Housing Summit

Over the past two years, the City of Mill Valley has passed an inclusionary housing ordinance that significantly stepped up its requirements on new multi-unit development and in September, the Council unanimously backed an affordable housing ordinance that includes a 1% City fee that will be applied to all new housing projects and remodels costing $100,000 or more, starting on November 1, 2018. Second-unit projects are exempt.

City officials say the fee would generate approximately $375,000 annually. That revenue would go into a new affordable housing trust fund. What to do with that money was a central focus of the Housing Summit, and will continue to be going forward. The options include acquiring properties, assisting with the building of new dwelling units, building multi-unit projects, renovating existing developments, or finding ways to subsidize rental rates for workforce housing, among others.

City Manager McCann said the plan for 2018 is to bring a series of recommendations to the City Council, spanning the range of options, including new regulations, new programs and new projects. "We hope to build on this conversation and move forward with practical decisions in the months and years ahead," McCann said.

To move the conversation forward and focus on the range of possible Mill Valley-specific, practical strategies, the City gathered a panel of experts including longtime Bay Area housing specialist Karen Warner, who assisted the City in the creation of its Housing Element and moderated the conversation; City Senior Planner Danielle Staude; Bruce Dorfman, a Mill Valley resident and longtime principal at Thompson Dorfman Partners, a development firm that specializes in creating publicly-owned housing communities for teachers and other public sector employees; Lewis Jordan, the executive director of the Marin Housing Authority; Mill Valley Planning Commissioner and Capretta Architecture founder Ric Capretta; Leelee Thomas, Marin County's Housing Planning Manager and Andrea Osgood, director of real estate development for Eden Housing, which has built projects like the 50-unit affordable housing at the former Fireside Hotel property in Tam Valley.

Warner walked through a number of data points to explain the problem, including:

• 91% of the 4,600 jobs in Mill Valley - largely roles in the service and retail industries -are held by people who live outside the City. One-third of those people commute more than 25 miles each way.
• The cost of housing in Mill Valley far outpaces median income, with a person needing to make $117,000 per year to afford a two-bedroom apartment and $289,000 to afford a median-priced home. That prices out most people in retail jobs, teachers, firefighters, police officers, clergy, physical therapists, and even some dentists.
• One-fifth of Mill Valley's households make less than $50,000 per year, and 24% have children under 18. One-fifth of homes have a senior citizen as the head of the household. "Mill Valley is not a homogenous community, no matter what people think or say," Warner said.
• One-fourth of seniors in Mill Valley are renters, and three-quarters of renters are low-income.

The panel focused much of its attention on the following three topics (click each bullet to read more on each topic):

• Acquire and convert units to create affordable units
• Create and build new affordable units
• Protect and enhance the City's existing affordable units

As McCann pointed out, the City has a more diverse stock than many people realize, as 2,200 of the total 6,084 dwellings in Mill Valley are multi-unit buildings. The City is also rife with second units - that is, standalone units on the property of a single-family home. Many of those units are used as separate homes, either by tenants or adult children of the household. "Many communities don't have that kind of mix," he said. "But the trick is to retain and improve those affordable units."

Staude noted that a vital goal for the City is to disincentivize property owners from tearing down older, affordable housing stock in favor of single-family homes or less affordable multi-unit developments. Strategies toward that end include:

• Increasing the requirement for affordable units in teardowns from 25% to 30% or higher.
• Institute an impact fee for the removal of affordable units.
• Establish a 1-for-1 replacement housing requirement.
• Reduce building fees for affordable housing projects.
• Staude also floated the possibility of restrictions on short-term rentals units via firms like Airbnb.

Thomas said the County has a number of ways to stabilize the existing rental market, including tenant protections like mandatory landlord-tenant mediation in the event of a rent increase of more than five %, rent stabilization measures and the requirement for just cause on evictions. She noted that 30% of Mill Valley households are renters, and encouraged City officials to continually monitor the data of its housing market and to rely on that data in crafting new policies and programs.

Jordan noted that Mill Valley has nearly 200 units of affordable housing, 103 of which are under the federal Section 8 housing program, which provides rental assistance to landlords on behalf of low-income households. The program calls for tenants to pay 30% of their income and for the federal government to pay the rest, Jordan said. "It guarantees that rent for the landlord," he said.

Some Section 8 vouchers stay with the units, while others can move with the tenant, he added, noting that the City could choose to create programs to support public safety officials or teachers whereby the voucher stays with the unit, this protecting that affordable unit. Marin County also gave the Housing Authority a $400,000 grant to offer incentives to landlords to rent to low-income families, Jordan said.

"As we look at these different options, there's no one size fits all," he said. "This shouldn't be a cookie cutter approach, but there must be an approach of some kind. You have the resources to create and maintain affordability in this wonderful community of Mill Valley."

