Mill Valley council reviews inclusionary housing overhaul, gives staff preliminary direction

City planning staff presented proposed revisions to Mill Valley's inclusionary housing rules and the City Council spent the bulk of its meeting probing trade-offs between encouraging development and producing deed-restricted affordable units. Planning manager Danielle Stoudy told council the review is intended to provide clear, predictable requirements to developers and said no action would be taken tonight; staff will forward draft regulations to the Planning Commission after council direction.

The presentation framed the issue around local housing constraints: about 1,400 people and roughly 6,500 housing units in town, a large share of single-family zoning and 30% of households cost-burdened, and few recent multifamily projects. Stoudy outlined a staff recommendation to raise the project threshold from four to seven units, set a 15% inclusionary requirement for projects of 7'19 units and 20% for projects of 20 units or more, and to add incentives such as impact-fee waivers for smaller units and options to trade one required affordable unit for a family-sized (three-bedroom) deed-restricted unit.

Vice Mayor Perret and other members questioned the practical effects of fees and design thresholds. On the impact fee, staff explained it is calculated as a share of construction valuation and estimated at about 1% of the valuation for the unit components staff used in their modeling. Stoudy also described an "affordable by design" option that would treat units of about 1,000 square feet (versus 1,200) as eligible for streamlined incentives, noting that smaller footprints sometimes allow the development to remain affordable but can complicate family-sized units.

Local developers and builders who spoke during public comment said higher construction costs, small and constrained sites (trees, easements, flood-zone complications) and permitting uncertainty are the dominant barriers to new housing. Architect Michael Heacock told council that "if you were to all say, look, let's just set this bar as low as we can to try to get anything built, you may not get anything built" and recommended predictable, simple rules. Developer Phil Richardson, who is working on a local project, said 15% would be more saleable than the previous 25% requirement and urged caution about raising percentage requirements while financing and market conditions remain difficult.

Councilmembers traded views on whether to follow the county nexus study'which staff said supports up to 20% inclusionary'or to adopt 15% as a more developer-friendly floor. Multiple councilmembers expressed support for raising the threshold to seven units and adopting 15% for smaller multifamily projects with 20% for larger developments, but no formal ordinance was adopted; staff will return the draft for Planning Commission review and the council may reassess outcomes at a future midpoint review.

The discussion left several concrete points for the record: staff will proceed with drafting language that clarifies the 7-unit threshold, the 15%/20% split and the set of incentives under consideration (impact-fee waivers for qualifying units, removal of the micro-unit cap in some cases, and retainment of density-bonus options). Councilmembers asked staff for follow-up data on how similar local jurisdictions adjusted their inclusionary rules and what measurable effect streamlining and percent changes had on approvals since 2021.

The council closed the topic with an instruction to staff to continue public outreach, prepare the ordinance language for the Planning Commission, and return to the council for a midpoint check to assess whether the changes are producing the intended results.