Folsom City Council
July 8, 2025

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Allocation Committee (“CDLAC”) for Low Income Housing Tax Credits (“LIHTC”), if applicable, and all other necessary project financing.

B. Submission of Materials
All applicants are required to comply with the submission criteria set forth in in these guidelines or within a particular NOFA. . The City reserves the right to require the submission of additional information as needed to complete project underwriting.

3. Structure of Transaction
A. Loan Types and Terms
The City will provide AHL funds in the form of a loan to the entity that owns the property. No AHL funds will be awarded, and funding commitments are not transferable without prior written City approval.

The City ’s AHL Program loan is intended as construction/ permanent financing. Proceeds of the AHL Program loan will only be released in conjunction with approved con struction draw requests and/or submission of invoices for approved soft costs and satisfaction of all requirements outlined below.

In all cases, the AHL Program loan will:

 Have a term of 35 years1;
 Be repayable in full upon sale, refinancing, or transfer of the property or upon maturity, whichever occurs first;
 Be secured with a deed of trust, promissory note, and appropriate UCC liens. Mortgages will be recorded in Sacramento County and may be subordinate only to an amortizing permanent first mortgage and a temporary bank construction loan, all of which must be approved by the City, if applicable.

The City will offer one of two potential repayment structures:

 For projects with senior amortizing loans (i.e ., “must pay” debt), AHL program loans will be structured with annual payments equal to 50% of Surplus Cash (aka Cash Flow, Residual Cash Flow, Residual Receipts) as further defined below.

As discussed below, the City may consider deferring payments on its AHL until cumulative distributions of Surplus Cash are equal to a project’s deferred developer fee.

 For projects without senior amortizing loans, AHL Program loans will be structured as an amortizing loan with a 35-year term and an interest rate of 3% simple interest. Payments may be

1 When necessary for tax analysis purposes, the City may consider a longer loan term (e.g., 55 years to match the period of affordability).

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deferred for th e first year following completion of construction. Based upon the City’s underwriting evaluation, payments may be based on a longer amortization period with a balloon due at maturity if a project cannot be expected to fully amortize the loan.

B. Reserves Requirements
To preserve the ongoing viability of projects, the City will require the establishment and maintenance of an Operating Reserve Account and a Replacement Reserve Account (collectively, the Reserve Accounts) consistent with then current CDLAC/ CTCAC requirements. All Reserve Accounts shall be held in interest-bearing segregated accounts at banks or credit unions fully licensed to do business in the State of California and insured to the maximum limit of either the Federal Deposit Insurance Corporation (FDIC) or the National Credit Union Association (NCUA) as applicable. Any interest earned on the Reserve Accounts shall remain within the Reserve Accounts.

All Reserve Accounts shall remain in place through the restriction period (i.e., 55 years) not withstanding any change in ownership and in no circumstances may be disbursed for “exit taxes” upon any future transfer of limited partner interests.

Owners must report any withdrawal or other use of Reserve Accounts to the City within 10 days, providing information on the conditions leading to the withdrawal and the use of those funds. Initially, the City will not require the Owner to obtain permission prior to making withdrawals from the Reserve Accounts but reserves the right to require reserve accounts be established subject to a depositary control agreement such that withdrawals may not be taken without the City’s specific authorization to the financial institution (e.g., if the Owner has taken un-approved withdrawals or for other good cause as determined by the City). Owners must also authorize the financial institutions in which reserves are held to provide to the City, when requested, verified statements reflecting account balances and transactions.

 An Operating Reserve intended to protect against unexpected operating deficits which must be fully funded at or before permanent loan conversion in an amount equal to three months of estimated operating expenses and debt service under stabilized occupancy;  A Replacement Reserve intended to fund future ca pital and rehabilitation needs . For rehabilitation projects an initial capitalized replacement reserve of the greater of i) $1,000 per unit; or ii) the amount determined by a CNA approved by the City must be established as of initial closing. For all proje cts, ongoing deposits to the replacement reserve of not less than $300 per unit per year must be made beginning no later than the date of permanent loan closing (or a date certain established by the City). Thereafter, annual deposits will be increased at an annual rate of

3.5%. The City also reserves the right to modify reserve requirements during the period of affordability based on periodic CNAs.
 For projects where the City’s underwriting anticipates operating deficits during the affordability period, an additional Operating Deficit Reserve must be capitalized as of the initial closing;  As may be required based on specific or unique project features, additional specialty reserves may be required, such as for tenant services, abnormal security costs, etc.

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C. Annual Payments & Distributions
Following completion of construction and conversion to permanent financing , the City loan will require annual payments equal to 50% of Surplus Cash.2

Surplus Cash Flow will be defined as all rental and other operating income generated by the Project after:

1. Payment of the reasonable and customary operating expenses for such the Project (see Sections

5.B.IV. and 6D):
a. Property management fee not to exceed 4% of the Project’s effective gross income; b. Advertising, legal, accounting, security, and other general office administration expenses; c. Utilities;
d. Payroll expenses, benefits, and payroll taxes;
e. Maintenance, repairs, grounds, pool, and turnover costs; f. Property insurance;
g. Property taxes and assessments;

2. Costs of social s ervice programs offered to residents (as necessary and only as appropriately determined by the City on a case-by-case basis);

3. Cash deposited into Project Reserves (including the Replacement Reserve and/or Operating Reserve) in such amounts as are require d by the Project lenders (including the City) and/or tax credit investor ( further including a requirement that if drawn, operating reserves must be replenished prior to any distributions of cash flow);

4. Cash deposited into any escrow for property taxes and/or insurance as may be required by any of the Project Lenders;

5. Payment of debt service on other “hard payment” loans approved by the City (including principal, interest, and any applicable mortgage insurance premium);

6. Payment of asset management fees to the tax credit investor limited partner in an amount no greater than $7,500 per annum starting in the first year the Project receives a certificate of occupancy; and

7. Payment of asset management fees to the nonprofit managing general partner or managing member of the owner in an amount no greater than $100 per unit per year with payments starting in the first year the Project receives a certificate of occupancy.

Other than those specifically provided for above, any payments not specified above made to the partners, members, other underlying ownership entities or individuals, and any of their related parties , including but not limited to other or additional asset management fees, incentive fees, performance fees, owner’s representative, compliance management, consulting, or oversight fees may only be paid from Surplus Cash remaining after payment on the City, loan.

2 Surplus Cash is also varyingly referred to as – cash flow, residual cash flow, residual receipts – for purposes of this document, shall generally have the same meaning.

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In addition, the City will generally agree to defer annual payments on the AHL Loan until the earlier of i) 12 years from the date upon which the project is placed in service or ii) the point at which cumulative distributions of Surplus Cash are equal to a project’s deferred developer fee as approved by the City as of the final closing and cost certification. In all cases, the deferral period will be determined based on cumulative Surplus Cash distributions regardless of how any items described above as payable only from Surplus Cash are characterized within an owner’s operating or partnership agreement . As way of example, insomuch as an owner’s partnership agreement requires some or all cash flows to be distributed to the investor for any tax credit adjustors or investor loans not specifically anticipated in the project’s financing plan, those distributions will still be counted toward the cumulative Surplus Cash distributions for purposes of any deferral period on the City’s loan.

Further, any identity of interest costs (e.g. use of a related party management company, vendor, or the like) included within the Project’s annual operating budget must be disclosed and approved by the City as necessary and reasonable.

D. Guarantees
The City will require joint and several corporate guarantees from the underlying individual and corporate owners of the general partner(s), member(s), or other controlling entities of the Owner, and from any other guarantors required by the other financing sources investing in the Project.

Required guarantees will include:

1. A guaranty of project completion and initial funding of reserves;

2. A guaranty of replacement reserve deposits; and

3. A guaranty for full and prompt payment of any loss, damage, liability, action, cause of action, cost, or expense incurred by City as a result of, and to the extent of, i) fraud or material gross misrepresentation, ii) intentional bad faith waste, iii) losses resulting from Owner/Developer’s failure to properly maintain insurance, iv) gross misappropriation of any of the rents, security deposits, loan proceeds, insurance proceeds, condemnation awards, or any other proceeds derived from the collateral security; and/or v) unauthorized disbursements of surplus cash.

E. Declaration of Restrictive Covenants
Each AHL-funded project must maintain restrictions and covenants running with the land enforcing City guidelines, as applicable. The Declaration of Restrictive Covenants will be separately recorded and will remain in place for the 55-year period of affordability even if the AHL program loan is prepaid prior to that date. Among other items, the Declaration of Restrictive Covenants will address:

 Restrictions on the transfer of title to the property or underlying ownership interest s in the property owner;
 Restrictions on further encumbrances on the Property without the City’s prior permission;  Operational and performanc e requirements, including maintenance of various reserves, restrictions on the distributions of surplus cash, approval of property management, and insurance expectations;

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 Provisions to enforce ongoing requ irements for project c ompliance th rough the period of affordability, including:
o The length of the period of affordability;
o Applicable income and rent restrictions;
o Property standards to be enforced;
o Marketing and leasing requirements; and
o Recordkeeping and reporting requirements.

While the City ’s AHL pro gram loan(s) will generally be subordinate to conventional debt, the AHL Declaration of Restrictive Covenants must be recorded senior to all foreclosable liens associated with the project financing, including any loans senior to the City’s AHL program loan, and structured to survive any foreclosure by a senior lien . The AHL covenant may be recorded junior to any similar restrictions related to federal funding, LIHTC, or other public funding.

F. AHL Agreement
In addition to any financing documents, owners of AHL‐financed projects must sign an AHL Agreement with the City. The Agreement will identify requirements for compliance with City’s Rental Housing Program and will remain in effect in the event of any prepayment of the AHL program loan.

4. Underwriting & Subsidy Layering Reviews

A. Project Underwriting Standards
The City anticipates that in most cases, projects seeking AHL funding will be seeking awards of federal LIHTC as administered by CTCAC. In general, for administrative efficiency, the City anticipates using underwriting standards consistent with those adopted by CTCAC. Further, the City expects to align most affordability requirements with those of the LIHTC program (e.g., the definition of and processes for verifying tenant income, the calculation of rent limits, determination of utility allowances, etc.). However, in all cases, the City reserves the right to impose more restrictive underwriting or compliance requirements based upon its assessment of risk within a given project or specific policy goals outlined in these guidelines or within a particular NOFA. Insomuch as an applicant identifies disconnects between any of the specific underwriting, affordability, or other requirements outli ned herein, it is their responsibility to discuss those with the City prior to submitting an application and seek any needed clarification.

Market Study. For a ll AHL project applications the City will require the submission of a professionally prepared market study meeting the market study requirements of the CTCAC. If more than 12 months old at the time of closing, the City may require an updated market study. Proposed rent levels must be supported by the applicant’s market study and within applicable regulatory limits.

