Larkspur housing projects delayed by soil toxins

Construction on two housing developments in eastern Larkspur will be delayed because of soil contamination.

The projects are slated to be built on a 8.5 acres of state land near San Quentin that used to include a gun range. The land contains lead from expended bullets and possibly other types of projectiles.

The California Department of Toxic Substances Control notified the housing developers recently that June would be the earliest the land could be approved for construction.  According to a department report, the maximum lead concentration at the site was 29,000 milligrams per kilogram. The agency considers lead levels above 80 milligrams per kilogram unsafe for residential areas.

The basic plan is to remove contaminated dirt and replace it with clean soil.

One of the developments, the Oak Hill workforce housing project, had been scheduled to begin construction in April. It involves 135 affordable apartments: 92 for education employees and 43 for county employees. The Marin County Public Finance Authority, which includes the county government and the Marin County Office of Education, is overseeing the project.

The other project, which is being developed by Eden Housing, will include 115 apartments affordable to low-income and extremely-low-income households. Construction is expected to start in the second quarter of this year, said Teddy Newmyer, an Eden Housing executive.

In a Jan. 20 letter to the county, a Department of Toxic Substances Control official said it would review and approve a cleanup plan for public comments, respond to the comments and then approve a final version of the cleanup plan for implementation.

“Our standard timeframe for approving a cleanup plan is typically over a year and half after execution of the agreement, and in many cases longer,” wrote the official, Maryam Tasnif-Abbasi, whose title is brownfield development manager.

However, because of the acute need for housing, the department could expedite the approval by June, provided a list of conditions were met, Tasnif-Abbasi said. They include no more contamination discoveries; no discovery of human remains or indigenous cultural artifacts; and no delays from extended bad weather.

“We are going to be working to adjust our pro forma and our timeline over the next few weeks with the developer and our financial folks,” Matthew Hymel, director of the Marin County Public Financing Authority, said at its meeting on Jan. 22. A real estate pro forma is a detailed financial projection of a development’s future income, expenses and profitability.

Hymel said the delay “certainly creates some construction cost risk, but interest rates may change over that time too.”

“They’ve been trending downward, so it could go in either direction,” he said.

Bruce Dorfman, the developer of the workforce housing project, said, “I don’t see construction inflation being a major concern. The biggest commodity that we use is lumber, and lumber costs are flat or trending lower.”

Newmyer said tax credits Eden Housing was awarded for its project require that it meet a July readiness-to-build deadline. He said the risk of interest rates going higher was more worrying than construction costs increasing, at least over the short term.

Speaking at the meeting, Nancy McCarthy, a Marin County Office of Education board member, was skeptical the state agency could complete its work by June.

“You’re talking about rosy pictures of the timeline here,” McCarthy said. “I’ve never seen something like this occur in a couple months. I don’t know why we’re moving ahead with something when in fact the dollars and cents of all of this is not clear.”

Board member Paul Jensen said the Jan. 20 letter was the “most positive letter I’ve ever read” from the state agency.”

“I’ve never seen them offer expedited reviews,” he said.

Hymel said, “We have been clear all along that we’re not going to proceed without a clean site. We’re not going to do our financing without a clean site.”

The Oak Hill workforce housing project has only recently managed to overcome a budget shortfall caused primarily by higher than expected interest rates. The financing plan depends on the county guaranteeing the debt service reserve fund and various entities guaranteeing portions of the rental income.