Folsom City Council
January 13, 2026

1 Agenda
City Council Regular Meeting
Folsom City Hall | City Council Chambers, First Floor
50 Natoma Street, Folsom, CA 95630
January 13, 2026, 6:30 PM

Welcome to Your City Council Meeting
We welcome your interest and involvement in the city’s legislative process. This agenda includes information about topics coming before the City Council and the action recommended by city staff. You can read about each topic in the staff reports, which are available on the city website and in the Office of the City Clerk. The City Clerk is also available to answer any questions you have about City Council meeting procedures.

Participation
If you would like to provide comments to the City Council, please:
 Fill out a blue speaker request form, located at the back table.  Submit the form to the City Clerk before the item begins.  When it’s your turn, the City Clerk will call your name and invite you to the podium.  Speakers generally have three minutes, unless the presiding officer (usually the mayor) changes that time.

Reasonable Accommodations
In compliance with the Americans with Disabilities Act, if you are a person with a disability and you need a disability-related modification or accommodation to participate in this meeting, please contact the City Clerk’s Office at (916) 461-6035, (916) 355-7328 (fax) or [email protected]. Requests must be made as early as possible and at least two full business days before the start of the meeting.

How to Watch
The City of Folsom provides three ways to watch a City Council meeting:

In Person Online On TV

City Council meetings take place at
City Hall, 50 Natoma Street
Watch the livestream and replay past
meetings on the city website,
www.folsom.ca.us
Watch live and replays of meetings on
Sac Metro Cable TV, Channel 14

More information about City Council meetings is available at the end of this agenda

2 City Council Regular Meeting
Folsom City Hall | City Council Chambers, First Floor
50 Natoma Street, Folsom, CA 95630
www.folsom.ca.us
Tuesday, January 13, 2026 6:30 PM

Justin Raithel, Mayor

Sarah Aquino, Councilmember Barbara Leary, Councilmember Mike Kozlowski, Councilmember Anna Rohrbough, Vice Mayor

AGENDA

CALL TO ORDER
ROLL CALL: Councilmembers: Aquino, Kozlowski, Leary, Rohrbough, Raithel The City Council has adopted a policy that no new item will begin after 10:30 p.m. Therefore, if you are here for an item that has not been heard by 10:30 p.m., you may leave, as the item will be continued to a future Council meeting.

PLEDGE OF ALLEGIANCE

AGENDA UPDATE
BUSINESS FROM THE FLOOR:

Members of the public are entitled to address the City Council concerning any item within the Folsom City Council's subject matter jurisdiction. Public comments are generally limited to no more than three minutes. Except for certain specific exceptions, the City Council is prohibited from discussing or taking action on any item not appearing on the posted agenda.

SCHEDULED PRESENTATIONS:

1. Presentation Regarding the Leadership Folsom Project - Folsom Zoo Sanctuary Monument Sign

2. Presentation Regarding the Final Report for the Folsom Water Vision

3 CONSENT CALENDAR:

Items appearing on the Consent Calendar are considered routine and may be approved by one motion.

Councilmembers may pull an item for discussion.

3. Approval of the December 4, 2025 City Council Special Meeting Minutes

4. Approval of the December 9, 2025 City Council Special Meeting Minutes

5. Ordinance No. 1359 – An Ordinance of the City of Folsom Amending Certain Sections of Chapter 17.104 (Inclusionary Housing) of the Folsom Municipal Code to Update the Methodology for Calculating In-lieu Fees Applicable to Residential Development, and to Incorporate Non-Substantive Cleanup Revisions for Clarity and Consistency (Second Reading and Adoption)

6. Updating Appointment of City Council Representatives to Regional Boards/Commissions

7. Resolution No. 11529 - A Resolution Authorizing the City Manager to Execute an Additional Non- Exclusive Agreement with an Approved Licensed Contractor to Implement the Sacramento Housing and Redevelopment Agency Inter-Agency Contract for the Seniors Helping Seniors Home Repair Program, Utilizing the $200,000 Allocation from the Community Development Block Grant Fund (Fund 201)

8. Resolution No. 11530 – A Resolution Authorizing the City Manager to Execute a Contract with The Permanente Medical Group, Inc. (TPMG) to Provide the Folsom Fire Department a Medical Director

9. Resolution No. 11531 - A Resolution Setting Aside the Approval and CEQA Determination for the 603 Sutter Street Mixed Use Project (PN-17-145) and All Associated Approvals

10. Resolution No. 11532 – A Resolution Authorizing the City Manager to Execute an Agreement with Pur Water LLC for $971,500 from the Water Operating Fund (Fund 520) for the Supply of Sodium Hypochlorite for the Water Treatment Plant and $153,120 from the General Fund (Fund 010) for the Supply of Sodium Hypochlorite for the Steve Miklos Aquatic Center

11. Resolution No. 11534 - A Resolution Authorizing the City Manager to Amend the FY2025-26 Budget with an Additional Appropriation for Development Engineering Services Contracts in the Amount of $850,000 in the General Fund (Fund 010)

12. Resolution No. 11535- A Resolution Authorizing the City Manager to Amend the FY 2025-26 Budget with an Additional Appropriation for Building Services Contracts in the Amount of $435,000 in the General Fund (Fund 010)

13. Resolution No. 11536- A Resolution Authorizing the City Manager to Execute a Construction Contract with M&M Electric in the amount of $87,371 for the Flashing Yellow Arrow Trial Project, Project No. PW2604, from the Transportation Improvement Fund (Fund 446), and Appropriation of Funds in the amount of $136,111
NEW BUSINESS:

14. Resolution No. 11510 – A Resolution of the City Council Establishing Inclusionary Housing In- lieu Fee Amounts for For-sale Residential Development

4 OLD BUSINESS:

15. Castle Park - Play Structure Replacement Project:
i. Resolution No. 11537– A Resolution Authorizing the City Manager to Execute a Construction Agreement with Granite Construction, Inc. for Concrete Pavement Work for the Castle Park - Play Structure Replacement Project (PK2501) for a Not to Exceed Amount of $72,356 and Appropriation of Measure A Funds (Fund 276) in the Amount of $79,592 Including 10% Contingency

ii. Resolution No. 11538– A Resolution Authorizing the City Manager to Execute a Construction Agreement with KYA for Site Work for the Castle Park - Play Structure Replacement Project (PK2501) For a Not to Exceed Amount of $308,309 from the Parks and Recreation Equipment and Capital Fund (Fund 609) in the Amount of $257,755, and Appropriation of Measure A Funds (Fund 276) in the Amount of $55,609 for a Total Budgeted Amount of $313,364 Including a 10% Contingency for the Measure A Portion

16. Resolution No. 11528– A Resolution Amending Resolution No. 11525 and Appointing Members to the 2026 Ad Hoc Charter Review Committee

17. Public Meeting Related to Proposal to Modify the Folsom Tourism Business Improvement District

CITY MANAGER REPORTS

COUNCIL COMMENTS

ADJOURNMENT

NOTICE: Members of the public are entitled to directly address the City Council concerning any item that is described in the notice of this meeting, before or during consideration of that item. If you wish to address Council on an issue, which is on this agenda, please complete a blue speaker request card, and deliver it to a staff member at the table on the left side of the Council Chambers prior to discussion of the item. When your name is called, stand to be recognized by the Mayor and then proceed to the podium. If you wish to address the City Council on any other item of interest to the public, when the Mayor asks if there is any “Business from the Floor,” follow the same procedure described above. Please limit your comments to three minutes or less.

NOTICE REGARDING CHALLENGES TO DECISIONS: Pursuant to all applicable laws and regulations, including without limitation, California Government Code Section 65009 and or California Public Resources Code Section 21177, if you wish to challenge in court any of the above decisions (regarding planning, zoning and/or environmental decisions), you may be limited to raising only those issues you or someone else raised at the public hearing(s) described in this notice/agenda, or in written correspondence delivered to the City at, or prior to, the public hearing.

As presiding officer, the Mayor has the authority to preserve order at all City Council meetings, to remove or cause the removal of any person from any such meeting for disorderly conduct, or for making personal, impertinent, or slanderous remarks , using profanity, or becoming boisterous, threatening or personally abusive while addressing said Council, and to enforce the rules of the Council.

PERSONS INTERESTED IN PROPOSING AN ITEM FOR THE CITY COUNCIL AGENDA SHOULD CONTACT A MEMBER OF THE CITY COUNCIL.

5 This meeting of the City Council is recorded with closed captioning. The recording will be cablecast on Metro Cable Channel 14, the local government affairs channel on the Comcast and DirecTV U -Verse cable system, and will be shown in its entirety on the Friday and Saturday following the meeting, both at 9 a.m. The recording will also be video streamed at metro14live.saccounty.gov.The City does not control scheduling of this telecast and persons interested in watching the televised meeting should co nfirm this schedule with Metro Cable TV, Channel 14. The City of Folsom provides live and archived webcasts of regular City Council meetings. The webcasts can be found on the online services page of the City's website www.folsom.ca.us.

In compliance with the Americans with Disabilities Act, if you are a person with a disability and you need a disability-related modification or accommodation to participate in this meeting, please contact the City Clerk’s Office at (916) 461-6035, (916) 355-7328 (fax) or [email protected]. Requests must be made as early as possible and at least two full business days before the start of the meeting.

Any documents produced by the City and distributed to the City Council regarding any item on this agenda will be made available at the City Clerk’s Counter at City Hall located at 50 Natoma Street, Folsom, California and at the Folsom Public Library located at 411 Stafford Street, Folsom, California during normal business hours.

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Folsom City Council
Staff Report

1 MEETING DATE:

1/13/2026
AGENDA SECTION:

Scheduled Presentations
SUBJECT: Presentation Regarding the Leadership Folsom Project – Folsom Zoo Sanctuary Monument Sign

FROM: Public Works Department

BACKGROUND / ISSUE

The Leadership Folsom Class, sponsored and developed by Choose Folsom, chooses an annual project for each class. This year’s 2025 -2026 Leadership Folsom Class has selected the development and installation of the Folsom Zoo Sanctuary Monument Sign.

Select members of the current Leadership Folsom class will give a presentation to the City Council and public on the selection of the project, some design concepts being considered (to be selected by the City) as well as the fundraising strategy and framew ork to fund the project itself. No action is being requested by the City Council.

Submitted,

Rebecca Neves,

PUBLIC WORKS DIRECTOR / CITY ENGINEER

01/13/2026 Item No.1.

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01/13/2026 Item No.1.

Folsom City Council
Staff Report

1 MEETING DATE:

1/13/2026
AGENDA SECTION:

Scheduled Presentations
ITEM TITLE: Presentation Regarding the Final Report for the Folsom Water Vision
FROM: Utilities Department

BACKGROUND / ISSUE

On August 22, 2023, City Council approved Resolution No. 11089 with Water Systems Consulting, Inc. (WSC) to complete the City’s Water Vision planning process. EWR staff recommended a Water Vision planning process to evaluate water supply alternatives to meet customer demands during drought or infrastructure outages, to consider water supply impacts due to climate variability, and to include key stakeholders and customers in the development process.

The process evaluated the adequacy and reliability of the City’s water supplies, developed a water supply portfolio that addresses water supply reliability, resiliency, and sustainability, and developed recommendations to provide long -term guidance for managing these supplies through the Stakeholder process.

The intent of the Water Vision was to initiate a City-wide discussion and an opportunity for public participation in the long -range (at least 50 years) planning of Folsom’s future water supply. The planning process was structured into eight key stages across six workshops, including:
 Defining planning objectives to reflect city values, desired outcomes, and process goals  Assessing risks and vulnerabilities in the current supply  Screening potential projects for supply improvements
 Developing themed water supply portfolios
 Evaluating and refining these portfolios
 Identifying a recommended future supply portfolio
 Creating an adaptable roadmap for implementation
 Documenting the process in a comprehensive report

City staff along with WSC conducted six stakeholder and public meetings throughout the process of the Water Vision. The workshops covered the following:
 Workshop 1: Your Water Values & Goals

01/13/2026 Item No.2.
2  Workshop 2: Our Drinking Water Supply
 Workshop 3: Confirm New Water Supply Alternatives
 Workshop 4: Future Water Supply Portfolios
 Workshop 5: Defining the Recommended Portfolio
 Workshop 6: Adaptable Implementation Roadmap

Utilities Director, Marcus Yasutake, will present findings from the final report for the Folsom Water Vision. No action is being requested by the City Council.

Submitted,

Marcus Yasutake, Utilities Director

01/13/2026 Item No.2.

File 034-21 25-001
Folsom City Council Minutes
December 4, 2025

Draft- Not Official Until Approved by the City Council Page 1

City Council Special Meeting

MINUTES

Tuesday, December 4, 2025 1:00 PM

CALL TO ORDER

The special City Council meeting was called to order at 1:00 pm with Mayor Aquino presiding.

ROLL CALL:

Councilmembers Present:

Barbara Leary, Councilmember
Justin Raithel, Vice Mayor
Sarah Aquino, Mayor
Councilmembers Absent: Michael Kozlowski, Councilmember (appeared by phone during closed session at 1:03 p.m.)
Anna Rohrbough, Councilmember (arrived at 1:01 p.m.)

ADJOURNMENT TO CLOSED SESSION FOR THE FOLLOWING PURPOSES:

1. Conference with Legal Counsel - Existing Litigation - Pursuant to Government Code Section 54956.9(d)(1):

i. Laura Knudsen v. City of Folsom, Sacramento County Superior Court Case No. 24CV011111

ii. James Dorris v. City of Folsom, Sacramento County Superior Court Case No. 34-2023- 00337834

2. Conference with Labor Negotiator- Pursuant to Government Code section 54957.6. Agency Negotiator: Human Resources Director Allison Garcia. Employee Organization: Various Bargaining Groups

Motion by Mayor Aquino, second by Vice Mayor Raithel to adjourn to closed session. Motion passed by the following roll-call vote:

AYES: Leary, Raithel, Rohrbough, Aquino
NOES: None
ABSENT: Kozlowski
ABSTAIN: None

01/13/2026 Item No.3.

File 034-21 25-001
Folsom City Council Minutes
December 4, 2025

Draft- Not Official Until Approved by the City Council Page 2

RECONVENE
City Attorney Steven Wang announced that the City Council approved the settlement in the matters of Knudsen v. Folsom and Dorris v. Folsom.

ADJOURNMENT
There being no further business to come before the City Council, the meeting was adjourned at 2:18 pm.

SUBMITTED BY:

_______________________________
Jennifer Jimenez, Deputy City Clerk
ATTEST:

______________________________
Sarah Aquino, Mayor

01/13/2026 Item No.3.

File 034-21 25-001
Folsom City Council Minutes
December 9, 2025

Draft- Not Official Until Approved by the City Council Page 1

City Council Special Meeting

MINUTES

Tuesday, December 9, 2025 4:30 PM

CALL TO ORDER

The special City Council meeting was called to order at 4:30 pm with Mayor Aquino presiding.

ROLL CALL:

Councilmembers Present:

Barbara Leary, Councilmember
Michael Kozlowski, Councilmember
Sarah Aquino, Mayor
Councilmembers Absent: Justin Raithel, Vice Mayor (arrived during closed session) Anna Rohrbough, Councilmember (arrived during closed session)

ADJOURNMENT TO CLOSED SESSION FOR THE FOLLOWING PURPOSES:

1. Conference with Legal Counsel - Existing Litigation - Pursuant to Government Code Section 54956.9(d)(1):

i. Kim Lim-Watson v. City of Folsom, Sacramento County Superior Court Case No. 24- CV011212

2. Conference with Labor Negotiator- Pursuant to Government Code section 54957.6. Agency Negotiator: Human Resources Director Allison Garcia. Employee Organization: Various Bargaining Groups

Motion by Mayor Aquino, second by Councilmember Kozlowski to adjourn to closed session.

Motion passed by the following roll-call vote:

AYES: Leary, Kozlowski, Aquino
NOES: None
ABSENT: Raithel, Rohrbough
ABSTAIN: None

RECONVENE
City Attorney Steven Wang announced that the City Council approved the settlement in the Lim-Watson case without admission of any fault.

01/13/2026 Item No.4.

File 034-21 25-001
Folsom City Council Minutes
December 9, 2025

Draft- Not Official Until Approved by the City Council Page 2

ADJOURNMENT
There being no further business to come before the City Council, the meeting was adjourned at 5:30 pm.

SUBMITTED BY:

_______________________________
Christa Freemantle, City Clerk
ATTEST:

______________________________
Sarah Aquino, Mayor

01/13/2026 Item No.4.

File 034-21 25-001
Folsom City Council Minutes
December 9, 2025

Draft- Not Official Until Approved by the City Council Page 1

City Council Special Meeting

MINUTES

Tuesday, December 9, 2025 5:30 PM

CALL TO ORDER

The regular City Council meeting was called to order at 5:30 pm with Mayor Aquino presiding.

ROLL CALL:

Councilmembers Present: Barbara Leary, Councilmember
Justin Raithel, Vice Mayor
Anna Rohrbough, Councilmember
Michael Kozlowski, Councilmember (joined at 5:32 p.m.)
Sarah Aquino, Mayor

Councilmembers Absent: None

PLEDGE OF ALLEGIANCE

The pledge of allegiance was recited.

AGENDA UPDATE
City Attorney Steven Wang advised that there was additional information for Item Nos. 5, 16 and 17.

BUSINESS FROM THE FLOOR:

The following speakers spoke under this item:

1. Gary Qualset
CONSENT CALENDAR:

Items appearing on the Consent Calendar are considered routine and may be approved by one motion.

Councilmembers may pull an item for discussion.

1. Approval of the November 12, 2025 City Council Special Meeting Minutes

2. Appointment of At-Large Member to the Folsom Landscaping and Lighting District Advisory Committee to Represent the Willow Creek Estates East and Willow Creek Estates East No. 2 District

3. Ordinance No. 1357 – An Ordinance of the City of Folsom Amending Sections 17.06.030 and

17.06.080 and Adding Section 17.06.045 to Chapter 17.06, “Design Review,” of the Folsom

01/13/2026 Item No.4.

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December 9, 2025

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Municipal Code Regarding Objective Development and Design Standards and Establishing a Ministerial Review Process (Second Reading and Adoption)

4. Resolution No. 11507 – A Resolution Approving the Historic District Commission’s Recommendation for Approval of a Design Review for a Residential Addition and Exterior Modification Project Located at 1016 Persifer Street and Determination that the Project is Exempt from CEQA Under Section 15301 (Existing Facilities) of the CEQA Guidelines

5. Resolution No. 11508 – A Resolution Approving the Historic District Commission’s Recommendation for Approval of a Design Review for a New Duplex Project Located at 307 Reading Street and Determination that the Project is Exempt from CEQA Under Section 15303 (New Construction or Conversion of Small Structures) of the CEQA Guidelines

6. Resolution No. 11509 – A Resolution Approving the Historic District Commission’s Recommendation for Approval of a Design Review for a Temporary Storage Shed Project Located at 810 Sutter Street and Determination that the Project is Exempt from CEQA Under Section 15303 (New Construction or Conversion of Small Structures) of the CEQA Guidelines

7. Resolution No. 11511 – A Resolution Approving the Historic District Commission’s Recommendation for Approval of a Design Review for a New Custom Home Project Located at 294 Leidesdorff Street and Determination that the Project is Exempt from CEQA Under Section 15303 (New Construction or Conversion of Small Structures) of the CEQA Guidelines

8. Resolution No. 11513- A Resolution Authorizing the City Manager to Enter into a Renewal Agreement with Sun Ridge Systems, Inc. for Annual Software Support for FY 25-26 for $95,464 and Authorizing the City Manager to Renew the Agreement Annually Through FY 2030-31 with Annual Increases of Approximately 9% per Year Funded from the General Fund (Fund 010)

9. Resolution No. 11514 – A Resolution Authorizing the City Manager to Execute a Certification Form for the Folsom Fire Department to Participate in a Medi-Cal Intergovernmental Transfer (IGT) Program with the Department of Health Care Services (DHCS) for Reimbursement of PP- GEMT IGT Services for the Service Period of January 1, 2026, through December 31, 2026, and Make Transfers Not to Exceed $588,963 and Appropriation of Funds in the General Fund (Fund 010)

10. Resolution No. 11515 – A Resolution Authorizing the City Manager to Execute a Memorandum of Understanding with the Capital SouthEast Connector Joint Powers Authority related to Construction Administration and Transfer of Funding for the White Rock Road Class 1 Trail Project

11. Highway 50 Class I Undercrossing and Trail Improvements Capital Improvement Project

i. Resolution No. 11516 - A Resolution Approving the Highway 50 Class I Undercrossing and Trail Improvements Capital Improvement Project and Appropriation of Funds in the Amount of $572,312 from the Folsom Plan Area Impact Fees $337,879 (Fund 472), the

01/13/2026 Item No.4.

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December 9, 2025

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Transportation Development Act Fund $117,584 (Fund 248), and the Measure A Fund $116,849 (Fund 276)

ii. Resolution No. 11517 - A Resolution Authorizing the City Manager to Execute a Design and Engineering Consultant Services Agreement with Wood Rodgers, Inc. for the Highway 50 Class I Undercrossing and Trail Improvements Project for a Not-to-Exceed Amount of $497,312, from the Folsom Plan Area Impact Fees $292,879 (Fund 472), the Transportation Development Act Fund $102,584 (Fund 248), and the Measure A Fund $101,849 (Fund 276)

12. Resolution No. 11523 - A Resolution Authorizing the City Manager to Execute an Agreement with Long Beach BMW for the Purchase of Two Police Motorcycles in the Amount of $84,000 Funded by the CHP Cannabis Tax Fund Grant (Resolution No. 11440) in the General Grants Fund (Fund 012) and $199.32 from the Police Capital Vehicle Fund (Fund 607)

13. Resolution No. 11524 – A Resolution Accepting the AB1600 Development Fees Annual Report for the Fiscal Year ended June 30, 2025

14. Receive and File SB-165 Annual Reports for Community Facilities Districts No. 13, No. 14, No. 2013-1, No. 16, No. 17, No. 18, No. 19, No. 20, No. 20-1, No. 21, No. 22, and No. 23 to Comply with the Local Agency Special Tax Bond and Accountability Act

Motion by Councilmember Kozlowski second by Councilmember Leary to approve the Consent Calendar. Motion passed by the following roll-call vote:

AYES: Leary, Raithel, Rohrbough, Kozlowski, Aquino
NOES: None
ABSENT: None
ABSTAIN: None

PUBLIC HEARING:

15. Ordinance No. 1359 – An Ordinance of the City of Folsom Amending Certain Sections of Chapter 17.104 (Inclusionary Housing) of the Folsom Municipal Code to Update the Methodology for Calculating In-lieu Fees Applicable to Residential Development, and to Incorporate Non-Substantive Cleanup Revisions for Clarity and Consistency, and Determine that the Project is Exempt from CEQA (Introduction and First Reading) Community Development Planning Manager Desmond Parrington and Economic and Planning Systems Senior Principal Amy Lapin made a presentation and responded to questions from the City Council. City Attorney Steven Wang responded further to questions from the City Council.

The public hearing was opened at 6:14 p.m.

The following speaker spoke under this item:

1. Martin Nivinski
The public hearing was closed at 6:17 p.m.

01/13/2026 Item No.4.

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Community Development Planning Manager Desmond Parrington and Economic and Planning Systems Senior Principal Amy Lapin responded further to questions from the City Council. City Attorney Steven Wang provided clarification to the motion.

Motion by Councilmember Kozlowski, second by Councilmember Leary to introduce Ordinance No. 1359 and to ask staff to come back at a later date with an exemption provision. Motion passed by the following roll-call vote:

AYES: Leary, Rohrbough, Kozlowski, Aquino
NOES: Raithel
ABSENT: None
ABSTAIN: None

The following agenda item was called out of order:

NEW BUSINESS:

20. Resolution No. 11512 - A Resolution Approving a Minor Administrative Modification Request from Folsom Cordova Unified School District to Modify Folsom Plan Area Specific Plan Land Use Designations and Residential Unit Allocations for Designated Parcels, to Accommodate the Relocation of a Planned Middle School Site to a Location Adjacent to a High School Site Community Development Principal Planner Jessica Brandt made a presentation. Folsom Cordova Unified School District Executive Director Facilities Development Craig Rouse presented further and responded to questions from the City Council.

The following speaker spoke under this item:

1. Martin Nivinski
Motion by Vice Mayor Raithel, second by Councilmember Leary to approve Resolution No. 11512. Motion passed by the following roll-call vote:

AYES: Leary, Raithel, Rohrbough, Kozlowski, Aquino
NOES: None
ABSENT: None
ABSTAIN: None

OLD BUSINESS

16. Resolution No. 11522 - A Resolution Authorizing the City Manager to Execute a Professional Services and Consultant Agreement with Romo Studios, LLC for a Not-to-Exceed Amount of $279,730 (Grant Funds) for the Fabrication, Installation, and Construction of Hello, I'm Johnny Cash on the Johnny Cash Trail Art Experience (PK1502) from California Department of Parks & Recreation Budget Act of 2023 Grant Funds and Acceptance of Grant and Appropriation of Funds
Parks and Recreation and Community Services Manager Tom Hellmann made a presentation and responded to questions from the City Council.

Motion by Councilmember Kozlowski, second by Vice Mayor Raithel to approve Resolution No. 11522. Motion passed by the following roll-call vote:

01/13/2026 Item No.4.

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AYES: Leary, Raithel, Rohrbough, Kozlowski, Aquino
NOES: None
ABSENT: None
ABSTAIN: None

NEW BUSINESS:

17. Appointment of At-Large Members to the Folsom Historic District Commission Motion by Councilmember Rohrbough, second by Vice Mayor to appoint Lisa Gomez in the category of Business Owner within the Sutter Street subarea. Motion passed by the following roll-call vote:

AYES: Leary, Raithel, Rohrbough, Kozlowski, Aquino
NOES: None
ABSENT: None
ABSTAIN: None

Motion by Councilmember Leary, second by Councilmember Kozlowski to appoint Kathleen Cole in the category of Resident of the Historic District. Motion passed by the following roll-call vote:

AYES: Leary, Raithel, Rohrbough, Kozlowski, Aquino
NOES: None
ABSENT: None
ABSTAIN: None

Mayor Aquino noted there were no applicants in the category for the Historic Preservation seat and directed staff to reopen the vacancy notice.

Community Development Director Pam Johns responded to questions from the City Council regarding the qualifications for this category.

18. Resolution No. 11525 - A Resolution Establishing the 2026 Ad Hoc Charter Review Committee City Manager Bryan Whitemyer made a brief presentation and responded to questions from the City Council.

Motion by Councilmember Kozlowski, second by Councilmember Leary to approve Resolution No. 11525 with an amendment to remove section 1(C) “two appointees recommended by City staff”. Motion passed by the following roll-call vote:

AYES: Leary, Raithel, Rohrbough, Kozlowski, Aquino
NOES: None
ABSENT: None
ABSTAIN: None

19. Resolution No. 11526 – A Resolution Establishing the 2026 American River Canyon School District Boundary Ad Hoc Committee
Mayor Aquino made a brief presentation and responded to questions from the City Council.

01/13/2026 Item No.4.

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December 9, 2025

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Motion by Mayor Aquino, second by Vice Mayor Raithel to approve Resolution No. 11526 with amendments to section 1(A) to appoint Councilmembers Mike Kozlowski and Sarah Aquino, removal of section 1(B) “one appointee by each Councilmember” and amendment to the wording in section 1(C) from “parents of students” to “residents” living in American River Canyon: Tom Scott, Kelly Dudley, and Kendyl Gilmore. Motion passed by the following roll-call vote:

AYES: Leary, Raithel, Rohrbough, Kozlowski, Aquino
NOES: None
ABSENT: None
ABSTAIN: None

Human Resources Director Allison Garcia made a combined presentation on the following four items:

21. Resolution No. 11518 - A Resolution Authorizing the City Manager to Execute a Memorandum of Understanding Between the City of Folsom and the Folsom Middle Management Group

22. Resolution No. 11519 - A Resolution Authorizing the City Manager to Execute a Memorandum of Understanding Between the City of Folsom and the Folsom Police Officers Association (FPOA)

23. Resolution No. 11520 – A Resolution Authorizing the City Manager to Execute a Memorandum of Understanding Between the City of Folsom and the Folsom Police Management Association (FPMA)

24. Resolution No. 11521 - A Resolution Authorizing the City Manager to Execute a Memorandum of Understanding Between the City of Folsom and the City of Folsom Fire Department Middle Management Employees
Motion by Councilmember Leary, second by Councilmember Rohrbough to approve Resolution No. 11518. Motion passed by the following roll-call vote:

AYES: Leary, Raithel, Rohrbough, Kozlowski, Aquino
NOES: None
ABSENT: None
ABSTAIN: None

Motion by Councilmember Rohrbough, second by Councilmember Kozlowski to approve Resolution No. 11519. Motion passed by the following roll-call vote:

AYES: Leary, Raithel, Rohrbough, Kozlowski, Aquino
NOES: None
ABSENT: None
ABSTAIN: None

Motion by Councilmember Kozlowski, second by Vice Mayor Raithel to approve Resolution No. 11520. Motion passed by the following roll-call vote:

AYES: Leary, Raithel, Rohrbough, Kozlowski, Aquino

01/13/2026 Item No.4.

