By Jon Peterson
As housing continues to be a scarce commodity across the region, developers are looking at ways of bringing additional inventory, especially the affordable kind, to cities across the greater Bay Area. Mill Valley-based Thompson Dorfman Partners and Hayward-based Eden Housing are planning such an apartment development project in Marin County in the unincorporated area of San Quentin on Sir Francis Drake Boulevard totaling 230 units. The projected development cost of the project could come in as high as $175 million, according to sources familiar with the project.
The development is named as Oak Hill Apartments. The site is owned by the State of California as excess land through the Department of Corrections. There are no improvements on the site at this time.
Thompson Dorfman and Eden Housing will each develop 115 units on the site. The land is not entitled at this time, and it will be the responsibility of the State of California to take the project through CEQA, entitlements and permitting. There will be a long-term ground lease issued on each of the two projects.
The actual planned start of the project has not been determined at this time, since the entitlement process has not been finalized. The State’s goal is to have the apartments available for occupancy within 36 months, if that process moves swiftly. The Thompson Dorfman project will be built by its Education Housing Partners unit geared for teachers and staff of local high school districts.
“It’s our expectation that this project will have much more demand than the 115 units can accommodate based on the fact that there are 6,000 employees working in the school districts in Marin County,” says Bruce Dorfman, partner at Thompson Dorfman.
The development planned by Eden Housing will be targeted towards low-income eligible families. Both projects will have a mixture of one, two and three-bedroom apartments. They will also share common infrastructure including some amenity areas and a parking structure.
The Educational Housing Partners unit of Thompson Dorfman was formed in 2004 as a California nonprofit public benefit corporation with the mission to develop affordable housing to help school districts and other public agencies recruit and retain employees. EHP’s developments are structured to be fully financed, requiring minimal funding from the district and self-sustaining with below market rental rates covering all operating and financing costs.
“These communities are owned by the district or a Joint Power Authority (JPA) and fully financed through the sale of a tax-exempt bond issue. This structure limits the district’s economic exposure as bond investors are secured a pledge of the leasehold interest and net operating income,” said Dorfman.
Without a profit motive, rental rates can be set at minimum levels to cover operating costs, debt service and reserves. “Due to no land cost or property taxes, and other operational efficiencies, rental rates are typically up to 30 percent below market for comparable newer quality apartments and all units’ rental rates qualify for HUD or moderate-income categories,” said Dorfman.
EHP is now looking for future development opportunities in all of the counties within the San Francisco Bay Area. Other areas of interest include Monterey and the Southern California areas of San Diego and Los Angeles.