Mill Valley

Background: Based on a recentsurvey of building inventory in Mill Valley, there are approximately 4,436 residentialstructuresin Mill Valley.1 Prior to resale of residential property, the City requires a residential building report to identify any Building or Zoning Code violations and requires compliance for health and safety violations. This program is effective in updating outstanding code violations and/or safety violations of approximately 30‐40 residential structures each year. Of the 4,436 structures, there are approximately 125 buildingsthat provide three or more housing units built prior to 1983 earthquake building standards. Many of these older residential buildings are modest small‐scale apartment buildings that are affordable by design but have not been retrofitted and/or updated to new building code standards. As a means of preserving affordable multi‐family housing, the City is actively working to adopt a soft story ordinance that will require safety retrofitsto Multi‐Family Residential properties of three units or more, to ensure that homes are adequately maintained to withstand an earthquake. The City also highlights information on its housing resources website and at the Building Counter about how qualifying property owners can apply for home loans to improve housing conditions as part of the resale report. Since 2017, 42 low‐income households in Marin County (1 in Mill Valley) have participated in Marin Housing Authority’s housing rehabilitation loan program. Energy efficiency improvements are also available to homeowners and renters administered by PGE and Marin Clean Energy, including rebates for home energy assessments, energy efficiency updates, and solar energy improvements. Income‐qualified residents can participate in PGE’s Energy Savings Assistance Program which provides free minor home improvements and replacement of old space and water heating systems. As an update to this program, the City intendsto continue work to finalize its Soft Story Ordinance and host an open house with property managers/owners of Multi‐Family Residential buildings to establish better working relationships and/or partnerships so that information is exchanged on various opportunities that are available to maintain properties. The City will also institute a program to waive fees for building permits that are required to modify housing to accommodate a person with a disability.

Adopt the Soft Story ordinance in 2023 as a means of protecting and preserving the City’s existing affordable multi‐family housing stock (completed June 26, 2023). Host an Open House with the multi‐family homeowners/managers by the end of 2024. Update informational handouts on available rehabilitation assistance and energy retrofit programs on an annual basis, for distribution through the code enforcement and building permit process. Proactively publicize rehabilitation assistance and energy retrofit programs on the City’s website and through dissemination of brochures at City Hall, with focused outreach to senior citizen organizations. Identify five (5) lower income households during the 8‐year housing cycle 1 Memorandum from David Bonowitz, Mill Valley Softy Story Study, Task 1: Inventory, April 29, 2022. - that qualify and register for rehabilitation and retrofit programs. Institute reduced building fees for building permits that solely address reasonable accommodation in conjunction with the universal design (program 30).Target: City‐wide

Background: The previous housing element reported eight income restricted housing facilities with over 300 low‐income rental units in the City, which included two properties that are within the unincorporated area of Mill Valley. There is a total of six (6) income‐restricted affordable rental facilities located within Mill Valley city limits, providing 218 units affordable to lower income families, seniors and persons living with disabilities. In addition, the City’s Inclusionary Housing Ordinance has resulted in the development of 39 affordable rental and ownership units integrated within ten market rate developments, of which 29 ownership units are managed by Marin Housing Authority as part of the Below Market Rate homeowner program. There are six (6) non‐profit operated affordable rental housing complexes in Mill Valley (see Table 2.15), two of the housing complexes (651 Miller and 260 Camino Alto Court), totaling 56 units, have affordability subsidies set to expire before the end of 2031 but are identified as low risk of converting to market rate during the current planning period due to their non‐profit housing ownership status2 . Regardless of risk, the City is working to extend the affordability subsidies with the two housing complexes. Should these units be at risk of converting to market‐rate housing, the City would draw upon organizational and financial resourcesto preserve the subsidized, below market rate rental housing. Qualified, non‐profit entities will be notified of any potential units becoming at risk, including those qualified entitles listed through HCD’s website that are interested in acquiring and/or managing at‐risk units. All six subsidized housing projects in Mill Valley currently are owned by nonprofit organizations and transferring ownership to other nonprofits could be a strategy to preserve the units, and funding could be made available through Marin County’s Affordable Housing Trust Fund, Permanent Local Housing Allocation (PLHA), HOME, CDBG funds and Mill Valley’s Affordable Housing Trust Fund. Preservation is one of the priorities identified for City and County funds. Costs to preserve affordable units are likely less than replacement cost to construct new affordable units. Based on recent examples in Marin County, the cost of constructing new affordable one‐bedroom affordable units is $650,000 per unit versus the acquisition cost of $356,250 per unit (half the cost of new construction).3 Based on these estimates, building 56 new affordable units would equate to an estimated $36.4 million; while the cost of preserving such units could be estimated at about $20 million. In addition, the limited supply of developable land, high cost of construction and lengthy approval process, rehabilitation of existing units instead of new construction is the most economical way of providing housing. In terms of the 39 inclusionary deed‐restricted units, there are eight (8) below market rate (BMR) ownership units set to expire during the 8‐year planning cycle associated with the Eucalyptus Knolls development built almost 30 years ago. At the time of its development, BMR units were only allowed to extend as long as the term of home loans, which was 30 years. Eight of the 39 total BMR units in Mill Valley are set to expire between 2023‐2031. Should any of these deed restrictions expire the long‐term owners (living in the deed restricted homes for over 30 years) would be able to resell the property for a profit. While the reduction in affordable units is significant, these residents have been a part of the Mill Valley community for 30 years and have provided an opportunity for lower‐income households to purchase and, upon satisfying the BMR terms, accumulate wealth through property ownership. The City’s inclusionary requirements (MVMC 20.80.060) now require affordable units remain deed restricted as affordable below market rate units in perpetuity