Developer/Guarantor Financial Capacity . Collectively and on an unduplicated basis, guarantor(s) must demonstrate minimum financial capacity as follows:

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 Minimum liquidity (current assets less current liabilities) of at least the greater of $1M or 5% of the total development costs of all pipeline projects (i.e., projects for which initial funding awards have been issued, that are under construction or in lease -up/stabilization, and for which permanent loan conversion has not yet occurred).
 Minimum net worth of the greater of $5M or 10% of the total development costs of all pipeline projects.

All applications must include the three (3) most recent audited annual financial statements and current (less than 90 days) interim financial statem ents of all developer(s), underlying ownership entities, guarantors, and , in the case of rehabilitation, the p roject, as applicable, and will be subject to City’s evaluation of fiscal soundness. For entities that are not audited, the City may, in its discretion, accept CPA reviewed financial statements. In the case of individual guarantors, current personal financial statements (less than 90 days) and three (3) years of individual tax returns are required.

Vacancy factor of at least 7% for family (i.e., not age-restricted) developments and at least 5% for senior (i.e., age-restricted) developments, unless the third-party market study indicates a higher vacancy factor is needed. For family projects where substantial ly all units are supported by project -based rental assistance, a 5% vacancy rate will be permitted.

Inflation factors. In general alignment with CTCAC guidelines, City staff will use a maximum inflation factor of 2.5% for all sources of income and a minim um inflation factor of 3.5% for all operating expenses and reserve deposits.

All AHL Program funded projects must maintain a Debt Coverage Ratio (“DCR”) of at least 1.15 for at least 20 years on all amortized, must-pay debt. In some cases, for projects with small levels of mortgage debt or where long-term cash flow projections suggest declining annual cash flows, this may require a higher initial DCR but generally not greater than 1.25 for year 1 . The City reserves the right, during the affordability perio d or any extended commitment period, to disapprove or reduce proposed rent increases for projects with actual debt coverage ratios of more than 1.35.

Operating Margin. In addition to considering DCR, the City will review the operating margin ( cash flow cash divided by the sum of operating expenses and replacement reserve deposits). The operating margin must remain at or above 7% for the period of affordability. Like the DCR standards above, if operating margins exceed 10%, the City may require the project to take on additional amortizing debt or, following project completion, may disapprove or reduce proposed rent increases.

Operating Costs. Proposals must include justification of operating costs that includes a comparison to similar projects in the local market. Whenever possible, comparable properties should be operated by the proposed management company. The City may establish minimum annual per unit operating costs as part of a NOFA, generally in alignment with any published CTCAC standard.

Projects must include a capitalized operating reserve equal to three (3) months of underwritten operating

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expenses, amortizing debt service, and required reserve deposits. If drawn, the operating reserve must be replenished prior to distributions of Surplus Cash. The operating reserve is intended to protect against unplanned operating deficits. If the City’s underwriting projections anticipate deficits within the applicable affordability period, a separate operating deficit reserve must be capitalized as well.

To substantiate LIHTC equity pricing, if applicable, applicants must submit documentation (e.g., a term sheet or LOI) indicating that a syndicator or investor has reviewed the proposal and indicated preliminary pricing along with their interest in the project.

Pre-conversion NOI from project operations prior to the conversion of construction to permanent financing must be shown as a source of income in the applicants proforma using a factor of 75%.

Other Financing . Applicants must provide the amounts and terms for the construction financing, permanent financing, and if applicable, owner equity information. Amortizing permanent financing that will be senior to the City’s AHL Program loan must have a term of at least 15 years.

Deferred Developer Fee s. It is common for projects to include deferred developer fees as a financing source. The City will generally require:

 That following the initial application to the City:
o The level of deferred developer fee may not be reduced (in nominal dollar terms) unless the City’s underwriting determines that the deferred fee cannot be retired within 15 years. In the event City underwriting identifies net cost reductions, increases in other funding sources, or other changes that result in a net reduction of the “gap” needed for the project, the City’s AHL Program award will be reduced accordingly; o In the case of projects with 9% LIHTC, the gross Developer Fee may not be increased; and o In the case of projects with 4% LIHTC, any increase in the g ross Developer Fee must be offset with a corresponding increase in the deferred developer fee;  That any net savings (or increased funding sources including but not limited to upward adjusters for tax credit equity) at project completion and cost certificat ion will be used in equal parts to reduce the deferred developer fee and the City’s permanent loan. In the event savings are sufficient to eliminate the deferred fee in this manner, any remaining net savings will be used to further reduce the City’s loan, or in the sole discretion of the City, to increase the operating or replacement reserves; and
 The deferred fee to be structured as an unsecured loan subordinate in priority to the City’s lien; and
 Insomuch as payments on the City loan are deferred prior to the retirement of the deferred fee, the deferred fee must carry no interest.

B. Proforma Requirements
Applicants must submit an unlocked proforma, containing all underlying formulas, in a Microsoft Excel

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format as a part of their application. The proforma must, at minimum, include:

 An itemized breakdown of units by bedroom size, square footage, income restriction, and both gross and net rent levels (i.e., net rents are those actually charged after adjusting rents for tenant paid utilities);
 Operating cost assumptions should be itemized and show costs on both a total development and per unit basis;
 Total development costs showing breakdowns by those included in LIHTC basis and identifying which specific line items the applicant proposes to use AHL funds towards. o In particular, the development costs should separately itemize t he hard costs of any stand-alone accessory buildings (including leasing offices, community buildings, laundry facilities, free -standing garages or carports, or maintenance buildings), off -site infrastructure costs, and organizational costs such as partnership or syndication expenses associated with establishing the ownership entity and/or equity investment; FF&E, start- up costs and capitalized reserves.
 For projects using LIHTCs, net tax credit equity projections should be supported by calculations clearly showing eligible basis, any basis boost, actual credit sought (i.e., if limited by the state QAP or competitive factors), and anticipated pricing;
 Construction and stabilization period cash flows, showing the timing of sources and uses prior to conversion to permanent debt , including but not limited to the specific timing of equity installments;
 Projections of unit delivery and lease up estimating the need for any initial lease up reserve (prior to break even operations) and the availability of pre -conversion net operating income available as a development source; and
 At least a 20-year operating projection show ing inflation assumptions for all revenues and expenses, including increases in replacement reserve funding , and modeling the distribution of surplus cash/cash flow (e.g., toward deferred fees, payments due the City, and any “waterfall” of distributions anticipated by the operating/partnership agreement.

Failure to provide an adequate proforma may result in increased underwriting costs due from the applicant.

C. City Fees
Any NOFA issued by the City will include an allowance for the City’s costs associated with reviewing the application for funding, underwriting the project, closing the transaction, and monitoring performance during the construction and stabilization period. These may includ e but are not limited to third -party consulting, legal, or inspection costs and direct staff costs associated with reviewing, processing, and monitoring award of funds to a project. Following the issuance of any preliminary award, applicants will be responsible for all such City costs whether or not the transaction ultimately closes.

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D. Cost Limitations
All project costs must be reasonable and necessary whether directly paid with AHL Program funding or another source. The City reserves the right to review any line‐item cost to ensure that both itemized and total project costs are not excessive. Additionally, AHL funded projects will be subject to the following specific cost limitations:

 For projects utilizing LIHTC, the maximum developer fee may be calculated pursuant to the QAP.

In all cases, however, consultant fees and any interest on predevelopment financing are payable only from proceeds of the developer fee.
 For LIHTC developments, developers shall defer the maximum developer fee allowable under tax law and LIHTC regulations and, insomuch as payments on the City loan are deferred, the deferred developer fee shall bear no interest.
 Maximum allowable builder/general contractor General Requirements, Overhead, and Profit are 6%/2%/6%, respectively. The builder line -item percentages are calculated on the construction contract price which cannot include construction contingency. If change orders use the contingency for construction costs, the same percentages for builder line items apply.  When t here is an identity of interest between the developer /owner and the builder/general contractor, in addition to the fee limits stated above, the combined balance of developer fee, general requirements, overhead, and profit may not exceed 20% of the total de velopment cost less reserves and start-up costs and the developer fee, general requirements, overhead, and profit themselves.3
 Generally, Architectural, including Engineering fees, may not exceed 7% of total project hard costs (excluding builder’s fee line items) unless the City has approved a larger fee (e.g., in response to specific project characteristics such as a requirement for historic rehabilitation or unusual site conditions requiring additional engineering).
 Acquisition costs may not exceed the le sser of the appraised value of a property, the purchase price negotiated with an arms-length seller, or the cost basis of an identity of interest seller.

E. Other Public Funding Sources
Owners must disclose all other commitments for funding with the initial AHL Program application to the City at the time of application and upon receiving any additional commitments of funding. Using its underwriting criteria, the City will assess the project and may require changes to the transaction to ensure that cash flows to the owner/developer are not excessive. Changes may include reductions of the AHL Program award, reductions in the rents being charged to tenants, requirements that excess cash flow is deposited to project reserves, or increased annual payments due on the AHL Program loan.

The City may consider adjusting its underwriting in consultation with other funders to the project.

However, the City retains, at its sole discretion, the right to determine whether to accept alternative

3 Generally, the City considers there to be an identity of interest concern when the owner or developer is an affiliate of, or related party to, the builder/general contractor.

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standards.

5. Project Funding Requirements

A. Eligibility Criteria

I. Eligible Applicants
Applications are accepted from non -profit and for -profit housing corporations, joint ventures, limited liability companies, and partnerships. In general, a pplicants must have previous ex perience owning affordable housing projects or partner with an entity that does have the required experience.

II. Project Location
Projects must be located in the City of Folsom . The City will encourage sites not adjacent to existing regulated affordable housing. In addition, preference may be considered for development of sites identified as being appropriate for affordable housing in the Housing Element, or developments that meet specific needs outlined in a given NOFA.

III. Project Types
Funds will be provided for acquisition, new construction, and rehabilitation of multifamily residential rental projects. While the City will enterta in any proposals meeting its criteria (e.g., small-scale and/or transitional housing projects), in practice most projects will also require other public investment to be economically feasible (i.e., large-scale multifamily projects with LIHTC). Within a given NOFA, the City may include scoring preferences for projects meeting certain criteria (e.g., senior, large family units, deep income targeting, special needs housing, etc.).

IV. Funding Parameters
Typically, the City will also establish a maximum cap on its investment in a single development. Such a limit will be based on the availability of funding and other City priorities and will be addressed in any NOFA issued by the City.

B. Eligible Costs
I. General
Subject to any other limitations based on state law, the City will allow AHL funds to be used for any project cost otherwise included in the City-approved project budget. In all cases, any specific cost funded by the City as well as all project costs must be reasonable and properly allocable to the project.

