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Health & Fitness

Wake up, Mill Valley. The City Is About to Reduce The Value of Many of Your Homes!

The City Council of Mill Valley recently approved an ordinance that will severely impact anyone who owns a home on a smaller sized lot in the Triangle Neighborhoods or anywhere in Mill Valley. This ordinance is coming up for its "second" and final reading / approval within the next week or so at City Council (possibly at the June 17th City Council meeting). If approved, it will become law.

This can only be stopped if everyone acts quickly.

I hope you didn’t just purchase a home with the dream of expanding it, or are about to sell a home that has expansion or remodeling potential, because you’re in for a shock. The zoning changes in this new ordinance will reduce your property values because you or your buyer will no longer be able to build as much square footage when you remodel or add onto your home. If this new ordinance is approved and if you own or live on a lot smaller than 8,000 square feet, you will lose, on average, about $140,000 in property value, overnight.

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Now you’re probably wondering why the city would do this. Apparently, this all started because the Planning Commission was befuddled trying to deal with what are called “monster homes” on large lots in the hills. So they began looking for ways to make homes either smaller or more “aesthetically” pleasing (in their subjective opinion). But somehow through the grinder of the political process, they ended up crafting an ordinance that heavily penalizes those owning the smallest properties in the city while letting the original transgressors completely off the hook.

The absurdity of all this is that small lot owners (below 8,000 square feet) can’t build very big homes anyway because all our other codes preclude that possibility (floor area ratio limits, height limits, setbacks, lot coverage limits, etc.).

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The New Zoning Code:

Here is how this new zoning change works. Currently, the zoning code says that Mill Valley homes are allowed a 500 square foot Floor Area Ratio (FAR) exemption for a garage irrespective of the size of the lot (20.08.032). The FAR in most Mill Valley residential zones is 35 percent of the lot size. So for example, this means that if you had a 7,000 square foot (sf) lot, you could presently build a home that had a floor area of living space equal to 35 percent of that, which is 2,450 square feet (35 percent of 7,000) plus up to a 500 square foot garage. In other words, you can currently build a garage up to 500 sf and not have it counted against the total amount of living space of your home.

That is what has changed.

The new ordinance would reduce the FAR exemption for your garage (and consequently decrease the total square footage of living space you can build, assuming you do want to build a two car garage) as follows:

Lot Size:                    New FAR Exemption

4,000 sf or less           0 – no exemption (lose 500 sf of area)

4,001 to 5,000 sf        200 sf exempt (lose 300 sf of area)

5,001 to 6,000 sf        250 sf exempt (lose 250 sf of area)

6,001 to 7,000 sf        300 sf exempt (lose 200 sf of area)

7,001 to 8,000 sf        400 sf exempt (lose 100 sf of area)

To say this in another way, if you own a lot that is 4,000 sf or less, you can build a garage but it will all be counted as living space even if you put your car in it. But if you own a lot larger than 8,000 sf, you can build all your allowable living space (35 percent of lot size) plus a 500 sf garage even if you don’t put your car in it. So if you want to have a real garage to put a car in and own a smaller lot, that space will be counted as living space even though you can’t live in it, and it will mean your actual living space will get smaller. Always wanted that extra bedroom? Well, forget it.

If you can tell me how that makes any sense at all or how that is equitable to all taxpaying homeowners, I’d like to hear it.

However, regardless of whether you want to build a garage or not, this ordinance will lower your property’s value and take money out of your pocket. Why? Because that’s how the basic rules of property valuation work.

Why Your Property Value Will Be Reduced

Property is valued on its potential development capability, not what it is presently. An appraisal is the value of its present condition. But people buy or invest based on what they can do to it, to improve it and add value. That’s why a one-acre lot with a shack on it can sell for a million dollars. This is the cornerstone of our real estate market. And real estate is still the most important investment most families will ever make.