Annually monitor status and potential risk of the six low‐income rental facilities with the goal of preserving 100 percent of these units and properties. Continue to contract with the Marin Housing Authority and property managers to monitor deed restricted ownership housing to ensure compliance with affordability restrictions. Require long‐term affordability controls on all future affordable housing units. Monitor at‐risk and/or publicly assisted housing projects and identify opportunities to purchase BMR units that are at risk of terminating as affordable units including: 1) establish an early warning system and monitor at‐risk units. Create a list based on at‐risk units in the eight‐year inventory and analyses (conversion risk, costs, and resources) for possible conversions within the current planning period; 2) monitor the list on an annual basis; and 3) collaborate with Marin Housing Authority on an on‐going basis (every 3 months) to establish an action plan to address at‐risk BMR units set to expire within the next two years. In the event of a potential conversion, conduct outreach to other nonprofit housing providers to acquire projects opting out of low‐income use. Asfunding permits, assist in funding the acquisition or support funding applications by nonprofit providers. Use available financial resources to restructure federally assisted preservation projects, where feasible, to preserve and/or extend affordability, including notifying non‐profit and affordable housing partners and/or utilize affordable housing trust funds (Program 13), as needed, for units to remain affordable.Target: City‐wide based on deed restricted properties

Background: Mill Valley will explore non‐traditional housing types for inclusion in the Zoning Ordinance to broaden the variety of housing types available and cater to all economic segments. In addition, the City will modify its definition of “family” (MVMC 20.08.091.5), so it is inclusive for 4 Mill Valley 2023‐2031 Housing Element, Appendix F, page F‐10. all households living in a variety of housing types. Currently Mill Valley Zoning Code defines a “family” as “two or more persons living together as a single housekeeping unit in a single dwelling unit”. While this definition does not require relation by blood or by marriage nor does it regulate the number of persons constituting a family, it unfairly links the definition a housing type (e.g. single family) and will therefore be updated to remove “single‐family dwelling unit” from the definition.  Co‐housing refers to collaborative housing, or intentional and supportive communities where people can both live comfortably and conveniently while also developing a powerful sense of community. Co‐housing communities consist of individually owned, private units clustered around common facilities and amenities in a walkable, sustainable environment. Common features may include a community garden, recreational areas, and a common house where day care and meals can be shared. The communities are managed by the residents who have chosen to live in a close‐knit neighborhood. Hundreds of co‐housing communities currently exist throughout the country in a variety of settings, including communities in Berkeley, Oakland, Pleasant Hill, Cotati, Grass Valley, Davis and Santa Barbara. Based on the nature of co‐housing and its emphasis on common areas and human scale, there is a distinct opportunity to develop models for a uniquely Mill Valley housing type that responds to the community character and needs.  “Roomers” and Junior Accessory Dwelling Units are currently permitted by right in single‐ family Residential zones. The roomer and Junior ADU regulations allow homeowners to sublet parts of their residences and create less costly rental opportunities. For senior homeowners, taking on roomers can not only generate needed income, it can provide added security and companionship, and help to address the many Mill Valley seniors who are over‐ housed in single‐family homes. The City also updated its Zoning Code in 2021 to provide objective standards for establishing a Junior Accessory Dwelling Unit (JADU) within a single‐ family home.  Live/work housing is intended for housing a resident and his or her business, typically on different floors of the same building or same unit. Currently, the City considers live/work housing on a case‐by‐case basis. For instance, the Aloha Lofts at 65 Throckmorton Avenue in the downtown area, were provided reduced parking and modified development standards based on the live/work concept. Additional objective design guidelines are needed to establish objective standards and guidelines for live work housing.  Assisted living facilities are designed for elderly individuals requiring assistance with certain activities of daily living – such as eating, bathing and transportation – but desiring to live as independently as possible. Such facilities bridge the gap between independent living and nursing homes. The Redwoods is a continuing care retirement community (CCRC) and includes a mix of independent senior apartment units, assisted living units and health care center/skilled nursing, allowing residents to age in place. The City’s Zoning Ordinance does not currently identify assisted living facilities, or provide specialized standards to facilitate their development but does promote redevelopment opportunities based on the State’s Density Bonus standards and incentives.  Employee housing allows for flexibility in providing workforce housing. Currently the City’s Zoning Code is not consistent with state law, including the Employee Housing Act, which permits housing for six or fewer employees (in any industry) as single‐unit residential use.