II. City Project-Related Soft Costs and ongoing Monitoring Fee The City will include, as project costs, its internal soft costs specifically attributable to an AHL funded project. These may include consulting, legal, inspection, and staff costs associated with reviewing, processing, and overseeing the award of funds to the project. Within any NOFA., the City will provide a

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budget allowance for “City Due Diligence & Legal Costs” to be included in the project’s total development costs.

III. Cost Reasonableness
All project costs must be reasonable, whether or not paid directly with AHL funds. The City will review all project costs, including hard and soft costs, to evaluate their reasonableness and may, at its option, require applicants to obtain additional quotes, bids, or estimates of costs.

Acquisition costs must be supported by an independent appraisal of the property. Appraisals must be completed by an MAI certified appraiser, licensed to do business in California. The appraisal must meet USPAP standards. Acquisition costs exceeding the appraised value of the property will be ineligible for AHL funding. When a project’s sources include HUD funding, appraisal methodologies required by federal authorities, insomuch as they are more proscriptive, will apply.

In general, to avoid unnecessary duplication and for administrative ease, the City anticipates relying on various third-party reports (including appraisals and A&E plan and cost reviews) ordered by or certified to other sources of project financing. In all cases, however, the City reserves the right to require an applicant, at its own cost, to provide third-party reports separately from those obtained by or for other financing sources and /or specifically certified to the City. The se may include but are not necessarily limited to market studies, appraisals, environmental reports, and/or plan and cost reviews.

Insomuch as it may use third-party reports initially prepared for other project funders, the City or its representatives must be provided reasonable time to review the information, analysis and conclusions therein and, as necessary, permitted access to the professionals preparing such reports. In addition, the City’s staff, or its agents, must be allowed access to the property as necessary to evaluate the cost projections associated with a project’s plans and specifications . Applications may be determined ineligible if access is not granted or costs are determined to be unreasonable.

IV. Identity of Interest
Applicants must disclose any identity of interest situations that may occur when contracting with related parties during either the development (e.g., related-party general contractor) or ongoing operation (e.g., affiliated property management company) of the project. This includes any identity of interest with the seller of the property . The City must approve the use of any identity of interest contractor, service provider, supplier, or vender and reserves the right to withdraw approval for ca use upon notice to the owner.

C. Property Standards
To meet AHL program and City goals, all projects must meet certain physical standards intended to provide quality affordable housing that is durable and energy efficient.

 Construction must meet all applicable local building and fire codes (including related electrical,

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mechanical, and plumbing codes).
 If not otherwise required by another funding source, notwithstanding the AHL is not federally funded, the City will require that all projects meet the federal standards associated with Section 504 and the associated Uni form Federal Accessibility Standards (“ UFAS”) requirements. New construction or substantial rehabilitation projects with five or more total units must provide 5% of the project’s units (but not less than one) for physically disabled occupants and another 2% of units (but not less than one) designed to be accessible to those with visual or hearing impairments.  “Covered multifamily dwellings,” as defined at 24 CFR 100.201, must also meet the design and construction requirements required by the Fair Housing Act as outlined in 24 CFR 100.205.

D. Unit Allocation
In the case of mixed -income projects that include a market rate component, in no case may the sum of the City’s funding, along with other public funding such as that from HOME, CDBG, the national Housing Trust Fund (“HTF”), etc. exceed the project’s “applicable fraction” for purposes of LIHTC.

In general, the City expects to provide additional consideration to projects that provi de a higher percentage of deeply income-targeted units.

E. Income and Rent Restrictions
Affordable units in City-assisted projects will be income and rent restricted in the same manner as units designated as LIHTC units. A specific matrix of income restrictions defined by the percentage of AMI will be applied, with units at or below 80% AMI being counted as “affordable.” When combined with other federal funding sources, the City may consider alternative definitions of income and rent limits for the purpose of aligning restrictions to another public source.

In general, the City expects to defer to annual approvals of rent schedules and utility allowances to other public funders or oversight agencies, especially CTCAC. Owners will be expected to provide copies to the City concurrently with required submissions to any other oversight agency . Owners must also provide copies of approvals received from other public oversight agencies. The City reserves the right, as necessary (for example, following any determination that an owner has failed to comply with City requirements) to require affirmative City approvals of rent and/or utility schedules.

I. Income Limits
Income limits will be set based upon HUD-published Multifamily Tax Subsidy Program (“MTSP”) limits. The MTSP limits establish income limits for LIHTC and form the basis of the rent limits. They are updated annually, and projects will be required to always use the most current limits published by HUD.

II. Rent Limits

Consistent with LIHTC requirements, rents on affordable units may not exceed 30% of the monthly income of a household at the identified income level, using HUD’s methodology that assumes one and one -half

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persons per bedroom (except for efficiency units which are based on a one-person household).

For all AHL funded projects, the owner (or property management agent) must submit the project’s rent schedule on an annual basis , including utility allowances and any tenant fees as described in the sections below. In most cases, the City anticipates deferring to annual rent approvals by other public funders (e.g., CTCAC, CDLAC).

III. Utility Allowances
Rent limits are gross rent limits. The actual rent collected from a tenant must be adjusted considering an allowance for tenant paid utilities. The City encourages the use of project-specific methods of determining the utility allowance, but any method allowed by the LIHTC program may be used by the owner. The City anticipates deferring to annual approvals of the UA by other public funders (e.g., CTCAC, CDLAC).

IV. Prohibition on Certain Fees to Tenants
AHL program participants (i.e., owners) may not charge mandatory fees in addition to rent . Specifically, rental project owners may not charge tenants fees that are not customarily charged to tenants of rental housing (e.g., laundry room access fees). However, owners may charge fees approved by the City or other public funders for the following:

 Reasonable application fees to prospective tenants;4
 Fees or penalties related to the late payment of rent, non-sufficient funds or returned checks, or the like provided such fees are determined by the City to be customary for rental housing projects in the area and not excessive;
 Parking fees to tenants onl y if such fees are determined by the City, in its sole discretion, to be customary for rental housing projects in the neighborhood (that it is common for even market rate projects not to provide a parking space for each unit); and  Fees for optional services such as supportive services for special needs tenants or general services such as bus transportation or meals, as long as the services are voluntary and fees are charged only for services provided.

IV. Income Verification
For purposes of income restrictions, projects shall use the definition of “annual income” from 24 CFR

5.609 for determining income eligibility. Prior to signing a lease, income must be verified for all new tenants with documentation otherwise acceptable under LIHTC requirements . On an annual basis thereafter, income of renewing tenants must be re -evaluated as required by the LIHTC program.

V. Rent Adjustments
HUD publishes MTSP Income Limits on an annual basis. Unless shorter notice is required (but not if shorter

4 “Nominal” application fees only for the purpose of discouraging frivolous applications. Application fees are not intended to cover the cost of processing an application and should not be set with that in mind.

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notice is merely permitted), the rent for in-place tenants may only be increased with lease renewal and upon no less than 60 days’ written notice to renewing tenants. Further, except for tenants whose incomes have increased b eyond the applicable income limit for their unit , the year -on-year increase in rent for any renewing tenant may not exceed 5%, absent specific prior approval from the City.

For tenants whose incomes have increased beyond 80% AMI, the City will expect owners to take steps to replace those units with the next available market rate unit in the project (if any) while limiting any rent increase to the over-income tenant to a maximum of 30% of that tenant’s household income.

F. Environmental Requirements
In general, the City expects that all projects will fully comply with the requirements of the California Environmental Quality Act (“CEQA”). Applicants must provide a Phase I Environmental Assessment to the City along with any further assessments, testing, or other environmental reports. Insomuch as environmental concerns are identified, they must be mitigated to the City’s satisfaction in order to receive AHL program funding. This may include various clean -up activities or specific design or construction elements to protect occupants (e.g., vapor barriers and/or air exchange systems). If the City determines that a given site ’s environmental risks cannot be adequately mitigated, it may rescind any preliminary award of AHL program funding. Additionally, the City will not fund any project in a 100-year flood zone.

G. Other Requirements
I. Nondiscrimination and Equal Opportunity
In addition to being the law, it is the City’s policy that all projects comply with all applicable fair housing and equal opportunity statutes, laws, ordinances, and/or regulations, including but not limited to:

 The requirements of the Fair Housing Act (42 U.S.C. 3601 -20) including prohibitions against discrimination or disparate treatment on the basis of race, color, religion, national origin, sex (including sexual orientation and gender identity) , disability, and familial status and applicable California statutes which prohibit discrimination on the basis of marital status, military/veteran status, political affiliation, and status as victim of domestic violence, sexual assault, or stalking;

 The prohibition against discrimination on the basis of age under the Age Discrimination Act of 1975 (42 U.S.C. 6101-07) and implementing Regulations at 24 CFR Part 146; and

 The requirements that owners make reasonable accommodations in order to afford a person with a disability equal opportunity to lease and occupy a unit in the project as required by the California Fair Employment and Housing Act (FEHA) or, as may be applicable, Section 504 of the Rehabilitation Act of 1973 (29 U.S.C. 794).

II. Relocation and Displacement
In general, the City discourages projects that will result in the permanent displacement of existing tenants.

Insomuch as a project will result in the temporary or permanent relocation of existing tenants, applicants

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will be expected to provide benefits which are substantially similar to those provided under the federal Uniform Relocation Act (“URA”) to federally funded projects even if the project is not, due to another source, already specifically subject to these requirements.

III. Prevailing Wages
In general, the City does not expect the receipt of an AHL program loan to require the payment of prevailing wages. However, applicants are responsible for carefully assessing whether other project funding sources require compliance with federal (e.g., Davis -Bacon) or state prevailing wage or related labor standards compliance.

IV. Excluded Parties
The City will not fund projects owned, developed, or otherwise sponsored by any individual, corporation, or other entity that is suspended, debarred, or otherwise prec luded from receiving federal or state awards. Nor may the owner contract with any other entity (including but not limited to builders/general contractors, property management companies, or other members of the development team) that are suspended, debarred, or otherwise so precluded. Similarly, the general contractor will be required to determine that subcontractors are not so precluded.

The System for Award Management ( “SAM”) database should be used by applicants to confirm that development team members are not excluded. The SAM database is available at www.sam.gov.

6. Ongoing Project Requirements
At all times during the term of the AHL program loan or for an affordability period of 55 years, whichever is longer, AHL projects are subject to ongoing monitoring activities to be coordinated by the City and/or any third-party designee assigned by the City, in the City’s sole discretion. During such time, the project must continue to comply with applicable income and rent restrictions, be maintained in compliance with all applicable federal, state, or local codes or regulations related to the physical condition of the property and otherwise meet performance requirements outlined in the project’s AHL Agreement with the City (including any other financing documents or regulatory or use restrictions).

