San Rafael complex considers affordable housing program
The owners of a San Rafael apartment complex that has a history of evictions are pursuing an affordable housing program that would give them a break on property taxes, but tenants fear the change could lead to more displacement.
The “property tax welfare exemption” program requires that the apartments be restricted to households earning 80% or less of the area median income. For a family of four in Marin County, that’s about $154,700 annually.
The amount exceeds the household income of many current renters at the 99-apartment complex at 400 Canal St., members of a tenants union said. They worry families will be priced out.
“They don’t want to give us a benefit, what they want is to benefit themselves,” said Glendy Barrios, who has lived at the complex for 15 years. She is married with three children.
The complex has been at the center of a gentrification debate since 2022, when the Tesseract Capital Group of San Francisco purchased the property in the primarily Latino, low-income community, and launched a $8.2 million renovation. Tenants started receiving letters encouraging them to voluntarily relocate, and rent increases and evictions soon followed.
Barrios, whose comments were translated from Spanish, said her family used to pay $2,100 a month. As renovations continued last year, her family moved into one of the renovated apartments and rent went up to $3,000 a month, plus $300 in utilities.
“We have experienced evictions, we have experienced high rents and it has affected us,” said 12-year resident Lisbeth Lopez, whose comments were translated from Spanish. Lopez, who lives with her husband and two children, pays $2,167 a month for a two-bedroom apartment, and her rent will go up $190 a month in July. Her apartment has not been renovated, she said.
The two residents are part of the tenants union that urged the City Council to halt evictions last year. The council adopted an urgency ordinance that required landlords performing renovations to provide tenants with temporary relocation assistance and the right to return to their dwellings after work is complete.
Representatives of the Tesseract Capital Group acknowledged receiving requests for comment but provided no statements.
In an email obtained by the Independent Journal, a Tesseract representative told the tenants union that the affordable housing program they are pursuing would be voluntary.
In the email, Derek Flores, president of development and construction, wrote that a minimum of 40% of the apartments must be designated for lower-income households and that rent caps for qualifying apartments would be limited to 30% to 80% of the area-median income, based on apartment size. Any increase would be tied to rises in the area median income.
According to the company, 53 households qualify for the rent reductions. If at least 40 tenants agree, the rent cap limit would be committed to for 30 years. If not, then the company cannot pursue the program.
The tenants union has attempted to renegotiate the terms so rent would be capped at 50% of AMI, which the organization said was denied. It asked for 70%, and that was also denied.
Union members have collected signatures from 72 households rejecting the program as proposed, hoping to negotiate new terms.
Tesseract has indicated that if the program is rejected, then the complex would continue operating as market-rate housing, leaving residents fearing more rent increases are coming, union members said.
In addition to the tenant income requirement, the property tax welfare exemption program requires that owners must be a nonprofit or partner with a nonprofit and owners must receive some form of public financing or subsidy for their project, such as local, state, or federal grants or bonds.
The program is administered by the state Board of Equalization and the county assessor. The property owner does not need to submit an application or paperwork to San Rafael for review or approval.
Tesseract Capital Group has requested forms from the assessor’s office, but has not filed an application, said Shelly Scott, the county assessor.
San Rafael officials said Tesseract has informed city staff of its intent to apply for the program and has provided updates out of courtesy.
Tesseract told the city it is partnering with the nonprofit Housing on Merit, and that through the program, the California Municipal Finance Authority would provide a $10,000 grant and a 30-year deed restriction on the property.
Legal Aid of Marin has been providing guidance to the tenants.
Ethan Strull, the nonprofit’s housing policy advocate, said tenants and their supporters are concerned that the savings from the exempted taxes would go into the pockets of the landlord. There is no clear regulation that would require reinvestment of any of those savings into the property, Strull said.
Additionally, the city’s just-cause-for-eviction ordinance exempts complexes where 49% or more of the dwellings have a regulatory agreement restricting rent. Legal Aid is worried that if program participation reaches 49%, those tenants would no longer be protected, Strull said.
San Rafael officials are seeking clarity from the California Municipal Finance Authority on the issue.
Marin County Supervisor Dennis Rodoni, whose district includes the Canal neighborhood, said he’s been engaged with the tenants union of the complex since a fire during renovations in 2022 displaced several families.
Rodoni said he supports efforts to expand affordable housing, and the welfare exemption could be part of a broader strategy to address the housing crisis in Marin. At the same time, he understands the tenants’ questions and concerns, which he said need “to be clarified to ensure transparency and consistency.”
“It’s important to me that, as this process moves forward, tenants remain fully informed and that their rights are upheld and respected,” he said. “Ensuring strong communication, legal clarity and health and safety standards are all essential components of a successful transition to long-term affordability.”