By 2024, amend the Zoning Code to include regulations for employee and agricultural worker housing consistent with state law and amend the definition of family so it is not tied to a single‐family home and is consistent with state law. As part of the Zoning Code updates, update handouts and provide outreach to the community on new housing opportunities. By 2027, modify the Zoning Code to develop live/work and co‐housing standards that accommodate new housing types suited to the community’s housing needs and that respect neighborhood attributes. Develop a guidance booklet on the building permit process illustrating how housing opportunities can be created in Single‐Family homes while remaining consistent with neighborhood standards. Communicate the co‐housing/rooming opportunities through the Home Match (Program 29) and the Junior/Accessory Dwelling Unit/Duplex (Program 8).Target: City‐wide

Background: Accessory Dwelling Units (ADUs) are self‐contained living units with cooking, eating, sleeping, and full sanitation facilities, either attached to or detached from the primary residential unit on a single lot. Junior ADUs are attached to the primary unit and can include shared bathroom facilities. ADUstypically rent for lessthan apartments of comparable size and can offer affordable rental options for seniors and single persons. The primary homeowner can also benefit by receiving supplementary income through the rental and can help many modest income and elderly homeowners afford to remain in their homes. ADUs are an integral part of Mill Valley’s housing stock and continue to be an important component of the overall production of new housing in Mill Valley. ADUs have been successful in diversifying the type and size of housing available within Single Family neighborhoods and the community. There are approximately 569 legal ADUs in Mill Valley, with development standards dating back to 1983.5 Mill Valley’s ADU ordinance was updated in 2021, reflecting updates and changes to regulations based on State Law that streamline the approval process, modify development standards, and reduce fees. Since 2015, over 118 new ADU building permits have been issued. In 2021, the City partnered with the County of Marin, utilizing SB2 grant funding to develop and launch a county‐wide website promoting and providing information on ADUs. With modifications to local standards based on state law, there has been an upward trend in ADU permits—with 29 ADU permits issued in 2021. “Duets” and “duplexes” are similar from a physical standpoint to a single‐family home, and typically involve two attached residential units, with the distinction lying in their different ownership structure. Duplexes are sold together as a single building and typically rented out, whereas duet homes are sold and owned separately and typically remain owner‐occupied. Duets and duplexes are now permitted on qualifying parcelslocated within Single‐Family Zoning Districts based on new State Law under SB9. In 2021, the City updated its Zoning Code to permit duplexes in qualifying single‐family zoning districts based on state law. City staff is currently working to update the subdivision ordinance (MVMC Title 21), to facilitate lot splits on quality single family zoned parcels, as allowed by state law. The City continues to review and make appropriate refinements to its ADU and Duplex regulations (MVMC 20.90 and 20.91) to diversify housing within the Single‐Family Zoning Districts while addressing safety and evacuation concerns. The City continues to promote opportunities to build ADUs in exchange for renting out such units to affordable households through the City’s Home Match program (Program 29) and ADU handout materials. There is also interest within the community to create incentives for ADUs above and below a garage asthistype of ADU is common in Mill Valley’s existing built environment. 5 Department of Planning and Building records. The County‐wide ADU website could also be expanded to include information and/or mapping of those areas that qualify for lot splits and/or building duplexes. To streamline the construction process, objective design guidelines and building permit guidance could be developed to assist homeowners in modifying or converting their homes to create ADUs, JADUS, and/or duplexes.