A. Marketing and Leasing
The owner/developer must establish a written tenant selection plan outlining any criteria other than income that tenants must meet to be approved for residency as well as any preferences or limitations that will be used to select applicants from the project’s waiting list. Owners may not reject an applicant based on that household’s receipt of a Housing Choice Voucher or other similar form of publicly funded tenant-based rental assistance. The City requires that the owner (or owner’s agent) provide written notification to any rejected applicant of the reason for their rejection.

Leases between the tenant and owner shall be for one year, unless by mutual agreement between the tenant and the owner.

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B. Reporting and Recordkeeping
To allow effective oversight of funded projects and document compliance with applicable AHL program requirements, all projects must submit periodic reports to the City. In most cases the City expects to accept reports made in the format required by and submitted to other public funders or oversight agencies (e.g., CTCAC). However, the City reserves the right to require additional reporting or to alter the reporting format or frequency based on future changes to City policy. Additionally, the City reserves the right to require additional or more frequent reporting for projects with compliance deficiencies. In general, reports will be accepted via email.

 Owners may be required to report quarterly during the development phase and lease‐up phase.

Quarterly reports will be due on the 15th of the month following the end of the prior quarter (e.g., by April 15th reports on the first quarter are due).
 Owners must submit any annual reports due to other public oversight agencies (e.g., CTCAC, the housing authority, etc.) to the City. In most cases the City expects such reports will be adequate for its purposes, but upon request by the City owners are required to provide any additional performance information the City may reasonably require. By way of illustration, this may include occupancy reports (showing turnover and management of the unit mix), current rent roles, utility allowance documentation, and examples of marketing materials.  All AHL funded projects are required to submit annual operating budgets to the City including comparisons against trailing 12 -month budget and actuals . Additionally, all projects will be required to submit an audit prepared by an independent Certified Public Accountant within 180 days of the end of its fiscal year . For small-scale projects (generally defined to be projects with fewer than 20 total units not involving LIHTC) where the cost of a project-specific audit is deemed by the City to be burdensome, the City may accept a statement of financial condition with prior approval by the City’s Finance Director.
 Within 10 days of receipt, owners much submit to the City copies of any monitoring reports, findings, 8823s, inspection reports or deficiency notices , or oth er similar documents issued by other public oversight authorities including but not limited to CTCAC or any other similar state agency; the provider of any HOME, HTF, or federal financing; and the Sacramento Housing and Redevelopment Agency (including as the provider of either project or tenant based vouchers or other financing).

In all cases, t he City may require additional and/or more frequent reporting due to concerns identified whether from reports submitted to the City or otherwise (e.g., from public complaints, media, information from other public agencies or City departments, etc.).

Owners shall allow the City, all other pertinent federal or state agencies, or their designated representatives the right to inspect records and property.

C. Capital Needs Assessment
The City may periodically require owners to obtain a capital needs assessment (“CNA” – sometimes also

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referred to as a physical needs assessment “PNA” ) prepared by an independent third-party architect, engineer, or other qualified firm approved by the City. Such CNAs shall be used for the purposes of determining the adequacy of the Replacement Reserve, considering its existing balance, planned deposits, and anticipated future capital replacement costs for the project.

If the CNA indicates the Replacement Reserve is not sufficient to address anticipated capital costs during the period of affordability , the owner must, at the City’s option, either make an additional deposit or increase its annual deposits sufficient to meet any underfunding. If an additional deposit is required by the City, the owner (or the guarantors) must replenish the Replacement Reserve Account within six months.

In general, the City anticipates requiring a CNA eight (8) years after a project has been placed in service and every fifth (5th) year thereafter. However, the City reserves the right, for cause, to require an additional CNA outside of this general cycle (e.g., following significant damage due to a casualty event, if components are regularly failing prior to their expected useful life, etc.).

D. Conflicts of Interest and Identities of Interest
To maintain a high standard of accountability to the public, conflicts of interest and perceived conflicts of interest must be avoided.

 Developers and o wners with employees, family members, consultants, or agents that are otherwise eligible to occupy AHL-funded units must receive approval from the City before entering into a lease with AHL eligible employees, family members, consultants, or agents.  As noted earlier, all identity of interest relationships with contractors, service providers, suppliers, or venders must be disclosed to and approved by the City.

7. Construction Process
A. City Construction Inspections
In addition to any City inspections related to a project’s building or other related permits, Owners will be required to provide copies of consolidated monthly draw requests, including supporting documentation, showing the sources and uses of funds during the construction period. Owner must provide reasonable notice of any scheduled draw inspections during the construction period. Even when not disbursing toward a specific draw, the City will have the right to participate in all draw reviews and conduct inspections to ensure that the project is progressing and that work completed is consistent with all applicable AHL Program requirements.

B. Drawing Funds
The City’s AHL Program loan is intended as construction and/or permanent financing. Proceeds of the AHL Program loan will only be released as reimbursement for eligible project costs.

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I. Conditions of Final Disbursement
In addition to the requirements set forth above, the City will hold back ten percent 10% of the AHL proceeds until completion of the Project, including all landscape requirements and offsite utilities and streets and correction of defects in workmanship and/or materials and the following:

 A certificate of occupancy, if applicable, or a final approved construction repo rt from the City’s Community Development Department for the Project.
 Evidence satisfactory to the City that the Project has been completed lien free and substantially in accordance with the plans and specifications.
 Review and acceptance of the cost certification.
 Such other supporting evidence as may be requested by the City or its agent to substantiate all payments which are to be made out of the final disbursement and/or to substantiate all payments then made with respect to the Project.
 A lease-up report showing the demographics of tenants at initial lease up.  Achievement of stabilized occupancy and conversion to permanent financing.

II. Limitations on Draw Requests
Within any NOFA, the City may specify the draw schedule in the form of controlled disbursements. A typical disbursement schedule may include the following milestones:

1. 40% upon the close of construction financing.

2. 30% upon certification by the City’s Building Official that framing inspections for all buildings are complete.

3. 20% upon issuance of final Certificates of Occupancy for all buildings.

4. 10% upon satisfaction that all required documentation for final disbursement has been submitted and approved.

8. Monitoring During Affordability Period
As noted in Sections 5 and 6, the City generally expects to Following project closeout, the City and/or any third-party designee assigned by the City, in the City’s sole discretion, may monitor the project for ongoing compliance with AHL program requirements, including but not limited to income and rent restrictions, property standards, tenant protections, and mar keting and fair h ousing requirements. In addition to periodic reporting outlined herein , the City and/or any third -party designee will conduct on‐site monitoring visits. The purpose of these visits will inc lude, at minimum, reviews of project records and inspection of the premises including common areas and residential units.

In most cases, the City may conduct such reviews annually. However, the City reserves the right to conduct any reviews or site visits more or less frequently based on changes to City policy or based on evidence of compliance deficiencies.

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9. Exceptions
The City reserves all rights to make exceptions to the Guidelines and/or deny any affordable housing loan request if doing so would further the purpose and intent of the City’s Affordable Housing Loan Program.

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Folsom City Council
Staff Report

1 MEETING DATE:

7/8/2025
AGENDA SECTION:

New Business
SUBJECT: Resolution No. 11428 – A Resolution Authorizing the City Manager to Execute a Lease Agreement with the Folsom Historic District Association for Operation and Management of Public Spaces in the Folsom Historic District

FROM: Parks and Recreation Department

RECOMMENDATION / CITY COUNCIL ACTION
Staff recommend the Folsom City Council approve Resolution No. 11428 - A Resolution Authorizing the City Manager to Execute a Lease Agreement with the Folsom Historic District Association for Operation and Management of Public Spaces in the Folsom Historic District, including Zittel Family Amphitheater and Historic Railroad Turntable within the District.

BACKGROUND / ISSUE
The Folsom Historic District is a unique gem in the City of Folsom that attracts guests and visitors to local restaurants and shops that generate an economic and social impact in the city.

Since the rehabilitation of the Folsom Historic District was completed in 2012, the public spaces at the Historic Railroad Turntable Plaza and Amphitheater have been managed by the Parks & Recreation Department as public spaces that are available for rent. The Folsom Historic District Association (FHDA) represents the various businesses and merchants in the Folsom Historic District and their mission is to:

 Preserve, protect and enhance the Folsom Historic District  Educate others about preservation, protection and revitalization of the Folsom Historic District Community
 Establish the Folsom Historic District as a destination for visitors and residents alike  Provide a clean and safe working and living environment with high quality and high service social and recreational opportunities
 Contribute to the overall welfare of the City of Folsom

07/08/2025 Item No.22.
2 Staff presented the Folsom City Council with options for a lease operation agreement of the Folsom Historic District public spaces during closed session on August 27, 2024. Staff received directions to begin negotiations with the FHDA on the lease operations of the public spaces including the Historic Railroad Turntable and the Zittel Family Amphitheater.

POLICY / RULE
Folsom Municipal Code 2.02 General Powers of the City Council: All powers of the city shall be vested in the City Cou ncil, except as otherwi se provided by this Charter, and the Council shall provide for the exercise thereof and for the performance of all duties and obligations imposed on the City by law.

Government Code Section 37380, a city may lease property it owns, holds, or controls for a period not exceeding 55 years.

ANALYSIS
After several meetings with the Executive Director of the FHDA, along with FHDA Board, staff recommend that the FHDA become the lease operator of the Zittel Family Amphitheater and Historic Railroad Turntable. This would be in the best interest of the business community, align with FHDA’s mission and support the community. The lease agreement terms are set for an initial three-year term that would commence upon execution of the agreement. Staff and the FHDA will do an initial walk of the public spaces to document the conditions of the spaces to get a baseline starting point and document any issues that need to be addressed. The FHDA will take responsibility for all use of these public spaces that includes events and activities planned by the FHDA and those community members and organizations that wish to use the spaces that the FHDA will provide opportunities to rent. The FHDA will work with the City to manage and mitigate special event use in these public spaces to ensure requirements for event hosting are met from the City and County. A special event application would only be required should the event extend outside of these areas including Sutter Street and beyond. Events contained within these two public spaces would be managed and conditions included for special event use. Prior to the execution of the agreement, staff will work to update the website with information available to the community on how to contact the FHDA for use of these public spaces.

FINANCIAL IMPACT
The terms of the lease agreement are for 3 years. During years 1 and 2 the FHDA will do a revenue share of 90% net revenue to the FHDA and 10% net revenue to the City of Folsom . In year 3 the FHDA will do a revenue share of 85% net revenue to the FHDA and 15% net revenue to the City of Folsom.

Additionally, the FHDA will take responsibility for everyday and general maintenance of these areas including trash pickup, general clean up and repair, and maintain the facility exterior.

