Planning Commission recommends lowering inclusionary requirement to 15% for larger projects and backs "affordable-by-design" options for small projects

The Mill Valley Planning Commission on Dec. 9 voted 4-1 to recommend that City Council adopt a revised inclusionary housing ordinance that reduces the city's inclusionary requirement and adds incentives aimed at encouraging buildable, mixed-income housing.

Staffer Danielle (planning staff) framed the ordinance as a tool to disperse affordable units through market-rate development while recognizing Mill Valley's small parcel sizes and hillside constraints. "The overall intent is to create mixed income housing within those market rate units, disperse those affordable housing units throughout the community versus just in one potential affordable housing project, and prioritize construction of such units with the construction of the market rate units," Danielle said.

Major features of the commission's recommendation:

- Applicability and rate: Projects of 10 or more units would be subject to a 15 percent inclusionary requirement (with a typical split of low- and moderate-income units as described in staff materials). The commission favored 15 percent as a single, simpler percentage for larger projects.

- Mid-size projects: The 7-to-9-unit category would remain with a reduced requirement (one moderate-income unit in many configurations) to ease burdens on smaller developments while still producing housing.

- Small projects and "affordable by design": For very small projects the commission recommended waiving fees in exchange for providing compact units that meet "affordable by design" benchmarks. Commissioners discussed working definitions for affordable-by-design units (examples offered during deliberations: 1-bedroom ~850 sq ft; 2-bedroom ~1,000 sq ft; 3-bedroom ~1,200 sq ft) and a process to confirm affordability (such as disclosing first rental or sale prices prior to occupancy).

Commissioners debated the merits of a single percentage versus a tiered approach. Several commissioners argued a single 15 percent rate would simplify policy and avoid introducing perverse incentives that developers might "game" by manipulating unit sizes; others emphasized the need to meet deeper affordability targets for certain projects and to retain some incentives for family-sized (three-bedroom) affordable units. Commissioner Kevin Yolis summarized a broader rationale for boosting supply: "Supply will bring affordability down," he said during deliberations.

Staff noted the ordinance aligns with state law and cited a 2021 Nexus study that supports a 20 percent figure in some larger-jurisdiction analyses; staff recommended balancing nexus findings with local parcel sizes and feasibility. The Planning Commission asked staff to forward the recommended modifications to City Council for final consideration and to prepare clearer draft language defining affordable-by-design metrics and procedural checks for verifying first rents or sale prices.

The Planning Commission's recommendation will be transmitted to the City Council, which will consider adoption of the ordinance and any implementing code amendments. The commission's action was a recommendation only; City Council retains final authority.