In 2024, amend the Subdivision Ordinance to include regulations to permit lot splits in single family zoning districts, as allowed under state law (SB9). Update handouts to educate homeowners on SB9 housing opportunities. Facilitate and generate at least one SB9 application per year to generate at least 8 new units. Should the City receive SB9 applications for fewer than eight net new units by the mid‐point RHNA assessment in April 2028, the City shall initiate a fee reduction program and host a workshop on SB9 housing opportunities. Continue to review and refine the ADU ordinance to provide housing options for seniors, caregivers, and other lower and extremely low‐income households. Based on past trends, seek to facilitate creation of an average of 21 ADUs on an annual basis. Continue to collaborate with local Marin County jurisdictions to promote small‐scale ADUs and Duplexes through resources such as SB2 grant funding. Should the average number of new ADUs fall below 15 new units a year, the City shall initiate an amnesty program or additional incentives such as square footage allowances for ADUs built above a garage and/or reduced building permit fees. As part of a reduced fee program, the City shall consider financial assistance through the local Trust Fund (Program 13) for income‐qualified property owners building ADUs using State funds (such as Cal HOME funds).Target: City‐wide

Background: As a predominately built‐out city, Mill Valley has few remaining vacant properties suitable for residential development. This shortage of vacant developable land has resulted in the exploration of publicly owned and tax‐exempt sites for affordable housing. City staff has worked through the Housing Advisory Committee on this Housing Program to evaluate and initiate a potential publicly owned site for redevelopment. A third‐party consultant was hired as part of the evaluation and to confirm the Committee’s assumptions of the parcelsize required to build a fully affordable housing apartment complex and if additional funds were necessary to build the housing. The third‐party analysisindicated that a parcel of at least .75 acres could be successfully used to fully finance a low‐income rental apartment complex of at least 40 units on the site. On June 21, 2021 City Council reviewed the third‐party analysis and accepted the Housing Advisory Committee’s recommendations to select the northern portion of the 1 Hamilton City‐ owned parcel and issue a Request for Qualifications to solicit interest and partner with a non‐ profit home builder. This portion of land has been deemed “exempt surplus land” for the sole purpose of building affordable homes on the property and the City has an exclusive negotiating agreement with EAH Housing. The 1 Hamilton parcel (Assessor Parcel Number 030‐250‐01) is over 11 acres in size and is zoned “O‐A" (Open Area) with a land use designation of “C‐F” (Community Facility). The western portion of the parcel is considered bayland and includes Hauke Park and Bayfront Park. The eastern portion of the parcel includes: the City’s Public Safety Building and parking lot that serves the administrative offices of the City’s Police Department and Fire Station 7, a ground mounted solar array, public parking lot and public restrooms for park users, and a community garden to the south. The City intends to designate the northeastern area of the site, as illustrated below, for the sole purposes of building affordable housing, rezoning the property and amending the land use to “multi‐family” to facilitate the development of the site. Additional sites were evaluated during the site selection process that merit additional discussion to further evaluate housing opportunities on the sites. As part of on‐going work to further identify affordable housing opportunities, the following publicly owned properties should be evaluated: a) Tax‐exempt land not owned by the city, particularly educational facilities and religious institutions to facilitate housing opportunities; b) City‐owned land, particularly the 411 Miller Avenue municipal parking lot (APN 030‐071‐28) and Edgewood Reservoir parcel (APN 046‐070‐02),should be furtherstudied in order to determine the feasibility of removing existing barriersto development (e.g. building in a floodway and removing open space easements); and c) Use of the City’s Affordable Housing Trust Fund to assist with feasibility studies to determine redevelopment potential. In terms of building affordable housing on the 1 Hamilton site, Council directed staff on November 30, 2022 to assemble a development review package for Planning Commission and City Council review and approval. Based on this direction, City staff and the EAH Housing team isin the process of assembling development review materials, which will include a ground lease and design approval, a tentative map and rezoning of the northern portion of 1 Hamilton, tree removal permit and environmental review for the construction of 45 affordable rental units on the property. The sites inventory reflects 45 units based on work conducted to date related to cost, construction feasibility, and City Council direction. The project requires additional environmental review, which is underway. Because the 1 Hamilton affordable housing project is on City‐owned property and would require the approval of a ground lease, approval of the project by the City would be a purely legislative decision. Therefore, the by‐right approval process established by state law for those parcels identified in the Sites Inventory to accommodate the City’s lower‐income RHNA would not apply to this project, as that process is intended to benefit a private applicant. The established timeframe for the project includes the following:  Development Review Package: includes environmental review, design review, tree removal permit, tentative map and rezoning the northern portion of the 1 Hamilton site as multi‐family residential (public release spring 2023; review and approval late 2023)  Long‐term ground lease or disposition and development agreement with EAH Housing to build and operate approximately 40‐50 low‐income residential units on site (end of 2023)  Financing based on entitled project (2024)  Construction (2025‐26), which includes the relocation of existing facilities  Occupancy and management of the housing complex (2027) Photo of the city‐owned parcel, known as 1 Hamilton Drive