Additionally, this will free the Sr. Recreation Coordinator that coordinates the community facility rental program to focus on higher demand facilities with ability to host rented events and generate additional rental revenue.

ENVIRONMENTAL REVIEW
There is no environmental impact.

07/08/2025 Item No.22.
3 ATTACHMENTS

1. Resolution No. 11428 - A Resolution Authorizing the City Manager to Execute a Lease Agreement with the Folsom Historic District Association for Operation and Management of Public Spaces in the Folsom Historic District.

2. Lease Agreement

Submitted,

Kelly Gonzalez, Parks and Recreation Director

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Attachment 1

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Resolution No. 11428

RESOLUTION NO. 11428

A RESOLUTION AUTHORIZING THE CITY MANAGER TO EXECUTE A

LEASE AGREEMENT WITH THE FOLSOM HISTORIC DISTRICT ASSOCIATION

FOR OPERATION AND MANAGEMENT OF

PUBLIC SPACES IN THE FOLSOM HISTORIC DISTRICT

WHEREAS, the City of Folsom owns and manages the public spaces in the Folsom Historic District which include the Historic Railroad Turntable and Zittel Family Amphitheater ; and
WHEREAS, the Folsom Historic District Association represents the business owners of the Folsom Historic District who support its unique historic downtown qualities; and

WHEREAS, the Folsom Historic District Association will accept lease operational management of the identified public spaces as agreed upon; and

WHEREAS, the Folsom Historic District Association will provide a revenue share of net revenue back to the City as agreed upon; and

WHEREAS, the agreement will be in a form acceptable to the City Attorney:

NOW, THEREFORE, BE IT RESOLVED that the City Council of the City of Folsom authorizes the City Manager to execute a Lease Agreement with Folsom Historic District Association.

PASSED AND ADOPTED this 8th day of July 2025, by the following roll-call vote:

AYES: Councilmember(s):

NOES: Councilmember(s):

ABSENT: Councilmember(s):

ABSTAIN: Councilmember(s):

___________________________________
Sarah Aquino, MAYOR

ATTEST:

____________________________________
Christa Freemantle, CITY CLERK

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Attachment 2

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LEASE AGREEMENT

This Lease Agreement is made and entered into as of this ____________, 2025, between the City of Folsom, a municipal corporation, (hereinafter referred to as "Lessor'') and Folsom Historic District Association (hereinafter referred to as “Lessee”), is made with reference to the following facts:

WHEREAS, City and Association wish to develop a Memorandum of Understanding to operate and manage public spaces in the Folsom Historic District, hereinafter referred to as (“District”) at select locations throughout the District including Zittel Family Amphitheater, Historic Railroad Turntable within the District and,

WHEREAS, Lessor owns the public spaces identified in the Folsom Historic District as the Zittel Family Amphitheater and Historic Railroad Turntable located at 905 Leidesdorff Street in Folsom, California, (as part of the Parcel # 070-0052-023-0000) comprising approximately 49,455 square feet of space for public access (the "Facility"), described more fully in Exhibit A attached hereto and incorporated herein by reference,

WHEREAS, Lessor hereby leases to Lessee and Lessee leases from Lessor for the term, at the rental rate contained in paragraph 2 below, and upon all the conditions set forth herein the Facility, together with all improvements thereon and appurtenances thereto, and subject to the conditions set forth below, the continuous and uninterrupted right of Lessee and its officers, employees, business invitees, customers and patrons, of access to and from Facility,

WHEREAS, Upon execution of this Agreement, the Parties shall conduct a joint site visit of the facility to assess and document the existing conditions of the premises, including but not limited to the concrete walkways, railroad rails, handrails, artificial turf, fences, benches and other structural or functional components. A written report or photographic documentation may be created to establish a baseline for future maintenance responsibilities.

NOW, THEREFORE, the parties hereto, in consideration of the mutual promises, covenants, terms and conditions set forth herein, and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged and agreed, do hereby agree as follows:

1. TERM.

The term of this Lease shall be three (3) years, commencing_________, and ending on _____________, unless sooner terminated pursuant to any provisions hereof. Lessee has the option to renew the Lease for 3 additional terms of 3 years each upon giving Lessor not less than 180 days prior written notice of Lessee's exercise of said option prior to the expiration of the initial or subsequent extended term. Failure to provide notice within the time herein provided to exercise the first option shall cause all options to terminate.

2. RENT.

Lessee shall pay to Lessor as rent for use of the Facility at the rates identified as:
 Year 1: July 1, 2025-June 30, 2026
o 90 Lessee/10 Lessor revenue share
 Year 2: July 1, 2026-June 30, 2027
o 90 Lessee/10 Lessor revenue share
 Year 3: July 1, 2027-June 30, 2028
o 85 Lessee/15 Lessor revenue share Page 1029
07/08/2025 Item No.22.

This Lease is net of taxes, utilities, and insurance.

3. USE.

During the term of this Lease, and any renewal hereof, Lessee shall use the Facility only as an outdoor gathering area for events, activities, and celebrations as managed by the Lessee with ability to rent the public spaces to outside individuals or organizations that benefit the Folsom Historic District. Lessee shall not permit any act or acts in or on the Facility or use the Facility or suffer it to be used in any manner which will cause a cancellation of any liability, or other insurance policy covering the Facility or any part thereof. Lessee shall provide Lessor with a calendar of events scheduled annually and updated quarterly for review and to notify the Community Development Department of upcoming special event applications that could be submitted.

The Lessor has the final right of refusal as to any proposed use or rental of the facilities should the Lessor determine that a scheduled use does not match the Lessor’s mission, vision, and values.

4. FEE SCHEDULE
The Lessee shall develop a facility rental fee schedule of the areas available for public use and are rentable to be posted on the FHDA website. These rental fees shall be reviewed annually by the parties and are subject to approval by the Lessor to ensure market value of the public spaces for public use.

5. SPECIAL EVENT APPLICATION/PERMIT
A special event application will be required for events taking place in the Folsom Historic District and will be the responsibility of the event organizer to complete the application.

Requirements of a City of Folsom special event application are cited in Exhibit B. Event Organizers that do not submit an application within 60-days of their event date will have their facility use cancelled by the FHDA for failure to meet City of Folsom requirement.

Upon execution of the lease agreement the Lessee agrees to honor all facility rentals that the Lessor has scheduled prior to the beginning date of this lease agreement. The Lessor will provide details of these facility reservations to the Lessee and the Lessor will take an active role in ensuring the facility rental is conducted without any issues. The Lessor will keep any facility rental fees associated with the facility rentals that have been scheduled prior to the execution of this lease agreement.

6. PARKING GARAGE
The Lessee has access to encourage event visitors to park in the public parking garage located at the corner of Leidesdorff Street and Readings Street. Parking is free of charge and any charges of money to the Lessee are in violation of Folsom Municipal Code 10.20.380 unless donation approval is given by the City Manager.

7. REPAIRS, MAINTENANCE, AND UTILITIES.
a. Lessee, at its sole cost and expense, shall repair and maintain the Facility exterior, concrete grounds and all improvement at the Facility in good condition. The parties agree that maintenance means ongoing work undertaken to remedy deficiencies that occur through normal use to keep the Facility and all improvements thereon in good repair and working order.

b. Lessor warrants that all operating systems at the Facility, including without limitation, plumbing, electrical, and lighting shall be in good working order for the terms of the lease. Page 1030 07/08/2025 Item No.22.

Lessor shall maintain, repair, and replace all operating systems, including without limitation, plumbing, electrical, and lighting.

c.

The Lessee shall be responsible for all maintenance and repairs required due to its use of the facility. This includes, but is not limited to:
 Cleaning and upkeep of artificial turf to maintain safety and appearance.  Ensuring handrails remain secure and addressing any damages caused during use.  Regular power washing of concrete surfaces to remove dirt, stains, and debris, ensuring a clean and safe environment.
 Repairing concrete walkways and amphitheater sitting areas as needed to prevent hazards and/or deterioration.
 General upkeep of the facility to ensure it remains in a safe and operable condition.

d. The Lessor shall maintain the landscape areas within this area as with other areas in the Folsom Historic District. The Lessor shall remain responsible for any pre-existing structural issues identified during the initial site visit, as well as any major repairs or replacements not caused by the Lessee’s use of the facility.

e. The Lessor shall pay the total cost of utilities for the Facility, including, water, sewer, electricity, gas, and garbage during the term of the lease.

f. The Lessee shall provide, perform, and pay for maintenance, repair, and janitorial services for the Facility. The Lessor shall provide, perform, and pay for maintenance, repair, and janitorial services of the public restroom building located to the south of the Zittel Family Amphitheater.

8. ALTERATIONS AND IMPROVEMENTS.

Lessee shall have the right to make alterations and improvements to the Facility subject to the following terms and conditions:

a. No alterations or improvements made by Lessee shall in any way impair the structural stability of the Facility and the value of the property.

b. All alterations or improvements shall be first approved in writing by the Lessor but said approval shall not be unreasonably withheld by Lessor.

c. Lessee shall keep the Facility and every part of the Facility free and clear of any liens arising out of the construction of any such alterations or improvements.

d. All alterations and improvements made to the Facility shall become the property of the Lessor and shall remain on and be surrendered with the Facility at the expiration or sooner termination of this Lease or any renewal or extension of this Lease.

e. Lessee's personal property and its trade fixtures, including machinery, equipment, and furnishings, shall remain the property of Lessee and may be removed by Lessee. Any personal property, trade fixtures, or equipment not removed by Lessee within thirty (30) days after the termination of this Lease or any extension thereof, shall automatically become the property of the Lessor. Lessee shall repair any damage to the Facility caused by Lessee's removal of its personal property, trade fixtures, or equipment, but Lessee shall have no obligation to remove such items from the Facility at any time.

07/08/2025 Item No.22.

9. REPORTING AND RESOLUTION OF MAINTENANCE ISSUES
The Lessee shall promptly notify the Lessor of any maintenance concerns beyond its responsibility. If disputes arise regarding maintenance obligations, the Parties agree to engage in good faith discussions to determine appropriate resolution.

10. ENTRY AND INSPECTION.

Lessee shall permit Lessor or Lessor's agents to enter the Facility at all reasonable times and upon reasonable notice for the purpose of inspecting the Facility, and shall permit Lessor, at any time within sixty (60) days prior to the expiration of this Lease to place upon the Facility any usual "To Let" or "For Lease" signs, and permit persons desiring to lease the Facility to inspect the Facility at reasonable times.

11. HAZARDOUS MATERIALS.

Lessee shall not use, store, or dispose of any hazardous substances upon the Facility, except for the use and storage of such substances that are customarily used in Lessee's business, and are in compliance with all environmental laws. Hazardous substances means any hazardous waste, substance, or toxic materials defined or regulated under any law or regulations.