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NOES: None
ABSENT: None
ABSTAIN: None

Motion by Councilmember Leary, second by Vice Mayor Raithel to approve Resolution No. 11521. Motion passed by the following roll-call vote:

AYES: Leary, Raithel, Rohrbough, Kozlowski, Aquino
NOES: None
ABSENT: None
ABSTAIN: None

25. Resolution No. 11527 – A Resolution to Approve and Adopt a City-wide Pay Schedule as Required by the California Public Employee Retirement System (CalPERS) and Establish New Salary Tables for the City of Folsom Executive Management Team Human Resources Director Allison Garcia made a presentation.

Motion by Vice Mayor Raithel, second by Councilmember Leary to approve Resolution No. 11527. Motion passed by the following roll-call vote:

AYES: Leary, Raithel, Rohrbough, Kozlowski, Aquino
NOES: None
ABSENT: None
ABSTAIN: None

SELECTION OF MAYOR AND VICE MAYOR FOR 2026

26. Selection of Mayor and Vice Mayor
Mayor Aquino thanked her colleagues for allowing her to serve as mayor over the past year.

Nomination by Mayor Aquino, second by Councilmember Kozlowski of Justin Raithel to serve as Mayor. Motion passed by the following roll-call vote:

AYES: Leary, Raithel, Rohrbough, Kozlowski, Aquino
NOES: None
ABSENT: None
ABSTAIN: None

Mayor Aquino nominated Councilmember Anna Rohrbough to serve as Vice Mayor for 2026.

Nomination by Mayor Aquino, second by Councilmember Kozlowski of Anna Rohrbough to serve as Vice Mayor. Motion passed by the following roll-call vote:

AYES: Leary, Raithel, Rohrbough, Kozlowski, Aquino
NOES: None
ABSENT: None
ABSTAIN: None

01/13/2026 Item No.4.

File 034-21 25-001
Folsom City Council Minutes
December 9, 2025

Draft- Not Official Until Approved by the City Council Page 8

Mayor Aquino congratulated the new Vice Mayor and Mayor for 2026.

CITY MANAGER REPORTS
City Manager Bryan Whitemyer welcomed the new Police Chief Adam Green. He spoke about the night work at Oak Avenue Parkway and East Bidwell, the upcoming design reveal for the Benevento Family Park, and congratulated the Finance team and Finance Director Stacey Tamagni on receiving a Certificate of Achievement in Excellence. He also noted the Folsom Holiday Lights contest, announced that the Fire Department will be hosting the regional rescue training, and noted the upcoming Utility Commission meeting.

COUNCIL COMMENTS
Councilmember Kozlowski congratulated the Folsom Historic District Association on the successful tree lighting event and the Arts and Craft Show and thanked the Folsom Police Department for their assistance with the CIM marathon. He welcomed Police Chief Adam Green and congratulated Justin Raithel and Anna Rohrbough for the upcoming year. He also spoke about the Vista Del Lago and Folsom High School Cross Country teams qualifying for the State Championship Cross Country meet.

Vice Mayor Raithel spoke about his appointment by the Sacramento Valley Division to the League of California Cities Revenue and Taxation Policy Committee, thanked Mayor Aquino for serving the past year as mayor, and expressed appreciation to his colleagues for their trust in him for upcoming year.

He also thanked Anna Rohrbough for her willingness to serve in the coming year.

Councilmember Rohrbough thanked Mayor Aquino and Vice Mayor Raithel for their service over the past year and expressed appreciation to her colleagues for their vote and trust in her for the upcoming year. She wished everyone a Merry Christmas and Happy Holidays Councilmember Leary welcomed Police Chief Adam Green, thanked staff for the agenda and for streamlining the presentations, expressed appreciation to Mayor Aquino and Vice Mayor Raithel for their service over the past year. She spoke about the Wild Nights and Holiday lights event and the fundraiser for the veterinary zoo trailer. She noted her appointment to the Legue of California Cities Environmental Quality Policy program and wished everyone a Happy Holiday.

Mayor Aquino welcomed Police Chief Adam Green and thanked the high school students for attending the City Council meeting.

ADJOURNMENT
There being no further business to come before the City Council, the meeting was adjourned in memory of Barbara Baker at 7:46 p.m.

SUBMITTED BY:

_______________________________
Christa Freemantle, City Clerk
ATTEST:
______________________________
Sarah Aquino, Mayor

01/13/2026 Item No.4.

Folsom City Council
Staff Report

1 MEETING DATE:

1/13/2026
AGENDA SECTION:

Consent Calendar
SUBJECT: Ordinance No. 1359 – An Ordinance of the City of Folsom Amending Certain Sections of Chapter 17.104 (Inclusionary Housing) of the Folsom Municipal Code to Update the Methodology for Calculating In-lieu Fees Applicable to Residential Development, and to Incorporate Non-Substantive Cleanup Revisions for Clarity and Consistency (Second Reading and Adoption)
FROM: Community Development Department

RECOMMENDATION / CITY COUNCIL ACTION
Staff recommends that the City Counc il move to conduct a second reading and adopt Ordinance No. 1359 – An Ordinance of the City of Folsom Amending Certain Sections of Chapter 17.104 (Inclusionary Housing) of the Folsom Municipal Code to Update the Methodology for Calculating In -lieu Fees Applicable to Residential Development, and to Incorporate Non-Substantive Cleanup Revisions for Clarity and Consistency.

BACKGROUND / ISSUE
On December 9, 2025, the City Council introduced and conducted the first reading of Ordinance No. 1359 amending certain sections of Chapter 17.104 (Inclusionary Housing) of the Folsom Municipal Code to update the methodology for calculating in-lieu fees applicable to residential development, and to incorporate non-substantive cleanup revisions for clarity and consistency. No changes have been made to Ordinance No. 1359 since the first reading.

The City’s Inclusionary Housing Ordinance plays a key role in promoting the development of affordable housing. Adopted in 2002 and amended in 2013, the ordinance is a significant component of the City’s overall affordable housing strategy.

Under the City’s Inclusionary Housing Ordinance, developers of new for-sale detached single- family homes within subdivisions of ten housing units, or more are required to provide at least 10 percent of their homes to lower-income households (3 percent very low and 7 percent low).

However, a developer may opt to pay an in-lieu fee instead of constructing affordable units on-

01/13/2026 Item No.5.
2 site. Other seldom-used options also exist such as land dedication, off -site construction, etc.

Given the complexities and challenges associated with building deed-restricted affordable for- sale homes, almost all developers in Folsom choose to pay the in- lieu fee. This fee is paid instead of or in-lieu of building the affordable, deed-restricted housing units. It is calculated as 1 percent (1%) of the sales price of the lowest-priced unit in the subdivision, multiplied by the total number of units in the project. To determine the fee amount, developers are required to submit architectural plans and anticipated homes sales pricing prior to the issuance of building permits. Additionally, developers must enter into an inclusionary housing agreement to formalize the fee calculation and related requirements. To date, the Inclusionary Housing Fee program has generated approximately $30.5 million, which has been instrumental in providing gap financing for affordable rental housing projects. However, administration of the in-lieu fee program is unnecessarily complex and burdensome as described in more detail in this report.

Housing Element Program H-9
The City’s 2021–2029 Housing Element included Program H -9, which required the City to conduct an inclusionary housing fee study. The purpose of the program was to evaluate fee levels and funding gaps, as well as to improve the existing methodology for calculating the in- lieu fee. To implement Program H-9, the City retained Economic & Planning Systems, Inc. (EPS) to conduct a comprehensive review of the existing fee program, with a particular focus on exploring alternative fee calculation methods that better align with regional practices.

In addition to policy considerations, City staff identified administrative challenges within the current fee structure. The system has resulted in more than 75 subdivision- specific fees, each requiring manual input into the City’s permit processing system. This lack of integration with the City’s automated review and permitting systems increases the risk of clerical errors and creates inefficiencies in fee administration.

Inclusionary Housing Program Feasibility Analysis
EPS conducted a study to update the City’s Inclusionary Housing Ordinance (IHO), focusing on in-lieu fees for projects not meeting affordable housing requirements on- site. While not legally required under California’s Mitigation Fee Act, EPS used a nexus -based approach to reassess affordability gaps and calculate a justifiable fee. The study also reviewed Assembly Bill 1505 (2017), which allows cities to apply inclusionary requirements —including in-lieu fees—to rental developments, and evaluated expanding the ordinance accordingly.

Using updated socioeconomic and market data, EPS analyzed impacts of COVID -19, rising construction costs, and higher interest rates, all of which increased housing production costs and widened funding gaps for affordable projects. The goal was to recommend a revised fee that balances affordability needs with feasibility for market-rate development.

The study incorporated input from developers and City staff, compared fees across jurisdictions, and reviewed state legislative changes and peer housing policies to inform potential updates.

01/13/2026 Item No.5.
3 Summary of Key Study Findings and Recommendations
Fee Structure and Developer Impact
• The Study recommends adopting a per -square-foot fee structure to streamline administration and offer developers greater clarity regarding project costs.

Specifically, it proposes:
o An In -lieu fee of $3.00 per square foot for single -family for sale units, consistent with average current fee levels ($2.97 per square foot). o A lower $2.50 per square foot fee for multifamily for -sale units (1,500 square feet or less), structured to support the financial viability of higher density missing middle housing alternatives.

• In the Folsom Plan Area—where most new housing development is concentrated—the Study found that developers currently face significant fee burdens:
o Single-family for-sale units incur average impact fees of nearly $95,000 per unit, including inclusionary in- lieu fees typically ranging from $5,000 to $11,000 per unit.

o Rental multifamily units, although exempt from inclusionary fees, still face impact fees of approximately $60,000 per unit, posing feasibility challenges under current market conditions.

Developer Feedback and Historical Fee Data
• Developers expressed strong s upport for retaining the existing fee structure and fee levels given that it is based on the sales-price for the lowest priced home.

• Historical building permit data from 2023 to present indicates that developers have paid an average inclusionary housing in- lieu fee of approximately $3.00 per square foot under the current framework.

Feasibility Analysis and Recommendations
• Estimated development costs, including the current in-lieu fee, are feasible for single- family residential projects.

• Multifamily for -sale housing types (e.g., condominiums, townhomes) are barely feasible based on current construction costs and sale prices while multifamily rental apartments are generally infeasible under current market conditions.

• To address these feasibility concerns and support the City’s Housing Element goals for higher-density housing, the Study recommends:
o Implementing a $2.50 per square foot in-lieu fee for multifamily for-sale units (e.g., condominiums, townhomes).
o Establishing a clear definition of multifamily for-sale units to ensure consistent application of the reduced fee.
o Continuing to exempt multifamily rental units (apartments) from the in-lieu fee to enhance development viability.

01/13/2026 Item No.5.
4 o Applying an automatic construction cost inflation adjustment to the new fee(s).

Proposed FMC Title 17 Amendments
Based on the findings and recommendations of the EPS study, staff’s experience administering the Inclusionary Housing Ordinance (IHO), recent amendments to California State law regarding density bonuses, and the presence of outdated language in the current ordinance, a series of revisions to Folsom Municipal Code Chapter 17.104 are proposed . The central proposal involves amending Section 17.104.060(g) to revise the methodology for calculating the in-lieu fee. Specifically, the proposed change would replace the current formula—1% of the lowest priced home in the subdivision —with a simplified, standardized square - footage-based fee, as recommended in the section above. This approach is consistent with practices in many other jurisdictions and, while not legally mandated, aligns with the nexus requirements of AB 602 (2021), which standardizes development impact fees on a per-square- foot basis.

In addition to the proposed changes to the fee methodology, several other amendments to the inclusionary housing ordinance are included. These revisions eliminate outdated references, such as those pertaining to the former Redevelopment Agency, and update language to match current administrative practices and terminology. Furthermore, a number of revisions are intended to bring the ordinance into alignment with recent changes in California housing law.

The State has enacted multiple measures to streamline housing production and reduce regulatory barriers for developers, nec essitating updates to existing provisions related to density bonuses, fee deferrals, and tenant preference policies to ensure compliance with current legal requirements.

Planning Commission Workshop
On September 17, 2025, the Planning Commission held a public workshop to review and discuss the Inclusionary Housing Ordinance. City staff presented preliminary findings from the Inclusionary Housing Program Study, provided an overview of the ordinance’s history and current framework, and outlined challenges with the existing in-lieu fee calculation. Staff also introduced potential goals for updating the fee structure to improve efficiency and better align with affordable housing objectives. Materials from the workshop are available at the following link:
https://www.folsom.ca.us/government/community-development/planning-services/planning- commission

Other Outreach
In addition to the workshop, staff conducted outreach through emails, consultation meetings, stakeholder sessions, and a dedicated webpage to share information on the Inclusionary Housing Ordinance Update. Building industry representatives supported retaining the current sales price-based in-lieu fee model, citing its flexibility, and the fact that it was based on home sales prices. They also raised concerns about potential cost increases and impacts on rental projects. Developers suggested process improve ments such as a one -time processing fee, submission of sales data at model home permitting, and fee collection at certificate of

01/13/2026 Item No.5.
5 occupancy. Affordable housing stakeholders emphasized the need to maintain or increase fee levels and supported earlier fee collection to provide timely funding for affordable housing projects.

Planning Commission Hearing
On November 9, 2025, the Folsom Planning Commission held a public hearing to review proposed amendments to the Inclusionary Housing Ordinance, focusing on updates to the in- lieu fee for residential projects without on -site affordable units. EPS presented f indings from the Inclusionary Housing Program Study, highlighting affordability gaps driven by COVID - 19 impacts, rising construction costs, and higher interest rates, while also noting Assembly Bill 1505’s implications for rental developments. Staff outlined three fee structure alternatives but ultimately supported a per-square-foot methodology recommended in the study. After hearing stakeholder input from the Building Industry Association and Toll Brothers, the Commission voted 5-0-0-2 to recommend City Council adoption of Ordinance No. 1359, determining the project exempt from CEQA.

City Council Hearing
On December 9, 2025, the City Council reviewed staff’s proposed revisions to FMC Chapter

17.104 and considered updates to the inclusionary housing in-lieu fees. The City Council asked questions of staff and the consultant and ultimately voted (4- 1-0-0) to introduce and conduct the first reading of Ordinance No. 1359 (An Ordinance of the City of Folsom A mending Certain Sections of Chapter 17.104 (Inclusionary Housing) of the Folsom Municipal Code to Update the Methodology for Calculating In-lieu Fees Applicable to Residential Development, and to Incorporate Non-substantive cleanup Revisions for C larity and Consistency. No changes have been made to Ordinance No. 1359 since the first reading.

POLICY / RULE
Folsom Municipal Code (FMC) Chapter 17.68 (Amendments) governs the process for the City to amend FMC Title 17 – Zoning. The Planning Commission must hold a public hearing on any proposed amendment and make a recommendation to the City Council. The City Council then may consider the amendment at a public hearing. The City Council must find that the public necessity and convenience and the general welfare require such an amendment.

ANALYSIS
The City’s 2021–2029 Housing Element includes Program H-9, which directs staff to conduct a study of the inclusionary housing in-lieu fee. The goal of this program is to evaluate fee levels and funding gaps, and to improve the methodology for calculating the in-lieu fee. The existing calculation method—based on 1% of the lowest-priced home in a subdivision—has proven to be administratively inefficient and incompatible with the City’s current fee processing system.

Despite these challenges, the inclusionary fee program has been highly successful, generating approximately $30.5 million in funding that has supported gap financing for several affordable housing developments. This funding has resulted in the creation of over 320 new affordable apartments in Folsom, demonstrating the effectiveness of the fee amount.

01/13/2026 Item No.5.
6 Overview of Current Process and Challenges
• Sales Price Estimation: Fees are based on 1% of the lowest-priced home, but final prices are often unavailable at permit issuance. Staff must validate developer market analyses.
• Initial Fee Determination: Each subdivision establishes a formal in-lieu fee to ensure consistent tracking.
• Manual Fee Entry: Fees must be manually entered for every home permit. With over 75 subdivision-specific fees in Folsom, this non-automated process is error-prone and inefficient.
• Deed Restrictions: Projects require deed restrictions to enforce fee compliance and transparency. Recording and later removing these restrictions is time-consuming for staff.
• Annual Fee Review: Fees must be recalculated if home prices change by more than 10%. Developer reporting is inconsistent, forcing staff to follow up or research independently.

Revision to Fee Structure
While the current ordinance offers flexibility for developers and has effectively generated funding for affordable housing, as indicated above, its administration demands ongoing staff time, coordination, and effort to maintain fairness and consistency. To address these operational inefficiencies and reduce the amount of staff time dedicated to implementing the current fee structure, staff supports the Study’s recommendation to revise the Inclusionary Housing Ordinance (IHO) and transition to a square foota ge-based fee structure. This approach, increasingly adopted by other jurisdictions, is expected to streamline administration, reduce processing burdens, and provide developers with clearer and more predictable cost expectations.

The Study presents a comparative survey of jurisdictions evaluating the City’s inclusionary program against others in the region and other selected jurisdictions in the State with inclusionary programs. The survey highlights that no other jurisdiction uses sales price as a basis for calculating in-lieu fees. Instead, most apply either a flat fee or a per -square-foot fee.

Because square footage is a standard metric used in building permits, it simplifies fee calculation and verification. Moreover, flat fees may disproportionately impact smaller projects or undercharge larger ones, which is the current situation with Folsom’s existing in - lieu fee. However, a square footage- based fee ensures a more equitable distribution of costs across varying project sizes.

Fee Amount Recommendation and Analysis
The Study recommends establishing an in-lieu fee of $3.00 per square foot for single-family for-sale units, aligning with current fee levels, and $2.50 per square foot for for -sale multifamily units to help ensure the financial viability of this housing type. The following section offers a high- level summary of the EPS Study and the rationale behind the proposed fees.

01/13/2026 Item No.5.
7 To inform these recommendations, the Study analyzed four representative residential prototypes—two single-family and two multifamily —reflecting recent development patterns in Folsom. Although the prototypes differ in design and pricing, the analysis applie d a standardized pro forma with consistent assumptions regarding unit size, base density, and housing type. A summary of the prototypes used in the Study is presented below.

Prototype Housing Type Tenure Unit Size
(sq ft)
Bed-
rooms
Base Density
(DU/acre)
Prototype 1 Single Family Low Density For-sale 2,600 4 5 Prototype 2 Single Family Medium Density For-sale 2,000 3 10 Prototype 3 Multifamily Low Density For-sale 1,500 3 18 Prototype 4 Multifamily High Density Rental 1,000 2 30

Using a nexus-based methodology, the Study estimates the maximum supportable in- lieu fee for each residential prototype by evaluating two key factors: the affordability gap and the additional demand for affordable housing generated by new market -rate development. This demand arises from the increased need for lower -wage workers who support higher -income households—workers who are typically unable to afford market -rate housing. This approach is based on the premise that higher -income households spend more on goods and services, which creates jobs —many of which pay lower wages. These workers often cannot afford market-rate housing. Charging fees on new market -rate development helps address the increased demand for affordable housing created by this dynamic.

The study identifies the maximum nexus-based inclusionary housing in-lieu fee per square foot for each prototype analyzed. Although this maximum fee is quite high, it does not account for the cumulative impact of all development -related charges. Consequently, no jurisdiction actually adopts the maximum; instead, it serves as the upper boundary of a legally defensible fee range.

Prototype Housing Type Tenure
Unit
Size
(sq ft)
Per Square Foot Fee Level
Max
Allowed
Fee
High Scenario
(20 % of
maximum)
Low
Scenario
(matches existing fee)
Prototype
1 Single Family
Low Density
For-sale 2,600 $59.56 $11.91 $3.00
Prototype
2 Single Family
Medium Density
For-sale 2,000 $44.35 $8.87 $3.00
Prototype
3 Multifamily Low
Density
For-sale 1,500 $35.82 $7.16 $2.50
Prototype
4 Multifamily
High Density
Rental 1,000 $34.01 $6.80 $0.00

01/13/2026 Item No.5.
8 In addition to identifying the maximum nexus -based fee, the EPS Study presents two alternative in-lieu fee scenarios for City Council consideration: a low -fee option consistent with current rates, and a high-fee option set at 20% of the maximum supportable amount. These alternatives, together with the maximum, provide a structured framework for evaluating feasible in-lieu fee levels and are summarized in the Table above.

While the City has the authority to adopt fees up to the maximum level, it is standard practice to set fees well below that threshold to maintain project feasibility and avoid discouraging housing production. Because the primary goal of the Inclusionary Housing Ordinance (IHO) update is to transition to a square -foot-based fee calculation method – not to increase fee levels—the Study recommends adopting a fee of $3.00 per square foot for single -family for- sale units and $2.50 per square foot for for -sale multifamily units. These rates are financially viable and align with the City’s current affordable housing strategy. As noted earlier in this report, historical building permit data from 2023 to the present indicates that developers have paid an average in -lieu fee of approximately $2.97 per square foot under the existing fee methodology.

The recommended fee levels would continue to provide the City with meaningful financial resources to support affordable housing development. With an estimated local subsidy of approximately $55,000 per unit, the City can invest in housing opportunities for lower-income residents while maintaining overall project feasibility. Rental multifamily projects would remain exempt, reflecting ongoing economic challenges in the rental housing market where narrow margins mean that additional fees could jeopardize proj ect viability and reduce the supply of much-needed rental units in the Folsom Plan Area.

This balanced approach ensures that the Inclusionary Housing Ordinance remains effective in generating resources for affordable housing while avoiding undue burdens on new residential development.

Regional In-Lieu Fee Comparison
To evaluate the City’s current and proposed in- lieu fee levels, the Study compared per -unit fees for single-family low-density housing across the Sacramento Region. Folsom’s fees were found to be generally consistent with regional benchmarks—about 10% lower than Sacramento and Sacramento County, but 35% higher than Rancho Cordova and 75% higher than Elk Grove. However, the City of Elk Grove is currently re-evaluating their existing fee levels. It is worth noting that Rancho Cordova’s fee reflects only a single Affordable Housing Plan tied to one development.

FINANCIAL IMPACT
There is no financial impact on the General Fund. The inclusionary housing in- lieu fee will continue to support the Folsom Housing Fund (Fund 238).

Consistent with existing in -lieu fee requirements, a minimum of 50% of revenue generated from the fund will be allocated for the development of lower -income housing units. Overall, revenues are expected to remain stable compared to current collections. To ensure the fee

01/13/2026 Item No.5.
9 remains responsive to market conditions, it will be indexed to the Construction Cost Index (CCI), providing for regular adjustments over time.

ENVIRONMENTAL REVIEW
Adoption of the Ordinance is exempt from the California Environmental Quality Act (CEQA) under Guidelines Sections 15378(b)(4) and 15061(b)(3). Pursuant to Section 15378, the action does not constitute a “project,” as it involves only administrative or procedural matters without direct physical environmental impacts. In addition, Section 15061(b)(3), the “common sense exemption,” applies because it can be determined with certainty that adoption of this update will not result in significant environmental effects.

ATTACHMENT

1. Ordinance No. 1359 - An Ordinance of the City of Folsom Amending Certain Sections of Chapter 17.104 (Inclusionary Housing) of the Folsom Municipal Code to Update the Methodology for Calculating In-lieu Fees Applicable to Residential Development, and to Incorporate Non-Substantive Cleanup Revisions for Clarity and Consistency

Submitted,

______________________________________
Pam Johns, Community Development Director

01/13/2026 Item No.5.

Attachment 1

01/13/2026 Item No.5.

Ordinance No. 1359

ORDINANCE NO. 1359

AN ORDINANCE OF THE CITY OF FOLSOM AMENDING CERTAIN SECTIONS OF CHAPTER 17.104 (INCLUSIONARY HOUSING) OF THE FOLSOM MUNICIPAL

CODE TO UPDATE THE METHODOLOGY FOR CALCULATING IN-LIEU FEES

APPLICABLE TO RESIDENTIAL DEVELOPMENT, AND TO INCORPORATE NON-

SUBSTANTIVE CLEANUP REVISIONS FOR CLARITY AND CONSISTENCY

The City Council of the City of Folsom does hereby ordain as follows:

SECTION 1 PURPOSE
The purpose of this ordinance is to amend certain sections of Chapter 17.104 in the Folsom Municipal Code to amend specific sections of Chapter 17.104 of the Folsom Municipal Code, which includes a revision to the calculation method for the in-lieu fee. The current formula of 1% of the lowest -priced home in the subdivision will be replaced with a simplified, s tandardized structure based on square footage, aligning with practices in other jurisdictions. Additional revisions include cleanup amendments to remove outdated references, ensure consistency with current state law, and enhance clarity and administrative efficiency.

The City Council finds that such
change is necessary to promote the public health, safety, and welfare.

SECTION 2
Sections 17.104.020 to 17.104.070 of the Folsom Municipal Code is hereby amended to read as follows:

17.104.020 Definitions
“Adjusted basis” means the adjustment to the basis of a home for purposes of determining capital gains. Adjusted basis shall be defined and determined consistently with the Internal Revenue Service publication 523 “Selling Your Home.”
“Affordable” means rented at an affordable rent or sold at an affordable housing price. “Affordable housing price” means a sales price at which low income or very low income households as provided in this chapter can qualify for the purchase of for-sale inclusionary units.

A sales price shall be considered affordable only if each owner-occupied housing monthly payment is equal to or less than one-twelfth of thirty-five percent of gross income for the specified income level of the household (i.e., very low or low). For purposes of such calculation, housing expenses shall include mortgage principal and interest, taxes, insurance, and assessments. For purposes of this section, the interest rate shall be calculated based on an average of three major California lending institutions for thirty-year fixed rate FHA PAR financing.
“Affordable rent” means (1) for a unit whose occupancy is restricted to a low income household, that the monthly rent consists of no more than one-twelfth of thirty-five percent of eighty percent of the median income applicable to Sacramento County less a reasonable allowance for utilities;

01/13/2026 Item No.5.

Ordinance No. 1359

and (2) for a unit whose occupancy is restricted to a very low income household, that the monthly rent consists of no more than one-twelfth of thirty-five percent of fifty percent of the median income applicable to Sacramento County less a reasonable allowance for utilities. In each case, the median income applicable to Sacramento County is as determined annually by the United States Department of Housing and Urban Development, adjusted for household size. “Affordable rental agreement” means legal restrictions by which the rents for rental inclusionary units will be set at such rates to ensure that rents remain affordable for a period of thirty years or longer.
“City” means the city of Folsom.
“Community development director” means the director of the community development department of the city, or his or her designee.
“Condominium” means and includes:

1. “Condominium” as defined by Section 783 of the Civil Code;

2. “Community apartment project” as defined by Section 11004 of the Business and Professions Code;

3. “Stock cooperative” as defined by Section 11003.2 of the Business and Professions Code; and

4. “Planned development” as defined by Section 11003 of the Business and Professions Code.

The term “condominium” specifically includes, but is not limited to, the conversion of any existing structure for sale pursuant to a method described in subsections (1) through (4) of this definition.
“Condominium conversion” or “conversion” means a change in the ownership of a parcel or parcels of property, together with structures thereon, whereby the parcel or parcels and structures previously used as rental units are changed to condominium ownership. “Condominium project” or “project” includes the real property and any structures thereon, or any structures to be constructed thereon, which are to be divided into condominium ownership. “Condominium unit” or “units” means the individual spaces within a condominium project owned as individual estates.
“Density bonus” means increases in density in a development project above the maximum density otherwise permitted for the applicable land use designation, or if elected by the developer, a lesser percentage of density increase, including but not limited to, no increase in

01/13/2026 Item No.5.

Ordinance No. 1359

density, and any requested concession or incentives, waivers or reductions of development standards as provided in the Folsom Municipal Code or state law. “Developer” means any applicant, person, developer, firm, partnership, association, joint venture, corporation, or any entity or combination of entities which seeks the city’s approvals for all or part of a development project. “Applicant” includes “owner.” “Development agreement” means an agreement entered into between the city and developer pursuant to Section 65864 et seq. of the Government Code. “Development project” means any residential real estate project or mixed residential and commercial real estate project consisting of residential units, including homes, multifamily residences or other residential structures. Projects at one location undertaken in phases, stages or otherwise developed in distinct sections shall be considered a single development project for purposes of this section. Development projects are those projects for which the developer is applying for new legislative entitlements which are not otherwise exempt under the provisions of this chapter.
“Dwelling unit” means a residential unit within a development project. “External subsidy” means any source of funds that is not local public funding, including federal or state grants, loans, bond funds, tax credits or other tax-based subsidy. “Final decision-making body” means the entity with final approval authority on the development project.
“First-time home buyer” means that neither the purchaser nor spouse has owned a home during the past three years, or that the purchaser meets at least one of the following criteria:

1. The purchaser is a displaced homemaker, defined as a person who has not worked full-time for at least three years, worked primarily without remuneration to care for the home and family, is unemployed or underemployed, is experiencing difficulty in obtaining or upgrading employment, and, while a homemaker, owned a home with a previous spouse;

2. The purchaser is single (unmarried or legally separated), has one or more minor children of whom purchaser has custody, and, while previously married, owned a home with a previous spouse; or

3. The purchaser owns or owned, during the past three years, a mobile home or trailer which is/was not permanently affixed to a permanent foundation as their principal residence. “Folsom housing fund” means the fund created and administered by the city for use on affordable housing projects in the city.