From 2022 through 2024 will focus on processing the redevelopment application and securing funding for building approximately 40‐50 low‐income rental units on the 1 Hamilton city‐owned site. As part of the review and approval process, the City will rezone and amend the land use for the designated northern portion of 1 Hamilton to “multi‐family residential”. Additional studies to remove housing barriers will continue to determine other housing opportunities on other publicly‐owned sites, as outlined above. By the end of 2024, report back to the Housing Advisory Committee on the status of removing barriers to housing on those other city‐owned sites.Target: Parcelspecific on city‐owned land, including 1 Hamilton Drive (APN 030‐ 250‐01); 411 Miller Avenue (APN 030‐071‐28) and Edgewood Reservoir parcel (APN 046‐070‐02).

Background: Mill Valley faces a severe shortage of housing affordable to the local workforce, resulting in the vast majority of persons who work in the community commuting in from outside the city. Residential development further increases the demand for affordable housing, based on the growth in employment generated by residential households’ increased demand for goods and services. While the City’s Inclusionary Housing Ordinance specifies affordable housing requirements for development of four or more residential units, the Ordinance does not apply to construction of individual single‐family homes. As a means of distributing the responsibility for affordable housing across all new residential development, the City has established a 1% fee that is collected for allresidentialremodel projects and new development over $105K, including single‐ family and multi‐family projects (3 or less units). Certain types of projects are exempt, such as ADUs, JADUs, micro units, and other housing projects that create new affordable housing. These fees are deposited in the Affordable Housing Trust Fund earmarked to fund projectsthat enhance, produce, or protect affordable housing. Approximately $800K has been collected annually since the Trust Fund was established in 2018. Given the building permit and construction activity, the affordable housing impact fee has not been a constraint on market rate single‐family or small‐ scale multi‐family projects. The City shall re‐evaluate the impact fee at the mid‐point RHNA assessment to determine if the fee threshold should be reduced or eliminated to facilitate small‐ scale multi‐family development (projects with 3 or fewer units). In March 2020, City Council approved the administrative guidelines for the Trust Fund priorities, which included: 1) annual payment to Marin Housing Authority for managing below‐market rate housing ownership program; 2) projects leveraging existing underutilized housing stock to create more affordable rental housing opportunities such as the home match program; 3) projects that further explore and identify land that may be suitable to build affordable housing; and 4) projects that target the local community (seniors, workforce, special needs, etc.) to address their housing needs. Additional fees and/or taxes could also be established to increase local funds available to convert, acquire, maintain and/or produce affordable housing. Examples include: Vacancy tax; Real estate Transfer tax; Demolition fee(s); and or/increased single family impact fees for new homes over a certain size. Establishing such fees or taxes should be coordinated on a county‐wide basis to ensure that the city is not creating additional barriers or constraints to housing.

By 2025, coordinate with other local jurisdictions to consider: vacancy tax; real estate transfer tax; demolition fee(s); commercial linkage fees and/or single‐family impact fees for new homes over a certain size. At the mid‐point RHNA assessment in 2028, if the City has produced fewer than 10 units from duplexes or triplexes, consider adjusting and/or waiving the impact fee for small‐scale multi‐family development of three or fewer units with an average unit size of 1,000 sf .Target: city‐wide

Background: The City can play an important role in facilitating the development of quality, affordable housing in the community through provision of regulatory incentives and direct financial assistance. By utilizing various tools to facilitate infill development, the City can help to addressthe housing needs of its extremely low, very low‐, low‐ and moderate‐income households. In October 2022, City Council amended MVMC 5.32 providing additional incentives and fee reductions, including the full waiver of fees for those projects managed and operated by affordable housing organizations provided that at least 10% of the units are dedicated to housing very low‐income households. By the end of 2024, develop handout and website materials that highlight incentives for building affordable housing including reduced fees, modified development standards and streamlined approval, such as:  Flexible objective developmentstandards allowed under State Density Bonus and created as part of the three zoning overlay districts (Program #20);  Alternative methods for satisfying inclusionary housing requirements (Program #11);  Financial assistance available through the City’s Affordable Housing Trust Fund (Program #13).