12. MECHANICS LIENS.

Lessee agrees to keep the Facility free from any and all claims of persons or firms or corporations who, at the request of Lessee or its employees or contractors, furnish labor or materials to or for the benefit of the Facility and Lessee further agrees to hold Lessor harmless from any and all claims.

13. DAMAGE/DESTRUCTION.

If the Facility is damaged or destroyed in whole or in part by fire or other casualty strictly unrelated to Lessee's actions, inactions, or operations, Lessor shall repair and restore the Facility to a good tenantable condition. Rent shall abate wholly if the entire Facility is untenantable or shall abate pro rata for the portion rendered untenantable in the event only a portion of the Facility is untenantable, until the Facility is restored to a tenantable condition.

Lessor shall commence and complete all work required to be done under this Section with reasonable promptness and diligence, but Lessor shall not be in default in any required performance if delay in performance results from flood, storm, labor disputes, shortage of materials or transportation facilities, governmental regulations, war, act of God or other causes beyond Lessor's reasonable control. If Lessor shall not commence such repair or restoration within thirty (30) days after such damage or destruction shall occur or if repair or restoration will require more than one hundred twenty (120) days to complete, Lessor or Lessee may thereafter, at its option, terminate this Lease by giving written notice of its election to do so at any time prior to the commencement of such repair or restoration. In that event, this Lease shall terminate as of the date such notice is received by the intended recipient of the notice. Notwithstanding any other provisions to the contrary, Lessee shall insure and shall be solely responsible for repairing and restoring Lessee's trade fixtures and personal property located in or on the Facility in the event of damage or destruction of the Facility.

14. INSURANCE.

Lessee, at its sole cost, shall maintain liability and property damage insurance during the entire term of this Lease as required in Exhibit C attached hereto and incorporated herein by reference.

07/08/2025 Item No.22.

15. CONSTRUCTION RELATED PROVISIONS

Development and use of the Historic District, other events, or the need of the City to use its property, may, from time to time, affect the operation of the amphitheater and/or plaza. The parties agree to coordinate schedules and any planned work to minimize interference with the amphitheater and/or plaza. City agrees to make every reasonable effort to prevent any such closure, but both parties acknowledge that such closure may become necessary. The parties will endeavor to address any operational issues each year with the FHDA. Should any such closure or alteration of the operations occur as described herein, there shall be no money due or owing to the FHDA or its vendors by the City for the closure/alteration period.

The parties acknowledge that there is potential for construction to occur on the Historic District Station Plaza and surrounding properties during the term of this agreement. Such construction may create noise, dust, traffic or other activities that might affect the operation of the amphitheater and/or plaza. FHDA acknowledges, in advance, that construction and related effects from it may exist, and agrees that there shall be no City liability connected with such construction or related construction activities.

16. SIGNS.

Any and all signs or advertisements of any nature extending into, on, or located over the Facility, shall conform to all City of Folsom zoning and building codes and shall be approved by Lessor in writing prior to construction, use, or erection thereof.

17. TAXES.

The terms of this Lease may result in the creation of a possessory interest. If such possessory interest is vested in a private party to this Lease, the private party may be subjected to payment of personal property taxes levied on such interest. Lessee shall be solely responsible for the payment of, and shall pay before they become delinquent, all taxes, assessments and fees assessed or levied upon Lessee or the Facility, or any interest therein, including, but not limited to, buildings, structures, fixtures, equipment, or other property installed, or constructed thereon. Lessee further agrees not to allow such taxes, assessments, or fees to become delinquent and as such, to become a lien against the Facility or any improvement thereto. Nothing herein contained shall be deemed to prevent or prohibit Lessee from contesting the validity or amount of any such tax, assessment, or fee in the manner authorized by law. The obligation to make any payments pursuant to this Section shall survive the expiration of the term of this Lease.

The Lessor shall be responsible for the payment of the PBID tax as the property owners of this land.

Unless otherwise provided by this Section, Lessee shall pay Lessor any other taxes, assessments, or fees, which the Lessor may become obligated to pay in connection with the ownership or maintenance of the Facility.

18. ASSIGNMENT AND SUBLETTING.

Lessee shall not encumber, assign, sublet, or otherwise transfer this Lease, any right or interest in this Lease, or any right or interest in the Facility, without the prior written consent of Lessor, which may be withheld at Lessor's sole and complete discretion. A consent of Lessor to one assignment, subletting, or occupation and use by another person shall not be deemed to be a consent to any subsequent assignment, subletting, or occupation and use by another person. Any encumbrance, assignment, transfer, or subletting in violation of this requirement hereof, whether it be voluntary or involuntary, by operation of law, or otherwise, is void and shall, at the option of Lessor, terminate this Lease.

07/08/2025 Item No.22.

19. TERMINATION OF LEASE.

In the event the Lessee determines in good faith that it no longer practicably, economically, or operationally can do business from the Facility, upon making a reasonable showing of same to Lessor, Lessee shall have the right to terminate this Lease upon giving ninety (90) days prior written notice to Lessor.

It is understood and agreed by the parties hereto that Lessor shall and hereby does reserve the right to cancel or terminate this Lease prior to expiration of the term or renewed or extended term hereof as follows: If the Lessee is in default or breach of this Lease, as specified in Section 18 of this Lease or as otherwise provided by law or, upon 365 days’ notice without cause.

20. RIGHTS AFTER TERMINATION.

In the event of termination for default or unsatisfactory performance by the Lessee, the Lessor shall have the right (unless otherwise specified in the termination notice), at once and without further notice to the Lessee, or surety, to enter and take possession of the Facility occupied by the Lessee, and expel, oust and remove any and all parties who may occupy any portion of the Facility covered by this Lease, and any and all goods and chattels belonging to the Lessee or its associates which may be found in or upon the same, without being liable for prosecution or to any claim for damages therefor. Upon such termination by the Lessor, all rights, powers and privileges of the Lessee shall cease, and the Lessee shall immediately vacate any and all space occupied by Lessee under this Lease, and shall make no claims of any kind whatsoever against the Lessor, its agents or representatives, by reason of such termination, or any act incident thereto.

21. COMPLIANCE WITH LAWS.

During the term of this Lease and any renewals hereof, Lessee shall promptly execute and comply with all Federal, State, County, and City statutes, ordinances, regulations, laws, or other requirements applicable to the operation of the Facility.

22. DEFAULTS/REMEDIES. LESSEE:

The occurrence of any one or more of the following events constitutes a material default and breach of this Lease by Lessee:

a. The failure by Lessee to make any payment of rent or any other payment required to be made by Lessee hereunder, as and when due, where the failure continues for a period of twenty (20) calendar days after written notice thereof from Lessor to Lessee.

b. The failure by Lessee to observe or perform any of the covenants, conditions, or provisions of this Lease to be observed or performed by Lessee, other than those described in Subsection (a) above, where the failure continues for a period of thirty (30) calendar days after notice thereof from Lessor to Lessee; provided, however, that if the nature of Lessee's default is such that more than thirty (30) calendar days are reasonably required for its cure, then Lessee shall not be deemed in default if Lessee commences such cure within the thirty (30) day period and thereafter diligently completes the cure.

c. The failure to inform/properly use the City of Folsom Special Event Application process for all events subject in Exhibit B.

d. The appointment of a receiver or the making of any general assignment, or general arrangement for the benefit of creditors.

07/08/2025 Item No.22.
e. The filing of a petition in bankruptcy by or against Lessee.

f. The judicial declaration of Lessee as bankrupt.

g. The appointment of a trustee or receiver to take possession of substantially all Lessee's assets located at the Facility or of Lessee's interest in this Lease if possession is not restored within thirty (30) calendar days.

h. The attachment, execution or other judicial seizure of substantially all Lessee's assets located at the Facility or of Lessee's interest in this Lease, if the seizure is not discharged within thirty (30) calendar days. In the event of any such default or breach with the exception of bankruptcy or receivership, by Lessee, Lessor may, after giving written notice as provided above, pursue those remedies available to Lessor under the laws or judicial decisions of the State of California. In the event of bankruptcy or receivership, this Lease shall immediately terminate, and possession of the Facility shall immediately return to Lessor. If Lessee breaches this Lease or is in default, as provided above, the Lessor may terminate this Lease upon written notice as provided herein. On such termination, the Lessor may recover from Lessee:

(i) The worth at the time of award of the unpaid rent which has been earned at the time of termination;

(ii) The worth at the time of award of the amount by which the unpaid rent which would have been earned after termination until the time of award exceeds the amount of such rental loss that Lessee proved could have been unreasonably avoided;

(iii) The worth at the time of award of the amount by which the unpaid rent for the balance of the term after the time of award exceeds the amount of such rental loss for such period that Lessee proves could be reasonably avoided; and

(iv) Any other amount necessary to compensate Lessor for all the detriment proximately caused by Lessee's failure to perform its obligations under this Lease, or which in the ordinary course of things would likely be a result therefrom.

The "worth at the time of award" of the amounts referred to in Subsections (i) and (ii) hereinabove is computed by allowing interest at the legal rate. The worth at the time of award of the amount referred to in paragraph (iii) of this Subsection is computed by discounting such amount at the legal rate of interest.

Even though Lessee breaches this Lease or is in default, as provided above, this Lease continues in effect for so long as the Lessor does not terminate Lessee's right of possession; and the Lessor may enforce all its rights and remedies under this Lease, including the right to recover the rent as it becomes due under this Lease, unless the breach by Lessee constitutes a breach and abandonment of the Lease, in which case the Lessor may enforce all its rights and remedies except its right to recover rent as it becomes due.

The rights of the Lessor under this Lease shall be cumulative to all other rights or remedies now or hereafter given to Lessor by law. Nothing in this Lease affects the right of Lessor to equitable relief where such relief is appropriate.

Nothing in this Lease affects the rights of the parties under statutory provisions relating to actions for unlawful detainer, forcible entry, and forcible detainer. If Lessor brings an action for unlawful detainer, and possession of the property is no longer an issue because possession

07/08/2025 Item No.22.
of the property is delivered to Lessor before trial or, if there is no trial, before judgment is entered, unless Lessor amends the complaint to state a claim for damages not recoverable in the unlawful detainer proceeding, the bringing of an unlawful detainer, forcible entry, or forcible detainer action as described hereinabove does not affect Lessor's right to bring a separate action for relief on termination, or in equity; but no relief shall be requested and no damages shall be recovered in the subsequent action for any detriment for which claim for damages was made and determined on the merits in the previous action.

Efforts by the Lessor to mitigate the damages caused by Lessee's breach of this Lease do not waive the Lessor's right to recover damages under this Section.