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Ordinance No. 1359

“Inclusionary housing agreement” or “agreement” means the agreement described in Section 17.104.100 between a developer and the city setting forth the manner in which the inclusionary housing requirement will be met in the development project. “Inclusionary housing plan” means the plan described in Section 17.104.040 setting forth the manner in which the developer proposes to implement the inclusionary housing requirement or alternatives permitted in this chapter within the development project. “Inclusionary housing requirement” means the provision of the inclusionary housing units in a development project as specified in Section 17.104.030 of this chapter. “Inclusionary housing unit or inclusionary unit” means an ownership or rental dwelling unit developed as a part of the inclusionary housing requirement of a development project as provided in this chapter.
“Inclusionary incentives” means the fee waivers or reductions, planning and building standards waivers or reductions, regulatory incentives or concessions, and density bonuses provided by the city to a development project to assist in the provision of the inclusionary housing requirement. “Initial owner” means the first person or persons to purchase a new for-sale inclusionary unit for his, her or their primary residence.
“Land dedication fee” means a fee paid to the Folsom housing fund for purposes of affordable housing in the city as a method of meeting the inclusionary housing requirement for a development project as provided in Section 17.104.030.
“Legislative entitlements” means and includes general and community plan amendments, zoning and rezoning, planned development permits and conditions and amendments thereto, tentative and final maps and development agreements.
“Low income household” means a household whose income does not exceed eighty percent of median income applicable to Sacramento County, adjusted for family size as published and annually updated by the United States Department of Housing and Urban Development. “Market rate” means not restricted to an affordable housing price or affordable rent. “Moderate income household” means a household whose income does not exceed one hundred twenty percent of median income applicable to Sacramento County, adjusted for family size as published and annually updated by the United States Department of Housing and Urban Development.
“Multifamily residential” means residential units such as apartments, duplexes, halfplexes, townhomes, condominiums, or developments of greater intensity, that are planned, approved, or constructed on land planned or zoned for other than single-family residential.

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“Off-site” means outside of the boundaries of a development project, but within the city limits of the city of Folsom.
“One location” means all adjacent land owned or controlled by the same owner or a related owner, the property lines of which are contiguous at any point, or the property lines of which are separated only by a public or private street, road, or other public or private right-of-way. “Owner” means and includes the person, persons, partnership, joint venture, association, corporation, or public or private entity having sufficient proprietary interest in real property to commence, maintain, and operate a development project.
“Project level approval” means and includes a tentative subdivision map, a parcel map, a planned development permit, or other administrative or adjudicatory approval or determination in connection with a development project.
“Related owner” means a person or entity, including but not limited to partnerships, limited liability corporations, limited partnerships and corporations, which has any of the following relationships with an owner: (1) they share the majority of members of their governing boards; (2) they share two or more officers; (3) they are owned or controlled by the same majority shareholder(s) or general partner(s); (4) they are in a parent-subsidiary relationship; or (5) the person is a sibling, offspring or parent of an individual owner. For purposes of this definition, a controlling interest means fifty percent or more of the voting power of a corporation, and a parent-subsidiary relationship exists when one corporation owns, directly or indirectly, fifty percent or more of the voting power of another corporation. For purposes of this definition, a person and any general partnership in which the person is a general partner, or a person and any corporation in which the person owns a controlling interest, shall be treated as one and the same. “Residential project” means the entirety of market rate residential development in a development project subject to the requirement to provide an inclusionary housing requirement as specified in this chapter.
“Residential space” means the total conditioned square footage of a residential dwelling unit, measured to the exterior walls, and including all areas served by heating or cooling systems.

Residential space excludes unconditioned areas such as garages, carports, unfinished basements, attics, and exterior patios. For purposes of in-lieu fee calculations, residential space shall not include accessory dwelling units (ADUs) that are exempt from impact fees in accordance with state law, or other areas specifically exempted by the Folsom Municipal Code. “Single-family residential” means planned, approved or built on land planned or zoned solely for a permitted residential density of one unit per parcel. Where such a planning or zoning single- family designation also allows duplexes, halfplexes, second units, ADUs, or similar uses, the designation is nonetheless considered single-family residential for purposes of the inclusionary housing requirement and the other provisions of this chapter. “State density bonus law” means Sections 65915 through 65918 of the California Government Code, or successor provisions, as such laws may be amended from time to time.

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“Very low income household” means a household whose income does not exceed fifty percent of the median income, adjusted for household size, applicable to Sacramento County, as published and periodically updated by the United States Department of Housing and Urban Development. “Zoning code” means Title 17 of the Folsom Municipal Code as it may be amended from time to time. (Ord. 1033 § 2 (part), 2005: Ord. 958 § 2 (part), 2002)

17.104.030 Inclusionary housing requirement.

A. Number and Affordability of Inclusionary Units. All for-sale development projects consisting of ten or more units, including condominium conversion projects, as well as residential rental projects of ten or more units receiving funding assistance from the city or that are otherwise subject to a voluntary affordable housing agreement with the city, shall include inclusionary housing units equal to ten percent of the total number of units in the project, excluding density bonus units. The ten percent shall consist of three percent very low income units and seven percent low income units.

When four or fewer inclusionary units are required, the inclusionary units shall be provided in the following manner: one inclusionary unit: one low income unit; two inclusionary units: one low income unit and one very low income unit; three inclusionary units: two low income units and one very low income unit; four inclusionary units: three low income units and one very low income unit.

1. Calculation of Units Required. Where the number of units required to be constructed in the development project or condominium conversion project results in a percentage other than a whole number, the developer shall round to the nearest whole number the resulting percentage from the total inclusionary housing requirement calculated as provided in this chapter and provide only the whole units resulting from the inclusionary housing requirement calculation. If, after rounding to the nearest whole number, the total number of inclusionary units provided is less than ten percent of the total project units, any difference in units shall be provided as low income units.

2. Various Methods for Compliance. The inclusionary housing requirement may be satisfied by: including the units within the development project; providing an alternative as set forth in Section 17.104.060; providing the units off site; dedicating land for other affordable development projects; acquisition, rehabilitation, and conversion of existing market rate units; conversion of existing market rate units; paying an in-lieu fee as described in this chapter; other methods as approved by the city council that meet the intent of this chapter; or a combination of these methods or other alternatives set forth in this chapter.

B. Implementation. The developer shall propose an inclusionary housing plan as provided in this chapter and incorporate the agreed upon plan into conditions on the project and , if applicable, an inclusionary housing agreement as provided in this chapter.

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C. Unit Size. The inclusionary housing requirement shall accommodate diverse family sizes by including a mix of studio, one-, two- and/or three-bedroom units and the mix of inclusionary unit sizes shall generally accommodate the household sizes identified in the city’s general plan, unless otherwise negotiated in the inclusionary housing agreement. A developer may propose an alternative mix of the size of units as part of its inclusionary housing plan.

1. Projects of forty residential units or less are exempt from the unit size requirement.

D. Exterior Appearance. Inclusionary units shall be visually compatible with and shall have similar external building materials and finishes as the market rate units in the immediate neighborhood.

E. Access to Common Amenities. Tenants and residents of inclusionary units shall be provided the same rights and access to common amenities in the development project as tenants and residents occupying market rate units.

F. Smaller Parts of Larger Projects. The city shall not approve projects which reasonably appear to be smaller parts of a greater project and have the effect of circumventing the requirements of this chapter. (Ord. 1273 § 2, 2017; Ord. 1177 § 2, 2013: Ord. 1033 § 2 (part), 2005: Ord. 958 § 2 (part), 2002)

17.104.040 Inclusionary housing plan.

A. Submittal Requirements. The inclusionary housing plan must include:

1. The method by which the developer intends to comply with the requirements of this chapter. The developer shall describe the location of the inclusionary units within the development project, unit sizes, and any incentives requested.

2. Where the developer proposes to satisfy the inclusionary housing requirement through any method other than (i) constructing inclusionary units on-site or (ii) paying the in-lieu fee, the developer shall provide the following information:
a. Detailed information on the proposed parcel(s), site, or existing market rate units including the location, assessor’s parcel number(s), size, color photographs, an appraisal of the property dated within the prior six months, known information on physical, environmental or other constraints affecting the use of the property, and known information regarding the positive aspects of the use of the property for affordable housing including proximity to schools, transit routes, shopping and other services.
b. Site Suitability. The site proposed to fulfill the inclusionary housing requirement must be suitable from the perspective of size, configuration, physical characteristics, physical and environmental constraints, access, location, adjacent use, proximity to other affordable housing units and other relevant planning criteria.

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c. Current market rate rents, condition of units, and vacancy rate information for alternatives proposing to fulfill the inclusionary housing requirement through conversion of market rate units or acquisition, rehabilitation, and conversion of market rate units.
d. A written representation that the proposed parcel(s), site, or existing market rate units is/are available and capable of being dedicated to the city by the developer and that the site and/or units shall be deed restricted as affordable housing.

3. Timing of Development. The inclusionary housing plan and inclusionary housing agreement shall include a phasing plan that provides a schedule for the timely development of the inclusionary units as the residential project is built out. In instances where the developer demonstrates that phasing, other than concurrent with market rate units, is necessary in order to account for the different financing and funding environments, economies of scale, or infrastructure needs applicable to the development project, a phasing plan shall be provided that includes definitive dates for construction and does not inhibit the intent of this chapter to create affordable housing units. The community development director shall review the phasing plan and reasons for phasing and make recommendations to the final decision-making body on the timing of the development. The city may condition projects seeking alternative phasing to require posting of bonds, cash deposits, or other securities satisfactory to the city (i.e., deed restriction, development agreement, or withholding of building permit) in an amount sufficient to assure timely construction of the required inclusionary units and to require construction of the units within a specified period of time.

4. Where the developer proposes to satisfy the inclusionary housing requirement exclusively through the payment of an in-lieu fee, the inclusionary housing plan requirements may be satisfied through the provision of a signed letter from the developer as described in Section 17.104.060.

B. Community Development Director’s Scope of Authority. The community development director shall be responsible for review of the inclusionary housing plan submitted by the developer, preparation of the inclusionary housing agreement and providing recommendations on these items and other matters as provided in this chapter to the planning commission for action by the planning commission. In any case where the final authority on a project rests with the planning commission or the city council, the community development director shall make recommendations to the planning commission or the city council.

C. Standard for Approval. The community development director shall recommend approval of the inclusionary housing plan, provided the inclusionary housing plan meets all the requirements of this chapter and, if applicable, is included in the inclusionary housing agreement, and based upon a determination by the community development director that the inclusionary housing plan would meet the intent of this chapter. Factors to be considered by the community development director in his/her determination to recommend approval, conditional approval or rejection of the proposed inclusionary housing plan include the criteria provided in this section and Sections 17.104.030 and 17.104.060, the suitability of the proposed site for single- or

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multifamily affordable housing, the availability of and access to infrastructure, schools, shopping and transit, current zoning of the property, and proximity to and concentration of other affordable housing locations. If a method other than on-site development or payment of the in-lieu fee is proposed to meet the inclusionary housing requirement, the proposed method must further the goal of the ordinance codified in this chapter and provide no less units or opportunity for creation of units than if the units had been included within the development project. The recommendation of the community development director shall be included in the staff report to the final decision- making body who shall approve, reject or modify the inclusionary housing plan. (Ord. 1033 § 2 (part), 2005: Ord. 958 § 2 (part), 2002)

17.104.050 Specific plan requirement
A. Number and Affordability of Inclusionary Units. All specific plans approved pursuant to Chapter 17.37 on or after the effective date of the ordinance codified in this chapter and which are not otherwise exempt shall include three percent of the dwelling units restricted to and affordable to very low income households and seven percent of the dwelling units restricted to and affordable to low income households (inclusionary housing requirement).

1. The inclusionary housing requirement required by this section shall be determined at the specific plan stage, rather than on a project by project basis. Where the inclusionary component is not included in the specific plan, it shall be included with individual projects as provided in this section.

2. The specific plan shall include an inclusionary housing plan that establishes, as a minimum but not limited to, the following:
a. The number of market rate units in the specific plan. b. The inclusionary housing requirement for very low and low income units over the entire specific plan.
c. The location of multifamily parcels (if applicable), subdivisions and/or mixed-use development sites designated to receive the inclusionary units. d. The requirements for an inclusionary housing plan specified in Section 17.104.040.

3. If the specific plan is initiated by developer(s) or property owners, the implementation of this section shall be through the inclusionary housing agreement signed and approved at the time of adoption of the specific plan.

4. A general provision requiring that an inclusionary housing agreement shall be made a condition of all future discretionary permits for development within the specific plan. The provision shall establish that all relevant terms and conditions of any inclusionary housing agreement shall be filed and recorded as a restriction on the project as a whole and those

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individual lots, units, or projects which are designated as inclusionary units. The inclusionary housing agreement shall be consistent with Section 17.104.100.

17.104.060 Alternative methods to meet the inclusionary housing requirement.

Alternatives to the on-site construction of the inclusionary housing requirement shall be encouraged and allowed in order to meet the housing needs for low and very low income households, consistent with the criteria in subsections A through I of this section. Alternatives may include:

A. Land Dedication. The developer may dedicate sufficient land within the city of Folsom on which to construct at least the same number of units and infrastructure to support that number of units as the developer would be required to construct on site subject to the inclusionary housing requirement; provided, that the site will support the same number of units the developer is required to construct, has zoning of a minimum density necessary to accommodate the inclusionary housing requirement, that the site is acceptable to the city, and that the site is restricted for affordable housing. The developer shall dedicate the land to the city, an affordable housing developer, or special needs developer acceptable to the city at no cost to the city.

B. Off-Site Construction (“Off-Site”). The developer may develop housing to satisfy the inclusionary housing requirement at an off-site location within the city of Folsom.

C. Acquisition, Rehabilitation, and Conversion of Market Rate Units. The developer may propose to acquire and rehabilitate existing market rate units in the city of Folsom which are at or above existing affordable rents, which require repair, rehabilitation, modernization or other work, and convert those units to affordable housing units.

D. Conversion of Market Rate Units. A developer may propose to convert existing market rate units in the city of Folsom which do not require rehabilitation and are at or above existing affordable rents to affordable housing units by way of deed restrictions, recorded covenants or other legal mechanisms to assure that the units remain affordable housing units.

E. Inclusionary Housing Credits. A developer may use inclusionary housing credits, as defined in this chapter, to meet the inclusionary housing requirement.

F. In-Lieu Fee. A developer may satisfy the inclusionary housing requirement through payment of a fee to the city in-lieu of constructing the inclusionary units with the residential development project, in accordance with the following requirements:

1. The in-lieu fee shall be calculated based on square footage of residential space for each dwelling unit within the development project.

2. Procedures for the assessment, collection and adjustment of in-lieu fees shall be established by resolution of the city council.

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3. If a development project is approved for payment of an in-lieu fee, the fee shall be collected prior to the issuance of a building permit for each dwelling unit included in the development project.

4. In-lieu fees collected by the city shall be deposited into a fund known as the “Folsom housing fund”. This fund shall be used to assist in the provision of housing for extremely- low-, very-low- and low-income households, as well as any special needs populations. All expenditures shall be consistent with the goals and policies outlined in the city’s housing element. Eligible uses may include, without limitation: land acquisition, predevelopment costs, rehabilitation of existing units to extend their useful life and impose affordability restrictions, construction of new residential units, administration, and compliance monitoring of the affordable housing program.

5. Notwithstanding the provisions of Sections 17.104.030, 17.104.040, and 17.104.100, a developer electing to fulfill the project’s inclusionary housing requirements solely through the payment of in-lieu fees is not required to submit a full inclusionary housing plan.

Instead, a signed letter from the developer confirming this intent shall suffice to meet the requirements for both the inclusionary housing plan and inclusionary housing agreement.

No separate approval from the community development director is necessary, provided the project includes a condition of approval requiring payment of the applicable in-lieu fee per unit in effect at the time building permits are issued.

G. Combination. Combination of the above alternatives.

H. Other Alternatives. Other alternatives proposed by the developer which are accepted by the city and meet the requirements and intent of this chapter. (Ord. 1243 § 2, 2015; Ord. 1177 § 4, 2013: Ord. 958 § 2 (part), 2002)

17.104.070 Incentives and assistance.

A. Request for Incentives and Assistance. The developer of a development project which is subject to the inclusionary housing provisions of this chapter may request, and the city, in its sole discretion, may grant or deny the provision of inclusionary incentives as set forth in this section and other provisions of the Folsom Municipal Code.

B. Fee Waivers or Deferrals. The city may grant to a developer a program of waivers reductions or deferrals of development fees, administrative and financing fees for inclusionary units as provided in Chapter 16.60 of the Folsom Municipal Code or state law.

C. Density Bonuses. A developer fulfilling its inclusionary housing requirement through either on site or off-site development may request and receive from the city a density bonus as provided in state density bonus law.

D. Inclusionary Housing Credits. A developer may submit as part of the inclusionary housing plan a proposal to provide more affordable housing units or donate additional land in connection with a development project than the 10 percent required under this chapter, and may credit the

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additional amount of land or additional number of affordable housing units against future projects subject to the provisions of this chapter which are proposed in the city. Credits may be transferred or sold to any other person or entity subject to compliance with following conditions:

1. The transfer or sale of the credits shall not interfere with one of the goals of the ordinance codified in this chapter which is to provide affordable housing dispersed throughout the city of Folsom.

2. Any credits must be applied to another development project within 5 years of issuance of a certificate of occupancy for the inclusionary unit(s) or implementation of an alternative method of meeting the inclusionary housing requirement (i.e., land dedication) which gives rise to the credit. For purposes of this section, “applied” shall mean that the credits are committed for use at a development project and included in a developer’s proposed inclusionary housing plan. A developer who has not used, transferred or sold credits within the time specified in this section may apply to the city for a 1 year extension on the life of the credits. A request for extension of credits shall be reviewed by the city council who shall grant or deny the request for extension. The city council shall consider progress and efforts the developer has made to utilize the credits during the previous 5 years, the impact on affordable housing if the extension is granted, any proposals for use of the credits should the extension be granted and other relevant factors.

3. Inclusionary units receiving monetary subsidies through the city shall not receive credits unless the city has been reimbursed for its financial assistance.

E. Mixed Use. In order to provide additional opportunity for development of inclusionary units, residential development that would fully or partially fulfill the inclusionary housing requirement of a development project may be implemented in conjunction with commercial or office uses located within an area covered by a General Plan mixed-use or residential overlay designation. This applies within the central business (C-2), general commercial (C-3), and business and professional office (BP) zoning districts, as well as within areas governed by adopted specific plans, consistent with applicable provisions of the Folsom Municipal Code and the General Plan or the applicable specific plan.

F. Local Public Funding. The developer may apply to the city for local public funding to assist in the financing and development of the inclusionary housing requirement.

SECTION 3
Sections 17.104.090 to 17.104.110 of the Folsom Municipal Code are hereby amended to read as follows:

17.104.090 Restrictions on inclusionary units.

Each inclusionary unit created as a result of the ordinance codified in this chapter shall have limitations governing its occupancy and its sale and/or resale. The purpose of these limitations is

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to preserve the long-term affordability and to ensure its continued availability for income-eligible households.

A. Duration of Affordability for Rental Inclusionary Units. Rental inclusionary units under subsections (C)(1) and (2) of this section shall remain affordable for a period of no less than thirty years from the recordation of the affordable rental agreement unless state law requires a longer period. The affordable rental agreement shall be recorded no later than the issuance of the first building permit for the rental inclusionary project under subsection (C)(1) of this section, and prior to the first day of rental of the inclusionary unit under subsection (C)(2) of this section.

Rental units under subsection (C)(2) of this section shall be rented to an income-eligible person at the same income level of the original for-sale affordable housing price.

B. Affordability and Resale of For-Sale Units.

1. Sale and Resale to an Income-Eligible Person—Exception. After the initial sale of inclusionary for-sale units at a price affordable to the target income level group, inclusionary for-sale units shall remain affordable to subsequent income-eligible buyers pursuant to a resale restriction with a term of twenty years, or longer if required by state law or other provisions of this code. The initial owner shall be a first-time home buyer as defined in this chapter. Subsequent owners are not required to be a first-time home buyer.

The resale restriction shall require that the unit will be sold, by the initial owner and any subsequent owner, at the same affordable housing price income level as originally sold and will remain at that income level for the duration of the resale restriction term. For example, a home that was sold to the initial owner at a very low income level shall be sold to a subsequent owner who qualifies at the very low income level. a. If the owner is unable to sell the inclusionary unit within sixty days of offering and advertising the unit for sale, the owner may offer to sell the unit to the city at the affordable housing price at the time of offer. If the city or its assignee does not complete the purchase of the unit within ninety days of the owner’s offer of sale to the city, the resale obligations of this section shall terminate; however, the provisions of this section relating to recapture upon sale shall continue to apply and remain in full force and effect.

2. Recapture upon Sale. If the inclusionary unit does not sell within sixty days of offering and advertising the unit for sale and if the city does not acquire the inclusionary unit as specified in this section, the inclusionary unit may be sold at the current market price, and the seller shall pay to the city housing fund all proceeds from the sale of the unit less a percentage of profit, if any, as provided in this section. For purposes of this section, “profit” is defined as the net proceeds from the sale after deducting loan(s), ordinary expenses attributed to the seller, including real estate commissions not to exceed six percent, and after deducting the current affordable housing price. If the owner has made improvements to the home, profit shall be determined by deducting the adjusted basis of the home, or the current affordable housing price, whichever is higher.

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a. The percentage of profit retained by the owner shall vary according to the number of years an owner owns the residential unit. The percentage of profit to be allocated to the owner is provided as follows:

Years Current
Owner Owned
Residence
Percentage of
Profit to
Current
Owner
Percent Profit
Paid to the
City’s
Housing Trust
Fund
Less than 1 10 90
Less than 2 20 80
Less than 3 30 70
Less than 4 40 60
5 or more 50 50

3. Evaluation of Owner’s Repayment Ability. On a biannual basis, owners of for-sale inclusionary units who have acquired a second mortgage or other secondary financing or loan provided by the city will be evaluated by the city housing manageras to their ability to initiate repayment procedures. Where the city determines the owner’s household income exceeds the affordable income level applicable to the inclusionary unit, the city may require repayment according to the terms provided in the deed of trust or other financing document(s).

4. Guidelines. The city may adopt guidelines for the administration of this program by resolution of the city council.

5. Home Ownership Incentive. The city may establish guidelines by resolution to create incentives for home ownership, including partial loan forgiveness provisions relating to loans or second trust deeds provided by the city depending on the length of time a qualified owner has occupied the residence.

C. Occupancy Requirement.

1. Rental Units. Any person(s) who occupies a rental inclusionary unit produced or acquired with funding assistance from the city or is otherwise subject to a voluntary affordable housing agreement between the city and the unit’s developer shall occupy that unit as his or her principal residence and shall annually certify that he/she qualifies for the applicable affordable rent level. The city’s housing manager shall annually initiate this certification process. If and when any person(s) who rents an inclusionary unit no longer qualifies at the applicable affordable rent and income levels, that person(s) shall be required to quit the unit or pay the market rate for the unit provided another rental unit is made available at the income level of the inclusionary unit.

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2. For-Sale Units. Except as provided in this section, an initial owner who purchases a for-sale inclusionary unit shall occupy that unit as his or her principal residence. The inclusionary housing agreement shall provide that a for-sale inclusionary unit may be rented or leased only after the owner, initial or subsequent, has resided in the inclusionary unit for a period of not less than two years. If the owner rents or leases the inclusionary unit, the renter or lessee shall be an income-eligible person at the same income level of the original for-sale affordable housing price. For example, if the initial owner bought the unit at the very low income housing price, the unit shall be rented to tenants of a very low income household.
a. Any person offering a for-sale inclusionary unit for rent or lease shall notify the city housing manager in writing, prior to the renting of the unit, that the unit is offered for rent or lease. Any person offering a for-sale inclusionary unit for rent or lease shall notify prospective tenants of the income eligibility requirements. b. If the city has provided loans, incentives or other deeds of trust on a for-sale inclusionary unit, the city may include provisions, based on the ability of the owner to repay the loan or other financing instrument, in the deeds of trust to require repayment of the note secured by that deed of trust if the property is not owner occupied. c. If the city has provided loans, financial assistance or other incentives to purchaser of a for-sale inclusionary unit, the city shall require, in a recorded affordability covenant, that the unit, if rented or leased by the owner, initial or subsequent, pursuant to subsection (C)(2) of this section, shall be rented at an affordable rent level no greater than the affordable rent level currently in effect. Any person(s) who occupies a rental inclusionary unit shall occupy that unit as his or her principal residence and shall annually certify that he/she qualifies for the applicable affordable rent level. The city’s housing manager shall annually initiate this certification process. If and when any person(s) who rents an inclusionary unit no longer qualifies at the applicable affordable rent and income levels, that person(s) shall be required to quit the unit or pay the market rate for the unit provided another rental unit is made available at the income level of the inclusionary unit.

3. Converted Units. Units which are converted from market rate units shall follow the requirements of subsections A, B, and C of this section based on the type of converted residential unit applicable.

17.104.100 Administration of the inclusionary housing requirement.

A. Proposed Inclusionary Housing Plan. At the time of and as part of the application for the first entitlement, the developer of a development project shall submit a draft inclusionary housing plan consistent with the requirements of Section 17.104.040.

B. Action on Inclusionary Housing Plan. The inclusionary housing plan shall be subject to the same review and approval as the entitlements. No entitlement shall be granted without an approved inclusionary housing plan, except as described in Section 17.104.060(F)(4). The

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elements of the inclusionary housing plan shall be incorporated into the terms and conditions of the applicable entitlements and project-level approvals.

1. Amendment of Inclusionary Housing Plan. The community development director shall have the authority to approve amendments of the inclusionary housing plan to reflect changes in the underlying development project. Where the proposed amendment(s) will result in a change in the phasing or timing of development of the inclusionary units, the amendment must be reviewed under the criteria in Section 17.104.040(A)(3).

2. Amendment Process. Amendments which will result in the modification of conditions shall be subject to notice, review, approval and appeal in the same manner as the original approval.

C. Inclusionary Housing Agreement.

1. Requirement. Except as provided in this chapter, no project-level approval may be issued by the city without an inclusionary housing agreement executed by the owner and recorded against the property, the developer (if not owner) and the community development director, and approved by the city attorney; provided, that a tentative subdivision map or tentative parcel map may be approved prior to execution or recordation of an inclusionary housing agreement if (a) an inclusionary housing plan including a phasing plan has been approved; (b) any tentative map or parcel map contains conditions that enforce the applicable phasing and other requirements of the housing plan; and (c) the entitlements contain provisions that condition approval of planned development permits, plan review, or building permits on execution and recordation of, and compliance with, an inclusionary housing agreement.

2. Contents. The agreement shall be consistent with the inclusionary housing plan, and shall indicate ownership information, the number and size of very low and low income units, the developer of the inclusionary units, the phasing and construction scheduling of the inclusionary units, commitments for inclusionary incentives and any other information required by the city relative to the inclusionary housing requirement. In the case of alternatives to the inclusionary housing requirement, the agreement shall also contain the information required in this chapter pertaining to the alternative.

3. Information Required from Developer. The developer of the development project shall present to the city: (a) plans, schematics, and details of phasing of the residential project as a whole, including the inclusionary housing requirement; (b) the name and address of the entity which will develop the inclusionary housing requirement if not the developer; (c) in the case of land dedication, an executed irrevocable offer of dedication at no cost to the city; (d) in the case of off-site location, the evidence of control or ownership of the site required in this chapter; and (e) any other information reasonably required by the city in connection with the agreement.

4. Incentives. The community development director shall recommend to the final decision-making body which inclusionary incentives, if any have been requested by the

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developer, the city will make available in connection with the development project as provided in this chapter. The inclusionary housing agreement shall specify the nature of the incentives provided.

5. Incorporation into Project-Level Approvals and Recordation. The developer obligations and the inclusionary incentives in the agreement shall be incorporated into the applicable project-level approvals. The executed agreement shall be recorded as a covenant running with the land against the real property of the residential project and, in the case of off-site inclusionary units, against the real property on which such inclusionary units are to be located.

D. Affordable Rental and Affordable Housing Agreements. Upon approval of the entitlements for a for-sale development project which shall include inclusionary units, or a residential rental development project to be produced with funding assistance from the city or otherwise subject to a voluntary affordable housing agreement with the city, the developer shall record with the county recorder’s office an affordable rent agreement or affordable housing agreement against the parcels identified in the inclusionary housing plan for the inclusionary units. Where the inclusionary unit is a for-sale unit within a development project, the developer shall record the affordable housing agreement relating to the lot(s) within the development project which are to be inclusionary units prior to the issuance of a building permit on any lot(s) within the development project.