Utilize the Affordable Housing Trust Fund (Program 13) to generate at least 50 new units during the mid‐point RHNA assessment in 2028 with the goal of an additional 50 units by the end of the 6th RHNA cycle. By 2023, reduce development fees allowed under MVMC 5.32 (completed, Council adopted October 3, 2022). By the end of 2024, develop handout and website information that highlight financial and regulatory incentives, such as state Density Bonus law and streamlined approvals, for the development of affordable housing. Continue to identify priorities for local Trust Fund through the Housing Advisory Committee Workplan process (Program 37).Target: City‐wide, based on interest

Background: First‐time homebuyers in Mill Valley have access to several homebuyer assistance programs offered through Marin Housing Authority. The City has entered into a Memorandum of Understanding with Marin Housing to manage and monitor the City’s 29 affordable ownership inclusionary units, and to conduct ongoing education through publication of homeowner newsletters. Marin Housing Authority administers a Below Market Rate (BMR) first‐time homebuyer program on behalf of jurisdictions in the County with inclusionary housing requirements, including Mill Valley. Administration of the program includes sales, refinancing, inspections, rehabilitation of optioned units, first time homebuyer education and counseling, down payment assistance and occupancy monitoring of the units. Marin Housing Authority also utilizes an Affirmative Action Marketing Plan to advertise the initial sale and any resale of BMR units. As part of Program 26, the City will also work to expand methods of outreach to communicate and provide information to communities of color outside the City limits about housing opportunities (ranging in housing types and costs).

Continue to participate with Marin Housing in administration of the Below Market Rate program. By the end of 2025, renew the MOU with Marin Housing Authority as part of continued administration of BMR units. Continue the use of Affirmative Action Marketing Plans to provide access to housing opportunities, including but not limited the Mill Valley workforce, special needs populations, and communities of color outside the City limits. Expand methods of outreach to provide information to communities of color living outside city limits on housing opportunities as part of Program 26.Target: City‐wide within commercial and multi‐family residential areas

Background: In 2016, the City adopted Multi‐family and Mixed‐Use Development Standards and Guidelines, which include principles for sustainable site planning, slope design, soils grading and drainage design, landscaping and home hardening, and green building design. These standards and guidelines have provided more direction to applicants and for the community to understand as part of the application review and approval process. As a result, most commercial redevelopment projects now include mixed use opportunities as part of redevelopment. To align more with the State’s effortsto streamline development review, however, the City is now working to update its Mixed Use and Multi‐Family design guidelines and development standards so that the standards and guidelines are objective, where possible. The City has also partnered with other local jurisdictions in developing a toolkit of objective design and development standards (ODDS) through SB2 grant funding to facilitate further discussion about how to modify city standards to facilitate infill development.

Continue to implement a design review process to ensure that new single and multi‐family development and substantial modifications to existing structures are compatible with Mill Valley’s small‐town character, unique environmental, community and scenic attributes. By the end of 2023, accept the county‐wide collaborative “ODDS toolkit” as a reference to continue the discussion of how to apply objective standards to facilitate infill development. Also clarify design review thresholds based on various streamlining allowed under State Law.Target: city‐wide, within Commercial and Multi‐Family Zoning Districts Photo of Multi‐family Buildings facing Highway 101

