Forget Everything you Thought You Knew About (the) Design

We always knew that some of the things that we were planning to do in the garage weren't to code.  We naively thought that we could just do the minimum, get the Certificate of Occupancy and then add in the pieces that wouldn't be allowed (I'm talking to you, staircase).  When we went to visit my husband's family for Easter I spoke with several family members who are either in the trades or very familiar with the building process.  They basically told me that if the building is not built to code then should anything happen our insurance company would have an easy out to not pay for the damage.  Since this is a pretty expensive undertaking, this was enough to really give us pause.  Scott spent an some time with a local building inspector asking questions and he basically confirmed that a staircase would never be allowed and while the upstairs could be used for storage or host a loft office or something, there could be no bedroom up there.
Just like that, my beloved staircase and the wall full of storage needed to be completely reworked.  We met with the designers again, looked at our options, and made some decisions.  Here's where we landed.
BEFORE:

AFTER:

Essentially, the main living space remains the same, except the large closet is removed.  There will still be an entire wall of built-ins about 2 feet deep.  The lower areas will be our closets/clothes storage with an extra area for other storage.  There will be built-ins that go all the way up to the ceiling to give us that additional storage of what we don't use that often.  I'm still trying to figure out if a sliding ladder will be the best way to access that or not.
Instead of stairs we'll have a small doorway directly above the downstairs bedroom.  It will be accessed by a ladder that is on a track that can be slid out of the way when someone isn't upstairs.
The upstairs will be a true tiny house style sleeping loft.  We decided that our daughter will have the downstairs bedroom as her main room.  Since we co-sleep, we'll start out downstairs with her and when she's ready for her own space, we'll start using the upstairs bed.  A bed will be pretty much all that is in that room and then we'll still have the storage/mechanical room.  I have to admit that this change brought me a lot of peace.  I was apprehensive if we would be able to utilize a room with 5 ft ceilings as a regular room.  Having a full staircase to a small space started feeling like it might be really awkward.  Channeling the tiny house designs and instead using a sleeping loft definitely feels like the right choice.  It now seems like an extra bonus space rather than a room posing to be something it could never be.
The change also opens up a bit of space in the main living area.  The closets will only be 2 ft deep rather than the original 5 ft.  There will still have to be clearance behind to open the doors and use them comfortably, but I think we'll enjoy that extra space on a daily basis.  The only thing I'm a bit sad about is losing indoor space to store our stroller.  Since this is a walkable neighborhood, having a stroller is a must and ours is large (I also use it to run).  We can try to store it in the outdoor storage shed, but I wonder how user-friendly that will be.  Luckily, our daughter is already two, so hopefully the days of the stroller are coming to an end in the not-so-distant future, making this a smart move for the long term.