By Kurt Rossetti

The holidays certainly were “the most wonderful time of the year“ for real estate investment firm Merlone Geier Partners.

On Dec. 16, the firm won approval for their 1,422 unit “Northgate Town Square” development within the northern San Rafael community of Terra Linda. While naming the “Town Square” project after a 200-foot by 200-foot miniature courtyard seemed Orwellian to me (and others), city representatives didn’t take issue with it.

After heaping praise that would have made the most cynical real estate speculator blush, they voted unanimously in favor of the project.

The sailing wasn’t always so smooth. After purchasing the 45-acre Northgate mall in 2017, Merlone Geier faced strong headwinds as a plan to build a Costco on the site met stiff local opposition, community surveys for new tenants went nowhere and several businesses abandoned ship. Then, in March of 2020, the COVID-19 pandemic lockdown hit. It appears to have been the final fatal iceberg for Northgate as a retail center.

Apparently poised not to let a good crisis go to waste, Merlone Geier announced a plan to redevelop the mall into a mixed-use complex with 1,365 residences in buildings not exceeding five stories in March 2021.

A series of public hearings ensued, and the plan evolved to include townhomes, seven-story high-rises and the eponymous lawn (aka “town square”).

But in May 2022, the San Rafael Design Review Board raised “a laundry list of concerns” over the “huge, complex project” and the developer’s desire to segregate the paltry 96 affordable housing units into a separate complex.

After more developer machinations, in February 2024, the city published an environmental report reflecting 1,422 units with only 10% designated as “affordable.” Locals criticized the report for failing to fully consider traffic, noise, emissions and other disturbances. Perhaps growing frustrated with meddlesome community feedback or as a negotiating tactic, in March 2024 Merlone Geier threatened to construct a colossal 1,865-unit project with only 22 more affordable units under California Senate Bill 330’s expedited approval process, which prevents local officials from denying a project over “subjective standards.”

The apparent gambit worked. The City Council buckled and approved the environmental impact assessment and requisite property rezoning on Dec 2. It greenlit construction two weeks later.

To many residents, it appeared the council gladly rolled over in the face of a fight.

Based on the council members’ laudatory speeches, they seemed more than happy to stick 60% of the state-mandated housing expansion requirement into a community representing 10% of the city’s acreage, despite the objections of local residents. Terra Linda’s own council representative Rachel Kertz effusively thanked the developer for their “partnership” and “willingness to collaborate.” Considering the SB 330 maneuver and the amount of local opposition to the project, I was flabbergasted.

As Terra Linda prepares for a life-altering, multi-decade construction project that will increase the neighborhood’s population by 50%, the city of Capitola in Santa Cruz County may provide a view through the looking glass. In 2018, Merlone Geier announced plans to convert the Capitola mall into the “Capitola Town Square.” After local officials eased height restrictions for the construction of more affordable housing units, Merlone Geier balked and indicated that providing more than the minimum number of affordable units would make the project financially infeasible. That left it in limbo. I guess what Merlone Geier lacks in originality, they make up for in profit motive.

If San Rafael voters elected representatives with the backbones of Capitola’s, a development that actually reduces Marin’s high real estate costs could be constructed. Instead, city leaders approved a massive project with the minimum required affordable housing units. Merlone Geier will get the financial rewards of a development composed overwhelmingly of exorbitantly priced market-rate units, and the tiny hamlet of Terra Linda will get stuck with all the risks: the traffic, pollution, overcrowded schools and no discernable reduction in real estate prices.

If affordable housing champion Jane Addams were still alive, I suspect this plan would make her vomit. Absent litigation to expand the affordable units, those championing the project as a panacea to Marin’s housing crisis may soon be sick to their stomach.

Kurt Rossetti, of Terra Linda, is a registered professional civil engineer and an affordable housing advocate.