20. Rezoning to Accommodate RHNA/Housing Overlay Zoning Districts A Housing Overlay is a zoning tool which offers a package of incentives on designated sites designed to make the development of affordable housing more feasible. It is an “overlay” because it layers on top of base zoning regulations. Overlay incentives are distinct from incentives offered through State density bonus law in that they provide more certainty by providing the full set of incentives up front and establish local commitments to encourage specific types of housing.6 20. Rezoning to Accommodate RHNA/Housing Overlay Zoning Districts A Housing Overlay is a zoning tool which offers a package of incentives on designated sites designed to make the development of affordable housing more feasible. It is an “overlay” because it layers on top of base zoning regulations. Overlay incentives are distinct from incentives offered through State density bonus law in that they provide more certainty by providing the full set of incentives up front and establish local commitments to encourage specific types of housing.6 6 Property owners may utilize incentivesidentified in the proposed Overlay Districts and State Density Bonusincentives. Overlay incentives may also be used in combination with state Density Bonus allowances. As identified in Table 2.5, the City has a shortfall of sites under existing zoning and cannot sufficiently accommodate its RHNA (with a deficit of 556 total units including 309 units in the lower‐income RHNA category; 71 units in the moderate‐income RHNA category and 176 units in the above‐moderate RHNA category). Therefore, to accommodate its regional housing numbers and to facilitate the development of housing in Mill Valley, the following three Overlay Zoning Districts and Zoning Map Update will be adopted in conjunction with the Housing Element Update process. Note that the “opportunity site housing overlay” is specifically established to satisfy the City’s lower income RHNA shortfall and provides for specific streamlined approvals and allowances, as required by state law, see details below. The rezoning will also include regulations indicating that those nonvacant parcels that are part of the overlay zoning districts are subject to the replacement housing requirements contained in state law and outlined in Program 19 above. The regulations will also include an application process to add new sites to the overlay districts on a regular, on‐going basis. To facilitate unit yields at higher than the average densities (22 units/acre) yielded based on past trends (discussed in Appendix C), all three housing overlays include incentives and modified development standards (e.g. parking reductions, height increases), as outlined below. State Density Bonus allowances may also be combined with the housing overlay incentives. 1. Small Lot Housing Overlay Zoning District The “small lot overlay zone” will apply to those parcels identified on the sites inventory that are less than ½ acre. All sites that contain existing residential units will be subject to the replacement housing requirements specified in state law. The proposed rezone includes approximately 7 acres of underutilized non‐vacant land (33 parcels in total), of which 31 parcels are currently zoned as commercial and two parcels are zoned as multi‐family. The following modified standards will apply to projects seeking to develop a parcel through this overlay district, as further refined in the zoning ordinance: 1) reduced parking (1 parking space for units less than 1,000 square feet); 2) increased height up to 40’ for buildings being raised to address the floodplain or to provide higher ceiling heights on the first floor of a mixed‐use building; 3) increased density up to 40 units/acre; 4) modified Floor Area as allowed under SB 478; and 5) exemption to the inclusionary housing requirement for those projects that provide units that are 1,000 square feet or less. 2. Opportunity Site Housing Overlay Zoning District (includes lot consolidation) The “opportunity site overlay zone” will apply to those parcels identified on the sites inventory that are ½ acre or more. All sites that contain existing residential units will be subject to the replacement housing requirements specified in state law. - The rezone includes approximately 12.5 acres of underutilized, non‐vacant land, which includes 27 parcels, including 26 commercial zoned parcels and 1 residential zoned parcel8 . Of the 27 parcels, there are 22 parcelsthat have contiguous landownership resulting in 13 sites yielding 326 units to accommodate its very low‐ and low‐income RHNA and five parcels result in a total of 2 sites yielding 30 units for the moderate income RHNA.  Because over 50% of the sites in the “opportunity site housing overlay zoning district” are in mixed‐use commercialzoning districts, the City must allow fully residential projects and require that for any mixed‐use projects proposed on those sitesthat 50% of the floor area must be occupied for residential use. All sites are ½ acre in size and therefore have the capacity for at least 16 units or more, as required by state law.  Because the sites are designated for the lower‐income RHNA and consist of non‐vacant sites used in previous Housing Element cycles; and are being rezoned after January 31, 2023, the City has established a by right approval process for qualifying redevelopment projects, as required by law and outlined below.  To facilitate redevelopment of the above‐referenced sites, lot consolidation will be permitted and lot merger fees will be waived as part of the overlay zone. The following modified standards will apply to projects seeking to develop a parcel through this overlay district, as further refined in the zoning ordinance: 1) reduced parking (1 parking space for units less than 1,000 square feet); 2) increased height up to 40’ for buildings being raised to address the floodplain or to provide higher ceiling heights on the first floor of a mixed‐use building; 3) revised density standards: minimum density of 20 units/acre and maximum density of 40 units/acre; 4) full residential projects permitted; 5) mixed use projects must have at least 50% of the floor area for residential uses; 6) lot consolidation permitted and lot merger fees waived to facilitate proposed development;9 7) modified Floor Area as allowed under SB 478; 8) subject to inclusionary requirements established in MVMC 20.80, with the following additional incentives: a) projects subject to the inclusionary regulations must include six or more new units, b) waiving the maximum micro‐unit standards in MVMC 20.24.040(B)(1) for those projects that allocate 25% of the inclusionary units as low income, and 3) waiving one affordable inclusionary unit for projects that provide one three‐bedroom unit as a low‐income inclusionary unit; and 9) those redevelopment projects that designate 20% of the units as affordable to lower income households and do not require a subdivision are exempt from CEQA and subject to by‐right ministerial approval by the Planning Director based on satisfying objective standards (not subject to a hearing or discretionary review) as required by state law.10 3. Office Conversion Housing Overlay Zoning District The “office conversion overlay zone” will apply to those parcels identified on the sites inventory that currently utilize upper floor space as office space. All sites that contain existing residential units will be subject to the replacement housing requirements specified in state law. The proposed rezone includes approximately 4.40 acres11 of underutilized, non‐vacant land of which 11 parcels are zoned as commercial and two parcels are zoned as multi‐family. The following modified standards will apply to projects seeking to develop a parcel through this overlay district, as further refined in the zoning ordinance: 1) No additional parking shall be required on site as long as the proposed units are 1,000 square feet or less and the footprint of the building is not expanded; 2) modified density standards, up to 40 units/acre; 3) exemption to the inclusionary housing requirement for those projects that provide units that are 1,000 square feet or less; 4) modified Floor Area as allowed under SB 478; and 5) ministerial approval (no hearing) based on objective standards to streamline approval for those conversionsthat propose to demolish and/or renovate lessthan 50% of exterior surface area. 4. Future Overlay – Affordable Housing Overlay Zoning District During the Housing Element Update process, the City notified and discussed interest in dedicated affordable housing opportunities with property managers of the Redwoods Senior Housing facility, faith‐based and educational facilities. There has yet to be any firm commitment to providing housing on these sites to date. Therefore, additional collaboration is required prior to establishing this unique overlay zone in order to determine appropriate design, density, and housing affordability standards, while balancing and maintaining other community needs, such as the existing educational and faith‐based institutions located on CF Zoned parcels.12 While this proposed overlay is not required to meet the City’s 6th cycle RHNA, the City is interested in further collaborating with such property owners to identify and establish the incentives and standards necessary to build affordable housing on private and/or tax‐exempt land.