E. Administration of Affordability for Rental Inclusionary Housing. The owner of rental inclusionary units or for-sale inclusionary units offered for rent pursuant to Section 17.104.090(C)(2) shall be responsible for certifying the income of tenant to the city at the time of initial rental and annually thereafter. The owner of a for-sale inclusionary unit shall certify to the city the income of the initial purchaser and shall certify to the city that the initial purchaser is a first-time home buyer. The owner of rental inclusionary units shall apply the same rental terms and conditions (except rent levels, deposits and income requirements) to tenants of inclusionary units as are applied to all other tenants, except as otherwise required to comply with government subsidy programs. Discrimination based on subsidies received by the prospective tenant is prohibited. The city shall keep confidential the personal identifying information of the household members occupying an inclusionary unit.

F. Guidelines. The community development director may develop and adopt additional guidelines as necessary for the implementation of this chapter consistent with the terms contained herein and consistent with any guidelines adopted by the city council as provided in this chapter.

G. Appeal. Where the provisions of this chapter vest the community development director with final decision-making authority, any applicant aggrieved by the decision of the community development director may appeal that decision to the planning commission. Any appeal of a decision of the community development director must be filed with the community development department within ten calendar days of the date the decision is rendered by the community development director. The community development department shall set the appeal before the planning commission at the next regularly scheduled planning commission meeting, but in no

01/13/2026 Item No.5.

Ordinance No. 1359

case less than ten calendar days after the community development director’s decision. (Ord. 1273 § 3, 2017; Ord. 1177 § 7, 2013: Ord. 1033 § 2 (part), 2005: Ord. 958 § 2 (part), 2002)

17.104.110 Monitoring of inclusionary housing.

A. Developers. Developers that have an inclusionary housing agreement requiring the provision of inclusionary housing units will be monitored by the city annually to assure compliance with the inclusionary housing agreement.

B. Inclusionary Units. Units will be monitored by the city to verify that the units are and will remain affordable.

1. Rental Inclusionary Unit. Owners of the rental inclusionary units produced with funding assistance from the city or that are otherwise subject to a voluntary affordable housing agreement with the city will be monitored by the city annually to certify that tenant(s) occupying the unit(s) are income qualified to remain in the unit and that the rent is at or below the affordable rent as stipulated in Section 17.104.090. Owners of the for- sale inclusionary units offered for rent will be monitored by the city annually to certify that tenant(s) occupying the unit(s) are income qualified to remain in the unit. The city shall further monitor approximately ten percent of tenants annually by: (a) requiring the owner submit a copy of the signed rental or lease agreement to verify the rental rate, and (b) independently verifying that the tenant is income-eligible to reside in the inclusionary unit.

2. For-Sale Inclusionary Unit. Owners of for-sale inclusionary units will be monitored by the city to certify that the unit: (a) if sold during the monitoring period, was sold at an affordable for-sale price and to an income qualifying person, (b) is being occupied by the original income-qualifying buyer, and (c) if the unit is being rented or leased it is to an income-eligible household for a rental rate that is at or below the affordable rent as stipulated in Section 17.104.090.

C. Reporting. A reporting mechanism shall be created by the city to identify the number of inclusionary units, by very low or low income, that have been required by inclusionary housing agreements during the reporting period, the number of inclusionary units, by very low or low income, planned for creation in inclusionary housing agreements during the reporting period, the number of inclusionary units, by very low or low income, created during the reporting period, and the number of inclusionary housing credits, by very low and low income, both made available and used during the reporting period. The report shall also include the results of the monitoring of developers and inclusionary units in subsections A and B of this section and any corrective actions taken if the units were not being rented, sold, or occupied as stipulated in Section 17.104.090. The report shall identify the shortfall between the number of inclusionary units planned for creation and the number of units actually created. This information may be used for future change and amendments to the ordinance codified in this chapter. (Ord. 1177 § 8, 2013; Ord. 958 § 2 (part), 2002)

01/13/2026 Item No.5.

Ordinance No. 1359

SECTION 4
Section 17.104.140 of the Folsom Municipal Code is hereby amended to read as follows:

17.104.140 Enforcement and penalties
It shall be unlawful to sell any inclusionary unit without compliance with each and every provision of this chapter. It shall be unlawful to offer for lease or rent, or to enter into a lease or rental agreement, or to collect lease or rental payments without compliance with each and every provision of this chapter. Any person who violates any provision of this chapter shall be guilty of a misdemeanor and/or an administrative violation punishable as follows:

A. A violation of this chapter shall be an administrative violation as defined in Section 1.08.020. In addition to enforcement as set forth in Chapters 1.08 through 1.10, inclusive, any violation of this chapter shall be punishable as a misdemeanor, which shall be punishable by a fine not to exceed one thousand dollars or by imprisonment in the county jail for not more than six months, or by both such fine and imprisonment.

B. Notwithstanding the procedure for administrative violations provided in Chapters 1.08 through 1.10, no notice to correct as provided in Section 1.09.023 shall be required prior to issuance of a notice of administrative violation.

C. Each of the sanctions for administrative violations identified in Section 1.09.013 shall be available for enforcement of this chapter.

D. Based on the criteria for the imposition of administrative violations set forth in Section 1.09.014, a violation of this chapter shall be deemed a Level C violation, as that term is described in Section 1.09.012. The range of monetary sanctions available for a violation of this chapter shall be as set forth in Section 1.09.012(A).

E. Any person who violates any provision of this chapter shall be guilty of a separate offense for each and every day which any such person commits, continues, permits, or causes a violation thereof and, shall be punished accordingly. (Ord. 958 § 2 (part), 2002) SECTION 5 SCOPE
Except as set forth in this ordinance, all other provisions of the Folsom Municipal Code shall remain in full force and effect.

SECTION 6 SEVERABILITY
If any section, subsection, sentence, clause, or phrase in this Ordinance or any part thereof is for any reason held to be unconstitutional, invalid, or ineffective by any court of competent jurisdiction, such decision shall not affect the validity or effectiveness of the remaining portions of this Ordinance or any part thereof. The City Council declares that it would have passed each section irrespective of the fact that any one or more section, subsection, sentence, clause, or phrase be declared unconstitutional, invalid, or ineffective.

01/13/2026 Item No.5.

Ordinance No. 1359

SECTION 7 NO MANDATORY DUTY
This Ordinance is not intended to and shall not be construed or given effect in a manner that imposes upon the City or any officer or employee thereof a mandatory duty of care towards persons and property within or without the City, so as to provide a basis of civil liability for damages, except as otherwise imposed by law.

SECTION 8 EFFECTIVE DATE
This ordinance shall become effective thirty (30) days from and after its passage and adoption, provided it is published in full or in summary within twenty (20) days after its adoption in a newspaper of general circulation in the City.

This ordinance was introduced and the title thereof read at the regular meeting of the City Council on December 9, 2025, and the second reading occurred at the regular meeting of the City Council on January 13, 2026.

On a motion by Councilmember seconded by Councilmember , the foregoing ordinance was passed and adopted by the City Council of the City of Folsom, State of California, this 13th day of January, 2026, by the following roll-call vote:

AYES: Councilmember(s):

NOES: Councilmember(s):

ABSENT: Councilmember(s):

ABSTAIN: Councilmember(s):

__________________________________
Justin Raithel, MAYOR

ATTEST:

______________________________
Christa Freemantle, CITY CLERK

01/13/2026 Item No.5.

Folsom City Council
Staff Report

1 MEETING DATE:

1/13/2026
AGENDA SECTION:

Consent Calendar
SUBJECT: Updating Appointment of City Council Representatives to Regional Boards/Commissions

FROM: City Clerk's Department

RECOMMENDATION

Staff requests that the City Council update the appointment of City Council representatives to regional boards/commissions.

BACKGROUND / ISSUE

In addition to their primary duties on the City Council, the Mayor and Councilmembers represent the City of Folsom on various regional bodies. These assignments ensure that Folsom’s interests are effectively advocated for in broader discussions regarding transportation, housing, economic development, and environmental sustainability. Through this participation, the Council plays a vital role in shaping policies that impact both the city and the greater Sacramento region.

Current assignment proposals are based on the individual interests and expertise of Councilmembers, allowing for informed and effective advocacy. Furthermore, the distribution of these roles seeks to equitably allocate responsibilities - including positions that offer stipends - to maintain a fair and balanced workload across the Council. This collaborative approach leverages the unique strengths of each member, strengthening Folsom’s regional influence and ensuring professional, impactful governance.

2026 Updates
Regional assignments are periodically reviewed and adjusted to meet current needs. Minor modifications have already been made for the Retirement Board of Authority (under the Mayor’s authority) and the Greater Sacramento Economic Council (under the City Manager’s authority). An additional modification is proposed for the Sacramento Homeless Policy Council.

01/13/2026 Item No.6.
2 Please note that the Sacramento Homeless Policy Council may undergo a formal name change during the upcoming year. Should this occur, the City Council’s appointments will automatically transition to the successor entity to ensure continuity of representation without requiring further formal action.

POLICY / RULE

Each regional board and commission operates under its own specific enabling legislation, bylaws, or joint powers agreements, which dictate the composition and appointment process for board members.

The City Council exercises its authority to designate representatives to these external bodies to ensure Folsom’s interests are represented in accordance with each entity’s governing documents.

ATTACHMENTS:

1. Proposed City Council Regional Representation Assignments

Respectfully submitted,

Christa Freemantle, CMC
City Clerk

01/13/2026 Item No.6.

Folsom City Council – Regional Representation Assignments

PROPOSED FOR APPROVAL January 13, 2026

Mike Kozlowski
Councilmember
District 1
Primary Representative
• Capital Southeast Connector Joint Powers Authority
• SACOG (Sacramento Area Council of Governments)

Alternate Representative
• Folsom TEDCorp
• Sacramento Metro Cable Commission

Justin Raithel
Mayor
District 2
Primary Representative:
• 2x2 with Folsom Cordova Unified School District
• Greater Sacramento Economic Council (GSEC)
• Retirement Board of Authority (Folsom)
• Sacramento Homeless Policy Council
• Sacramento Sewer District
• Sacramento Transportation Authority (STA)

Alternate Representative
• Sacramento Area Council of Governments (SACOG)

Sarah Aquino
Councilmember
District 3
Primary Representative:
• Sacramento Metropolitan Air Quality Management District • Sacramento-Placerville Transportation Corridor JPA
Alternate Representative
• Capital Southeast Connector Joint Powers Authority
• Sacramento Sewer District
• Sacramento Transportation Authority

Barbara Leary
Councilmember
District 4
Primary Representative:
• Regional Water Authority
• Sacramento Metro Cable Commission
Alternate Representative:
• Regional Transit
• Sacramento Central Groundwater Authority
• Sacramento Groundwater Authority
• Sacramento Homeless Policy Council

Anna Rohrbough
Vice Mayor
District 5

Primary Representative
• 2x2 – City of Folsom / FCUSD
• Folsom TEDCorp
• Regional Transit
• Retirement Board of Authority (Folsom)
Alternate Representative
• Greater Sacramento Economic Council
• Sacramento Metropolitan Air Quality Management District • Sacramento-Placerville Transportation Corridor JPA

01/13/2026 Item No.6.

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to facilitate double-sided printing
and minimize paper use.

01/13/2026 Item No.6.

Folsom City Council
Staff Report

1 MEETING DATE:

1/13/2026
AGENDA SECTION:

Consent Calendar
SUBJECT: Resolution No. 11529 - A Resolution Authorizing the City Manager to Execute an Additional N on-Exclusive Agreement with an Approved Licensed Contractor to Implement the Sacramento Housing and Redevelopment Agency I nter-Agency Contract for the Seniors Helping Seniors Home Repair Program , Utilizing the $200,000 Allocation from the Community Development Block Grant Fund (Fund 201)

FROM: Community Development Department

RECOMMENDATION / CITY COUNCIL ACTION

Staff recommends that the City Council move to adopt Resolution No. 11529 - A Resolution Authorizing the City Manager to Execute an Additional Non -Exclusive Agreement with an Approved Licensed Contractor to Implement the Sacramento Housing and Redevelopment Agency Inter -Agency Contract for the Seniors Helping Seniors Home Repair Program , Utilizing the $200,000 Allocation from the Community Development Block Grant Fund (Fund 201).

BACKGROUND / ISSUE

On June 13, 2023, the City Council approved Resolution No. 11045, authorizing the City Manager to execute an agreement with the Sacramento Housing and Redevelopment Agency (SHRA) for continued participation in the Community Development Block Grant (CDBG) Program from January 1, 2024 to December 31, 2026. As part of the C ity’s participation in CDBG, the City Manager will contract with SHRA to receive $200,000 in CDBG funds to subsidize the City of Folsom Seniors Helping Seniors (SHS) Program for FY 2025-26.

On June 10, 2025, the City Council approved Resolution No. 11393 granting the City Manager the authority to execute agreements with five contractors - Benchmark Plumbing, F.L. Electric Service Company, Gray Construction a nd Securement Services, Inc. , Roseville Sheet Metal

01/13/2026 Item No.7.
2 Inc., and Sacramento City Building Co. - to provide contractor services in accordance with the SHRA Seniors Helping Seniors Inter-Agency Contract. All five contracts have been executed and qualified work assigned in keeping with the City’s Seniors Helping Seniors Program.

Subsequently, Gray Construction and Securement Services divested a portion of their business and established a separate construction firm- EZ Lift Accessibility Products Inc. (EZ Lift). One of the services assumed by EZ Lift includes the installation of porch wheelchair lifts for mobile home clients. Staff determined it would be beneficial to add this contractor to the City’s existing pool to ensure continuity of this service moving forward.

POLICY / RULE

In accordance with Section 2.36.120 of the Folsom Municipal Code, City Council approval is required for professional services contracts in excess of $75,049.

ANALYSIS
The Seniors Helping Seniors (SHS) Home Repair Program provides support to low -income, age-qualified senior citizens living in the City of Folsom. Its purpose is to assist residents who lack the financial resources to make essential home repairs related to health and safety. The program serves both manufacture d and non-manufactured homes and responds to more than 300 service requests each year.

As noted in the background section of this report, SHS provides wheelchair lift installations for mobile home clients. To ensure the continuity of this essential service, staff recommends adding EZ Lift to the City’s pool of contractors. EZ Lift not only holds the required license for lift installation but also maintains a General Building Contractor’s license, qualifying the company to perform a broad range of general contracting work beyond lifts. This added capacity strengthens the City’s ability to address a wide range of repair needs.

The SHS Program occasionally experiences minor delays in responding to requests, particularly during periods of high demand or when contractor availability is limited.

Expanding the pool of qualified contractors will help reduce these delays and ensure seniors continue to receive timely assistance with critical home repairs and modifications.

With approval of this resolution, and execution of the required cont ract, the following additional contractor will assist the City with providing non- exclusive contractor services as needed for the SHS Program:

• EZ Lift Accessibility Products, Inc.

FINANCIAL IMPACT

There is no financial impact to the City’s General Fund. The CDBG funding program requires the expenditure of funds with reimbursement requested and therefore the Community

01/13/2026 Item No.7.
3 Development Block Grant Fund (Fund 201) is utilized to cover the upfront contractor and material costs and invoices are sent to SHRA monthly for reimbursement from the grant proceeds. For the Fiscal Year 2025-26, a total of $ 200,000 of the Community Development Block Grant Fund (Fund 201) has been appropriated for the SHS Program to cover the cost of materials and outside contractors.

ENVIRONMENTAL REVIEW

This action by the City Council is exempt from environmental review pursuant to Section 15061(b)(3) (Review for Exemption) of the California Environmental Quality Act.

ATTACHMENT

Resolution No. 11529 - A Resolution Authorizing the City Manager to Execute an Additional Non-Exclusive Agreement with an Approved Licensed Contractor to Implement the Sacramento Housing and Redevelopment Agency Inter -Agency Contract for the Seniors Helping Seniors Home Repair Program , Utilizing the $200,000 Allocation from the Community Development Block Grant Fund (Fund 201)

Submitted,

Pam Johns, Community Development Director

01/13/2026 Item No.7.

Attachment 1

01/13/2026 Item No.7.

Resolution No. 11529

RESOLUTION NO. 11529

A RESOLUTION AUTHORIZING THE CITY MANAGER TO EXECUTE AN

ADDITIONAL NON-EXCLUSIVE AGREEMENT WITH AN APPROVED LICENSED

CONTRACTOR TO IMPLEMENT THE SACRAMENTO HOUSING AND

REDEVELOPMENT AGENCY INTER-AGENCY CONTRACT FOR THE SENIORS HELPING SENIORS HOME REPAIR PROGRAM, UTILIZING THE $200,000

ALLOCATION FROM THE COMMUNITY DEVELOPMENT BLOCK GRANT FUND (FUND 201)

WHEREAS, on June 13, 2023, the City Council adopted Resolution No. 11045, granting the City Manager the authority to enter into an agreement with the Sacramento Housing and Redevelopment Agency (SHRA) for continued participation in the Community Development Block Grant (CDBG) Program from January 1, 2024 to December 31, 2026; and

WHEREAS, funds from the CDBG Program subsidize the City’s Seniors Helping Seniors (SHS) Program, which provides eligible senior citizens in the City with financial assistance to repair and remedy health and safety hazards in their homes; and

WHEREAS, on June 10, 2025, the City Council approved Resolution No. 11393 granting the City Manager authority to execute agreements with five contractors ( Gray Construction and Securement Services, Inc.) to provide services in accordance with the SHRA Seniors Helping Seniors Inter-Agency Contract; and

WHEREAS, Gray Construction and Securement Services subsequently divested a portion of their business and established EZ Lift Accessibility Products Inc., which assumed responsibility for installation of porch wheelchair lifts for mobile home clients; and

WHEREAS, staff has determined that adding EZ Lift Accessibility Products Inc. to the City’s pool of contractors will ensure continuity of wheelchair lift installation services and expand the City’s capacity to address a wide range of repair needs under the SHS Program; and

WHEREAS, the proposed Fiscal Year 2025-26 Budget includes an appropriation of $200,000 in the Community Development Block Grant Fund (Fund 201) for the SHS Program ; and

WHEREAS, in accordance with Chapter 2.36 of the Folsom Municipal Code, contracts of $75,049 or greater shall be approved by the City Council.

NOW, THEREFORE, BE IT RESOLVED that the City Council of the City of Folsom hereby authorizes the City Manager to execute an additional non-exclusive contract with EZ Lift Accessibility Products Inc. to provide services under the City’s S HS Program through June 30, 2026, not-to-exceed a combined total of $200,000 for all said contracts.

01/13/2026 Item No.7.

Resolution No. 11529

PASSED AND ADOPTED this 13th day of January 2026, by the following roll-call vote:

AYES: Councilmember(s):

NOES: Councilmember(s):

ABSENT: Councilmember(s):

ABSTAIN: Councilmember(s):

Justin Raithel, MAYOR

ATTEST:

Christa Freemantle, CITY CLERK

01/13/2026 Item No.7.

Folsom City Council
Staff Report

1 MEETING DATE:

1/13/2026
AGENDA SECTION:

Consent Calendar
SUBJECT: Resolution No. 11530 – A Resolution Authorizing the City Manager to Execute a Contract with The Permanente Medical Group, Inc. (TPMG) to Provide the Folsom Fire Department a Medical Director

FROM: Fire Department

RECOMMENDATION / CITY COUNCIL ACTION

The Fire Department recommends that the City Council adopt Resolution No. 11530 – A Resolution Authorizing the City Manager to Execute a Contract with The Permanente Medical Group, Inc. (TPMG) to provide Folsom Fire Department a Medical Director.

BACKGROUND / ISSUE

The Folsom Fire Department provides a paramedicine- based level of pre-hospital emergency care for sick and injured persons throughout all areas of the City. The Fire Department provides this level of service by having paramedics on all fire apparatus including fire engines, fire trucks, and ambulances. To provide this advanced level of service, some medications , such as narcotics, require a physician to order (California Code of Regulations, Title 22, 100168). A physician also provides general medical oversight, provides EMS direction and collaborates with the EMS Division Chief to provide continuous quality improvement (CQI) to field personnel. The Medic al Director also p rovides input and direction for county EMS protocols and provides medical expertise coordinated with the Fire Department EMS Chief.

On December 13, 2022, Resolution 10955 authoriz ed the City Manager to execute a contract with The Permanente Medical Group Inc. to provide the Folsom Fire Department a medical director. This three -year contract expires in January 2026. Prior to this resolution, one Fire Service Medical Director was shared between five agencies (Sacramento Metropolitan Fire

01/13/2026 Item No.8.
2 District, Cosumnes Fire Department, Sacramento City Fire Department, Sacramento Regional Fire Emergency Communication Center, and Folsom Fire Department). As demand for the Fire Service Medical Director began to increase and individual agencies were not receiving the guidance, oversight, training or medical direction required, one Medical Director was no longer sufficient.

Staff is recommending that the City approve a new three-year agreement with The Permanente Medical Group, Inc. and continuing to use Doctor Bryan Sloane as the Folsom Fire Department Medical Director. The total three-year contract price is $115,200 ($38,400 per year).

POLICY / RULE

Section 2.36.080, Award of Contracts of the Folsom Municipal Code states, in part, that contracts for supplies, equipment, services, and construction with an estimated value of $75,049 or greater shall be awarded by City Council.

Section 2.36.120 Contracting for designated professional services of the Folsom Municipal Code does not require a competitive bid process.

ANALYSIS

The previous three -year contract with The Permanente Medical Group Inc. to provide the Folsom Fire Department (FFD) a medical director, expires in January 2026. A non-renewal of a contract for medical direction services would leave FFD without medical direction and oversight of our pre-hospital, paramedic program.

The Medical Director is an advocate for the Fire Services agency they represent at the Sacramento County Emergency Medical Services Agency (SCEMSA). The Medical Director has direct input in discussion of paramedic scope of practice, training, and steering the region to modern and advanced medical care. The Medical Director not only assists in creating new protocols but is also instrumental in providing department specific training to the paramedics on these new protocols.

With a dedicated Medical Director to FFD, training can be specialized to meet the needs of FFD. Department-specific EMS data can be analyzed to determine areas where improvement can be made. Additional training can be made available such as cadaver labs sponsored by the Medical Director. This allows for hands -on training of actual high- risk, low frequency procedures in real time on real “patients”. This type of training is highly valuable and was not possible under the previous medical director system.

The Folsom Fire Medical Director provides medical oversight and expertise to continuous quality improvement (CQI) programs by reviewing and analyzing EMS effectiveness, system trends and needs to ensure EMS system excellence. In addition, the Folsom Fire Medical

01/13/2026 Item No.8.
3 Director develops and assists in the formulation of policies and procedures; participates in call reviews with firefighter/paramedics, and firefighter/EMTs; assists in problem solving in field clinical decision making ; and participate s in investigations/disciplinary actions of EMS personnel.

The Folsom Fire Medical Director also oversee s all EMS exposure and post exposure prophylaxis programs for infectious diseases.

FINANCIAL IMPACT

The cost for the Medical Director services was included in the f iscal year 202 5-26 Fire Department operating budget in the General Fund (Fund 010) . The contract for the Medical Director services will be for a three-year period in the amount of $115,200 or $38,400 per year.

The contract amount will cover Medical Director services exclusively for the Folsom Fire Department.

ENVIRONMENTAL REVIEW

This action is not considered a project under Section 15061(b)(3) of the California Environmental Quality Act Guidelines, and as such is exempt from environmental review.

ATTACHMENTS

1. Resolution No. 11530 – A Resolution Authorizing the City Manager to Execute a Contract with The Permanente Medical Group, Inc. (TPMG) to Provide Folsom Fire Department a Medical Director.

Submitted,

Jason Solak, Fire Chief

01/13/2026 Item No.8.

Resolution No. 11530

RESOLUTION NO. 11530

A RESOLUTION AUTHORIZING THE CITY MANAGER TO EXECUTE A
CONTRACT WITH THE PERMANENTE MEDICAL GROUP, INC. (TPMG) TO

PROVIDE THE FOLSOM FIRE DEPARTMENT A MEDICAL DIRECTOR

WHEREAS, City of Folsom desires to engage a licensed physician to provide Medical Director services to the Fire Department; and,

WHEREAS, the Medical Director provides medical oversight, EMS direction, and collaborates with the EMS Division Chief to provide continuous quality improvement to field personnel; and,

WHEREAS, the agreement will be for the amount of $38,400 annually for a three year period for a total of $115,200; and,

WHEREAS, the cost for the Medical Director services was included in the fiscal year 2025-26 Fire Department operating budget in the General Fund (Fund 010); and

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

NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Folsom that the City Man ager is authorized to execute a three-year agreement with The Permanente Medical Group, Inc. representing Bryan Sloane, MD, for a total amount not to exceed $115,200.

PASSED AND ADOPTED on this 13
th day of January 2026, by the following roll-call
vote:

AYES: Councilmembers:

NOES: Councilmembers:

ABSTAIN: Councilmembers:

ABSENT: Councilmembers:

Justin Raithel, MAYOR
ATTEST:

______________________________
Christa Freemantle, CITY CLERK

01/13/2026 Item No.8.

Folsom City Council
Staff Report

1 MEETING DATE:

1/13/2026
AGENDA SECTION:

Consent Calendar
ITEM TITLE: Resolution No. 11531 - A Resolution Setting Aside Approval and CEQA Determination for the 603 Sutter Street Mixed Use Project (PN 17-145) and All Associated Approvals

FROM: City Attorney's Office

RECOMMENDATION / CITY COUNCIL ACTION
Adopt Resolution No. 11531 - A Resolution Setting Aside the Approval and CEQA Determination for the 603 Sutter Street Mixed Use Project (PN-17-145) and All Associated Approvals.

BACKGROUND / ISSUE
On September 6, 2023, the Historic District Commission approved a design review application (PN 17-145) for development of a three -story, 12,177-square-foot mixed-use building on a 0.17- acre site located at 603 Sutter Street (the Project) . Approval of the Project was based on a determination that the Project was exempt from environmental review pursuant to the Class 32 Infill Exemption found in CEQA Guidelines section 15332 and that none of the potential exceptions to use of the categorical exemption appli ed. A Folsom resident appealed the decision of the Historic District Commission to City Council and on October 10, 2023, City Council denied the appeal and approved the Project.

On or about December 4, 2023, the resident filed suit against the City and Cedrus Holdings Limited Partnership (the Project Applicant) in Sacramento County Superior Court, Case No. 23WM000125, challenging approval of the Project and alleging generally that the Project was not exempt from CEQA, in addition to other claims.

After the administrative record was certified, the matter was briefed and argued before the Court.

The City was represented by outside counsel selected, retained and paid for by the Project Applicant, consistent with a standard condition of approval.

01/13/2026 Item No.9.
2 On or about November 21, 2025, the Court issued a Judgment Granting Peremptory Writ of Mandate ordering the City to set aside the approval and CEQA determination for the Project and to set aside any other permit, license, or approval issued or granted for the Project in reliance thereon (the Judgment). To comply with the Judgment, the City must take affirmative steps to set aside approval of the Project and all associated approvals.

POLICY / RULE
California Code of Civil Procedure section 1087 requires compliance with a peremptory writ of mandate. Code of Civil Procedure section 1097 imposes penalties for disobedience to such a writ, including the issuance of fines and other relief necessary and proper for the complete enforcement of the writ.

ANALYSIS
In this case, the Judgment includes issuance of a peremptory writ of mandate from the Sacramento County Superior Court directing the City to take the actions described in this report and the accompanying City Council Resolution, and then to file and serve a return to the writ no later than 90 days after entry of judgment. The return must specify the actions taken to comply with the terms of the writ.

Compliance with the peremptory writ of mandate is required by law. Resolution No. 11531 is intended to accomplish the actions required by the Court and to document the City’s compliance with the terms of the writ of mandate.

FINANCIAL IMPACT
None.

ENVIRONMENTAL REVIEW
CEQA applies only to projects that the City proposes to carry out, support, or approve. Projects that the City rejects or disapproves are exempt from CEQA pursuant to Public Resources Code section 21080(b)(5) and CEQA Guidelines section 15270(a). Because the action proposed in this report is to set aside approval of the Project and all associated approvals, it is exempt from CEQA.

ATTACHMENTS

1. Resolution No. 11531 - A Resolution Setting Aside Approval and CEQA Determination for the 603 Sutter Street Mixed Use Project (PN-17-145) and All Associated Approvals

2. Judgment Granting Peremptory Writ of Mandate, Sacramento County Superior Court Case No. 23WM000125

Submitted,

Steven Wang
City Attorney

01/13/2026 Item No.9.

Attachment 1

01/13/2026 Item No.9.

