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Millbrae staff and consultant recommend changes to density-bonus rules, advise re‑setting rental inclusionary target
Summary
City planning staff and Harris & Associates presented findings that current market conditions make Millbrae’s 15% rental inclusionary requirement infeasible for some prototypes and proposed a layered local density bonus to encourage lot consolidation and incentivize development.
City planning staff and consultant Harris & Associates presented findings and recommendations to the Millbrae City Council on Jan. 28 about potential updates to the city’s density bonus and inclusionary housing ordinance.
Why the study: The analysis responds to the city’s housing element actions to encourage more affordable units and to make development more feasible in Millbrae’s smaller-lot downtown and corridor areas.
What the study found: Harris & Associates reported that current market conditions—higher construction costs, higher interest rates and limited rent growth—have reduced financial feasibility for many multi‑family rental developments. Using prototype projects, the consultant found: - Rental projects: Under current market assumptions, the city’s existing rental inclusionary requirement (10% very low income + 5% low income = 15% total) did not consistently produce financially feasible development across model prototypes. The consultant identified an 8% rental inclusionary mix (4% very low + 4% low) as the level that would be feasible for their prototypes with a buffer for market variation. - Ownership (for‑sale) projects: The existing 15% moderate‑income inclusionary requirement remains financially feasible under the consultant’s assumptions.
Density-bonus recommendation: Because Millbrae has many small lots that are costly and time‑consuming to assemble, Harris & Associates recommended that the city adopt a local density bonus layered on top of the state density bonus for developments that meet local inclusionary requirements (in particular for low- and moderate-income units). The added local bonus is intended to provide extra market-rate units developers can use to cover acquisition and financing risk and to incentivize lot consolidation in the downtown and on Broadway.
Council reaction and next steps: Councilmembers expressed differing views. Several members supported developer and community outreach and a builders’ summit to test incentives; others urged keeping the existing 15% inclusionary ownership requirement and said the 8% rental figure felt like a step back from the city’s goals. Councilmembers requested further outreach to local property owners and developers and additional fiscal modeling before taking legislative action.
Context: During the discussion a council member noted Millbrae’s state-designated RHNA allocation (cited in the staff report) and emphasized the need to produce housing consistent with state planning obligations through 2031. Staff recommended follow-up steps including targeted outreach to Downtown property owners and developers, additional review of specific plan areas and return of revised ordinance language for council consideration.
Ending: Council directed staff to conduct developer and stakeholder outreach, including the possibility of a developer summit, and return with recommended ordinance language and implementation details.