To accommodate the City’s shortfall of 556 RHNA units, the City shall rezone 73 parcels to establish three Housing Overlay Zoning Districts (e.g. Opportunity Site, Small Lot and Office Conversion Housing Overlays). These three housing overlays shall be adopted to implement the Housing Element Update as soon as possible in 2023 but no later than three years from adoption of the Housing Element, or as otherwise required by state law. To accommodate the City’s shortfall of 309 lower‐income RHNA units, the City will rezone 27 parcels totaling 12 acres of land to include the “opportunity site housing overlay” requiring densities of 20‐40 units/acre for any residential development project. Development projects using the “opportunity site housing overlay” shall be allowed to build fully residential buildings. Any mixed use development using the “opportunity site housing overlay” shall have at least 50% of the floor area devoted to residential use. For sites within the “opportunity site housing overlay,” owner‐ occupied and rental uses not requiring a subdivision in which at least 20 percent of the units are affordable to lower income households are permitted through “by right” ministerial Planning Director approval (based on satisfying objective standards, without a hearing). Adjacent parcels owned by the same owner may consolidate parcels as part of the “by right” ministerial process in order to consolidate lots in the opportunity site housing overlay (to generate parcels ½ acre in size with the capacity of at least 16 units or more, as required by state law). By the end of 2025, identify up to two property owners (focusing on faith based or educational institutions) interested in building affordable homes on a parcel as part of establishing regulations for the affordable housing overlay. During the 8‐year Housing Element cycle, the City shall facilitate discussions with property owners about the various overlay incentives and coordinate with site property owners determine appropriate standards and incentives for developing deed‐ restricted affordable housing in connection with religious, cultural, and/or educational institutions. By 2027, City Council shall consider applications requests to add sites to the various housing overlays based on owner interest and to facilitate additional housing opportunities in Mill Valley.Target: Parcel specific, mainly focused on commercially zoned parcels within census Tracts 1261 and 1270, see sites inventory for details.