Resolution No. 11531

RESOLUTION NO. 11531

A RESOLUTION SETTING ASIDE APPROVAL AND CEQA DETERMINATION FOR THE 603 SUTTER STREET MIXED USE PROJECT (PN 17-145) AND ALL ASSOCIATED APPROVALS

WHEREAS, on September 6, 2023, the Historic District Commission approved a design review application (PN 17-145) for development of a three-story, 12,177-square-foot mixed-use building on a 0.17- acre site located at 603 Sutter Street (the Project); and

WHEREAS, approval of the Project was based on a determination that the Project was exempt from environmental review pursuant to the Class 32 Infill Exemption found in CEQA Guidelines section 15332 and that none of the potential exceptions to use of the categorical exemption applied; and

WHEREAS, Folsom resident Robert Delp appealed the decision of the Historic District Commission to City Council; and

WHEREAS, on October 10, 2023, City Council denied the appeal and approved the Project; and

WHEREAS, on or about December 4, 2023 , Mr. Delp filed suit against the City and Cedrus Holdings Limited Partnership (the Project Applicant) in Sacramento County Superior Court , Case No. 23WM000125, challenging approval of the Project and alleging generally that the Project was not exempt from CEQA, in addition to other claims; and

WHEREAS, on or about November 21, 2025, the Court issued a Judgment Granting Peremptory Writ of Mandate ordering the City to set aside the approval and CEQA determination for the Project and to set aside any other permit, license, or approval issued or granted for the Project in reliance thereon (the Judgment).

NOW, THEREFORE, BE IT RESOLVED that the City Council of the City of Folsom hereby sets aside the approval and CEQA determination for the Project based on the Judgment in Case No. 23WM000125; and

BE IT FURTHER RESOLVED that any and all permits, licenses, or approvals issued or granted for the Project in reliance on approval of the Project are hereby set aside, consistent with the Judgment in Case No. 23WM000125.

PASSED AND ADOPTED this 13th day of January, 2026, by the following roll-call vote:

AYES: Councilmember(s):

NOES: Councilmember(s):

ABSENT: Councilmember(s):

ABSTAIN: Councilmember(s):
__________________________________
Justin Raithel, MAYOR

ATTEST:
______________________________
Christa Freemantle, CITY CLERK

01/13/2026 Item No.9.

Attachment 2

01/13/2026 Item No.9.

01/13/2026 Item No.9.

01/13/2026 Item No.9.

01/13/2026 Item No.9.

Folsom City Council
Staff Report

1 MEETING DATE:

1/13/2026
AGENDA SECTION:

Consent Calendar
SUBJECT: Resolution No. 11532 – A Resolution Authorizing the City Manager to Execute an Agreement with Pur Water LLC for $971,500 from the Water Operating Fund (Fund 520) f or the S upply of S odium Hypochlorite for the Water Treatment Plant and $153,120 from the General Fund (Fund 010) for the S upply of S odium Hypochlorite for the Steve Miklos Aquatic Center

FROM:

Utilities Department and Parks and Recreation Department

RECOMMENDATION / CITY COUNCIL ACTION

The Utilities Department and Parks and Recreation Department recommend that the City Council pass and adopt Resolution No. 11532 - A Resolution Authorizing the City Manager to Execute an Agreement with Pur Water LLC for $971,500 from the Water Operating Fund (Fund 520) for the Supply of S odium Hypochlorite for the Water Treatment Plant and $153,120 from the General Fund (Fund 010) for the Supply of Sodium Hypochlorite for the Steve Miklos Aquatic Center.

BACKGROUND / ISSUE

The City of Folsom receives 100% of its water supply from Folsom Lake. The City’s Water Treatment Plant treats up to 50 million gallons per day of this supply to provide potable water to its customers. To meet the California Department of Public Health’s drinking water standards, the water treatment process uses a combination of flocculation/sedimentation pretreatment, conventional gravity media filters, and disinfection. An essential chemical for this process is sodium hypochlorite.

Water Treatment Plant staff estimates a need for 165,000 gallons of sodium hypochlorite for calendar year 2026 and 170,000 gallons of sodium hypochlorite for calendar year 2027.

01/13/2026 Item No.10.
2 Sodium Hypochlorite is used at the Steve Miklos Aquatic Center as a sanitizer to keep the swimming pools free from disease-causing microorganisms. It is therefore an important part of aquatic center operations for maintaining a safe facility for community recreation.

Aquatic Center staff estimates a need for 26,400 gallons of sodium hypochlorite for calendar year 2026 and 26,400 gallons of sodium hypochlorite for calendar year 2027.

In an effort to reduce overall chemical costs, the City developed a request for bids to promote a competitive bid environment . Through this process, Pur Water LLC provided the lowest responsive and responsible bid for providing sodium hypochlorite for use at the City of Folsom Water Treatment Plant and the Steve Miklos Aquatic Center.

This resolution will authorize the City Manager to execute an agreement with Pur Water LLC for the supply of sodium hypochlorite for the Water Treatment Plant and the Steve Miklos Aquatic Center.

POLICY / RULE

In accordance with Chapter 2.36 of the Folsom Municipal Code, contracts for supplies costing $75,049 or greater shall be awarded by the City Council.

ANALYSIS

On November 28, 2025, the city publicly advertised a request for bids for supply and delivery of sodium hypochlorite in the Sacramento Bee with bid documents made available starting December 1, 2025 on virtual-bid.com and publicpurchase.com. Bids were opened on December 18, 2025 and Pur Water LLC was the lowest responsive and responsible bidder for the supply of sodium hypochlorite to the City of Folsom.

The following bids were received by the city on December 18, 2025 for the supply and delivery of sodium hypochlorite for the City of Folsom for two years:

Pur Water LLC Poolcorp Univar Solutions LLC
Item Est. Qty
(Gal) $/Gal Total Price $/Gal Total Price $/Gal Total Price WTP – 2026 165,000 $2.90 $478,500.00 $3.22 $531,300.00 $3.25 $536,250.00 WTP – 2027 170,000 $2.90 $493,000.00 $3.22 $547,400.00 $3.35 $569,500.00 Aquatic Ctr – 2026 26,400 $2.90 $76,560.00 $3.22 $85,008.00 $3.85 $101,640.00 Aquatic Ctr - 2027 26,400 $2.90 $76,560.00 $3.22 $85,008.00 $3.95 $104,280.00 Total Bid Price $1,124,620.00 $1,248,716.00 $1,311,670.00

Previous bids conducted by the City’s Utilities Department included utilizing a bid proposal from the Bay Area Chemical Consortium (BACC). In 2022, the bid received through the BACC included a per gallon price of $2.89, which was an increase from the BACC bid in 2020 that yielded a per gallon price of $0.85. In 2023 the City issued its own bid separate from the BACC bid and the bid results included a $2.29 per gallon price in 2024 and a $2.29 per gallon price in 2025. The BACC bid for 2024 was $3.25 per gallon and $3.35 per gallon for 2025. Given the City’s previous

01/13/2026 Item No.10.
3 bid achieved a lower per gallon price than the BACC bid, City staff issued a separate bid from the BACC for this bid proposal. The City’s 2026 bid proposal yielded a lower cost per gallon than the BACC proposal.

The Utilities Department and Parks and Recreation Department recommend that the City Council authorize the City Manager to execute an agreement with Pur Water LLC for the purchase of sodium hypochlorite for the next two years for use at the Water Treatment Plant for a total not to exceed amount of $971,500 and for use at the Steve Miklos Aquatic Center for a total not to exceed amount of $153,120.

FINANCIAL IMPACT

This agreement will cover the two calendar years 2026 and 2027, for a total not-to-exceed amount of $1,124,620. Funding for this agreement is included in the Fiscal Year 2025-26 Operating Budget at $120,000 under the Water Operating Fund (Fund 520) and $130,000 under the General Fund (Fund 010). It is also planned to be included in the Water Operating Fund (Fund 520) and General Fund (Fund 010) budgets for FY2026-27 and FY2027-28 as part of the annual budgeting process.

ENVIRONMENTAL REVIEW

This action is exempt from environmental review under the California Environmental Quality Act (CEQA), as it is related to Section 15301, Existing Facilities.

ATTACHMENT

Resolution No. 11532 - A Resolution Authorizing the City Manager to Execute an Agreement with Pur Water LLC for $971,500 from the Water Operating Fund (Fund 520) for the Supply of Sodium Hypochlorite for the Water Treatment Plant and $153,120 from the General Fund (Fund 010) for the Supply of Sodium Hypochlorite for the Steve Miklos Aquatic Center

Submitted,

Marcus Yasutake, Director

UTILITIES DEPARTMENT

01/13/2026 Item No.10.

Resolution No. 11532

RESOLUTION NO. 11532

A RESOLUTION AUTHORIZING THE CITY MANAGER TO EXECUTE AN AGREEMENT WITH PUR WATER LLC FOR $971,500 FROM THE WATER OPERATING FUND (FUND 520)

FOR THE SUPPLY OF SODIUM HYPOCHLORITE FOR THE WATER TREATMENT PLANT AND $153,120 FROM THE GENERAL FUND (FUND 010) FOR THE SUPPLY OF SODIUM

HYPOCHLORITE FOR THE STEVE MIKLOS AQUATIC CENTER

WHEREAS, sodium hypochlorite is an essential chemical to each phase of the City’s water treatment plant operation; and

WHEREAS, the aquatic center uses sodium hypochlorite for sanitizing pool water; and

WHEREAS, on December 18, 2025, the city received bids for sodium hypochlorite; and

WHEREAS, the City’s bid proposal was lower on a per gallon price than the bid proposal offered by the Bay Area Chemical Consortium; and

WHEREAS, Pur Water LLC was the lowest responsible, responsive bidder; and

WHEREAS, sufficient funds are budgeted and available in the FY 2025-26 Water Operating Fund (Fund 520) and are also planned to be included in the Water Operating Fund budgets for Fiscal Year 2026- 27 as part of the annual budget adoption process; and

WHEREAS, sufficient funds are budgeted and available in the FY 2025- 26 General Fund (Fund 010) and are also planned to be included in the General Aquatic Center Operating Fund budgets for Fiscal Year 2026-27 as part of the annual budget adoption process; 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 an agreement with Pur Water LLC for the Supply of Sodium Hypochlorite for an amount not-to-exceed $1,124,620 over a two-year period.

PASSED AND ADOPTED this 13
th day of January 2026, by the following roll-call vote:

AYES: Councilmember(s):

NOES: Councilmember(s):

ABSENT: Councilmember(s):

ABSTAIN: Councilmember(s):

___________________________________
Justin Raithel, MAYOR

ATTEST:

____________________________________
Christa Freemantle, CITY CLERK

01/13/2026 Item No.10.

Folsom City Council
Staff Report

1 MEETING DATE:

1/13/2026
AGENDA SECTION:

Consent Calendar
SUBJECT: Resolution No. 11534 - A Resolution Authorizing the City Manager to Amend the FY2025-26 Budget with an Additional Appropriation for Development Engineering Services Contract s in the Amount of $850,000 in the General Fund (Fund 010)

FROM: Community Development Department

RECOMMENDATION / CITY COUNCIL ACTION
Staff respectfully recommends that the City Council move to approve Resolution No. 11534 - A Resolution Authorizing the City Manager to Amend the FY2025-26 Budget with an Additional Appropriation for Development Engineering Services Contracts in the Amount of $850,000 in the General Fund (Fund 010)

BACKGROUND
All engineering plans for proposed development on private property in the City of Folsom are submitted to the Community Development Department, Engineering Division. The submittals are reviewed by qualified plan check staff for conformance to engineering standards and best practices prior to issuance of site improvement permits. Once the site improvement permits are issued and construction begins, qualified construction inspection staff will inspect the site to ensure construction is consistent with the approved plans and requirements.

Development activity in the City each year fluctuates in response to a variety of factors including but not limited to economic conditions, market demand, land use trends, and land availability and readiness. Regardless of the fluctuation, the City is obligated to review plans, issue permits, and conduct inspections in a timely manner.

With the reorganization of services and staffing among various City Departments in October 2025, the Community Development Department Development Engineering Division includes modest baseline staffing levels with five full time equivalent positions for development engineering plan review and inspection services as listed in the table below.

01/13/2026 Item No.11.
2 CDD Engineering Positions # Staff
Development Engineering Manager 1
Senior Civil Engineer 1
Assistant Civil Engineer 2
Senior Construction Inspector 1

With the recent transition of two senior engineering staff (City Engineer and Principal Civil Engineer) to the Public Works Department and a vacancy in our Senior Construction Inspector, Community Development Engineering team is currently operating at about 30% of capacity at a time when construction activity and corresponding demand for plan check and inspection services are relatively high.

Regardless of the current staffing shortages, the City has experienced consistently high levels of citywide development activity over the last ten years exceeding staff capacity in development engineering, especially with new development in the Folsom Plan Area Specific Plan (FPASP).

To meet the customer needs for these higher levels of building development activity and staff vacancies, the City has employed supplemental contract services (on call service contracts) for development engineering, construction inspection, and on -call surveying services paid for by corresponding revenue for services collected under each applicable project.

As authorized by City Council under Resolution 9673 and consistent with M easure W , development activity in the FPASP shall be full cost recovery using a deposit-based system with “time and materials” billing approach for staff time and consultant services associated with development activity. City Council has long authorized staff to manage assignment and oversight of consultant work for both off-site engineering (backbone infrastructure) and on-site engineering work on private development within the FPASP. The City continues primary work assignments under separate contracts with Pinnacle for plan check and inspections and Gerry Young for surveying /mapping work in the FPASP. Additionally, City Council recently approved new on call engineering contracts intended to serve primarily development north of Highway 50 with the occasional assignment for on-site (private development) services at full cost recovery in the FPASP.

For each fiscal year budget, the Community Development team prepares projections for anticipated development activity Citywide for planning, development engineering, and building plan check and inspection services with corresponding revenue estimates based on current fees for projected activity. Each year, the proposed budget includes more conservative estimates for revenue associated with development activity and a flat contract budget allocation is appropriated for each of the primarily service areas as an estimated operational expense for each division . As development activity occurs throughout the fiscal year, revenue and corresponding demand for se rvices (in-house staffing and supplemental contract) are appropriated and adjusted as needed with City Council authorization.

The table below shows historical projected and actual revenue and contract expense data for development engineering services for the last full five-year period (including the pandemic).

The table also includes revenue and contract expenditure data for the first six months of this fiscal year. Revenue has consistently exceeded projections by significant amounts. As a direct

01/13/2026 Item No.11.
3 correlation, contract costs for supplemental plan check and inspection service demands over that same five-year period have consistently exceeded contract budget expense allocations. See the projected and actual revenue numbers for development engineering , as well as the initial and actual budget allocation for contract engineering services for the last full five-year period in the table below. The table also includes projected and actual revenue and contract numbers for the first 6 months of the current fiscal year.

CDD Development Engineering Revenue and Contract Expense History Fiscal Year Projected
Revenue Actual Revenue Initial Contracts
Budget Amount
Actual Contract
Expense
FY 2020/21 $1,042,708 $2,473,221 $75,000 $ 1,657,199
FY 2021/22 $1,824,500 $2,309,522 $90,000 $ 2,257,112
FY 2022/23 $1,268,643 $1,722,910 $550,000 $ 2,596,382
FY 2023/24 $976,958 $1,785,758 $690,000 $ 1,879,224
FY 2024/25 $993,908 $3,140,431 $690,000 $ 1,425,708
FY 2025/26* $882,200 $1,450,560 $690,000 $851,682
* 6-month data July 1 through Dec 31, 2025

While the total annual consultant costs reflect services both north and south of Highway 50, most consultant costs involved pass through funding for consultant engineering services in the FPASP south of Highway 50 for both backbone infrastructure ( off sites ) and private development (on sites). Over the last full five-year period, annual engineering consultant costs varied widely from a low of $ 1,467,821 and a high of $ 2,596,382 in response to the volume, type, and level of services required to meet the customer need. Generally, engineering fees are collected at project or permit submittal, but for backbone infrastructure and larger projects south of Highway 50, the reconciliation of deposit and reimbursement or payment of final invoices owed can lag behind the actual completion of the work by many months (overlapping fiscal year periods). Ultimately, the full cost recovery system for development activity in the Folsom Plan Area ensures that the expense for engineering services will not exceed the revenue required for same engineering services.

As shown in the table above, actual development engineering revenue in the first half of this fiscal year is 160% of the total revenue pro jected for this year. With higher-than-expected workload, we’ve also recognized increased expenses for contract work in this first half of the fiscal year. Specifically, with invoices received to date, contract expenses of $851,682 in the first half of the year are 125% of the total contract budget of $690,000. This is exacerbated by the staff transitions and vacancies in development engineering and we expect it will take another three or four months to be fully staffed in development engineering.

Staff recommends the City Council approve an amendment to the FY2025-26 budget with an additional appropriation for development engineering services contracts in the amount of $850,000 in the General Fund (Fund 010) to cover anticipated contract expenses for the second half of the fiscal year. The contract expense will continue to track with engineering project and permit revenue for full cost recovery.

01/13/2026 Item No.11.
4 POLICY / RULE
As set forth in Section 5.05H of the City Charter, prior to the City Council making any supplemental appropriation, the City Manager shall certify that monies in excess of those estimated in the budget are available for appropriation. Any such supplemental appropriation may be made for the fiscal year by resolution up to the amount of any available excess funds.

ANALYSIS
As described in the background section of this report, Folsom has experienced consistently high volumes of development engineering permit, plan check, and inspection activity over the last ten years exceeding our baseline staffing capacity. In order to meet the engineering service demand that exceeds our staff capacity and/or expertise, Folsom has utilized consultant service contracts for development engineering plan check, surveying, and/or inspection services. For development activity north of highway 50 and for some on -site private development activity south of highway 50, engineering staff assign work to on -call contractors who receive a percentage of our plan check fee or a flat hourly ra te for inspection services. For development activity south of highway 50, engineering staff utilize separate contracts for backbone infrastructure, off site engineering work on public property, and some on-site work with deposit and reimbursement agreement s for full cost recovery. All contract revenue and expenses are accounted for in the City’s general fund through the same contract account.

The current fiscal year budget includes engineering revenue projections of $88 2,200 and contract expense appropriation of $690,000. In the first six months of this year, Community Development prepares revenue projections based on discussions with potential developers, landowners, and stakeholders about approved or planned entitlements and projects to predict the level of development activity for the next fiscal year. This projection is used to identify any additional staffing needs/costs and to estimate supplemental contract services needs/costs.

Historically, the City’s adopted budget includes a conservative percentage of the Staff revenue projection for development activ ity. For the last ten -year period, actual development activity and corresponding revenue and consultant contract costs have exceeded both the City’s adopted budget and the Staff projections.

Actual development engineering revenue in the first half of this fiscal year is $1,450,560, which is 160% of the total revenue projected for this year. With higher-than-expected workload, Community Development engineering division also recognized increased expenses for contract work in this first half of the fiscal yea r. Contract expenses in the first half of the year are $851,682, which is 125% of the total contract budget of $690,000. With two staff transfers associated with the City’s departmental reorganization and one vacancy on the engineering team, the engineering staff is now operating at about 30% of capacity with increasing need for contract support over the next few months. As such, staff recommends the City Council appropriate additional funds up to $850,000 for engineering contract support which will be offset by the increase in revenue as well as salary and benefit savings from staffing vacancies in the current fiscal year.

01/13/2026 Item No.11.
5 FINANCIAL IMPACT
The cost of third-party development engineering, construction inspection, and on-call surveying services is offset by revenue generated by Engineering Plan Check and Inspection Fees adopted by City Council Resolution.

The Community Development Engineering Division contract budget in the General Fund (Fund 010) is established by City Council budget authorization . In the current FY 2025-26 budget, funds in the amount of $690,000 are budgeted in the contracts line item for all Engineering Division contracts. Cumulative contract expenditures have exceeded $690,000 annually for the last 10 years, offset by additional Engineering Plan Check and Inspection Fee revenue each year, and staff is now requesting the City Council appropriate additional funds in the Community Development Engineering Division contract budget in the General Fund (Fund 010) for FY 2025-26 in the amount of $850,000, for a total engineering contract budget of $1,540,000. This additional appropriation is offset by a corresponding increase in Community Development Department revenue.

ENVIRONMENTAL REVIEW
The project is exempt from the California Environmental Quality Act (CEQA) pursuant to Section 15061 b (3) (General Rule Exemption) of the CEQA Guidelines.

ATTACHMENT
Resolution No. 11534 - A Resolution Authorizing the City Manager to Amend the FY2025-26 Budget with an Additional Appropriation for Development Engineering Services Contracts in the Amount of $850,000 in the General Fund (Fund 010)

Submitted,

Pam Johns, Community Development Director

01/13/2026 Item No.11.

Attachment 1

01/13/2026 Item No.11.

Resolution No. 11534

RESOLUTION NO. 11534

A RESOLUTION AUTHORIZING THE CITY MANAGER TO AMEND THE
FY2025-26BUDGET WITH AN ADDITIONAL APPROPRIATION FOR DEVELOPMENT ENGINEERING SERVICES CONTRACTS IN THE AMOUNT OF $850,000 IN THE GENERAL FUND (FUND 010)

WHEREAS, the Community Development Department, Engineering Division, has established the need for on-call outside development engineering plan check, construction inspection, and on -call surveying services to supplement baseline staffing levels and expertise in response to service demands; and

WHEREAS, each fiscal year, the Community Development Engineering Division makes revenue projections for anticipated development activity based on private landowner/developer plans and corresponding infrastructure needs; and

WHEREAS, historically t he annual budget establishes flat contract service budgets for supplemental on-call contract services in each of the Community Development Divisions regardless of projected development activity and additional appropriation is requested as needed in response to high service demands and corresponding revenue; and

WHEREAS, City Council appropriated $690,000 for Engineering Division contract services as part of the FY 2025-26 annual budget; and

WHEREAS, in the first six months of the year, engineering development activity and corresponding revenue exceeded budget estimates by $568,000 and corresponding on-call contract expenses through December 2025 have exceeded the contract budget by $162,000; and

WHEREAS, given ongoing contract service demands along with engineering staff vacancies, staff is requesting an additional appropriation of $850,000 which will be offset by a corresponding increase in revenue received; and

WHEREAS, as set forth in the City Charter, the City Manager certifies that monies in excess of those estimated in the budget are available for appropriation;

NOW, THEREFORE, BE IT RESOL VED that the City Council of the City of Folsom authorizes a supplemental appropriation to the FY2025-26 budget of $850,000 in the General Fund (Fund 010) for development engineering services contracts.

PASSED AND ADOPTED this 13th day of January, 2026, by the following roll-call vote:

AYES: Councilmember(s):

NOES: Councilmember(s):

ABSENT: Councilmember(s):

ABSTAIN: Councilmember(s):

__________________________________
Justin Raithel, MAYOR

01/13/2026 Item No.11.

Resolution No. 11534

ATTEST:

______________________________
Christa Freemantle, CITY CLERK

01/13/2026 Item No.11.

Folsom City Council
Staff Report

1 MEETING DATE:

1/13/2026
AGENDA SECTION:

Consent Calendar
SUBJECT: Resolution No. 11535 - A Resolution Authorizing the City Manager to Amend the FY 2025-26 Budget with an Additional Appropriation for Building Services Contracts in the amount of $435,000 in the General Fund (Fund 010)

FROM: Community Development Department

RECOMMENDATION / CITY COUNCIL ACTION
Staff respectfully recommend that the City Council move to approve Resolution No. 11535 - A Resolution Authorizing the City Manager to Amend the FY 2025-26 Budget with an Additional Appropriation for Building Services Contracts in the amount of $435,000 in the General Fund (Fund 010)

BACKGROUND
All building construction plans for proposed development in the City of Folsom are submitted to the Community Development Department, Building Division. The submittals are reviewed by plan check staff for conformance to the California Building Code and local ordinances prior to issuance of the building permit. Once the building permit is issued and construction begins, Building Inspectors will inspect the site to ensure construction is consistent with the approved plans and Code.

Building activity in the Cit y each year fluctuates in response to a variety of factors including but not limited to economic conditions, market demand, land use trends, land availability and readiness, and the age/conditions of existing structures. Regardless of the fluctuation, the City is obligated to review plans, issue permits, and conduct inspections in a timely manner.

The Community Development Department Building Division currently employs 1 1 full-time staff for Building Services to assist in plan review, permitting, and inspection services as listed below.

01/13/2026 Item No.12.
2 Building Division Positions # Staff
Permit Technicians 3
Building Plans Coordinator 1
Plan Checker II 1
Plan Check Engineer 1
Building Official 1
Building Inspector I/II 2
Senior Building Inspector 1
Supervising Building Inspector 1

The City’s current staffing levels represent minimum baseline staffing to support low to moderate levels of building development activity. Over the last five-year period, the City has experienced consistently high levels of building development activity exceeding staff capacity.

To meet the customer needs for these higher levels of building development activity, the City has employed supplemental contract services (on call service contracts) for permit processing, plan check, and inspection services paid for by corresponding revenue for services.

For each fiscal year budget, the Community Development team prepares projections for anticipated development activity Citywide for planning, development engineering, and building plan check and inspection services with corresponding revenue estimates based on current fees for projected activity. Historically, the proposed budget includes m ore conservative estimates for revenue associated with development activity (20% below projections) and a flat consultant contract budget is appropriated for building plan check and inspection divisions to supplement staffing capacity . If the City receives high levels of development activity increasing supplemental contract demand, Community Development requests additional contract budget appropriation supported by the corresponding revenue for development activity. Notably, for the current fiscal year budget projection, Community Development projections were included without a 20% reduction as has been done in the past.

The table below shows historical projected and actual revenue and contract expense data for building services for the last full five -year period (including the pandemic). The table also includes revenue and contract expenditure data for the first six months of this fiscal year.

Revenue has consistently exceeded projections by an average of 50%. As a direct correlation, contract costs for supplemental plan check and inspection service demands over that same five- year period have consistently exceeded contract budget expense allocations.

01/13/2026 Item No.12.
3 CDD Building Revenue and Contract Expense History
Fiscal Year Projected
Revenue Actual Revenue
Approved Contract
Budget
Appropriation
Actual Contract
Expense
FY 2020/21 $2,160,356 $4,651,797 $675,000 $711,344
FY 2021/22 $3,367,656 $4,904,803 $209,500 $262,623
FY 2022/23 $3,989,296 $5,268,332 $265,000 $557,703
FY 2023/24 $3,175,750 $5,365,953 $265,000 $1,337,601 FY 2024/25 $3,859,300 $4,629,862 $267,443 $1,038,228 FY 2025/26* $3,867,700 $1,942,516 $265,000 $335,426
* 6-month data July 1 through Dec 31, 2025

Annual average revenue for the Building Division over the last five years is $4,964,149 and the average annual contract expense over the same five-year period is $781,499. Despite the high annual contract expense, the contract budget appropriation for the last three fiscal years has been $265,000 . Each year, Community Development continues to request City Council approval of additional contract budget appropriation to meet the Building Division service demand and that expense is covered by the building services revenue.

In the first 6 months of FY2025 -26, building revenue is at 51% of the projected $3.8 million for the year. Corresponding contract expenses for the first 6 months with invoices received in December are $335,000, which exceeds the total contract budget for the full year of $265,000.

As a reminder, this projected revenue was not discounted by 20% as had been done in previous years. If the 20% reduction in projected revenue had been incorporated, revenue would exceed projections by $ 388,503 for the first six months of this fiscal year and $777,006 for the full fiscal year. That revenue will offset additional contract expense for higher levels of development activity.

POLICY / RULE**
As set forth in Section 5.05H of the City Charter, prior to the City Council making any supplemental appropriation, the City Manager shall certify that monies in excess of those estimated in the budget are available for appropriation. Any such supplemental appropriation may be made for the fiscal year by resolution up to the amount of any available excess funds.

ANALYSIS
As described in the background section of this report, Folsom has experienced consistently high volumes of building permit, plan check, and inspection activity over the last five years exceeding our baseline staffing capacity. To meet the building service demand that exceed our staff capacity and/or expertise , Folsom has utilized consultant service contracts for building plan check and inspection services. All contract revenue and expenses are accounted for in the City’s general fund.

The City of Folsom has a three-year contract in place with five on-call consultants who receive on average, 65% of the City’s Plan Check Fees for a full plan review as shown in the table below.

01/13/2026 Item No.12.
4 Consultant Costs for Services
Consultant
Percentage of Plan Review
Fee Hourly Rate for Staff
Commercial Residential
Permit
Technician
Building
Inspector
4Leaf, Inc. 64% 64% $80 $115
TRB & Associates 55% 30% $75 $115
CSG Consultants 65% 45% $80 $125
BPR Consulting Group 68% 65% $65 $115
Bureau Veritas 65% 60% $70 $105

Consultant Inspection and Technician Services are invoiced on an hourly basis and funded through the Permit Issuance Fees collected. Consultant inspection services are utilized for smaller, less complex construction projects such as residential remodels a nd new residential construction while City Staff inspect larger, more complex projects such as hotels, large apartment complexes, and commercial projects. Permit Technician services are utilized when high volumes of permit applications are anticipated to maintain customer service levels.

Each fiscal year, the Community Development Staff prepare revenue projections based on discussions with potential developers, landowners, and stakeholders about approved or planned entitlements and projects to predict the level of development activity for the next fiscal year.

This projection is used to identify any additional staffing needs/costs and to estimate supplemental contract services needs/costs. Historically, the City’s adopted budget includes a conservative percentage of the Staff revenue projection for development activity. For the last five-year period, actual development activity and corresponding revenue and consultant contract costs have exceeded both the City’s adopted budget and the Staff projections. Sta ff will continue to prepare cost -benefit analysis of high contract service costs vs additional full - time staff to meet building service needs.