Let’s take an example and run some quick numbers:

A family bought a typical Sycamore Park home that sits on a 6,000 sf lot. The house is presently only 1,500 square feet but using the allowable 35 percent FAR, that equates to a total allowable home size of 2,100 sf. They bought this house assuming that they could remodel it and make it bigger for their growing family, based on the zoning that was in place before this new ordinance. They also bought this home because having looked at many other houses, they knew that if they remodeled it and added on, it would be worth more.

A typical new or newly remodeled home of that size will sell today for about $1,150,000 (a low estimate: Zillow). At that price the residence is selling for about $550 per square foot (also a low estimate). So assuming that this family wants to end up having a home with a two-car garage, they were relying on the 500 sf garage exemption that has been the law in Mill Valley for many decades. It’s very unlikely that their real estate agent even knew much less disclosed to them that this law was about to change.

But if they need or want that two-car garage, any square footage over 250 sf will have to be deducted from their allowable living space. So if we deduct 250 square feet from the total amount of living space allowed (per the chart above), we are reducing the potential value of their home by a whopping $137,500! Yes, you read that right. If you own a typical Sycamore or Tam Park home that fits this description, you are about to lose one hundred and thirty seven thousand five hundred dollars in property value.

So assuming you were counting on being able to build or remodel a home with a garage that can actually fit your car (250 sf is too small to do that and fit your lawnmower too), using that very realistic valuation estimate, here is what this ordinance does:

Lot Size:                    New FAR Exemption

4,000 sf or less           0 – no exemption - lose $275,000 in value

4,001 to 5,000 sf        200 sf exempt - lose $165,000 in value

5,001 to 6,000 sf        250 sf exempt - lose $137,500 in value

6,001 to 7,000 sf        300 sf exempt - lose $110,000 in value

7,001 to 8,000 sf        400 sf exempt - lose $55,000 in value

Now let’s make a guesstimate that about 500 homes in Triangle Neighborhoods might be affected by this and that the average loss in value was $137,500. That equates to a total loss of property value of $68,750,000. Yes, that is sixty eight million seven hundred and fifty thousand dollars just in the Triangle Neighborhoods.

So how the heck is this a logical, fair or equitable in any way, shape or form?

Other Reasons This Makes No Sense

The Parking Code Requires Off Street Parking:

In all residential areas the zoning code requires that every residence provide two off street parking spaces. But since most small lots (below 8,000 sf) have physical restrictions that make that difficult or impossible, garages provide parking required to conform to code (and to get a permit to remodel or build new). So this new ordinance is making it even more difficult for the homeowners, who already have design challenges, to comply with the parking code. Yet large lot owners who do not have these challenges are not penalized at all.

It seems the city’s solution to our parking problems is to say, “Who cares, take it out of your living room space.” How does this make sense? How is that equitable?

Affordable Housing: 

We are inundated lately with reports about the need for affordable housing. And in Mill Valley one of the best ways to provide that housing is the creation of second units and micro units. Second units are a valuable way to provide quality, well located housing without our community for the elderly, service workers, and young people and students. 

A second unit can easily be created in 250 sf. So using the example above, the difference between having that available FAR of living space or garage area that is exempt becomes critical. You can’t have all your allowable living space, including the second unit, and a two car garage unless you take that second unit floor space out of your own living space. But with a total allowable living area of a couple thousand square feet, if you want a decent family sized home, that’s very hard to accomplish. 

Of course, the obvious question is, what's wrong with the way things are now. The answer is, nothing that can't be dealt with in better and less heavy handed ways.

For most of the lots covered by this ordinance this new law just put a stake in the heart of anyone who wanted to build one of those second units and wanted to have a garage they can actually use to put their cars in.

The Great Recession:

As privileged as we are to live here and enjoy high property values, the fact is that the country is very slowly coming out of the worst property value collapse since the 1930’s. Many people who purchased their homes in 2005 to 2007 are still far below what they paid for their homes (but many are still paying property taxes on those elevated values).