Nothing in this Section affects the right of the Lessor to indemnification for liability arising prior to the termination of this Lease for personal injuries or property damage as provided in Section 25 of this Lease.

23. DEFAULTS/REMEDIES. LESSOR:

Lessor shall not be in default unless Lessor fails to perform obligations required of it within a reasonable time, but in no event later than thirty (30) days after written notice by Lessee to Lessor; provided that if the nature of Lessor's obligation is such that more than thirty (30) days are reasonably required for performance, then Lessor shall not be in default if Lessor commences performance within the thirty (30) day period and thereafter diligently completes performance.

If Lessor defaults in the performance of any of the obligations or conditions required to be performed by Lessor under this Lease, Lessee may, after giving notice as provided above elect to terminate this Lease upon giving thirty (30) days written notice to Lessor of its intention to do so. In that event, this Lease shall terminate upon the date specified in the notice, unless Lessor has meanwhile cured the default. The foregoing shall be Lessee's sole remedy in the event of a breach or default by Lessor.

24. CONDEMNATION.

If all of the Facility or any portion thereof is taken under the power of eminent domain, solely under the threat of the exercise of said power or disposed of to satisfy federal requirements (all of which are herein called "condemnation"), this Lease shall automatically terminate as of the date the condemning authority takes title or possession, whichever occurs first.

Any award or payment made upon condemnation of all or any part of the Facility shall be the property of Lessor, whether such an award or payment is made as compensation for the taking of the fee or as severance damages; provided Lessee shall be entitled to the portion of any such award or payment for loss of or damage to Lessee's trade fixture or removable personal property.

25. WAIVER.

In the event that either Lessor or Lessee shall at any time or times waive any breach of this Lease by the other, such waiver shall not constitute a waiver of any other or succeeding breach of this Lease, whether of the same or any other covenant, condition or obligation. A waiver shall not be deemed effective until and unless signed by the waiving party.

26. BINDING EFFECT.

This Lease shall be binding upon the parties hereto, their heirs, personal representatives, administrators, successors, and assigns.

07/08/2025 Item No.22.

27. ASSUMPTION OF NEW OWNER.

In the event Lessor transfers any interest in the Facility to any other party or entity, this Lease shall remain in full force and effect, with the new owner assuming the role of Lessor with all the rights and duties specified in this Lease.

28. SURRENDER.

Lessee agrees to take good care of the Facility and to commit no waste and suffer no injury to be done to the same, and to return the possession of the same to Lessor at the expiration of the term, in as good condition as at the commencement of this Lease, normal and wear tear, unavoidable accidents and damage by casualty excepted.

If Lessee fails to surrender the Facility upon the expiration or termination of this Lease, Lessee shall indemnify and hold the Lessor harmless from all liability and expense resulting from the delay or failure to surrender, including, without limitation, claims made by any succeeding tenant founded on or resulting from Lessee's failure to surrender.

29. INDEMNITY.

Lessee shall indemnify, protect, defend, save and hold Lessor, its officers, employees, and agents, harmless from any and all claims or causes of action for death or injury to persons, or damage to property resulting from intentional or negligent acts, errors, or omissions of Lessee or Lessee's officers, employees, volunteers, and agents during performance of this Lease, or from any violation of any federal, state, or municipal law or ordinance, to the extent caused, in whole or in part, by the willful misconduct, negligent acts, or omissions of Lessee or its employees, subcontractors, or agents, or by the quality or character of Lessee's work, or resulting from the negligence of the Lessor, its officers, employees, volunteers and agents, except for loss caused solely by the gross negligence of the Lessor. It is understood that the duty of Lessee to indemnify and hold harmless includes the duty to defend as set forth in Section 2778 of the California Civil Code. Acceptance by Lessor of insurance certificates and endorsements required under this Lease does not relieve Lessee from liability under this indemnification and hold harmless clause. This indemnification and hold harmless clause shall survive the termination of this Lease and shall apply to any damages or claims for damages whether or not such insurance policies shall have been determined to apply. By execution of this Lease, Lessee acknowledges and agrees to the provisions of this Section and that it is a material element of consideration.

30. NOTICES.

All notices and other communications contemplated shall be in writing and shall be deemed given when personally delivered or received by mail, and shall be personally delivered or mailed by certified mail, return receipt requested, with postage and fees paid, as follow

Lessor:

City of Folsom
Attn: City Manager
50 Natoma Street
Folsom, California 95630

Lessee:

Folsom Historic District Association
Attn: FHDA Executive Director
PO Box 515
200 Wool Street, Suite 103
Folsom, CA 95630
Phone: (916) 985-7452

07/08/2025 Item No.22.

31. ENTIRE AGREEMENT. All preliminary and contemporaneous agreements and understandings are merged and incorporated into this Lease which contains the entire agreement between the parties. This Lease may not be modified or amended in any manner except by an instrument in writing executed by the parties hereto.

32. VENUE. This Lease and all matters relating to it shall be governed by the laws of the State of California and any action brought relating to this Lease shall be held exclusively in a state court in the County of Sacramento

33. ATTACHMENTS, HEADINGS, TERMS. All attachments referred to herein are hereby incorporated by reference into this Lease. The headings and underscoring contained herein are for convenience purposes only and shall not be used to interpret nor be deemed to extend or limit the specific sections. The word or words enclosed in quotation marks shall be construed as defined terms for the purposes of this Lease. The terms "Lessor" and Lessee" shall be construed to mean, when required by the context, the directors, officers, employees, invitees, contractors, materialmen, servants and agents of Lessor and Lessee.

34. ATTORNEYS’ FEES. If either party named herein brings an action to enforce the terms of this Lease or to declare rights hereunder, the prevailing party in any such action, on trial or appeal, shall be entitled to reasonable attorneys’ fees to be paid by losing party as fixed by the Court.

35. EXECUTION AND DELIVERY. This Lease shall not be binding nor confer any rights upon either party unless and until executed and mutually delivered by and between both parties.

36. RELATION SHIP OF PARTIES. This Lease does not create the relationship of principal and agent or a partnership or joint venture, or of any association other than that of Lessor and Lessee.

37. TIME OF ESSENCE. Time and specific performance are each of the essence of this Lease.

38. AUTHORITY TO EXECUTE. The person or persons executing this Lease on behalf of the parties hereto warrants and represents that he/she/they has/have the authority to execute this Lease on behalf of their entity and has/have the authority to bind their party to the performance of its obligations hereunder.

39. COUNTERPARTS. This Lease may be executed in one or more counterparts with each counterpart being deemed an original. No counterpart shall be deemed to be an original or presumed delivered unless and until the counterparts executed by the other parties hereto are in the physical possession of the party or parties seeking enforcement thereof.

[END OF DOCUMENT -- SIGNATURE PAGE FOLLOWS]

07/08/2025 Item No.22.

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed.

LESSEE: FOLSOM HISTORICT DISTRICT

ASSOCIATION
(If a corporation, must be signed by two
officers of the corporation per Corporations
Code section 313.)

______________________________
Date

_______________________________
Tax I.D. Number

______________________________
Signature

_______________________________
Signature

JUDY COLLINSWORTH_____________
Print Name

_______________________________
Print Name

EXECUTIVE DIRECTOR ____________
Title

_______________________________
Title

LESSOR: CITY OF FOLSOM, A Municipal
Corporation:

_______________________________
Date

______________________________
Bryan Whitemyer, City Manager

ATTEST:

_______________________________
Christa Freemantle, City Clerk Date

FUNDING AVAILABLE:

______________________________
Stacey Tamagni, Finance Director Date

ORIGINAL APPROVED AS TO CONTENT:

_______________________________
Kelly Gonzalez, Date Parks & Recreation Director

ORIGINAL APPROVED AS TO FORM:

______________________________
Steven Wang, City Attorney Date

NOTICE: SIGNATURE(S) ON BEHALF OF CONSULTANT MUST BE NOTARIZED.

A certificate of acknowledgment in accordance with the provisions of California Civil Code section 1189 must be attached for each person executing this agreement on behalf of consultant. This section provides, at part (b): "Any certificate of acknowledgment taken in another place shall be sufficient in this state if it is taken in accordance with the laws of the place where the acknowledgment is made.

07/08/2025 Item No.22.

EXHIBIT A

PROJECT DESCRIPTION

07/08/2025 Item No.22.

EXHIBIT B

SPECIAL EVENT APPLICATION

07/08/2025 Item No.22.

EXHIBIT C

INSURANCE

NOTE: The word “Consultant” in this Exhibit refers to “Lessee” as the term is used in the Agreement/Contract to which this Exhibit is attached.

A. During the term of this Agreement, Consultant shall maintain in full force and effect at all times during the term of the contract, at its sole cost and expense, policies of insurance as set forth herein:

1. General Liability:
a. General liability insurance including, but not limited to, protection for claims of bodily injury and property damage liability, personal and advertising injury liability and product and completed operations liability. b. Coverage shall be at least as broad as Ins urance Services Office Commercial General Liability coverage form CG 0001 (occurrence).
c. Claims-made coverage is not acceptable.
d. The limits of liability shall not be less than:

Each occurrence: One Million Dollars ($1,000,000)

Products & Completed Operations: One Million Dollars ($1,000,000)

Personal & Advertising Injury: One Million Dollars ($1,000,000) e. If a general aggregate limit of liability is used, the minimum general aggregate shall be twice the ‘each occurrence’ limit or the policy shall contai n an endorsement stating that the general aggregate limit shall apply separately to the project that is the subject of the contract.
f. If a products and completed operations aggregate limit of liability is used, the minimum products and completed operation aggregate shall be twice the ‘each occurrence’ limit or the policy shall contain an endorsement stating that the products and completed operations aggregate limit shall apply separately to the project which is the subject of the contract.
g. If the Consultant maintains higher limits than the minimums shown above, the City requires and shall be entitled to coverage for the higher limits maintained by the Consultant. Any available insurance proceeds in excess of the specified minimum limits of insurance and cover age shall be available to the City.

2. Workers’ Compensation
a. Workers’ Compensation Insurance, with coverage as required by the State of California (unless the Consultant is a qualified self -insurer with the State of California), and Employer’s Liability coverage.
b. Employer’s Liability Coverage with a limit not less than $1,000,000 per accident for bodily injury and disease.
c. Consultant shall sign and file with the City department responsible for this Agreement/Contract the Worker’s Compensation Certificate contained in the Project Manual.

07/08/2025 Item No.22.