The City has experienced consistently high levels of development activity over the last five years exceeding minimum baseline staffing levels for low development activity levels. While building revenue continues to remain high, appropriated contract expenses remain s around $265,000 annually. When projecting building revenue for FY 2025-26, a more calculated approach was taken, however the approved budget did not reflect the additional contract expense needed to support the higher development activity level. As Building revenues increase, Building consultant expenses increase as well to meet timelines and constr uction demands.

For FY 2025-26, Building is on track to meet or exceed projected revenues (currently at 51% of total revenue anticipated) entering the second half of the fiscal year, which historically collects more revenue than the first half of the fiscal year due to better weather and hours of daylight for construction activity to continue. As previously identified, the current revenue projection for FY2025 -26 reflects staff projection without the historical 20% reduction . It is anticipated that Building contract costs will not exceed $700,000 this fiscal year. With invoices

01/13/2026 Item No.12.
5 received to date, contract expenses of $335,426 in the first half of the year are 126% of the total contract budget of $265,000.

Staff is recommending the City Manager be author ized to amend F Y 2025-26 budget with additional appropriation for building services contracts in the amount of $ 435,000 in the General Fund (Fund 010) for a total appropriation of $700,000 to cover anticipated contract expenses for the second half of the fiscal year. The contract expense will continue to track with building permit revenue for full cost recovery.

FINANCIAL IMPACT
The cost of Third Par ty Building Plan Review and Inspection Services is offset by revenue generated by Plan Check and Issuance Fees adopted by City Council Resolution.

The Community Development Building Division contract budget in the General Fund (Fund 010) is established by City Council budget authorization. In the current FY 2025-2026 budget, funds in the amount of $265,000 are budgeted in the contracts line item for all Building Division contracts. Cumulative contract expenditures have exceeded $265,000 annually for the last five years, and staff is now requesting the City Council appropriate additional funds in the Community Development Building Division contract budget in the General Fund (Fund 010) for FY 2025-26 in the amount of $435,000 for a total building contract budget of $700,000.

ENVIRONMENTAL REVIEW
The project is exempt from the California Environmental Quality Act (CEQA) pursuant to Section 15061 b (3) (General Rule Exemption) of the CEQA Guidelines.

ATTACHMENT
Resolution No. 11535 - A Resolution Authorizing the City Manager to Amend the FY 2025-26 Budget with an Additional Appropriation for Building Services Contracts in the amount of $435,000 in the General Fund (Fund 010)

Submitted,

Pam Johns, Community Development Director

01/13/2026 Item No.12.

Attachment 1

01/13/2026 Item No.12.

Resolution No. 11535

RESOLUTION NO. 11535

A RESOLUTION AUTHORIZING THE CITY MANAGER TO AMEND THE FY 2025-26 BUDGET WITH AN ADDITIONAL APPROPRIATION FOR BUILDING SERVICES CONTRACTS IN THE AMOUNT OF $435,000 IN THE GENERAL FUND (FUND 010)

WHEREAS, the Community Development Department, Building Division, has established the need for on-call consultant plan review, permitting and building inspection services to supplement baseline staffing levels and expertise in response to service demands; and

WHEREAS, each fiscal year, the Community Development Building Division makes revenue projections for anticipated development activity based on discussions with developers, landowners, and stakeholders about approved or planned entitlements; and

WHEREAS, historically t he annual budget establishes flat contract service budgets for supplemental on-call contract services in each of the Community Development Divisions regardless of projected development activity and additional appropriation is requested as needed in response to high service demands and corresponding revenue; and

WHEREAS, City Council appropriated $ 265,000 for Building Division contract services as part of the FY 2025-26 annual budget; and

WHEREAS, in the first six months of the year, building development activity and corresponding revenue are at 51% of projections for the entire fiscal year ( $1,942,516) and corresponding on-call contract expenses with invoices in December have also 126% the contract budget for the fiscal year ($335,426); and

WHEREAS, given ongoing contract service demands along with Community Development staff vacancies, staff is requesting an additional appropriation of $435,000 which will be offset by a corresponding increase in revenue received; and

WHEREAS, as set forth in the City Charter, the City Manager certifies that monies in excess of those estimated in the budget are available for appropriation.

NOW, THEREFORE, BE IT RESOLVED that the City Council of the C ity of Folsom authorizes a supplemental appropriation to the FY 2025-26 budget of $435,000 in the General Fund (Fund 010) for building services contracts

PASSED AND ADOPTED this 13th day of January, 2026, by the following roll-call vote:

AYES: Councilmember(s):

NOES: Councilmember(s):

ABSENT: Councilmember(s):

ABSTAIN: Councilmember(s):

__________________________________
Justin Raithel, MAYOR

01/13/2026 Item No.12.

Resolution No. 11535

ATTEST:

______________________________
Christa Freemantle, CITY CLERK

01/13/2026 Item No.12.

Folsom City Council
Staff Report

MEETING DATE:

1/13/2026
AGENDA SECTION:

Consent Calendar
SUBJECT: Resolution No. 11536 – A Resolution Authorizing the City Manager to Execute a Construction Contract with M&M Electric in the amount of $87,371 for the Flashing Yellow Arrow Trial Project, Project No. PW2604, from the Transportation
Improvement Fund (Fund 446), and Appropriation of Funds in the amount of $136,111

FROM: Public Works Department

RECOMMENDATION / CITY COUNCIL ACTION

The Public Works Department recommends that the City Council pass and adopt Resolution No. 11536 – A Resolution Authorizing the City Manager to Execute a Construction Contract with M&M Electric in the amount of $87,371 for the Flashing Yellow Arrow Trial Project , Project No. PW2604, from the Transportation Improvement Fund (Fund 446) , and Appropriation of Fund in the amount of $136,111.

BACKGROUND / ISSUE

On May 13, 2025, the City Council approved Resolution No. 11379 authorizing the Public Works Department to implement a Flashing Yellow Arrow (FYA) Trial Project. The project advances the use of protected/permissive left turn operations with a four -section signal head containing a flashing yellow arrow, a Federal Highway Administration –approved traffic control device. This operational enhancement is intended to improve traffic flow, reduce vehicle emissions, and improve driver experience.

As part of the trial project, the City identified four intersections as candidates for FYA installation. The four locations identified for the trial are along Natoma Street at Prison Road, Wales Drive, Stafford Street, and Coloma Street. To implement the project, upgrades to the existing traffic signal wiring and signal heads need to be procured and installed. On September 4, 2025, staff solicited bids from local electrical contractors for the project.

01/13/2026 Item No.13.

On September 9, 2025, the City Council approved Resolution 11457 authorizing the City Manager to execute an agreement with Western Systems, Inc. in the amount of $160,906.25 , from the Transportation Improvement Fund ( Fund 446 ), to purchase cabinets and related components for the four identified locations for the said project.

On September 26th, 2025, City Staff received bids from local electrical contractors for the following scope : “The intersections of Natoma & Prison; Natoma & Wales; Natoma & Stafford; Natoma & Coloma will be upgraded to have Flashing Yellow Arrow for both travel directions on Natoma. All locations will need the existing signal cabinet foundations modified to fit a City of Folsom provided P -Plus cabinet and to be installed. All equipment and wire added to the intersections for FYA. Include “Left turn yield on FYA” sign on mast arms. Install CAT 5E cable from signal cabinet to mast arms with cord grip and slack for all directions for future Video Detection System (VDS) at East Natoma & Wales; East Natoma & Coloma.”

M&M Electric provided a quote in compliance with the Request for Quote (RFQ) for the necessary improvements and components to serve the four project locations. The total cost, including equipment and labor, is $87,371.00. The following bids were also received.

1. M&M Electric $87,371.00 (Low Bid)

2. Pacific Excavation $93,040.00

3. St. Francis Electric $169,700.00

Staff performed an analysis of the bids received and determined there were no irregularities with the apparent low bidder, nor was there a protest. References, relevant work, and experience were checked and found to be in good standing order with current licensing. M&M

01/13/2026 Item No.13.
is deemed to be the lowest responsive and responsible bidder. Therefore, staff recommends award of a construction contract to M&M Electric for the project in the amount of $87,371.

POLICY / RULE

Section 2.36.080 of the Folsom Municipal Code authorizes the City Manager to execute construction contracts following a competitive procurement process, provided that sufficient funds have been appropriated and the contract is approved by the City Council.

Section 2.36.120 of the Folsom Municipal Code states, in part, that contracts for supplies, equipment, services, and construction with an estimated value of $7 5,049 or greater shall be awarded by the City Council.

ANALYSIS
An additional appropriation in the amount of $1 36,111 is recommended to fully fund the project. As a cost saving measure, staff is administering design, bidding, and construction management of the project. There are sufficient funds available in the Transportation Improvement Fund (Fund 446) for this additional appropriation, which would increase the project budget to $297,017.25.

The Flashing Yellow Arrow Trial Project (PW 2604) is solely funded from the Transportation Improvement Fund (Fund 446) . The proposed project budget and funding to date are as follows:

Funding Sources Amount
Fund 446 Transportation Improvement Fund (Proposed) $ 136,111.00 Fund 446 Transportation Improvement Fund - Reso 11457 $ 160,906.25 Total Appropriations (Proposed + Approved) $ 297,017.25

Below are the current and proposed project encumbrances and expenditures to date:

Encumbrances and Expenditures Amount
M&M Construction Contract (Proposed) $ 87,371.00 Equipment Purchase - Resolution 11457 $ 160,906.25 City Staff Time (Design and Inspections) $ 40,000.00 Contingency (10% per FMC 2.36.080.B) $ 8,740.00 Total Encumbrances and Expenditures $ 297,017.25

FINANCIAL IMPACT
If approved, the contract with M&M Electric would be authorized in the amount of $87,371, which includes a 10 % contingency of $8,740, for a total budget amount of $96,111. The Flashing Yellow Arrow Trial Project (Project PW2604) currently has an approved budget of $160,906 in the Transportation Improvement Fund (Fund 446).

01/13/2026 Item No.13.

Staff is requesting an appropriation in the Transportation Improvement Fund (Fund 446) to cover the contract amount of $96,111, as well as City staff costs associated with design, bidding, and construction management, for a total appropriation request of $136,111.

If approved, the total project budget for the Flashing Yellow Arrow Trial Project (Project PW2604) would increase to $297,017. Sufficient funds are available in the Transportation Improvement Fund (Fund 446) to support the requested appropriation.

Work is anticipated to start in Spring of 2026.

ENVIRONMENTAL REVIEW

The action under consideration is categorically exempt from the California Environmental Quality Act (CEQA) pursuant to CEQA Guidelines Sections 15301 (Existing Facilities) and 15302 (Replacement or Reconstruction), as it involves upgrades to existing traf fic signal equipment within the public right-of-way and does not result in an expansion of capacity.

ATTACHMENT

Resolution No. 11536 – A Resolution Authorizing the City Manager to Execute a Construction Contract with M&M Electric in the amount of $87,371 for the Flashing Yellow Arrow Trial Project, Project No. PW2604, from the Transportation Improvement Fund (Fund 446) , and Appropriation of Funds in the amount of $136,111.

Submitted,

Rebecca Neves,

PUBLIC WORKS DIRECTOR / CITY ENGINEER

01/13/2026 Item No.13.

Attachment 1

01/13/2026 Item No.13.

Resolution No. 11536

RESOLUTION NO. 11536

A RESOLUTION AUTHORIZING THE CITY MANAGER TO EXECUTE A

CONSTRUCTION CONTRACT WITH M&M ELECTRIC IN THE AMOUNT OF $87,371 FOR THE FLASHING YELLOW ARROW TRIAL PROJECT, PROJECT NO.

PW2604, FROM THE TRANSPORTATION IMPROVEMENT FUND (FUND 446), AND APPROPRIATION OF FUNDS IN THE AMOUNT OF $136,111

WHEREAS, on May 13, 2025, the City Council approved Resolution No. 11379 authorizing the Public Works Department to implement a Flashing Yellow Arrow (FYA) Trial Project utilizing protected/permissive left-turn operations to improve traffic flow, reduce vehicle emissions, and enhance driver experience; and

WHEREAS, the FYA Trial Project includes the installation of new signal hea ds, wiring, and related traffic signal infrastructure at four intersections along Natoma Street at Prison Road, Wales Drive, Stafford Street, and Coloma Street; and

WHEREAS, implementation of the project requires modifications to existing traffic signal cabinet foundations, installation of City -standard P-Plus cabinets, upgrades to signal wiring and equipment, and installation of “Left Turn Yield on Flashing Yellow Arrow” signage; and

WHEREAS, on September 9, 2025 , the City Council approved Resolution 11457 authorizing the City Manager to execute an agreement with Western Systems, Inc. in the amount of $160,906.25 from the Transportation Improvement Fund (Fund 446) to purchase cabinets and related components for the four identified locations for the said project; and

WHEREAS, on September 26, 2025, City received bids from qualified contractors for the required construction work, and M&M Electric submitted the lowest responsive and responsible bid in the amount of $87,371; and

WHEREAS, an appropriation in the amount of $136,111 in the Transportation Improvement Fund (Fund 446) will be required, for a new total project budget of $297,017.25; 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 construction contract with M&M Electric in the amount of $87,371 for the Flashing Yellow Arrow Trial Project , Project No. PW2604, with the budgeted amount to include a 10% contingency or $8,740, for a total of $96,111 from the Transportation Improvement Fund (Fund 446).

NOW, THEREFORE, BE IT FURTHER RESOLVED that the Finance Director is authorized to appropriate $136,111 from the Transportation Improvement Fund (Fund 446) for the Flashing Yellow Arrow Trial Project, Project No. PW 2604 for a total project budget of $297,017.

01/13/2026 Item No.13.

Resolution No. 11536

PASSED AND ADOPTED this 13th day of January, 2026, by the following roll-call vote:

AYES: Councilmember(s):

NOES: Councilmember(s):

ABSENT: Councilmember(s):

ABSTAIN: Councilmember(s):

__________________________________
Justin Raithel, MAYOR

ATTEST:

______________________________
Christa Freemantle, CITY CLERK

01/13/2026 Item No.13.

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to facilitate double-sided printing
and minimize paper use.

01/13/2026 Item No.13.

Folsom City Council
Staff Report

1 MEETING DATE:

1/13/2026
AGENDA SECTION:

New Business
SUBJECT: Resolution No. 11510 – A Resolution of the City Council Establishing Inclusionary Housing In -lieu Fee Amounts for For-sale Residential Development
FROM: Community Development Department

RECOMMENDATION / CITY COUNCIL ACTION
Staff recommends that the City Council move to approve Resolution No. 11510– A Resolution of the City Council Establishing Inclusionary Housing In -lieu Fee Amounts for For-sale Residential Development.

BACKGROUND / ISSUE
The City’s Inclusionary Housing Ordinance plays a key role in promoting the development of affordable housing in Folsom. Adopted in 2002 and amended in 2013 and 2026, the ordinance is a significant component of the City’s overall affordable housing strateg y that is outlined in the adopted General Plan Housing Element.

Housing Element Program H-9
The City’s 2021 –2029 Housing Element included Program H -9, which required the City to conduct an inclusionary housing fee study. The purpose of the program was to evaluate fee levels and funding gaps, as well as to improve the existing methodology for calculating the in- lieu fee. To implement Program H -9, the City retained Economic & Planning Systems, Inc. (EPS) to evaluate potential updates to the Inclusionary Housing Ordinance (IHO), with emphasis on the in-lieu fee applied to residential developments that do not provide affordable units on -site. Although not legally required under the Mitigation Fee Act, EPS applied a nexus-based methodology to reassess affordability gaps and calculate a maximum justifiable fee, consistent with best practices given recent legal challenges to in -lieu fees. See EPS Inclusionary Housing Program Study (EPS Study) in Attachment 2.

01/13/2026 Item No.14.
2 The study also examined Assembly Bill 1505 (2017), which authorizes cities to apply inclusionary housing requirements—including in-lieu fees—to rental projects, and evaluated the potential expansion of the ordinance to cover such developments.

Using updated socioeconomic and market data, EPS identified significant changes since the last analysis, including the impacts of COVID-19, rising construction costs, and higher interest rates. These factors have increased both housing costs and the fundin g gaps for affordable housing production, underscoring the need for a revised fee structure that balances affordability goals with market feasibility.

The analysis incorporated input from developers and City staff, compared Folsom’s methodology and fee levels to peer jurisdictions, and reviewed state legislative changes and affordable housing funding strategies. The findings provide the basis for establishing a revised in-lieu fee that reflects current conditions while supporting the City’s housing policy objectives.

The EPS Study recommended adopting a standardized per-square-foot fee structure to simplify administration and provide developers with greater cost certainty. Specifically, the proposed in-lieu fee is $3.00 per square foot for single -family for -sale units , consistent with current average levels, and a reduced $2.50 per square foot for multifamily for -sale units of 1,500 square feet or less to support the financial viability of “missing middle” housing.

City Council Review and Actions
On December 9, 2025, the City Council reviewed staff’s proposed revisions to FMC Chapter

17.104 and considered updates to the inclusionary housing in -lieu fees. During the meeting, Council members asked questions of staff and the consultant, focusing particularly on whether multifamily for-sale units should be exempt from the fee in order to better incentivize small “missing middle” housing projects.

After deliberation, the Council ultimately approved the recommendations as presented, while directing staff to continue exploring alternatives that could encourage more first -time homeownership opportunities. By a vote of 4 -1-0-0, the City Council introduced and conducted the first reading of Ordinance No. 1359 - An Ordinance of the City of Folsom Amending Certain Sections of Chapter 17.104 (Inclusionary Housing) of the Folsom Municipal Code to Update the Methodology for Calculating In -lieu Fees Applicable to Residential Development, and to Incorporate Non -substantive Cleanup Revisions for Clarity and Consistency.

It is anticipated that o n January 13, 2026, the Council will conduct the second reading and adopt Ordinance No. 1359. To implement the revised fee methodology and amounts, and consistent with the recommendations of the EPS Study, staff now requests approval of Resolution No. 11510, establishing inclusionary housing in -lieu fee amounts of $3.00 per square foot for single-family for-sale units and $2.50 per square foot for multifamily for -sale units of 1,500 square feet or less, while continuing to exempt multifamily rental units from the in-lieu fee to support development viability.

01/13/2026 Item No.14.
3 Public Outreach
In addition to City Council Public Hearing, staff conducted outreach through a Planning Commission workshop and hearing, as well as through emails, consultation meetings with the Building Industry Association and affordable housing advocates , held stakeholder sessions, and a dedicated webpage to share information on the Inclusionary Housing Ordinance Update.

POLICY / RULE
The City’s 2021-2029 Housing Element was approved by City Council on August 24, 2021.

That document includes several policies that relate directly to the issues discussed in this staff report. These include:

• Policy H-3.1Funding for Affordable Housing: The City shall continue to use Federal and State subsidies, as well as inclusionary housing in -lieu fees, affordable housing impact fees on non -residential development, and other fees collected into the City’s Housing Fund in a cost -efficient manner to meet the needs of lower-income households, including extremely low income households.

• Policy H-3.2 Inclusionary Housing: The City shall continue to require inclusionary housing on all new for-sale units. The City may also consider inclusionary housing as a community benefit for non -City-initiated General Plan and/or Specific Plan amendments that result in rental housing.

ANALYSIS
The proposed resolution implements the fee methodology and fee amounts recommended in the City of Folsom Inclusionary Housing Program Study , prepared by EPS. Specifically, the Resolution sets the fee at $3.00 per square foot for single -family for-sale units and $2.50 per square foot for multifamily for-sale units of 1,500 square feet or smaller- typically located in multifamily medium -density (MMD) or multifamily low -density (MLD) areas Multifamily rental projects, which are generally developed on sites designated for multifamily high-density (MHD), will continue to be exempt from inclusionary requirements.

Historical building permit data from 2023 to the present shows developers have paid an average in -lieu fee of approximately $2.97 per square foot under the 1% of sales price methodology. The recommended fee of $3.00 per square foot for single -family for-sale units is consistent with these historical collections, while the proposed $2.50 per square foot fee for multifamily for-sale units of 1,500 square feet or less reflects the City’s effort to encourage more for-sale multifamily housing units that offer fi rst time home buyer opportunities. This approach aligns the goals outlined in the Housing Element and generally with council policy direction.

The recommended fee levels will provide the City with a stable and meaningful source of funding to support affordable housing development. With an estimated local subsidy of approximately $55,000 per unit, these revenues will enable continued investment in housing opportunities for lower -income residents while preserving overall project feasibility.

01/13/2026 Item No.14.
4 Consistent with existing requirements and pursuant to the 2013 Stipulation and Agreement between the Sacramento Housing Alliance and the City , a minimum of 50% of revenues generated from the in-lieu will be dedicated to the development of lower-income housing units.

As outlined in the EPS study and discussed at the December 9, 2025 City Council meeting, multifamily rental projects will remain exempt from the in -lieu fee, recognizing the ongoing economic challenges in the rental housing market. Given the narrow financial margins of rental development, additional fees could jeopardize project viability and r educe the supply of much-needed rental units in the Folsom Plan Area.

Overall revenues are expected to remain consistent with current collections. To ensure the fee remains responsive to changing market conditions, it will be indexed annually to the Construction Cost Index (CCI), providing for regular market adjustments over time. Any future modification beyond the annual CCI market adjustment would require further analysis/study of the in-lieu fee’s effectiveness, similar to the EPS Study.

This balanced approach maintains the effectiveness of the Inclusionary Housing Ordinance in generating resources for affordable housing while avoiding undue burdens on new residential development.

As directed in Council’s motion for approval of the revisions to the City’s Inclusionary Housing Ordinance on December 9, 2025, staff will return with a presentation on actions that the City could take to encourage homeownership opportunities for first -time and moderate - income households to ensure that there are more options in the community than rental apartments and larger single-family homes. Staff expects to return to the City Council in the first quarter of 2026.

FINANCIAL IMPACT
There is no financial impact on the General Fund. The inclusionary housing in -lieu fee will continue to support the Folsom Housing Fund (Fund 238) . As previously discussed in the Analysis section of this report, revenues are expected to remain stable compared to current collections.

ENVIRONMENTAL REVIEW
Establishment of an in-lieu fee exempt from the California Environmental Quality Act (CEQA) pursuant to CEQA Guidelines Section 15061(b)(3) commonly known as the “common sense exemption.” It can be seen with certainty that the act of setting or adjusting a fee does not itself cause a physical change in the environment.

ATTACHMENTS

1. Resolution No. 11510 – A Resolution of the City Council Establishing Inclusionary Housing In-lieu Fee Amounts for For-sale Residential Development

2. City of Folsom Inclusionary Housing Program Study (Public Review Draft)

01/13/2026 Item No.14.
5 Submitted,

______________________________________
Pam Johns, Community Development Director

01/13/2026 Item No.14.

Resolution No. 11510

RESOLUTION NO. 11510

A RESOLUTION OF THE CITY COUNCIL ESTABLISHING INCLUSIONARY

HOUSING IN-LIEU FEE AMOUNTS FOR FOR-SALE RESIDENTIAL

DEVELOPMENT

WHEREAS, the City of Folsom’s Inclusionary Housing Ordinance (IHO) codified in Chapter 17.104 of the Folsom Municipal Code plays a key role in promoting the development of affordable housing; and

WHEREAS, the City’s 2021 –2029 Housing Element included Program H -9, which required the City to conduct an inclusionary housing fee study to evaluate fee levels, identify funding gaps, and improve the methodology for calculating the in-lieu fee; and

WHEREAS, to implement Program H-9, the City retained Economic & Planning Systems, Inc. (EPS) to conduct a comprehensive review of the existing fee program, with particular focus on exploring alternative fee calculation methods that better align with regional practices; and

WHEREAS, the EPS Study recommended replacing the methodology of calculating the in-lieu fee (previously set at 1% of the lowest -priced home in a subdivision) with a standardized square-footage-based fee structure, in order to simplify administration, align with regional practices, and ensure the financial viability of diverse housing types; and

WHEREAS, on January 13, 2026, the City Council adopted Ordinance No. 1359, amending the IHO to move to a square footage -based fee consistent with the EPS Study recommendations, and

WHEREAS, Section 17.104.060(F) (In-Lieu Fee) of the Folsom Municipal Code sets forth that procedures for the assessment, collection, and adjustment of the in-lieu fee shall be established by resolution of the City Council.

NOW, THEREFORE, BE IT RESOLVED that the City Council of the City of Folsom hereby adopts Resolution No. 11510, establishing the inclusionary housing in-lieu fee amounts as shown in Exhibit “A” attached hereto.

BE IT FURTHER RESOLVED that:

1. The updated inclusionary housing fees shall be listed on all applicable fees schedules and become effective February 12, 2026.

2. The inclusionary in-lieu fee shall be deposited into the Folsom Housing Fund (Fund 238) and administered consistent with the Inclusionary Housing Ordinance.

3. A minimum of 50% of the collected inclusionary in-lieu fees shall be allocated for the development of lower-income housing units.

01/13/2026 Item No.14.

Resolution No. 11510

4. The City will adjust the inclusionary in-lieu fee annually, commencing on July 1, 2026 and on every July 1 annually thereafter, based on changes to the Construction Cost Index (CCI).

5. A developer who has executed an Inclusionary Housing Agreement with the City prior to the effective date of this ordinance, and who previously elected to satisfy inclusionary housing requirements through payment of an in-lieu fee calculated as one percent (1%) of the sales price, may continue to pay the in-lieu fee established under the current Inclusionary Housing Agreement, or request the City Manager to allow payment of the in-lieu fee established under the current square-footage-based fee schedule. Such request can be processed by the Community Development Department without further action of the City Council.

PASSED AND ADOPTED this 13th day of January 2026, by the following roll-call vote:

AYES: Councilmember(s):

NOES: Councilmember(s):

ABSENT: Councilmember(s):

ABSTAIN: Councilmember(s):

Justin Raithel, MAYOR

ATTEST:

Christa Freemantle, CITY CLERK

01/13/2026 Item No.14.

Resolution No. 11510

Exhibit A

INCLUSIONARY HOUSING IN-LIEU FEES
Applicable to all for-sale residential development projects of 10 or more units that elect to satisfy the inclusionary housing requirement through an in-lieu fee.

Product Type Fee Amount Basis
Single Family $3.00 per sq. ft.*
Multi Family (units greater
than 1,500 sq ft.)
$3.00 per sq. ft.*
Multi Family (units 1,500 sq.
ft. or less)**
$2.50 per sq. ft.*
*Excludes unconditioned areas such as garages, carports, unfinished basements, attics, and exterior patios. Also , excludes accessory dwelling units that are exempt from impact fees in accordance with state law. **Applicable only to those for-sale units 1,500 square feet or less located on parcels designated for multi -family development.

01/13/2026 Item No.14.

CITY OF FOLSOM

INCLUSIONARY HOUSING

PROGRAM STUDY

ADMINISTRATIVE
DRAFT REPORT #2
Prepared for: Prepared by:

City of Folsom Economic & Planning Systems, Inc.

October 22, 2025
EPS #252017

01/13/2026 Item No.14.

Table of Contents

1. Introduction and Summary of Findings 1
Introduction ............................................................................................................................................................................... 1 Current Policies ........................................................................................................................................................................ 2 Key Findings and Considerations ....................................................................................................................................... 5 Organization of Report ....................................................................................................................................................... 11

2. I
nclusionary Housing: Residential In-Lieu Fee Study 12
Methodology Summary ...................................................................................................................................................... 12 Step #1: Conduct Affordability Gap Analysis ............................................................................................................. 12 Step #2 Calculate Affordable Housing Demand ........................................................................................................ 15 Step #3 Compute Impact Fee per Market Rate Unit ............................................................................................... 17

3. A
ffordability Gap Analysis Results 18
Product Types ........................................................................................................................................................................ 18 Revenue Assumptions ......................................................................................................................................................... 18 Development Cost Assumptions ..................................................................................................................................... 25 Affordability Gap Results ................................................................................................................................................... 27 Demand-Based Nexus Fee Calculation ........................................................................................................................ 27 Affordable Housing Impact Fee Calculation Conclusions ..................................................................................... 36

4. C
omparative Jurisdictions Survey 40
Local Peer Jurisdictions ...................................................................................................................................................... 42 Selected Jurisdictions with Inclusionary Requirements and In- Lieu Fees ....................................................... 44 Local Jurisdiction Fee Amounts ....................................................................................................................................... 47

5. P
olicy and Implementation Considerations 49
Maximum/Recommended Fee Levels ........................................................................................................................... 49 Implementing Ordinances/Resolutions ........................................................................................................................ 49 In-Lieu Fee Update ............................................................................................................................................................... 50 Study Timeframe: Updating the Impact Fee Nexus Study ..................................................................................... 51 A
ppendix 52

01/13/2026 Item No.14.

