The Tamalpais Union High School District has declined to participate in a bond guarantee program designed to allow the Village at Oak Hill housing project to bridge a multimillion-dollar budget gap.

The project envisions 135 apartments on vacant land donated by the state in eastern Larkspur near San Quentin prison. The plan is to reserve 101 apartments for educators and 34 for county employees. The apartments would be priced to be affordable to households earning between 50% and 80% of area median income.

However, the project has a budget shortfall of more than $17 million. As a result, the Marin County Public Financing Authority, which is managing the project, is asking Marin’s 17 school districts to guarantee a portion of the rental income from the apartments in order to lower the interest rates on bonds to finance the project.

“We’re not participating,” said Tara Taupier, the Tam Union superintendent.

Taupier said she and the district’s chief business official, Corbett Elsen, met recently with Matthew Hymel, the authority’s director, and Ken Lippi, senior deputy superintendent at the Marin County Office of Education, who sits on the authority’s board, to discuss the proposal.

“We did not feel this was something we could support,” Taupier said. “I don’t think it’s the role of the district to actually fund public housing. I just don’t think that is something districts can take on reasonably.”

Taupier said she had discussed the matter privately with members of her school board and they agreed. The matter has been placed on the agenda of the board’s meeting on Tuesday.

“It would not be our recommendation to the board that they participate,” Taupier said. “I don’t believe our board would be supportive of it.”

Hymel said the authority doesn’t need all of the school districts to participate in the guarantee program for it to succeed. During a meeting of the authority’s board on Thursday, Hymel said he plans to present the proposal to San Rafael City Schools, the Novato Unified School District, the Marin County Office of Education, the Marin County Board of Supervisors and College of Marin this month.

Lippi said, “I’m gratified by the response that we’re getting from districts to give this a fair hearing.”

The possible participation of College of Marin is a new wrinkle.

“We will go to the College of Marin board,” Lippi said, “because they’ve expressed an interest from the beginning in joining as a partner if the timing were ever right.”

Contacted following the meeting, Jonathan Eldridge, College of Marin’s president, said, “We were approached by the joint powers authority so we will be bringing it to our board to ask questions. I honestly don’t know where we will land on this, but I certainly think it’s an intriguing possibility.”

Under the proposed bond guarantee program, school districts or a group of smaller districts would agree to backstop shortfalls in rental revenues from designated apartments at the end of each year. Because 101 of the apartments would be reserved for educators, school districts would back up 75% of the project’s rental income. Marin County would guarantee 25%, because 34 of the apartments would be reserved for county workers.

Any participating school district or consortium of districts would be required to assume responsibility for a minimum of nine apartments. They would include one apartment priced at 50% of area median income, two at 60% and six from 80% to 120%.

Critics of the plan have said it is fiscally irresponsible for the project to proceed given the size of its budget deficit.

“I don’t believe that this project should continue unless the county and definitely the school districts are off the hook for any guarantees,” said Nancy McCarthy, who was elected to the Marin County Office of Education board in November.

Hymel said, “We will not go forward if we have a budget shortfall. Our objective is to come back to this board in May or June with a financing plan, and if it’s not balanced we’ll tell you it’s not balanced.”

Hymel said the project is over budget because of higher-than-expected interest rates and the authority’s desire to ensure the apartments are affordable for households earning between 50% and 80% of area median income. A household of three earning $88,150 per year in Marin is at 50% of area median income, while a household of three earning $141,000 is at 80%.

Hymel has said that without the guarantor financing program, the only way to proceed with the project would be to increase rents. However, he said, that might also pose a problem.

“If we increase the rent levels,” Hymel said, “we would have a more balanced budget, but we would experience some of the challenges that we are hearing about with Sonoma State’s project or the Serenity project in Larkspur, where they’re charging higher AMI rental rates.”

Hymel was referring to Serenity at Larkspur, a 342-apartment complex at 700 Lincoln Village Circle in Larkspur, and Marina Crossing, a 90-apartment complex in Petaluma, which was purchased by Sonoma State University with the goal of providing affordable housing for faculty and staff. Both complexes have experienced problems keeping their apartments rented.

Several housing advocates attended Thursday’s meeting and urged the authority’s board to push ahead with the project.

“We need workforce housing for our employees. Our turnover rates are too high,” said Derek Knell, the Novato school district’s director of staff housing development.

Knell said a third of the district’s workforce is aging out into retirement, but new hires leave in less than two years on average because of the high cost of housing.

Aaron Burnett, director of policy at the Canal Alliance nonprofit in San Rafael, said more affordable housing is needed to attract teachers “who are also bilingual and bicultural.”

Jennie Silva, chair of the Marin Environmental Housing Collaborative, said any delay would likely increase costs.

Joe Mullin of San Anselmo accused project critics of seeking to kill the project.

“I cannot believe how long anti-housing forces have been listened to in this county,” Mullin said.

Paul Jensen, a former San Rafael planning director who serves on the authority’s board, said, “There are a handful of market-rate projects in this county that aren’t moving forward that are fully entitled. They have huge funding gaps, so this is more the norm than it is the exception.”

To which Mimi Willard, president of the Coalition of Sensible Taxpayers, replied, “Well, guess what? A publicly financed project that doesn’t pencil out also shouldn’t move forward. It needs to be revised in some way until it does pencil out.”

McCarthy said, “I’m in favor of affordable housing and I think that everybody I know that is concerned about this project is in favor of affordable housing. I don’t want to see the schools, who are struggling right now, saddled with a financial guarantee that they cannot possibly support.”