If you present information on the nuts and bolts of what it take to develop smaller-scale, incremental projects and the audience includes elected officials, municipal staffers, and local activists, they will ask you “What can our town do to encourage building differently?” It is not so much what a municipality can do, but what the individual leaders in a town are willing to do. Here is my list for those leaders.
1. Stop trying to guess how much parking is needed. Eliminate off-street parking minimums from your regulations.
2. Manage the supply of public parking with rational pricing. Convenient on-street parking should cost more than a space on the top floor of a parking deck two blocks away.
3. Get serious about streets as public spaces. Narrow lanes to 10 feet. Convert dumb Stroads to boulevards. Put on-street parking everywhere. Install better bike infrastructure like buffered bike lanes. Replace unwarranted traffic signals with stop signs. Don’t wait for your Public Works Director to lead this effort. (Believe me, he’s had plenty of time).
4. Stop letting your fire marshal design the town. Direct the Fire Department to figure out how to provide good emergency services on a network of connected low speed streets.
5. Overhaul your zoning. Get rid of minimum lot area and minimum lot width. Dump the silly maximum lot coverage percentage. The best incentives for incremental development support a clear vision and a reasonable process. Your Comprehensive Plan may contain something resembling a clear vision, but do your zoning reg’s and development standards screw up your chances for getting it delivered?
6. Think Small and Think Local. Encourage the small operators you have in your town and don’t worry about convincing large developers to come from out of the area to fix your town. They are probably not coming. If they do, agree to come and build in your town, the results are rarely what you had in mind.
7. Dig deep. Cowboy up. Find some allies. Making any of these thing a reality in your town will stir up some shit. Ask yourself if how much political risk or career risk you are willing to take to make a difference. Figure out what your Plan B is in case you lose the election, get demoted, or get fired. Once you have your downside covered, find some serious people to work with and make some changes.
rjohnthebad 
The main top-level decisions are probably these:
1. Test every regulation for the smallest player. Can a typical (or smaller) homeowner or small developer comply? Your building inspectors should not require a new roof every five years.
2. Don’t let the rules help neighbors take advantage of each other? Can the guy in the south lot overshadow the gal on the north? Can one developer saturate the market for years? For every such wink and nudge or undeserved variance there are a dozen little guys who get the message they’re screwed before they start. Conversely, don’t let a rule stand if everyone needs the same variance (or other relief). If everyone needs relief, nobody needs the rule.
3. When something is an impediment, think of it as a product or service platform. If lots are too small for garages on each lot, maybe a garage would turn a profit. If individual retention ponds are onerous, maybe the neighborhood park could use a pond, shared by everyone. And yes, if parking is precious, provide it on the street so everyone gets a shot.
Get your economic development staff or organization on board. If they are always chasing national tenants, large scale office tenants, and sizeable developers then they will put smaller operators at a disadvantage especially if they offer incentives for these larger targets.
Have a real world look at all of the fees you are charging people who want to help your city. If you want increased density by ADUs, for instance, don’t charge people $8K when they want to add one in or to their house. It’s already expensive enough for an individual to get the work done before the insane fees. If you want affordabile housing you can’t tack on $200K in fees to an 8 unit apartment building project.
Fee structures are often determined in a vacuum while they directly affect development. There may be a reality of CIP projects that they are based on, but it’s also likely that many of those projects are for expensive and unnecessary suburban roadway construction. If I’ve raised $100K in capital from friends and family for an experimental business, I can’t take a hit at 10% of my capital for change of use fees, especially when it may be for a project that will lower the success of the street I’m facing on to because it was incorrectly determined to require wider lanes and another 200 ft of stacking. And so on…