List of Tables
Table 1-1. Sacramento County Area Median Income (AMI) Categories (2025 in 2025$) ........................................ 4 Table 1-2. Residential Affordable Housing Impact Fee Comparison (2025$) ............................................................... 8 Table 3-1. Market-Rate Housing Development Prototype Assumptions .................................................................... 19 Table 3-2. Maximum Monthly Rent or Mortgage Payment ............................................................................................... 21 Table 3-3. Prototype Revenue Assumptions: Rental Product .......................................................................................... 22 Table 3-4. Prototype Revenue Assumptions: Ownership Product (2025$) ................................................................ 24 Table 3-5. Development Costs by Prototype: Existing Fees (2025$) ............................................................................ 26 Table 3-6. Development Funding Affordability Gap: Existing Fees ................................................................................ 28 Table 3-7. Required Income by Market Rate Unit Type ...................................................................................................... 30 Table 3-8. Summary of Worker and Household Generation per 100 Market -Rate Units ..................................... 35 Table 3-9. Maximum Nexus-Based Support Fee per Gross Square Foot ...................................................................... 38 Table 3-10. Development Feasibility Comparison: Existing Fee, Maximum Supportable Fee, and Potential Fee as % of the Maximum (2025$) .............................................................................................................................................. 39 Table 4-1. Sacramento Region Peer Cities Analysis ............................................................................................................. 41 Table 4-2. Comparison of Selected Jurisdictions' Inclusionary Programs ................................................................... 45

01/13/2026 Item No.14.

Economic & Planning Systems, Inc. 1 Introduction and Summary of Findings

1. Introduction and Summary of Findings
Introduction
In 2002, the City of Folsom (City) adopted an inclusionary housing ordinance (IHO) applicable to new development, including the provision of an optional fee in-lieu of developing the affordable housing units. In 2013, the City amended the IHO to establish a formal in-lieu fee component imposed on market rate owner-occupied housing units and to exclude rental developments from inclusionary requirements in accordance with the 2009 Palmer/Sixth Street Properties, L.P. v. City of Los Angeles decision.

The City’s 2021-2029 Housing Element includes Program H-9, which requires an evaluation of current in-lieu fee levels to ensure they effectively advance affordable housing goals under the IHO. To comply with Program H-9, the City retained Economic & Planning Systems, Inc. (EPS) to evaluate the existing IHO in-lieu fee program and determine whether methodology updates are warranted, feasible, and consistent with other regional affordable housing programs. In addition, City staff have indicated that the current fee calculation and collection process is administratively inefficient and does not align with the City’s fee processing system, which calculates other fees automatically for each unit based upon unit characteristics such as zoning and square footage. Because the per-unit fee is subdivision-specific, the IHO in-lieu fee must be entered manually, introducing the risk of clerical error.

This document, the Inclusionary Housing Program In-Lieu Fee Study (“Fee Study” or “Study”), considers an update to the City’s IHO in-lieu fee. This Study establishes updated maximum justifiable using a nexus-based methodology that can be charged to new market rate residential land uses in the City. Although the in-lieu fee is not subject to legal nexus requirements under the Mitigation Fee Act (California Government Code Section 66000 et seq.) and related legislation (e.g., Assembly Bill 602), this analysis applies a nexus-based approach to update the affordability gap analysis that underpins the calculation of the maximum justifiable in-lieu fee under the IHO.

Since the 2013 amendment to the City’s IHO, State Assembly Bill (AB) 1505 (2017) was signed into law, which explicitly allows local governments to impose inclusionary requirements, including in-lieu fees, on rental housing projects. This study examines the potential to expand the City’s existing inclusionary requirements on for-sale housing to also apply to rental housing.

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Economic & Planning Systems, Inc. 2 Introduction and Summary of Findings This Study evaluates an updated fee based on current socioeconomic and real estate market conditions in the City. Since the previous study, market shifts, including the impacts of the COVID-19 Pandemic, significant increases in construction costs, and notably higher interest rates, have impacted residential home values and rental rates, reinforcing the need to reassess the current financing gap or subsidy required to produce affordable units while maintaining feasibility for new market rate development.

In addition, this Study incorporates input from stakeholders - including market- rate and affordable housing developers and City staff - and considers legislative changes adopted since the previous study. EPS also reviewed affordable housing policies and funding approaches in select peer jurisdictions to provide context for potential in-lieu fee updates.

Current Policies
The City’s Municipal Code Ordinance Chapter 17.104 Inclusionary Housing (Ordinance) states that all for-sale and rental projects receiving financial assistance from the City with 10 or more units or that are otherwise subject to a voluntary affordable housing agreement with the City shall include inclusionary housing units equal to 10 percent of the total number of units in the project (excluding density bonus units). The 10 percent requirement comprises: 3 percent “Very Low Income” units and 7 percent “Low Income” units, as defined by the Department of Housing and Community and Development (HCD) Income Limits for Sacramento County. 1 For projects where four or fewer inclusionary units are required, the inclusionary units must be composed as follows: one inclusionary unit: one “Low Income” unit; two inclusionary units: one “Low Income” unit and one “Very Low Income” unit; three inclusionary units: two “Low Income” units and one “Very Low Income” unit; four inclusionary units: three “Low Income” units and one “Very Low Income” unit.

The City also provides that there are additional compliance methods the inclusionary requirement can be met beyond including the units in the project:
• Land dedication.
• Off-site construction.
• Acquisition, rehabilitation, and conversion of market-rate units. • Conversion of market-rate units.
• Inclusionary housing credits.
• In-lieu fee.
• A combination of the above alternatives.
2 1 City of Folsom Municipal Code, Chapter 17.104, Inclusionary Housing, June 12, 2020. 2 Ibid.

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Economic & Planning Systems, Inc. 3 Introduction and Summary of Findings The in-lieu fee alternative to on-site construction allows a developer to pay a fee to satisfy inclusionary housing requirements. The City has established the in-lieu fee amount as 1 percent of the lowest-priced for-sale residential unit in the proposed subdivision multiplied by the total number of for-sale residential units in the proposed subdivision.3
The Ordinance does not specify the size or ratio of unit types for the inclusionary units but states the provided units, “shall accommodate diverse family sizes by including a mix of studio, one-, two and/or three-bedroom units and the mix of inclusionary sizes shall generally accommodate the household sizes identified in the City’s General Plan.”
4 The household sizes encouraged in the General Plan
include 3- and 4-bedroom units in multifamily rental housing. Projects with 40 units or fewer are exempt from any unit size requirement.5 The Ordinance does provide that the exterior of the inclusionary units shall be compatible with or built with similar finishes as the market-rate units, as well as access to common amenities. The ordinance excludes any direction of the caliber of the unit’s interior finishes.

The in-lieu fee for each unit must be paid before the City issues a building permit for that unit. Once a per-unit fee has been set for a particular subdivision, it is not subject to review for 12 months. Once 12 months have passed, the fee is reviewed January 1 of each following year. In the event the price of the lowest-priced home in the subdivision changes by 10 percent or more, the fee is recalculated based on the updated price and the method described above.

3 Ibid.
4 Ibid.
5 City of Folsom 2035 General Plan, Policy H-5.9., Final Housing Element, Adopted October 22, 2013.

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Economic & Planning Systems, Inc. 4 Introduction and Summary of Findings Sources
To prepare the in-lieu fee study, EPS relied on numerous current sources of data, including but not limited to the following:
• State of California’s Department of HCD annual income limits for 2025. The study relies on the income limit definitions from HCD to estimate the housing costs by household type. HCD’s income limits define income levels based on county-level Area Median Income (AMI). In 2025, the AMI for the County of Sacramento for a family of 4 was $120,800. The income limits for households are defined by HCD as follows:
- “Extremely Low” is 30 percent or less of AMI
- “Very Low” is between 30 percent and 50 percent of AMI - “Low” is between 50 percent and 80 percent of AMI
- “Moderate” is between 80 percent and 120 percent of AMI - “Above Moderate” is between 120 percent and 160 percent of AMI.

Table 1-1 presents the income categories that are relevant for this fee program evaluation.

Table 1-1. Sacramento County Area Median Income (AMI) Categories (2025 in 2025$)

• U.S. Census Bureau American Community Survey (ACS) 1-Year Estimates (2023).6
• California Department of Finance Demographics Table E-5 2024.

6 For most metrics, the choice between 5-year and 1-year ACS data does not significantly change the takeaway. 5-year data is more stable and conservative but may flatten data that ought not to be while 1-year data is more current and allows for year-to-year comparisons but has higher margins of error.

Item 1 2 3 4 5
Income Level
Extremely Low Income 15 - 30% < 30% $27,050 $30,900 $34,750 $38,600 $41,700 Very Low Income 30 - 50% 30-50% $45,050 $51,450 $57,900 $64,300 $69,450 Low Income 50 - 80% 51-80% $72,050 $82,350 $92,650 $102,900 $111,150 Median Income 80 - 100% - $84,550 $96,650 $108,700 $120,800 $130,450 Moderate Income 100 - 120% 81-120% $101,450 $115,950 $130,450 $144,950 $156,550 [1] Base AMI for Sacramento County assumes median income and a household size of 4.

Source: State of California Department of Housing and Community Development, "State Income Limits for 2025"; EPS.

HUD Defined
% of AMI
Study
% of AMI
Sacramento County Income Limits
Based on HH Size [1]

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Economic & Planning Systems, Inc. 5 Introduction and Summary of Findings • JobsEQ Industry and Occupation data as of 1st quarter 2024. The JobsEQ model is based on the BLS projections.
• U.S. Bureau of Labor Statistics 2022 Consumer Expenditure Survey. • 2017 U.S. Census Economic Census.
• Input from market-rate and affordable residential developers, and City staff regarding recently developed market rate and affordable housing projects, market assumptions and trends, and the Study methodology. • Third-party real estate and construction data firms such as CoStar, Zillow, Redfin, and Saylor Construction Costs.

This report presents key findings and recommendations for updating the inclusionary housing program in-lieu fee in the City.

Stakeholder Outreach
In addition to the quantitative data sources consulted above, EPS incorporated stakeholder feedback into the study and recommendations. Stakeholders— including affordable housing developers, single dwelling and market-rate housing developers, and other professionals from the development community— shared their perspectives on the City’s existing affordable housing fee program, providing essential input to inform the findings of this analysis. The following themes were identified from these discussions:
• Home builders surveyed support the current fee calculation method, both because they view the typical fee amount as reasonable and because the fee can change in response to the market prices for new homes.
• All market-rate developers surveyed preferred paying an in-lieu fee to providing on-site affordable housing, citing the administrative difficulties with operating affordable housing.
• Multifamily developers expressed concern at the high fee levels for multifamily units in the City (particularly in the Folsom Plan Area), and shared that further fees would negatively impact multifamily feasibility.

Key Findings and Considerations
The following section reflects the results of the updated Fee Study, which is based on current cost and revenue assumptions. The analyses present updated maximum justifiable affordable housing in-lieu fees that could be exacted on new residential development in the City. This section also summarizes research conducted on affordable and inclusionary housing policies in comparable jurisdictions, current market dynamics, input from local stakeholders, and implementation steps and considerations for the City to provide housing affordable to different income levels.

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Economic & Planning Systems, Inc. 6 Introduction and Summary of Findings Inclusionary Housing Program In-Lieu Fee
This Study applies a nexus-based approach consistent with the requirements of the Mitigation Fee Act, even though in-lieu fees are not subject to these requirements.

This nexus-based approach provides the City and stakeholders with transparency regarding the methods and data used to calculate the fee amount. In addition, charging the fee on a per-square-foot basis, as recommended in this Study, eases the administrative burden on City staff and provides developers with clear expectations for fee levels associated with their projects.

Throughout the outreach process for this study, stakeholders in the development community expressed support for the in-lieu fee levels derived under the current methodology. Accordingly, this Study recommends that the updated in-lieu fee, now expressed on a per-square-foot basis, remains comparable to the existing fee, ensuring that developers in Folsom face similar and predictable costs while maintaining adequate revenues to support the City’s affordable housing goals.

It is important to ensure the fees exacted on development do not negatively affect development’s financial feasibility. The analysis contained in this Study demonstrates the recommended fee level is feasible for all three single-family for- sale prototypes analyzed. However, the analysis in this Study shows that, even without being subject to the current inclusionary housing in-lieu fee, multifamily rental developments in Folsom currently face significant feasibility challenges.

Updated In-Lieu Fee
Table 1-2 compares the City’s existing fee with the updated fees developed in this Study, which are calculated using a nexus-based approach for four residential prototypes representative of housing that has been recently constructed, is currently under construction, or is planned in the City.7 The updated fees include the updated maximum justifiable in-lieu fee as well as two scenarios representing lower to higher percentages of the maximum justifiable fee. This Study recommends the City consider the fees under the low scenario, which closely approximate the City’s existing fee when converted to a per unit fee equivalent.

Although now permitted under AB 1505, the Study recommends continuing to exempt multifamily rental units from the City’s inclusionary requirements, including the in-lieu fee. This recommendation reflects the feasibility challenges associated with developing this housing type and aligns with the City’s goal of encouraging higher-density housing in key locations.

7 Because the prototypes do not represent all possible home sizes and sales’ price points, the difference between the existing fee and the recommended fee may differ for actual developments. However, as this table shows, the overall change in fee level between the current fee and the recommended fee is minimal.

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Economic & Planning Systems, Inc. 7 Introduction and Summary of Findings Peer Jurisdictions Comparative Survey
EPS examined local affordable housing programs to provide context and comparable information as the City updates its in-lieu fee in Chapter 4. The information includes an evaluation of residential fees and program requirements and is intended to inform decision-making and ensure potential new fees are reasonable and competitive with neighboring areas.

EPS examined affordable housing programs in the following peer jurisdictions:
• City of Sacramento;
• City of Rancho Cordova;
• City of Elk Grove;
• City of Davis;
• City of West Sacramento;
• City of Roseville; and
• Sacramento County.

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Economic & Planning Systems, Inc. 8 Introduction and Summary of Findings Table 1-2. Residential Affordable Housing Impact Fee Comparison (2025$)

Table 1-2
City of Folsom
Inclusionary Housing In-Lieu Fee and Nexus Study
Recommended In-Lieu Fee Comparison (2025$)
Renter-Occupied Prototype
Single Family
Item
Average Unit Sq. Ft. 2,600 2,000 1,500 1,000
EXSITING AFFORDABLE HOUSING IN-LIEU FEE [1]
Per Unit Example [1] $8,610 $6,558 $5,025 $0
Current fee Estimate per Sq. Ft. Example [1] $3.31 $3.28 $3.35 $0.00 UPDATED AFFORDABLE HOUSING IN-LIEU FEE (2025$)
Maximum Supportable Fee per Sq. Ft. [2] $59.56 $44.35 $35.82 $34.01 Per Unit Example [1] $154,856 $88,700 $53,730 $34,010
Difference between Current Fee and Updated Maximum $146,246 $82,142 $48,705 $34,010 % Difference between Current Fee and Updated Maximum 1,698.5% 1,252.6% 969.3% N/A High Fee Scenario (20 % of Maximum) [3] 20.0% of Maximum 20.0% of Maximum 20.0% of Maximum 20.0% of Maximum Potential Updated Fee per Sq. Ft. $11.91 $8.87 $7.16 $6.80 Per Unit Example [1] $30,966 $17,740 $10,740 $6,800
Difference between Current Fee and Potential Updated Fee $22,356 $11,182 $5,715 $6,800 % Difference between Current Fee and Potential Updated Fee 259.6% 170.5% 113.7% N/A Recommended Fee Scenario (% of Maximum) [3] 5.0% of Maximum 6.8% of Maximum 7.0% of Maximum .0% of Maximum Potential Updated Fee per Sq. Ft. $3.00 $3.00 $2.50 $0.00 Per Unit Example [1] $7,800 $6,000 $3,750 $0
Difference between Current Fee and Potential Updated Fee ($810) ($558) ($1,275) $0 % Difference between Current Fee and Potential Updated Fee (9.4%) (8.5%) (25.4%) N/A Source: City of Folsom; EPS.
[2] For more details on the maximum supportable fee per square foot calculation, see Table 3-9. [3] The High Scenario is set at 20% of maximum supportable fee, while the objective of the Low Scenario is to apply percentages of the maximum supportable fee that would result in a similar per unit fee as the current in-lieu fee for the Single Family Detached units. The Low Scenario for the Single Family Attached units is set to be approximately $0.50 lower per square foot than the Single Family Detached units. The Low Scenario for multifamily units is set at zero to reflect the City's position to continue to exempt these units from inclusionary housing requirements.

Detached Medium
Density
Residential Prototype Examples
Owner-Occupied Prototypes
Single Family
Detached Low
Density Single-Family Attached
Multifamily
Apartment Units
[1] Per unit example based on current estimated sales price shown in Table 3-7. Per square foot examples based on per unit fee and prototype square footages. See Table 3-1. The City's current in-lieu fee is not applicable to renter-occupied units.

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Economic & Planning Systems, Inc. 9 Introduction and Summary of Findings Additionally, EPS examined other in-lieu fee amounts from jurisdictions outside of the region, including:
• City of Berkeley;
• City of Santa Rosa;
• City of Sunnyvale; and
• City of Atascadero.

Key Findings from Peer Jurisdictions
Peer jurisdictions offer a range of approaches to funding affordable housing.

Outside of Folsom, no other jurisdiction in the Sacramento region has a formal inclusionary housing in-lieu fee. In addition to Elk Grove, the two largest jurisdictions, the City of Sacramento and Sacramento County, have adopted affordable housing development impact fees applied to market rate residential and nonresidential uses.

The City of Sacramento adopted an incentive program for high-density market- rate development, exempting all single-family and duplex uses with densities greater than 20 units per acre and all multifamily uses with densities greater than 40 units per acre from the fee. The cities of Roseville and Rancho Cordova have no formal inclusionary programs, although both jurisdictions negotiate inclusionary requirements with in-lieu fee options for large development projects through a development agreement. Except for Roseville, all jurisdictions evaluated for this Study have implemented a commercial linkage development impact fee, as shown in Table 4-1.

Broadly speaking, the financial impact of Folsom’s in-lieu fee (both current and the recommended updated fee) are comparable to fees in other jurisdictions in the Sacramento region, slightly lower than the City of Sacramento and Sacramento County, and slightly higher than the City of West Sacramento and City of Elk Grove. The City of Davis is an outlier, charging a significantly higher in-lieu fee than other jurisdictions in the region.

Because no jurisdictions in the Sacramento have an inclusionary housing requirement and associated in-lieu fee similar to Folsom’s, EPS also examined other jurisdictions outside the Region who have formal inclusionary policies with pre-determined in-lieu fee amounts. Compared to these other jurisdiction’s formal in-lieu fee amounts, the City’s fee is significantly lower than any other jurisdiction examined. However, all of the other in-lieu fee programs that EPS examined are in cities with much higher housing prices than the City of Folsom.

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Economic & Planning Systems, Inc. 10 Introduction and Summary of Findings Policy and Implementation Considerations
There are many factors a jurisdiction should consider when establishing affordable housing fee requirements. Like many communities in the State and across the nation, housing demand in the City has continued to outpace supply over the last several decades. This undersupply has increased housing costs for consumers, impacting affordability, and disproportionately affecting the most vulnerable populations. If market-rate units are the only type of housing produced, this ignores the need for housing at below market-rate income levels. However, it should be noted that adding net new net units at any income level has the potential to help reduce the overall housing undersupply and competition for existing units.

While this Study finds that the inclusionary housing in-lieu fee in the City of Folsom is comparable to other jurisdictions’ affordable housing fees in the Sacramento Region, this fee is only a component of the overall fee and infrastructure burden within a community. The City should ensure that both the inclusionary housing in- lieu fee and other fees are regularly evaluated to ensure that the fee programs are both achieving their funding goals and that the City’s overall fee burden is not negatively impacting development feasibility.

Because City staff indicated that reducing administrative burden, rather than increasing revenue, was a key goal of this update, this Fee Study recommends that units subject to the fee be charged a single per-square foot fee, regardless of zoning or housing type. However, approaches from other jurisdictions show that the fee can be used as a policy tool to encourage or discourage different types of housing. For example, the City of Santa Rosa charges a lower per-square-foot fee for smaller units, which favors the construction of smaller dwelling units. Similarly, the City of Sacramento charges a lower per-square-foot fee for dwelling units in the City’s “Housing Incentive Zone.” If the City desires to encourage certain types of units or increased development in a certain location, these approaches could be considered.

Since the IHO was last amended, the state passed AB 1505 (2017) which allows local governments to require inclusionary housing (and related in-lieu fee options) on rental housing, subject to feasibility review and other conditions. As part of this study, feasibility findings suggest that rental housing, which is not subject to the City’s current in-lieu fee, already faces feasibility challenges. As such, and despite other peer jurisdictions imposing fees on this type of housing, this study recommends that the updated in-lieu fee continue to exempt rental housing.

Lastly, because this Study proposes charging market-rate units on a per-square- foot basis, rather than as a percentage of sales price, EPS recommends that an enacting ordinance include an indexing component. By allowing the City to ministerially increase the fee using the Construction Cost Index, the City can ensure that fee revenue keep pace with funding needs.

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Economic & Planning Systems, Inc. 11 Introduction and Summary of Findings Organization of Report
Following this Introduction and Executive Summary, this Study includes the following chapters:
• Chapter 2 summarizes the methodology of the Inclusionary Housing In-Lieu Fee Analysis.
• Chapter 3 summarizes the results of the Inclusionary Housing In-Lieu Fee Analysis.
• Chapter 4 provides a comparison of comparable jurisdictions inclusionary housing policies.
• Chapter 5 provides policy and implementation considerations.

This Study includes two technical appendices. Appendix A provides supporting assumptions and calculations for the Residential Inclusionary Housing In-Lieu Fee Study in Chapter 2. Appendix B includes key assumptions underlying this analysis.

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Economic & Planning Systems, Inc. 12 Inclusionary Housing: Residential In-Lieu Fee Study

2. Inclusionary Housing: Residential In-Lieu
Fee Study
Methodology Summary
As discussed in Chapter 1, the City’s Municipal Code (Chapter 17.104) currently allows a per-unit in-lieu fee option equal to one percent of the sales price of the lowest-priced dwelling unit in the subdivision. The City is interested in exploring other potential methodologies to calculate the in-lieu fee in place of providing onsite affordable units within their development projects. The analysis estimates the financing gap or subsidy required to develop affordable units to quantify a “maximum supportable inclusionary housing in-lieu fee” and compares this fee to the current existing in-lieu fee. The “financing gap” approach is a well-accepted methodology used in development impact fee studies to establish maximum supportable fees that can be imposed on new residential development projects.

The methodology, as discussed below and summarized in Figure 2-1, calculates a fee by combining (1) the subsidy needed to produce a residential unit affordable at HCD-defined income levels and (2) the demand for new affordable housing generated by spending from the households of new market-rate units, which creates additional lower-wage jobs.

This memorandum and the analysis contained herein are intended to support the City’s decision-making process regarding inclusionary policy and to promote the construction of affordable housing development in the City.

Step #1: Conduct Affordability Gap Analysis
EPS developed 4 residential prototypes representative of housing units that have been recently constructed, are currently under construction, or are planned in the City. These prototypes (shown in Table 3-1) were developed based on the weighted average of comparable project types from market research, the Folsom Plan Area Specific Plan, the City’s Municipal Code density and parking requirements, and input from City staff.

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Economic & Planning Systems, Inc. 13 Inclusionary Housing: Residential In-Lieu Fee Study Figure 2-1. Illustration of Inclusionary Housing In-Lieu Fee Methodology

Step #1
Affordability Gap Analysis
Step #2
Affordable Housing Demand
Step #3
Compute Impact Fee
(Subsidy Required to
Construct Units)
Define Residential
Prototypes
Subsidy Required
No Subsidy Required
if positive
minus
if negative
Affordable Unit Value
by HCD Income
Level
Required Household
Income Level
Household
Expenditures by
Category
Total Workers to Provide
Goods and Services by
Expenditure Category
Cost to Develop
Units Affordability Gapequals
Affordability
Gap
(Subsidy
Required)
(Generated by Market Rate
Housing)
Total Demand
for Affordable
Units for
Workers
Workers' Income Levels
and Household
Formation
New Population in
Homes
Added Public Sector
Workers per New
Population
Public Sector Worker
Income Levels &
Household Formation
(Per Residential Square Foot)
Market Rate Sales
Prices & Rents
multiplied by
Demand for Affordable Units for
Net New Workers
(per market rate unit)
equals
Maximum Supportable
Nexus-Based Housing Fee
(per market rate unit square foot)

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Economic & Planning Systems, Inc. 14 Inclusionary Housing: Residential In-Lieu Fee Study • Prototype #1: Low-Density Single Dwelling Unit (For-Sale). This prototype is a low-density Single Dwelling Unit with a density of 5 units per acre. The prototype unit size reflects an average of 2,600 square feet, with 4 bedrooms and an attached 2-car garage. See Table A-1 for market research details. • Prototype #2: Medium-Density Single Dwelling Unit (For-Sale). This prototype is a medium-density Single Dwelling Unit with a density of 10 units per acre. The average unit size is 2,000 square feet, with 3 bedrooms and an attached 2-car garage. See Table A-2 for market research details.
• Prototype #3: Townhome (For-Sale). This prototype is a higher density owner- occupied dwelling (townhome or condominium) with a density of 18 units per acre. The Townhome prototype unit size is 1,500 square feet, with 3 bedrooms and an attached 2-car garage. See Table A-3 for market research details. • Prototype #4: Multifamily Apartments (Rental). The Multifamily Apartments prototype is a renter-occupied building with a density of 30 units per acre. The Multifamily prototype unit size is 1,000 square feet, with 2 bedrooms and includes 1.5 parking spaces per unit. See Table A-4 for market research details.

An “affordability gap analysis” evaluates whether the cost to construct affordable units exceeds the income-based value of units that are affordable to lower- and moderate-income households. Not all projected new households will require affordable housing. The maximum housing cost is based on income that a household can expend on a mortgage payment or monthly rent (shown in Table 3- 2). This analysis estimates that a household spends 30 percent of the annual household income on all housing costs. Other housing costs include utilities for rental units and mortgage insurance, taxes, homeowners insurance, utilities, and HOA fees for for-sale units. These other costs are subtracted from the total housing costs to determine the estimated maximum mortgage amount or rent. to determine the subsidy required to construct affordable housing units for each affordable housing income level (households with incomes at 50 percent, 80 percent, and 120 percent of AMI). The maximum supportable fee calculations commence with an affordability gap calculation (Table 3-6), an analysis that compares the cost of developing residential units (Table 3-5) to their value under income-based pricing restrictions (Table 3-3 and Table 3-4). Where the development cost exceeds the unit value, there is an affordability gap that must be subsidized to support affordable unit development. The affordability gap is then applied to derive a maximum supportable inclusionary housing impact fee.

Each analytical element used in this calculation is detailed in the following sections.

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Economic & Planning Systems, Inc. 15 Inclusionary Housing: Residential In-Lieu Fee Study Step #2: Calculate Affordable Housing Demand
A justified nexus-based fee is based on the total demand for affordable housing units generated by the construction of market-rate units. The link (or nexus) between market-rate housing and increased demand for affordable housing is that residents of market-rate units demand goods and services that rely on lower wage earners (for example, retail salesclerks), some of whom cannot afford market-rate housing and thus require affordable housing.

Because more expensive housing units require occupants to have higher incomes, and higher income households create more jobs through their spending, the nexus impacts and thus the justified fees for units vary according to the price range of the market-rate units. Typically, larger units (i.e., larger square footage and more bedrooms) command higher sales prices or rents, so their occupants are required to have higher household incomes than occupants of smaller units. Thus, larger units create and/or support more jobs because of their occupants’ spending patterns. Consequently, nexus impacts and the justified fees for market-rate units vary by unit size.

This analysis evaluates the demand for affordable housing generated by an average unit size. The demand-based nexus fee calculation involves the following steps:

1. Market-Rate Household Income Levels. The expected sales price and rental rate of each prototype is based on market data reflecting the weighted average of current sales prices and effective rents of multi-unit dwellings of more recently built units at the different density ranges. The required income levels of households occupying new market-rate housing are derived based on these price points, assuming standard housing expenses as a proportion of overall household income. For example, a typical household renting a market-rate two-bedroom unit for around $2,980 per month plus $280 in monthly utilities would have a household income of $130,100, provided the household spends 30 percent of its income on housing costs (including rent and utilities). 8 (Table 3-7).

2. Household Expenditures. Based on the household income computed in Step 1, Consumer Expenditure Survey data is used to evaluate the typical spending patterns of each prototype household. This analysis provides an estimate of how much the household spends on specific categories of expenditures, such as “Food at Home.” As the households’ income increases along with the price and size of the market-rate units, the total spending on goods and services also increases. The Consumer Expenditure Survey also indicates that these relationships are not

8 Per HCD the “Affordable housing cost” for lower-income households is defined in State law as not more than 30 percent of gross household income with variations (Health and Safety Code Section 50052.5). “Housing cost” commonly includes rent or mortgage payments, utilities (gas, electricity, water, sewer, garbage, recycling, green waste), and property taxes and insurance on owner- occupied housing.

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Economic & Planning Systems, Inc. 16 Inclusionary Housing: Residential In-Lieu Fee Study linear (e.g., a household with twice the income does not necessarily spend twice as much on food). See Appendix A Table A-8, Table A-9, Table A-10, and Table A-11.

3. Job Creation and Worker Households. Having estimated the households’ spending on assorted items, that spending is then converted into an estimation of jobs created for each residential prototype. For each expenditure category, data regarding average worker wages and the ratio between gross business receipts and wages are used to translate these household expenditures into the total number of private-sector workers. For selected public-sector jobs that typically grow in proportion to the local population size (e.g., teachers, protective service workers), the demand for new workers is estimated by relating current levels of employment in such categories to the current population and applying this ratio to future development.

