to provide much-needed housing for school and county employees. However, to ensure its success, better financial strategies are essential.
A pause to consider alternatives to the current project proposal and the guarantor financing program could make it possible to create sustainable, affordable housing that truly serves its intended purpose, without unacceptable fiscal risk. Marin school districts must reject this proposal and use their valuable resources for education. The JPA and the developer must fix the underlying problem of a proposal that doesn’t pencil out.
Mary Stompe, of Novato, is a member of the Marin Coalition of Sensible Taxpayers Board of Directors. She served on the PEP Housing Board of Directors for 18 years.