3. Other Insurance Provisions:
a. The Consultant’s General Liability policy shall contain, or be endorsed to contain, the following provisions:
i. The City, its officials, employees, agents and volunteers shall be covered and specifically named as additional insureds on a separate endorsement as respects liability arising out of activities performed by or on behalf of the Consultant, products and completed operations of the Consultant, premises owned, occupied, or used by the Consu ltant, or automobiles owned, leased, hired, or borrowed by the Consultant in a form acceptable to the City Attorney.
ii. The Endorsement requirement may be satisfied with express provisions in the insurance policy(ies) which identifies any person or entity required to be included as an insured under the policy. A copy of the declarations page identifying the policy number, and pertinent provisions in the policy providing additional insured coverage shall be provided to the City. iii. The policy shall contain no spe cial limitations on the scope of coverage afforded to the City, its officials, employees, agents or volunteers. b. For any claims related to the project, the Consultant’s General Liability insurance coverage shall be primary insurance in their coverage of the City and its officers, officials, employees, agents, or volunteers, and any insurance or self-insurance maintained by the City, its officers, officials, employees, agents or volunteers shall be excess of the Consultant’s insurance and shall not contribute with it.
c. Any failure to comply with reporting or other provisions of the policies on the part of the Consultant, including breaches of warranties, shall not affect coverage provided to the City, its officers, officials, employees, agents or volunteers.
d. The Consultant’s Workers Compensation and Employer’s Liability policies shall contain an endorsement that waives any rights of subrogation against the City, its officers, officials, employees, agents, and volunteers. e. Each insurance policy shall state that coverage shall not be suspended, voided, canceled by either party, reduced in coverage or in limits, non -renewed, or materially changed except after 30 days prior written notice by certified mail has been given to the City. Ten days prior written notice by certified mail shall be given to the City in the event of cancellation due to nonpayment of premium.

4. Acceptability of Insurers : Insurance is to be placed with insurers with a Bests' rating of no less than A:VII.

5. The Consultant shall furnish the City with C ertificates of Insurance and endorsements or insurance binders, signed by a person authorized by the insurer to bind coverage on its behalf, evidencing the coverage required by this section, the Standard Specifications, Special Provisions and/or any Supple mentary Conditions. The Consultant shall furnish complete, certified copies of all required insurance policies, including original endorsements specifically required hereunder if requested.

6. The Consultant shall report, by telephone to the Project Manager within 24 hours, and also report in writing to the City within 48 hours, after Consultant or any Subcontractors or agents have knowledge of, any accident or occurrence involving death of or serious injury to any person or persons, or damage in excess of Te n

07/08/2025 Item No.22.

Thousand Dollars ($10,000) to property of the City or others, arising out of any work done by or on behalf of the Consultant as part of the contract.

7. Such report shall contain:
a. the date and time of the occurrence,
b. the names and addresses of all persons involved, and c. a description of the accident or occurrence and the nature and extent of the injury or damage.

8. The City, at its discretion, may increase the amounts and types of insurance coverage required hereunder at any time during the term of the contract by giving 30 days written notice.

9. If the Consultant fails to procure or maintain insurance as required by this section, the Standard Specifications, and any Supplementary Conditions, or fails to furnish the City with proof of such insurance, the City, at its discretion, may procure any or all such insurance. Premiums for such insurance procured by the City shall be deducted and retained from any sums due the Consultant under the contract.

10. Failure of the City to obtain such insurance shall in no way relieve the Consultant from any of its responsibilities under the contract.

11. The making of progress payments to the Consultant shall not be construed as relieving the Consultant or its Subcontractors of responsibility for loss or direct physical loss, damag e, or destruction occurring prior to final acceptance by the City.

12. The failure of the City to enforce in a timely manner any of the provisions of this section shall not act as a waiver to enforcement of any of these provisions at any time during the term of the contract.

13. In the event Consultant carries Excess Liability Coverage, the Excess Liability Coverage shall apply to any and all claims related to the project on a primary and non-contributory basis, and the City’s insurance or self -insurance coverage s hall be excess to the Consultant’s Excess Liability Coverage.

07/08/2025 Item No.22.

Folsom City Council
Staff Report

1 MEETING DATE:

7/8/2025
AGENDA SECTION:

New Business
SUBJECT: Resolution No. 11435 – A Resolution Approving Deferral of Hiring Ten (10) Firefighters Due to Over $3 Million Dollars in Projected FY 2025/2026 Operational Deficit

FROM: City Manager's Office

RECOMMENDATION / CITY COUNCIL ACTION

The City Manager recommends that the City Council pass and adopt Resolution No. 11435 - A Resolution approving deferral of hiring ten (10) firefighters due to over $3 million dollars in projected FY 2025/2026 operational deficit.

BACKGROUND / ISSUE

On June 24, 2025, the Folsom City Council approved the FY 2025/2026 Budget that utilize s more than $3 million dollars of General Fund reserves to cover the projected expenses for the year. This budget was passed with the expectation that City staff would continue to look for ways to reduce costs to close the deficit.

Currently, there is an open recruitment to fill 10 firefighter vacancies. Conditional offers have been extended, and those firefighters are scheduled to begin their employment with the City of Folsom on July 21, 2025. Considering the City’s shortfall in the General Fund, is it prudent for the City of Folsom to fill those positions?

POLICY / RULE

Pursuant to Section 2.02 of the City Charter, all powers of the City shall be vested in the City Council except as otherwise provided by the City Charter. Under Section 3.03 of the City Charter and Section 2.08 .040 of the Folsom Municipal Code, the City Manager shall be responsible for the appointment, removal, and discipline of all City employees.

07/08/2025 Item No.23.
2 Hiring, determining the method of financing, organizational structure, size and composition of the work force, and maintaining order and efficiency in City facilities and operations are management rights under Article II of the Memorandum of Understanding between City of Folsom and Sacramento Area Firefighters Local 522, IAFF, Folsom Unit.

ANALYSIS

The City Manager recommends that the City Council defer the hiring of ten (10) firefighter positions due to over $3 million dollars in the City’s projected operational deficit for Fiscal Year 25/26. Deferring the hires will result in an estimated cost savings of approxima tely $2 million and is a necessary step toward achieving near-term fiscal sustainability.

Staff recognizes the long-term importance of public safety staffing and recommends this action only as a temporary measure. The positions will remain authorized in the budget, and hiring may be revisited when the City’s financial condition stabilizes.

Are other General Fund position vacancies being considered for deferral?

Yes, as discussed in the recent budget hearings City staff is exploring all options to re duce General Fund expenditures to close the deficit. The firefighter positions are a current focus since conditional offers of employment have been extended and the start date for those candidates is scheduled for July 21, 2025. Time is of the essence, and we need to decide whether to move forward with the hires very quickly.

Additionally, t he City Manager has asked the Human Resources Department to assess all current position vacancies, identify those positions that are 100% funded by the General Fund and implement a preliminary and immediate General Fund hiring freeze. Please note that there are essential vacancies in the Finance Department that may be partially funded by the General Fund which will still be filled.

How will not hiring these firefighters affect the operations of the fire department?

Not hiring these positions will result in a reduction in service to the community. To realize savings and reduce overtime costs a fire station may need to be browned out.

07/08/2025 Item No.23.
3 Fire Station Brown Out:

A fire station brownout refers to a temporary, planned reduction in fire department services due to budget constraints, staffing shortages, or other resource limitations. Specifically, it usually means that:
 A fire station is partially or fully closed for a period of time.  One or more fire engines, trucks, or ambulances are taken out of service.  The crew from that station is either reassigned or not staffed, reducing the department’s overall response capacity.

Key Points:
 Not a full shutdown: Unlike a permanent closure, a brownout is meant to be temporary and often rotates among different stations to spread the impact.  Response times may increase: With fewer units available, neighboring stations must cover a wider area, which can lead to delays in emergency response.

FINANCIAL IMPACT

The adopted FY 2025/2026 budget shows an operational deficit of over $3 million dollars in the General Fund. The savings of not hiring the 10 firefighters in FY 2025/2026 is expected to create a savings of approximately $2,000,000, which will reduce the use of General Fund reserves to approximately $1,000,000.

ALTERNATIVES

 Proceed with the hiring of the 10 firefighter positions and identify alternative cuts or revenue sources to address the deficit.

 Approve a partial hiring (e.g., 4 positions) to balance fiscal responsibility and public safety.

 Approve the staff recommendation to defer all 10 firefighter hires until a later date.

ENVIRONMENTAL REVIEW

The California Environmental Quality Act (CEQA) does not apply to activities that will not result in a direct or reasonably foreseeable indirect physical change in the environment (CEQA Guidelines section 15061(b)(3)). This action pertains to City budget and personnel and is not subject to CEQA. No environmental review is required.

07/08/2025 Item No.23.
4 ATTACHMENT

1. Resolution No. 11435 – A Resolution Approving Deferral of Hiring Ten ( 10) Firefighters Due to Over $3 Million Dollars in Projected FY 2025/2026 Operational Deficit

Submitted,

Bryan Whitemyer, CITY MANAGER

07/08/2025 Item No.23.

Resolution No. 11435

RESOLUTION NO. 11435

A RESOLUTION APPROVING DEFERRAL OF HIRING TEN (10) FIREFIGHTERS DUE TO OVER $3 MILLION DOLLARS IN PROJECTED FY 2025/2026

OPERATIONAL DEFICIT

WHEREAS, on June 24, 2025, the Folsom City Council approved the FY 2025/2026 Budget that utilizes over $3 million dollars of General Fund reserves to cover the projected expenses for the year , and th is budget was passed with the expectation that City staff would continue to look for ways to reduce costs to close the deficit; and

WHEREAS, there is an open recruitment to fill 10 firefighter vacancies and contingent offers have been extended, and those firefighters are scheduled to begin their employment with the City of Folsom on July 21, 2025; and

WHEREAS, the City Manager recommends that the City Council defer the hiring of ten (10) firefighter positions due to over $3 million dollars in the City’s projected operational deficit for Fiscal Year 25/26; and

WHEREAS, deferring the hires will result in an estimated cost savings of approximately $2 million and is a necessary step toward achieving near-term fiscal sustainability; and

WHEREAS, staff recognizes the long -term importance of public safety staffing and recommends this action only as a temporary measure and the positions will remain authorized in the budget, and hiring may be revisited when the City’s financial condition stabilizes.

NOW, THEREFORE, BE IT RESOLVED that the City Council of the City of Folsom Approves the Deferral of Hiring Ten (10) Firefighters due to projected operational deficit.

PASSED AND ADOPTED this 8th day of July 2025, by the following roll-call vote:

AYES: Councilmember(s):

NOES: Councilmember(s):

ABSENT: Councilmember(s):

ABSTAIN: Councilmember(s):

___________________________________
Sarah Aquino, MAYOR
ATTEST:
____________________________________
Christa Freemantle, CITY CLERK

07/08/2025 Item No.23.

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07/08/2025 Item No.23.