Point Reyes Light - October 28, 2004
Planners endorse EAH pricing change
By Jacob Resneck
Marin County planning commissioners on Monday endorsed EAH’s request to amend its masterplan enabling the nonprofit developer to sell all seven of its cottages in its Point Reyes Station affordable-housing project at prevailing real estate-market prices.
In EAH’s masterplan, approved by county government, the seven cottages were to have been affordable to low- and moderate-income families. Also planned are 27 affordable-rent apartments.
However, the US Housing and Urban Renewal Department has withdrawn an expected $1.2 million in financing. To raise enough money to help finance the affordable-rent apartments, EAH now wants to sell all its cottages at market rates.
The nonprofit says that without the masterplan amendment, it may not be able to keep the already-excavated project alive. Having secured commissioners’ endorsement for the change, EAH will ask the Board of Supervisors to approve it Nov. 9.
By converting the seven cottages from affordable (expected to sell for $224,300 each) they could now sell them for more than twice that much (around $550,000).
In a 5-to-2 vote, planning commissioners said that San Rafael-based EAH has a good track record and acknowledged that the Point Reyes Station project’s financial woes were largely brought on by factors outside of the nonprofit’s control.
Last June, HUD shocked the county and affordable-housing groups in announcing that it was terminating Marin Housing Authority’s "Section 8 vouchers."
"Had HUD [not pulled the vouchers], we would not be here today," Lamar Turner, EAH’s project manager, told commissioners. "We had a project [with a budget] that balanced."
The commissioners endorsement stipulated that EAH must make every attempt to try to keep some of the cottages affordable before selling all seven at real estate-market prices. Planning Director Alex Hinds will verify that EAH does this.
"Their conditions are that I make the best efforts to maintain affordability," Turner told The Light after the meeting. "Well, we’re already making our best efforts, so they aren’t asking me to do anything I wasn’t already going to do."
Marin Housing Authority is appealing to HUD to reconsider its decision. The authority allocates housing vouchers, and HUD has claimed the allocations have not followed its rules.
West Marin residents had endorsed the project as a means of keeping the community intact. Many of West Marin’s working-class residents have been forced to move away as wealthy people from elsewhere have bought up long-term-rental housing to use as vacation homes.
EAH financial info rapped
Several of the commissioners complained that EAH’s finances, as presented to the county, were vague at best. Based on EAH’s figures, commissioners said by selling all seven cottages at market rates, EAH may end up with a surplus. If so, at least some of the cottages could remain affordable, commissioners said.
"The income generated by the revenue from the sale of all seven [cottages] seems to exceed the deficit," Commissioner Hank Barner told EAH’s Turner.
"If you put it in the spreadsheet, it all balances," Turner replied, adding that the formulae used to balance the project’s budget are complex and so were presented to the commission in a simplified form.
"I’m still concerned with the absence of financial [detail,]" Barner said. "Lending agencies just don’t lend on this kind of stuff. Somebody better do some hard work before it goes to the Board of Supervisors because I expect some of them will be asking the same kinds of questions."
Presumption criticized
Commissioners also expressed irritation when they learned that in June, EAH – without consulting county government – had decided to sell two of the seven cottages at market prices to keep the project alive.
Speaking to EAH president Mary Murtagh, Commissioner Randy Greenberg asked, "While I don’t doubt your good intentions, how can you explain a budget that assumed that two housing units could be sold at market rates?" "It was an error, plain and simple," Murtagh replied.
Greenberg and Commissioner Jo Julin ultimately voted against amending the project’s masterplan.
Rising costs
Rising costs have hindered the project, EAH representatives said, adding that increases in the costs of materials as well as labor have pushed the project further into the red.
"The contractor has not been able to hold the bids from March and April. So that brought [costs] up $150,000," Turner told commissioners.
"An increase in building materials is a normal thing that any normal developer has to go through," Commissioner Barner replied.
Commissioner Steve Thompson said he was also troubled by EAH’s apparent lack of detailed financial planning. He said he was worried that EAH’s projected figures cut it awfully close and warned of further problems during development.
"You have [budgeted] 1.09 percent increase for your contingency costs, and you haven’t even opened the door on [constructing] the apartments," Thompson said to Turner.
"Your contingency is so low in a place where costs can rise so fast," Commissioner Greenberg agreed.
Measure A vital
A further impediment to the project is HUD’s requirement that the project be served by public transport. Point Reyes Station is only served by the West Marin Stage, a pilot program whose fate hinges on passage of Measure A on Tuesday’s ballot. Such a precarious service does not meet HUD’s requirements.
As a result, EAH must budget $300,000 for a transit shuttle, driver, and insurance to serve residents without cars. EAH hopes that this cost will be unnecessary if Measure A passes, but the final decision will be made by HUD. It might still be decided that the West Marin Stage doesn’t satisfy federal funding requirements.
Housing for whom?
Point Reyes Station resident Madelyn Sobel, who is on the waiting list to buy an affordable cottage, told the commissioners how frustrated she was to see her dream of owning property in West Marin slip away.
"I work three jobs to afford to live in West Marin with no assistance and no inheritance. My only vacation was in intensive care. My dream is to own one of these houses. If you have only 27 [affordable] apartments with [renters] from all over, what’s the benefit to the community?"
Commissioner Greenberg agreed: "I would like to see a program that gives priority to West Marin residents. They’re not going to want weekenders commuting back and forth on their roads."
Planning Director Hinds pointed out that while a program giving West Marin residents preference may have its merits, it would probably violate HUD policy.
"In my experience, what may make perfect common sense isn’t always possible when you’re dealing with a whole myriad of government agencies," he said, noting that while building affordable housing to keep a community from fragmenting is honorable, it is viewed by government agencies as discriminatory and could jeopardize much of the project’s funding.
Village Association offers mea culpa
Philip Fradkin, a member of the Point Reyes Village Association board, put some of the blame on his own organization for successfully lobbying EAH to scale down its project, effectively making each housing unit more expensive.
"The Village Association negotiated less units there, and it made the economics closer. Lamar [Turner] said this was true, but we persisted," he said.
The cottages are nearing completion, and Fradkin said, "Those seven houses are there. Everything else said today is academic. The rules were changed midstream by HUD. There was no mismanagement by [EAH.]"