Mill Valley moves to cut affordable housing requirement after decade of near-zero construction

What's happening: The Mill Valley City Council voted 5-0 last week to advance an ordinance that would cut the city's affordable housing requirement for new apartment projects from 25% to 15%, an acknowledgment that one of the highest inclusionary rates in the Bay Area had produced almost nothing, according to a staff report prepared for the hearing.

The numbers: According to a staff report prepared for the June 1 hearing, nine new multi-family units were built in Mill Valley over the past ten years. The city has 39 inclusionary units citywide, the result of a program that dates to 1982. The council concluded the existing requirement was defeating its own purpose.

Mill Valley's multi-family and mixed-use zones, where most new residential development would occur under the proposed ordinance. (Map: City of Mill Valley)

The stakes: The vote comes as Mill Valley faces a state mandate to facilitate 865 new units by 2031, with 413 of those reserved for very low or low income households, according to the city's 2023-2031 Housing Element. The city has permitted a small fraction of those units so far, a pattern shared across most Marin jurisdictions.

A staff report prepared for the hearing noted that state law gives California's Department of Housing and Community Development authority to scrutinize local inclusionary ordinances that require more than 15% for rental projects in cities failing to meet their housing goals. Council members said the change was aimed at making development in Mill Valley financially viable again.

"If you produce zero, you're not getting any inclusionary housing," Councilmember Urban Carmel said during deliberations.

What changes: The ordinance would reduce the requirement from 25% to 15% for projects of seven or more units, exempt projects of two to six units entirely, and remove an existing cap that limited micro-units to 20% of any building. A 20-unit project that previously required five affordable units would require three.

It would also waive affordable housing impact fees for projects of two to six units that keep unit sizes below certain square footage thresholds. "We're not trying to extract maximum fee revenue from this," Councilmember Stephen Burke said. "Instead, we're doing the opposite."

The context: Mill Valley's 25% rate had been among the highest in the Bay Area, according to the June 1 staff report. Neighboring jurisdictions including Corte Madera, Larkspur, San Anselmo and Marin County all dropped to 20% after a 2021 study by Strategic Economics, commissioned by the Marin County Housing Collaborative.

Principal Planner Danielle Staude told the council the existing requirement was compounding itself through fractional rounding rules that pushed the effective rate above 25% for many projects.

The debate: The council debated whether projects of 20 or more units should face a higher 20% requirement. Architect Michael Heacock, who works on projects subject to Mill Valley's zoning rules, urged the council during public comment to settle on a flat 15%. "The difference between 15% and 20% might be 3 units over the next 10 years, might be 6 units," he said. "You're not making a huge sacrifice here in terms of the number of units you're going to get."

Mayor Max Perrey said he preferred 20% for larger projects but was willing to go with the council majority. "It seems like we have a different perspective," he said. "Happy to go with the group."

The micro-unit piece: Under the current rules, micro-units can make up no more than 20% of any building. The ordinance would remove that cap entirely. Micro-units, defined as studios between 350 and 450 square feet, would be exempt from inclusionary requirements entirely under the new rules.

According to Principal Planner Danielle Staude, 63% of Mill Valley's housing stock is three-bedroom units. Single-person households, younger workers and seniors looking for smaller, cheaper units have almost nowhere to look.

Councilmember Burke argued the micro-unit change could do more to expand affordable options than the percentage reduction itself. "I don't know how many 20-unit proposals we're going to see in Mill Valley in your lifetime," he said. "The huge win here are the micro-units."

The open question: Vice Mayor Caroline Joachim voted yes but raised a question the ordinance cannot answer. "I do feel like we are chasing that sweet spot, and I don't know where it is, and I don't think anybody does, actually," she said. "I am a little wary of us putting in all this effort when we may not be the actual obstacle in all this."

What's next: The second reading is scheduled for the June 15 City Council meeting. The ordinance will appear on the consent calendar and is expected to pass without discussion, unless a council member or member of the public requests otherwise. If adopted, the new rules take effect 30 days later. The 25% requirement remains in force until then.

The housing debate is far from over. The second reading vote is June 15. After that, Mill Valley faces 865 units to plan for by 2031, with state regulators watching. We'll cover every step. Daily subscribers get the weekday briefing at 6am, Monday through Friday.

I spent 16 years covering national issues at the BBC before I moved to Mill Valley and decided the most important stories were happening here - in my own community. Your contribution makes this journalism possible.

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Mill Valley's old post office gets a building permit as construction economy hits $43 million

The city issued 121 building permits in May covering $8.8 million in construction and renovation work, according to the city's monthly permit activity report. That is down from April's high of 146 permits and $14.3 million, which was the most active month of the year. The five-month running total now stands at approximately $43.4 million in permitted work across 596 permits.

The building at 55 Sunnyside Avenue opened as Mill Valley's downtown post office in 1940. In 1942 the basement was converted into an emergency receiving hospital with ten beds, designated as a casualty station in the event of bombing after Pearl Harbor, according to the Mill Valley Historical Society. The post office moved to Lomita Drive in 1982. It has been vacant for six years. A permit has been issued to convert it into Wonderhouse, a family coworking space.

The largest single permit went to 55 Sunnyside Avenue, the former downtown post office, valued at $1,798,346. The permit covers interior renovation for Wonderhouse, a family-oriented coworking business approved by the Planning Commission in February.

The largest residential permit was a remodel and second-story addition on Hilarita Avenue, valued at $1,755,000, followed by a remodel and exterior repairs on Eldridge Avenue at $976,260.

Two permits were issued for soft-story retrofits on Gomez Way and Roque Moraes Drive. One new detached ADU was permitted on Oxford Avenue, a 226-square-foot unit valued at $136,245. A dozen or more mechanical permits recorded furnace-to-heat-pump conversions, continuing a pattern visible across recent months.

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