The Bay Area Housing Finance Authority (BAHFA) recently finalized a collaboration with Tesseract Capital Group that will help preserve up to 99 affordable homes for families in San Rafael’s Canal District. Through BAHFA’s Welfare Tax Exemption Preservation Program, Tesseract Capital Group will convert The Meridian apartment community into long-term affordable housing.
At least 60 units in the complex will be converted to affordable homes initially, and the owner will work to convert the rest of the units in the near future.
BAHFA created the Welfare Tax Exemption Preservation Program to help mission-driven housing developers achieve preservation and protection goals. The program provides the public sector support that private developers need to qualify for property tax relief under state laws. Eliminating property taxes from a building’s operating budget means lower rents for tenants. The program’s assistance includes a recorded deed restriction on the property that ensures that rents remain affordable in the future.
Since its inception in 2022, the program has helped preserve the affordability of 847 apartments across eight developments.
“We identified the BAHFA program to be the one affordable housing program that would benefit us because it preserves our rights as tenants and ensures protections for the low-income families and workers in the community,” said Marina Palma, 400 Canal Tenants’ Union Leader. “With support from the Marin Tenants Power Committee, Legal Aid of Marin, Canal Alliance, the Regional Tenant Organizing Network, and the City of San Rafael, the 400 Canal Tenants’ Union has been advocating for a program like this for three years, so we are thrilled that Tesseract Capital Group has partnered with BAHFA.”
“The BAHFA program has given us a platform to work hand-in-hand with our residents, the tenants’ union, the Canal community, and the City of San Rafael to achieve a common goal of creating and maintaining affordable housing,” said Derek Flores, President of Development & Construction for Tesseract Capital Group.
The property consists of mostly larger, family-sized units, which can be hard to find in the Bay Area’s housing supply. According to Tesseract Capital Group, the majority of households in The Meridian are low-income, earning below 80% of the area median income (AMI), and 86% of units currently offer rents under Marin County’s 80% AMI rent limits. BAHFA’s program will require that affordable units not only maintain these low-income rent limits over time but also offer a 10% discount to current market rate rents. Additionally, rents may not increase by more than 4% each year. Preserving the building’s affordability ensures these residents can’t be displaced by rent increases.
“Cities and counties look to programs like BAHFA’s to help bring together partners and provide the tools to help them achieve their housing goals,” said Stephanie Moulton-Peters, Marin County Supervisor and Vice Chair of the Metropolitan Transportation Commission. “BAHFA’s regional perspective and focus on collaboration are preventing displacement and helping families in Marin County access safe, affordable housing.”
“Marin County is the third most expensive rental market in the Bay Area and the state, making it especially critical to preserve existing affordable housing and increase supply,” said San Rafael Mayor Kate Colin. “This project will help ensure that homes in a large multifamily property remain affordable or accessible to a range of income levels in the long term, thereby safeguarding housing stability for current and future residents who might otherwise face displacement due to market‐rate pressures.”
In addition to enabling below-market rents for residents, savings from the property tax exemption will be used to complete about $3.8 million in future building improvements and maintenance needed over the next 20 years, including elevator modernization, walkway repairs, electrical system upgrades, window replacements, roof replacement, and repairs and replacements of components reaching the end of their remaining useful life. Learn more about the history of The Meridian in the Marin Independent Journal.
The Welfare Tax Exemption Preservation Program is just one tool in BAHFA’s toolkit of resources created to deliver affordable housing to the nine-county Bay Area. Staff are available to work with all developers who are considering building acquisitions. More information is available on the program webpage.