In both the private and public sectors, there are times when what initially seems like a great idea turns out to be a fiasco. There’s often a brief period when projects can be halted or revised.

That’s where Marin now finds itself regarding what once seemed like a good idea. The project is called the Village at Oak Hills.

The concept was that the state would contribute vacant land on an old firing range next to the San Quentin Rehabilitation Center, formerly known as San Quentin State Prison. The goal is to build 135 “affordable” apartments. Of those, Marin County educators are allotted 101 and county staff 34. In theory, they could live closer to their jobs with lower-cost housing, incentivizing employee retention.

When the project was first introduced to the Board of Supervisors, County Administrator Matthew Hymel assured the public that the project would be cost-neutral.

Now, with an estimated cost of $118 million, the total housing project has a shortfall estimated to be between $11 million and $16.4 million. Apartments will cost around $900,000 per unit despite the land being donated.

Costs increase, inflation continues regardless of who is in the White House, interest rates climb and initial estimates can be wrong. That’s the reality real estate developers face. It’s a business based on risk and reward. Developers take a risk. If all goes well, they make money. If the risk turns sour, they cut their losses and projects die.

The Oak Hills private sector developer, Education Housing Partners, part of Mill Valley’s Thompson Dorfman Partners LLC, now finds this project saddled by a funding gap.

They can fill that hole by issuing bonds. Given the scheme’s precarious financial outlook, those bonds are prohibitively expensive. Wall Street understands the fiscal hazard and prices bonds accordingly. It’s a red flag to Marin school districts. This month school trustees can avoid a trap that might impact their budgets for 30 years.

This looming fiscal fiasco has been highlighted by the Marin Coalition of Sensible Taxpayers.

Much of Oak Hill’s financing comes from issuing bonds. To sell and manage those bond guarantees, county government and Marin’s Office of Education created a joint powers agency, Marin County Public Financing Authority. Its sole purpose is to finance and manage this one project. Its part-time executive director is the same past county administrator (Hymel) who was confident that the project would be “cost neutral.” He’s earning $225 per hour for this gig.

Wall Street will offer a lower interest rate if someone else guarantees it will pay should rental revenue falls short. The “Rube Goldberg plan” is that Marin school districts will guarantee the majority of those bonds. That notion is based on the far-fetched premise that school trustees know something that Wall Street whizzes missed.

A member of the Coalition of Sensible Taxpayers, Mary Stompe a former member of the Petaluma City Council, told authority directors, “You can’t use taxpayer money to guarantee that those units are going to be filled and shift all that risk away from the bond holders.”

Stompe, the retired executive director of the PEP Housing nonprofit organization, added, “If you can’t balance your budget, you don’t have a viable project. When I didn’t have a balanced budget, I couldn’t move forward.”

She pointed out that “Education Housing Partners will receive a $5.9 million developer’s fee. Once the project is completed, they will walk away, leaving a third-party management company providing day-to-day operations.”

School districts should pause. Trustees with little fiscal acumen are being asked to assume risks Wall Street veterans shun. Schools aren’t in the risk-reward business. So far, commitments include $4.58 from the county, $10 million from the state and a generous $700,000 Marin Community Foundation grant. It’s unclear how much of this has already been spent.

Right now is when tough decisions are needed to cut losses and abandon what once seemed like a good idea.

Columnist Dick Spotswood of Mill Valley writes on local issues Sundays and Wednesdays. Email him at spotswood@comcast.net.