A Marin County Superior Court judge dealt a blow to the developer of a planned affordable housing project in Marin City, invalidating $40 million in tax-free bond revenue for the development.
After a tentative ruling on Oct. 8, Judge Stephen Freccero issued the final order on Oct. 16, both times siding with Save Our City, a Marin City group that filed a petition with the court to reverse two resolutions approving the bonds—one by the Marin County Board of Supervisors and the other by the California Municipal Finance Authority, which issues the bonds.
Save Our City hopes the ruling helps derail the Marin City project; however, the developer says he will build affordable housing at 825 Drake Ave., with or without revenue from tax-free bonds.
“The ruling doesn’t deal with land use, and it doesn’t deal with the ability to build or anything else of that matter,” said developer Caleb Roope, CEO of The Pacific Companies. “So, we’re under construction, and we’re going to stay under construction.”
The Case
The crux of Save Our City’s petition involved whether the county supervisors understood they had discretion to deny tax-exempt bond financing for the project during the board’s March 2023 hearing required by the Internal Revenue Service.
“There are definitely parts of that hearing that are very confusing,” Freccero said to Roope’s attorney, Daniel Cucchi, during a court proceeding on Oct. 8.
The supervisors’ apparent confusion stemmed from the county’s 2020 approval of the Marin City project, under Senate Bill 35. The 2018 state law restricts local governments from rejecting multi-family residential developments that satisfy specific affordable housing criteria when the municipality has not built enough new housing to meet state-mandates aimed at reducing the housing shortage.
SB 35 should have held no sway over the supervisors’ approval or denial of the tax-free bond funding for the project, according to the judge. Yet, before the board approved the bonds in a 3-2 decision, discussion ensued about SB 35 limiting the board’s discretion.
In his ruling, Freccero cited statements by Brian Washington, county counsel, at the 2023 bond hearing as one source of the “convoluted and confusing” description of the supervisors’ duties.
“County Counsel stated that the board also had discretion in not approving the bond,” Freccero wrote in his ruling. “However, he followed up his broad statement regarding discretion with specific statements describing a narrower range of discretion due to SB 35.”
Although the judge reversed the county’s and bond issuer’s approvals of the bonds, developer Roope told the Pacific Sun in May that all the bonds had already been issued for the project.
The Consequences
Jack Chen, an expert in structured finance, stated in a declaration to the court on behalf of Save Our City that if the bond issuance is invalid, in his opinion, Citibank and bond investors would “terminate those agreements, unwind the structure and seek a return of their capital.”
Roope admits that the ruling has placed him in a challenging position but insists that it won’t stop the Marin City project.
“We were ready for this,” Roope said. “And we, you know, had a plan of action already established. And we’re just staying on that course.”
According to Roope, his company has other financing options, including appealing Freccero’s decision to invalidate the bond approval, reapplying for the tax-free municipal bonds, finding other funding or putting its own money into the project.
Just as Roope has back-up plans, so does Save Our City. Anticipating that The Pacific Companies would reapply for the $40 million in tax-free bonds, the group has met with individual supervisors, trying to persuade them to vote against the financing for the project if it comes before the board again.
“I can’t comment on how I will vote in the future; however, I can say I voted against the issuance of the bonds last year,” Supervisor Stephanie Moulton-Peters, who represents Marin City and the rest of Southern Marin’s district, told the Pacific Sun.
Since the board’s approval of the bonds in 2023, the scope of the affordable housing project in Marin City has changed significantly because of public pressure, including Save Our City’s legal challenge to the financing. The county announced in August 2024 that Roope bought a second property at 150 Shoreline Hwy., near Tam Junction, and plans to put 32 of the 74 Marin City units at the new location. With the reduced number of units, Roope also committed to providing one-to-one parking at 825 Drake, although SB 35 requires no parking spaces with the nearby public transit.
Marilyn Mackel, a Save Our City leader, maintains that even with these changes, the supervisors could not “in good conscience” approve the bonds a second time. The community continues to oppose the project for a variety of reasons.
The Marin City building will remain five-stories, as in the original plan, much to the chagrin of residents at Village Oduduwa, a two-story apartment complex for low-income seniors located just yards away from the planned development. Sun studies conducted by The Pacific Companies show that the larger building will block some sunlight from reaching Village Oduduwa.
“In terms of the design of the building and its impact on the community, it still puts the senior housing in the shadows and impacts the amount of traffic and street parking in the community,” Mackel said. “It’s across the street from Marin City’s only park, and the increased traffic presents a danger to children.”
Most of all, Mackel emphasizes that the Marin City project and the revisions did not include input from the community. They want the supervisors to give significant consideration to the wants and needs of Marin City residents before a future vote on the bonds.
The Future
Interestingly, the county has delayed moving forward with a Memorandum of Understanding with Roope about changes for the Marin City project. Although slated for the Oct. 15 Board of Supervisors meeting, the topic did not appear on the agenda. The county also has not yet provided the promised information about the Shoreline proposal for consideration by the Tam Design Review Board and the Planning Commission. All these meetings would allot time for public comment.
According to Sarah Jones, director of the Marin County Community Development Agency, the court’s tentative ruling issued on Oct. 8 provided “a point to pause and evaluate.” However, Freccero’s final order did not affect the developer’s approval under SB 35 for the Marin City project, and the permits and construction remain valid, she said.
“How this project proceeds and the timing for development will be up to the developer,” Jones said. “We’ll know more in the days and weeks ahead.”