City officials said that one-quarter of Mill Valley's rental stock is units that are older apartment buildings in need of rehabilitation. Panelists suggested that one option would be to use the City's affordable housing trust fund revenue to acquire properties in danger of being sold and displacing low-income tenants, particularly given the community's stated desire during the Housing Element process to preserve the existing apartment stock and not allow it to be torn down and turned into luxury condo stock.

Thomas pointed to several examples in the County, including the 8-unit Ocean Terrace Apartments in Stinson Beach and the 20-home Trailer Court in Forest Knolls, which the County purchased for $3 million and $1.4 million, respectively, and retained as affordable developments. Finding willing sellers and sufficient funding sources remains the key, she said.

Staude said the City issues an average of eight permits a year for the construction of second units. "We've embraced second units in town as a way of diversifying our population of large single-family homes," she said.

She said that the City could place deed restrictions on those units to provide floor area exemptions, thus allowing the unit to use more of more floor area than is allowed under the building code if it retains affordability.

Several panelists mentioned an idea that would likely fit in Mill Valley, whereby large single-family homes were modified into multi-unit buildings, co-housing spaces, or live-work projects.

Given their respective backgrounds in building new residential projects, some of which are entirely affordable and others in which affordable units were included within a market-rate project, Dorfman, Capretta, and Osgood drove the discussion on this topic. The trio noted that Gov. Jerry Brown signed into law in September 15 bills designed to streamline the approval process for affordable housing projects.

Dorfman explained a 40-unit project his firm built in 2000 for the Santa Clara Unified School District in an effort to lower teacher attrition rates due to housing coasts during the first dot-com boom. The project allowed teachers to rent one-and two-bedroom apartments with below-market-rate rent and was a huge success in lowering the attrition.

"We have been engaged now by four or five dozen other school districts for similar projects," Dorfman said. "We think the wheel has been invented. It takes a champion within the district to see it through and we are interested in seeing it done locally."

Dorfman noted that his firm remains interested in building a four-unit, teacher-focused affordable project on a Forrest Avenue lot they own. That project was unable to garner community support when it was proposed in 2007, he said.

"I hope to build a project in Mill Valley one day," Capretta said, noting that he's built about 1,500 units of housing as market-rate projects with an affordable unit component to them. Those projects tend to leverage local density bonuses whereby municipalities allow develop more units per square foot than otherwise allowed if they include affordable units. "You also get a break on building standards and parking requirements," he said.

It is a very complex issue," Capretta said. "Communities need to start understanding that there are people like me and others that want to help with this affordable housing shortage."

Dorfman pointed to a recent line from former Mill Valley Mayor and Marin Independent Journal columnist Dick Spotswood: "American civic life has developed a perverted process where little happens quickly. Every interested group has veto power. Few will compromise for the greater good. Mandated paperwork is overwhelming." Read this article online.

The panel concluded by listing the three most important actions - grouped by short-, medium- and long-term - that Mill Valley could take in addressing its affordable housing shortage.

Thomas: Adopt tenant protection for renters; focus on second and junior second units; find a City-owned parcel and "build a jewel of an affordable infill project that could be a model and build goodwill for the future."

Jordan: Creating a program to give landlords incentives to rent to those that need affordable housing; acquiring property onto which you can build affordable projects.

Staude: Pooling resources with other agencies and firms and to identify local champions for affordable housing.

Dorfman: We definitely need champions locally, but we should be open to looking outside of Mill Valley. There are other opportunities in the general vicinity."

Osgood: Eliminate minimum parking requirements, especially in commercial corridors; be open to adjusting the rules on density - the number of dwelling units allowed per acre.

Capretta: Create more aggressive policies to disincentivize more of our housing stock from being reduced; the City becoming a buyer in the marketplace with affordable housing trust funds; incentivize developers with density bonuses and fee abatement.

The rest of the housing summit featured community members providing their own perspectives on the subject, and in that discussion, former Mill Valley Mayor Bob Burton posed a compelling question: "How do we change people's attitudes? I have been here for 51 years and I've seen so many projects go by the wayside. How do we go about of changing the attitudes of a community so that we can get this done."

"Part of it is dispelling the myth of who these people are who need affordable housing," Jordan said. At some point, we have to get beyond the stereotypes. People who provide goods and services in our community can live in our community."

"Sit down and ask yourselves: what's in it for you as a community?" he added. "If we can provide these affordable opportunities, how does it enhance the community and make it have more long-term viability?"

Thomas said that the North Bay fires have opened people's minds a bit on the subject. "People realized just how dependent we are on Sonoma County and our neighbors to the north. Teachers couldn't get to work and our schools were closed as a result. People could see and feel the impact on them personally. That goes beyond just that it's the right thing to do."

The meeting was a constructive and informative start to a long conversation on potential solutions to the affordability crisis. As Mayor Sloan remarked, affordable housing "is an issue that really touches our community and one that we are committed to taking a stance on." The event offered a chance for staff to share information and receive input from the community to allow staff to bring practical ideas to the City Council for discussion and direction.