But in the face of this our city council has somehow concluded that the best way to solve a few occasional aesthetic issues and neighbor complaints at the Planning Commission is by devaluing thousands of properties in the entire city. From a fiscal standpoint this might be the worst time in a half century to do something like this. And if the city desperately needs tax revenue, why in the world would we devalue a large percentage of our residential properties (this loss in value will show up slowly but surely in tax valuations in the coming decade)?

What the heck are they smoking? I guarantee that no one ever voted for a city council member because they wanted them to lower their property values or further curtail their property rights.

So Why Did They Do This?

The city says they did this in response from many community complaints about the negative impacts of large homes. But that belief is based on purely anecdotal evidence. Certainly, as more and more homes are remodeled, and some too aggressively, there will be complaints about them. And some of those complaints may be justified. And sitting on the Planning Commission listening to arguments for and against every night can make commissioners “feel” like they’re getting lots of complaints. But there’s no real evidence (studies or surveys) to support that conclusion (i.e why not poll all our residents on this decision).

The truth is that there is no public outcry by the majority of our residents (and we do live in a democracy) to decrease home sizes in Mill Valley, and certainly not in neighborhoods like Sycamore Park, where I live.

Further exacerbating the problem is the city tends to lump all complaints they receive about homes into one category that they call "homes are too big," when in fact most of the complaints are about a wide variety of specific impacts (it blocks my view, it shades my back yard, they can see into my living room, etc.) that have nothing to do with the home’s size, and certainly nothing to do with the garage exemption. These are design problems not a zoning problems.

On top of this there are many instances where internal disagreements between the Planning Department and the Planning Commission creates problems, poor decisions and bad implementation of existing rules and regulations. And certainly there's the real problem of some oversized, cheat every inch homes that get built. But this is not the case in Sycamore Park where so many of the smaller lots in town are. So how is this ordinance a solution to any of this?

What is particularly frustrating is that many of us are signed up for email information notices about all city planning meetings and events. Many of us have participated regularly in the ongoing General Plan and Miller Avenue planning process. And we attend many planning and community leader meetings. Yet not a single community leader that I know was aware of this new ordinance. Why?

Act Now

If you feel this new ordinance is a bad idea and should not be approved, you must call, write or email the Mill Valley City Council immediately and make your displeasure known and ask the city council to NOT APPROVE this ordinance at its second reading.

citycouncil@cityofmillvalley.org

I’d like to acknowledge that this whole issue was brought to my attention by city councilman Ken Wachtel, who sent an email about it to another local community representative. In doing so, he was doing the job we elected him to do: represent all the residents of Mill Valley and keep them informed in instances where he feels we might not be.  In his letter to me, he commented, “I cannot in good conscience let this go through without my outreach to you and your neighborhood.” Many thanks for doing that, Ken.

This ordinance is grossly inequitable to a class of taxpayers who by no fault of their own purchased a smaller lot. It unfairly penalizes the “starter” home community, the very group the city is always claiming to want to help. It arbitrarily favors wealthier property owners who can build large homes over less wealthy property owners who can only build more modest homes (I’m sorry but a 2,500 sf home is not a “monster” home). It is unfair to those who have purchased homes in the Triangle Neighborhoods with hopes of expanding for their growing families.

The great irony is that the goals of this ordinance can be better and more easily addressed and remedied as they always have been, in our Design Guidelines. Having well-crafted design guidelines about overall home design and visual impacts allows a homeowner to appear before the city in a public hearing and plead their case and it gives the Planning Commission the tools and discretion needed to stop truly over-sized homes or homes that are poorly designed from being built. Fix the Design Guidelines. Don't use the blunt instrument of zoning codes to attempt to micro-manage home designs.

Help stop this wrong-headed zoning change. Call or write the Mill Valley city council today.

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The views expressed in this post are the author's own. Want to post on Patch?