Because each new worker does not represent an independent household (Folsom has an average of 1.65 workers per working household), the total number of new households created is somewhat less than the number of new jobs created.
9 This analysis assumes that workers form households with others earning similar wages. EPS has further adjusted the household formation rates to reflect the fact that a certain proportion of workers will not form their own households, particularly those of younger ages.10 See Table 3-8, Appendix A Table A-12, Table A-13, Table A-14, Table A-15, and Table A-16.

4. Worker Households by Income Category. Each worker household generated is assigned to an income category—represented as a proportion of AMI ranging from 50 to 120 percent— based on its estimated gross wages. This provides the total number of households generated at each income level by the construction of market-rate units at various sizes and price points. The results indicate that residents of smaller, lower-priced units generate fewer worker households requiring affordable housing than do residents of larger, higher-priced units.

Appendix A Table A-12, Table A-13, Table A-14, Table A-15, and Table A-16.

These steps of the nexus-based fee calculation provide the total number of income- qualified workers required to meet the needs for goods and services generated by market-rate housing. The number of workers servicing market-rate housing is then converted to total income-qualified households and each household is assumed to occupy one housing unit.

9 Average workers per household per ACS.
10 BLS data indicates that 12.5 percent of retail/restaurant workers are age 16-19, but an average of only 1.9 percent of workers overall (this factor is applied to other industries). EPS has assumed that such young workers do not form their own households.

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Economic & Planning Systems, Inc. 17 Inclusionary Housing: Residential In-Lieu Fee Study Step #3: Compute Impact Fee per Market Rate Unit
The nexus fee is calculated by multiplying the number of affordable units required to support the development of a 100-unit market rate project proportionally for each income-level households by the dollar amount affordability gap or subsidy needed to build that affordable unit. The total is divided by 100 to estimate the weighted average per unit and then divided by the gross square footage of the prototype to estimate the maximum supportable in-lieu fee per gross square foot (Table 3-9).

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3. Affordability Gap Analysis Results
For any nexus-based inclusionary in-lieu or affordable housing development impact fee calculation, it is necessary to estimate the subsidy required to construct affordable housing units. This chapter details the analysis conducted to determine the subsidy needed to produce both the different prototype density levels of for- sale and rental housing that is affordable to very low- through moderate-income households (31 through 120 percent of AMI).

Product Types
While the nexus fees calculated herein are based on demands created by market- rate housing that may be Single-Family Units, Townhomes/Two-Packs, or Multiunit Apartments, the analysis assumes that new lower-income worker households would be housed in affordable units similar to the type of construction currently observed in the City. The assumed prototypes reflect construction at various densities including two (2) Single-Family Detached ownership prototypes, one (1) Townhome prototype, and one (1) Multifamily Apartment prototype as discussed in the methodology section of this chapter and shown in Table 3-1. Project densities, unit sizes, and the number of bedrooms per unit are based on with comparable projects in the area, parking requirements from the City’s Municipal Code, Chapter 17, the Folsom Plan Area Specific Plan, and City staff input.

Revenue Assumptions
To calculate the values of the affordable units, assumptions must be made regarding the applicable income level (Very Low, Low, and Moderate incomes) and the percentage of household income spent on housing costs. In addition, translating these assumptions into unit prices and values requires estimates of purchase price variables, including interest rates, down payment amounts, as well as operating expenses and capitalization rates for the renter-occupied Multifamily Apartment prototype.

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Economic & Planning Systems, Inc. 19 Affordability Gap Analysis Results Table 3-1. Market-Rate Housing Development Prototype Assumptions

Prototype Designation [1] Product Type Construction Type Density Bedrooms Unit Sq. Ft. Parking Type [2] 1 R-1-L through R-1-M For-Sale 5 units/acre 4 Bedroom 2,600 sq. ft. 2 spaces per unit

SF/SFHD
2 For-Sale 10 units/acre 3 Bedroom 2,000 sq. ft. 2 spaces per unit 3 For-Sale 18 units/acre 3 Bedroom 1,500 sq. ft. 2 spaces per unit 4 Rental 30 units/acre 2 Bedroom 1,000 sq. ft. 1.5 spaces per unit [7] Source: City of Folsom Municipal Code; Redfin; CoStar; EPS. [1] Residential prototype designations are based on associated density ranges established in the Folsom Plan Area Specific Plan and Folsom Municipal Code. [3] Assumption data for the low-density, single family detached home prototype derived from Redfin (accessed 03/25), see Table A-1. Values have been rounded. [4] Assumption data for the medium-density, single family detached home prototype derived from Redfin (accessed 03/25), see Table A-2.Values have been rounded. [6] Assumption data for the multifamily apartments prototype derived from Costar (accessed 03/25), see Table A-4. Values have been rounded. [7] Per Folsom Municipal Code Section 17.57.040, 1.5 spaces required per multifamily unit.

City of Folsom Prototypes Characteristics
Item
Single-Family
Detached Homes
Type V
1-2 Stories
[5] Assumption data for the single-family attached prototype derived from Redfin (accessed 09/24). Values have been rounded. Given the lack of recently-constructed homes of this type in Folsom, this prototype is based on developments in the greater Sacramento Region. See Table A-3.

Single-Family
Attached [5]
Type V
1-2 Stories
R-2 through R-3

MLD/MMD
R-4
MHD
Multifamily
Apartments [6]
Type V
2-3 Stories
Type V
2-3 Stories
Single-Family
Detached Homes
R-1-M through R-2

SFHD/MLD
[2] Parking requirements per the City of Folsom Municipal Code, Chapter 17.

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Economic & Planning Systems, Inc. 20 Affordability Gap Analysis Results The following assumptions were used for both the rental and ownership product calculations:
• Income Levels—This analysis estimates the subsidy required to produce units for households earning up to 50, 80, and 120 percent of AMI for 3-person, 4- person, and 5-person households. HCD’s income limits by household size are shown in Table 1-1.11
• Percentage of Gross Household Income Available for Housing Costs—HCD standards on overpaying for rent indicate that households should pay no more than 30 percent of their gross income on housing costs. For this analysis, EPS has assumed that all households spend 30 percent of their gross income on housing costs, including utilities. Table 3-2 provides the estimated maximum monthly rent or mortgage payment by household size for HCD’s different household income levels.

Rental Product Assumptions
As shown in Table 3-3, the following assumptions are applied to the maximum rent payment calculated in the steps above to estimate the total supportable unit value by income level for a 3-person household:
• Operating Costs for Rental Units – This analysis assumes that multifamily rental operators incur annual operating costs of 35 percent of the annual rental revenue based on data from the National Apartment Association Survey. • Capitalization Rate – This analysis assumes a 5.25 percent capitalization rate based on information from CBRE United States Cap Rate Survey H1 2024, the most recently available survey at the time of this report. 12 • Vacancy Rate – This analysis assumes a vacancy rate of 4.3 percent based on the average vacancy rate for multifamily rentals in the Sacramento-Roseville- Arden-Arcade Metropolitan Statistical Area from 2014 to 2024, as reported by the US Census Bureau.

Based on HCD’s income levels, the supportable multifamily apartment unit values range from $152,400 for very low, $265,600 for low, and $388,700 for moderate income.

11 California State law (California Health and Safety Code Section 50052.5) assumes that a 2-bedroom unit is occupied by a 3-person household, a 3-bedroom unit is occupied by 4-person household, and a 4-bedroom unit is occupied by a 5-person household and these assumptions are used in this analysis.
12 The capitalization rate is used to determine the current value of a property based on estimated future operating income and is typically a measure of estimated operating risk.

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Economic & Planning Systems, Inc. 21 Affordability Gap Analysis Results Table 3- 2.Maximum Monthly Rent or Mortgage Payment
Item
Percentage
of AMI [1]
Maximum
Annual HH
Income [1]
Total Max.

Annual
Spending on
Housing [2]
Total Max.

Monthly
Spending on
Housing
Monthly
Spending on
Other Housing
Costs [3]
Maximum
Monthly Rent or
Mortgage
Payment [4]
Formula a b = a * 30% c = b / 12 d e = c - d

INCOME CATEGORY
AND HOUSEHOLD (HH) SIZE [5]
Rental Units
3-Person HH (2 bedrooms)
Extremely Low < 30% $34,750 $10,425 $869 $278 $591
Very Low 30-50% $57,900 $17,370 $1,448 $278 $1,170
Low 51-80% $92,650 $27,795 $2,316 $278 $2,038
Moderate 81-120% $130,450 $39,135 $3,261 $278 $2,983
For-Sale Units
4-Person HH (3 bedrooms)
Extremely Low < 30% $38,600 $11,580 $965 $610 $355
Very Low 30-50% $64,300 $19,290 $1,608 $850 $758
Low 51-80% $102,900 $30,870 $2,573 $1,160 $1,413
Moderate 81-120% $144,950 $43,485 $3,624 $1,500 $2,124
5-Person HH (4 bedrooms)
Extremely Low < 30% $41,700 $12,510 $1,043 $650 $393
Very Low 30-50% $69,450 $20,835 $1,736 $890 $846
Low 51-80% $111,150 $33,345 $2,779 $1,230 $1,549
Moderate 81-120% $156,550 $46,965 $3,914 $1,590 $2,324
[5] California State law (California Health and Safety Code Section 50052.5) assumes that a 2-bedroom unit is occupied by a 3-person hous
ehold, a 3-bedroom unit is occupied by 4-person household, and a 4-bedroom unit is occupied by a 5-person household and t
hese assumptions are used in this analysis.

Source: State of California Department of Housing and Community Development, "State Income Limits for 2024"; EPS.

Maximum Monthly Rent or Mortgage Payment
[4] Maximum income available to pay for rent or mortgage after allowance for other housing costs. [2] Assumes a housing cost-to-income ratio of 30 percent, which is the standard measure used by the U.S. Department of Housing and U
rban Development (HUD) to assess housing cost burden.
[1] See Table 1-1.
[3] For rental units, other housing costs include utility expenditures consistent with the Sacramento Housing and Redevelopment Agency al
lowances for a 2-bedroom unit (assumes electric heating and cooking); Refer to Table A-6 for cost breakdown. For for-sale units, ot
her housing costs include mortgage insurance, taxes and homeowner insurance, utilities, and HOA fees. The assumptions are bas
ed on the applicable prototypes and are shown on Table 3-3 and Table 3-4.

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Economic & Planning Systems, Inc. 22 Affordability Gap Analysis Results Table 3- 3. Prototype Revenue Assumptions: Rental Product Item Assumptions Formula
Very Low Income
(50% AMI)
Low Income
(80% AMI)
Income
(120% AMI)
Maximum Annual HH Income (rounded) Table 3-2 a $57,900 $92,650 $130,450 Maximum Monthly Spending on All Housing Costs Table 3-2 b = a * 30% / 12 $1,448 $2,316 $3,261 Monthly Spending on Other Housing Costs
Utilities Table A-6 c $278 $278 $278
Maximum Rent Payment d = c - b $1,170 $2,038 $2,983
Project Net Operating Income (NOI)
Total Annual Revenue e = d * 12 $14,034 $24,459 $35,799 Less Operating Costs 35.0% f ($4,912) ($8,561) ($12,530) Less Vacancy for Market Rate Units [1] 4.3% g ($603) ($1,052) ($1,539) Annual NOI h = e - f - g $8,519 $14,847 $21,730
Capitalization Rate [2] 5.25% i - - -
Total Supportable Unit Value (rounded) j = h / i $162,300 $282,800 $413, 900 Source: National Apartment Association Survey; CBRE; US Census Bureau Current Population Survey; EPS. [2] Cap rate per CBRE Cap Rate Survey H12024 for suburban west. [1] Vacancy rates based on the average multifamily vacancy rates within the Sacramento-Roseville-Arden-Arcade Metropolitan Statistical Area from 2014 - 2024, rounded. 2 Bedroom (3 Person Household)

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Economic & Planning Systems, Inc. 23 Affordability Gap Analysis Results Ownership Product Assumptions
As shown in Table 3-4, the following assumptions are applied to the maximum monthly spending on housing costs for an ownership product calculated in the steps above to estimate the total supportable unit value by income level and household size:
• Mortgage Insurance—This analysis assumes a mortgage insurance rate of

1.5 percent of the loan.
• Taxes and Insurance – Assumes property taxes, including Mello-Roos special tax assessments, and homeowners’ insurance account for 2 percent of the unit value.
• Utilities– Utilities costs calculations are shown in Table A-5 based on estimates from Sacramento Municipal Utilities District and the City of Folsom. • HOA Fee – Estimated HOA fees are based on comparable properties as shown in Table A-7.
• Down Payment – Assumes a 5 percent down payment.

The supportable ownership unit values based on HCD’s income levels by household size range from the following:
3 bedroom (4-Person Household)
• Very Low Income: $126,200
• Low Income: $235,300
• Moderate Income: $353,700
4 Bedroom (5-Person Household)
• Very Low Income: $140,900
• Low Income: $258,000
• Moderate Income: $387,000

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Economic & Planning Systems, Inc. 24 Affordability Gap Analysis Results Table 3-4. Prototype Revenue Assumptions: Ownership Product (2025$)

Item Assumptions Formula
Maximum Annual HH Income (rounded) Table 3-2 a $64,300 $102,900 $144,950 $69,450 $111,150 $156,550 Maximum Monthly Spending on All Housing Costs [2] b = a* 30% / 12 $1,608 $2,573 $3,624 $1,736 $2,779 $3,914 Monthly Spending on Other Housing Costs [3]
Mortgage Insurance [4] 1.50% c $150 $280 $420 $170 $310 $460 Taxes and Insurance [5] 2.00% d $210 $390 $590 $230 $430 $640 Utilities Table A-5 e $300 $300 $300 $300 $300 $300
HOA Fee Table A-7 f $190 $190 $190 $190 $190 $190
Total Monthly Spending on Other Housing Costs g = c + d + e + f $850 $1,160 $1,500 $890 $1,230 $1,590 Maximum Mortgage Payment h = b - g $758 $1,413 $2,124 $846 $1,549 $2,324 Estimated Loan Value [6] i $119,924 $223,552 $336,040 $133,846 $245,069 $367,682 Total Supportable Unit Value [7] [8] 5.0% down payment j = i / (1 - 5%) $126,200 $235,300 $353,700 $140,900 $258,000 $387,000 Source: California Health and Safety Code; HUD; Freddie Mac; EPS. [2] Assumes a housing cost-to-income ratio of 30 percent, which is the standard measure used by the U.S. Department of Housing and Urban Development (HUD) to assess housing cost burden. [3] Rounded to nearest $10.
[4] Assumes mortgage insurance is equal to approximately 1.5% of loan value, divided by 12. [5] Assumes property taxes, Mello-Roos taxes, and homeowners insurance is equal to 2% of home value, divided by 12. [6] The estimated loan value is based on mortgage terms of a 6.5% interest rate and a 30-year repayment period. [8] Rounded to nearest $100.

Moderate
Income
(120% AMI)
3 Bedroom (4 Person Household) [1] 4 Bedroom (5 Person Household) [1] Moderate
Income
(120% AMI)
[7] The total supportable unit value is equivalent to the estimated loan value plus a 5.0 percent down payment. Federal Housing Administration-backed loans require a minimum of 3.5% down for most buyers. This analysis rounds this figure to 5%.

Very Low
Income
(50% AMI)
Low
Income
(80% AMI)
Very Low
Income
(50% AMI)
Low
Income
(80% AMI)
[1] California State law (California Health and Safety Code Section 50052.5) assumes that a 2-bedroom unit is occupied by a 3-person household, a 3-bedroom unit is occupied by 4-person household, and a 4-bedroom unit is occupied by a 5-person household and these assumptions are used in this analysis.

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Economic & Planning Systems, Inc. 25 Affordability Gap Analysis Results Development Cost Assumptions
Housing development costs include land costs, direct costs (e.g., labor and materials), and indirect or “soft” costs (e.g., architecture, entitlement, marketing, etc.). Data from recent Folsom land transactions have been combined with EPS’s information from various market-rate housing developers to estimate appropriate development cost assumptions for use in Folsom. These assumptions are shown in Table 3-5 and demonstrate the following total cost per unit in the Folsom Plan Area Specific Plan:
• Single Dwelling Unit Low Density 4-bedroom Unit: $807,600 • Single Dwelling Unit Medium Density 3-bedroom Unit: $611,600 • Owner-Occupied Multi-Unit Dwellings 3-bedroom Unit: $512,500 • Renter-Occupied Multi-Unit Dwellings 2-bedroom unit: $455,900

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Economic & Planning Systems, Inc. 26 Affordability Gap Analysis Results Table 3-5. Development Costs by Prototype: Existing Fees (2025$)

Rental Prototype
Item
Input
Assumptions
Prototype 1: Single-
Family Detached Home
(Low Density)
yp g
Family Detached
Home (Medium
Density)
Prototype 3: Single
Family Attached
(High Density)
Prototype 4: Multifamily
Apartments
(High Density)
Development Program Assumptions
Acreage 20.00 10.00 5.56 3.33
Density/Acre 5 10 18 30
Total Unit Count 100 100 100 100
Gross Unit Size [1] 2,600 2,000 1,765 1,176
Net Unit Size 2,600 2,000 1,500 1,000
Number of Bedrooms 4 3 3 2
Parking Spaces/Unit [2] 2 2 2 1.5

Cost Assumptions per Unit
Land Value/ Acre [3] $470,000 $470,000 $470,000 $810,000 Land Value (rounded) $9,400,000 $4,700,000 $2,611,000 $2,700,000 Land Cost/ Unit [3] $94,000 $47,000 $26,110 $27,000
Direct Costs
Basic Site Work/Grading $10 per land site sq. ft. $48,100 $37,000 $32,647 $21,765 Construction Costs/Gross SF [4] $150 $150 $150 $200
Direct Construction Costs/Unit (rounded) $390,000 $300,000 $264,700 $235,300 Carport Parking Construction Cost/Unit [5] $8,000 per space $0 $0 $0 $12,000 Subtotal, Direct Costs/Unit $438,100 $337,000 $297,347 $269,065 Indirect Costs
Indirect Costs/Unit (rounded) [6] 12.0% of direct costs $63,900 $40,400 $35,700 $32,300 Impact Fees
Existing Affordable Housing In-Lieu Fee $8,610 $6,558 $5,025 $0 Other Impact Fees (North of 50) Table A-20 $66,524 $59,764 $54,131 $34,016 Other Impact Fees (FPASP) Table A-21 $128,340 $121,421 $96,693 $78,079 Total Impact Fees (North of 50) [7] $75,134 $66,322 $59,155 $34,016 Total Impact Fees (FPASP) [7] $136,950 $127,979 $101,717 $78,079 Financing + Developer Fee Costs
Interest (7.0%, 50% LTC, 50% Outstanding) [8] $11,182 $8,844 $7,608 $6,640 Fees (2.0% of loan amount) $6,390 $5,054 $4,348 $3,794
Developer Fee 10.0% of direct costs $59,471 $45,762 $40,416 $34,582 Subtotal Financing + Developer Fee Costs $77,042 $59,660 $52,372 $45,016 Total Estimated Cost/Unit (rounded) (North of 50) $748,200 $550,400 $470,700 $407,400 Total Esitimated Cost/ Unit (rounded) (FPSAP) $810,000 $612,000 $513,200 $451,500 [7] Development impact fee estimates per the City of Folsom website for FY 2024-25. [8] Financing costs based on FPASP fees.
[6] Includes estimated costs for architecture and engineering; project management; appraisal and market study; marketing, commissions, and general administration; insurance; and contingency. [5] Garage parking costs for the single family units is assumed to be included in the construction costs per gross square foot.

The 1.5 parking spaces per multifamily unit are assumed to be covered spaces. [4] Construction cost estimates for single family home (both attached and detached) product is based on input from developers.

Construction cost estimate for multifamily rental product is based on 2022 Saylor Construction Cost data and adjusted for inflation to 2024 dollars. [3] Single family land value assumption based on 2024 appraisal for Folsom SPIF Public Land/ Parkland Equalization Fee. Multifamily land value assumption based on 2024 appraisal for Folsom CFD No.18 Bond sale. [2] Parking assumption is consistent with the City's parking requirements for the prototype..

For-Sale Prototype
[1] Gross size per unit includes garage for single family attached units and common areas for high-density multifamily (assumed efficiency ratio of 85%).

Source: Saylor Construction Costs 2023 Edition 2022 Construction Costs; City of Folsom Municipal Code; California HCD; CoStar; Weekly; local developers; EPS.

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Economic & Planning Systems, Inc. 27 Affordability Gap Analysis Results Affordability Gap Results
Table 3-6 provides the affordability gap, or subsidy, required to develop each prototype unit at the very- low, low, and moderate-income levels. As shown, there is an affordability gap or subsidy needed for all of the prototypes at all income level ranges. The affordability gap ranges from a high of $666,700 for a low-density single family detached units at the Very Low-income level to a low of $67,200 for multifamily apartment units at the Moderate Income level. These housing affordability gaps then were used to calculate the justified nexus-based maximum supportable in-lieu fees by multiplying the required subsidy by the number of units required to house workers providing goods and services to new market-rate housing development. This methodology is discussed in more detail in the next section.

Demand-Based Nexus Fee Calculation
The maximum supportable nexus-based fees are based on both the affordability gap and the estimated impact that new market-rate rental units have on the need for affordable units, as reflected in the number of income-qualified local workers required to support the residents of market-rate multi-unit dwellings and the total subsidy required to construct housing for those workers.

This approach is based on the following logic: (a) residents of market-rate housing have disposable incomes and require a variety of goods and services (including private sector goods and services and government services); (b) the provision of those goods and services will create employment demand for some workers who make moderate or lower incomes and cannot afford market-rate housing; and (c) fees charged to market-rate projects can mitigate the impact of those projects on the increased need for affordable housing.

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Economic & Planning Systems, Inc. 28 Affordability Gap Analysis Results Table 3-6. Development Funding Affordability Gap: Existing Fees

Item Source
Prototype 1: Single-Family Detached Home (Low Density)
Supportable Unit Value Table 3-4 $140,900 $258,000 $353,700 Unit Development Cost [1] Table 3-5 $810,000 $810,000 $810,000 Affordability Gap ($669,100) ($552,000) ($456,300)
Prototype 2: Single-Family Detached Home (Medium Density) Supportable Unit Value Table 3-4 $126,200 $235,300 $353,700 Unit Development Cost [1] Table 3-5 $612,000 $612,000 $612,000 Affordability Gap ($485,800) ($376,700) ($258,300)
Prototype 3: Single Family Attached
Supportable Unit Value Table 3-4 $126,200 $235,300 $353,700 Unit Development Cost [1] Table 3-5 $513,200 $513,200 $513,200 Affordability Gap ($387,000) ($277,900) ($159,500)
Prototype 4: Multifamily Apartments
Supportable Unit Value Table 3-3 $162,300 $282,800 $413,900 Unit Development Cost [1] Table 3-5 $451,500 $451,500 $451,500 Affordability Gap ($289,200) ($168,700) ($37,600)
[1] All unit development costs based on FPASP unit development costs.

Affordability Gap
by Income Level per Unit
Moderate
Income
(120% AMI)
Source: EPS.

Very Low
Income
(50% AMI)
Low Income
(80% AMI)

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Economic & Planning Systems, Inc. 29 Affordability Gap Analysis Results Market-Rate Household Income Levels
Households with larger incomes typically spend more on goods and services, thereby creating additional lower-income jobs, which in turn generates a greater demand for affordable housing. To assess the impact that market-rate rental units have on the need for affordable housing, EPS estimated the typical income required to purchase or rent average market-rate units in Folsom, as shown in Table 3-7.

Average purchase prices and rental rates are based on recent comparable products shown in Table A-1, Table A-2, Table A-3, and Table A-4. Generally, newer unit purchase prices and rents are higher than existing housing stock because the higher prices and rents are required to cover the costs of construction.

The minimum household income needed to purchase or rent each unit type is calculated using the same assumptions to calculate the additional housing costs such as utilities, mortgage insurance, property taxes and homeowners’ insurance, and HOA costs as shown in Table 3-3, Table 3-4, and Table A-6. The minimum annual household income is also predicated on the assumption that a household will spend 30 percent of their income on the above housing costs in addition to rent and mortgage. As shown in Table 3-7, the required average household income by unit type is as follows:
• Single-Family Detached Low Density 4-bedroom Unit: $327,200 • Single-Family Detached Medium Density 3-bedroom Unit: $253,500 • Townhome/2-Packs 3-bedroom Unit: $199,100
• Market Rate Multifamily Apartment 2-bedroom unit: $130,100

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Economic & Planning Systems, Inc. 30 Affordability Gap Analysis Results Table 3-7. Required Income by Market Rate Unit Type

Item
Formula A B C D E G = F * 12 H = G / 30%
Unit Type
Prototype 1: Single-Family Detached Home (Low Density) $861,011 $5,170 $300 $1,080 $1,440 $190 $8,180 $98,161 $327,200 Prototype 2: Single-Family Detached Home (Medium Density) $655,794 $3,938 $300 $820 $1,090 $190 $6,338 $76,054 $253,500 Prototype 3: Single Family Attached Home $502,467 $3,017 $300 $630 $840 $190 $4,977 $59,726 $199,100 Prototype 4: Market-Rate Multifamily Apartments $2,974 $2,974 $278 - - - $3,252 $39,026 $130,100 Source: CoStar;RedFin; EPS.
[1] See Table A-1, Table A-2, Table A-3, and Table A-4. [2] Estimated monthly mortgage and rent calculated using the same assumptions used in Table 3-4. [3] See Table A-5 and Table A-6.
[4] Assumes a housing cost-to-income ratio of 30 percent, based on HCD requirements.

Required Household Income for Market Rate Prototypes
Average Market
Rate Monthly
Mortgage/Rent
[2]
Mortgage
Insurance
Taxes and
Insurance
HOA
Fee
Utilities
[3]
Monthly
Total
Housing
Costs
Annual
Total
Housing
Costs
Minimum
Annual
Household
Income Required
(rounded) [4]
Weighted
Average
Sales
Price/Rent
[1]
F = A + B + C
+ D + E

01/13/2026 Item No.14.

CITY OF FOLSOM INCLUSIONARY HOUSING PROGRAM STUDY

Economic & Planning Systems, Inc. 31 Affordability Gap Analysis Results Household Expenditures and Job Creation by Income Level Having established the income requirements for purchasing or renting average units in the City, the fee calculation then requires an analysis of the household spending patterns at those required income levels. Consistent with development impact fee nexus calculations for schools, parks, roads, etc., this analysis also assumes that all households purchasing or renting new market-rate units in Folsom are “net new” households to the City. To assume otherwise—for instance, that only those buyers or renters of new housing units relocating from outside Folsom should be counted in the impact analysis—would require assuming that the homes left by those households relocating within Folsom would be demolished or left vacant in perpetuity. This scenario would occur only if the City were experiencing a significant loss of population and housing inventory, which has not happened and is not expected to occur.

The Consumer Expenditure Survey from the United States Bureau of Labor Statistics provides data for households at a variety of income levels, detailing the amounts that typical households spend on things like “Food”, “Apparel and Services”, and “Vehicle Maintenance and Repairs”. Interestingly, household expenditures by category are not uniformly proportional to household income levels. For example, households earning around $40,000 to $49,000 spend roughly 17 percent of their income on food and drink (at home and eating out), while households earning $100,000 to $149,000 spend only about 11 percent of their income on food and drink. Because of these and other differences in proportionate spending, the expenditure profile varies at different income levels.

Each of the prototype’s household’s typical expenditures were converted to the number of jobs created by its spending. The first step in this process is to determine how much of an industry’s gross receipts are used to pay wages and employee compensation. EPS relied on data from the Economic Census, which provides employment, gross sales, and payroll data by industry for Sacramento County. 13 To link the Economic Census data and the Consumer Expenditure Survey data, EPS made determinations as to the industries involved with expenditures in various categories. For example, purchases in the Consumer Expenditure Survey’s “Food at Home” category would likely involve the Economic Census’s “Food & Beverage Stores” industry, where gross receipts were more than eight times the employees’ wages. By contrast, purchases in the Consumer Expenditure Survey’s “Entertainment Fees and Admissions” category were attributed to the Economic Census’ “Arts, Entertainment, and Recreation” industry, where gross receipts are only four times the employees’ wages. Where more than one Economic Census category was

13 The Economic Census and Consumer Expenditure Survey and were published in 2017 and 2022, respectively, but are current as of 2024. EPS converted all numbers to 2024 dollars using the Consumer Price Index (CPI) for the urban west from the Bureau of Labor Statistics.

01/13/2026 Item No.14.

CITY OF FOLSOM INCLUSIONARY HOUSING PROGRAM STUDY

Economic & Planning Systems, Inc. 32 Affordability Gap Analysis Results attributable to a Consumer Expenditure Survey category, EPS estimated the proportion of expenditures associated with each Economic Census category.

After determining the amount of the household’s expenditures that were used for employee wages, EPS estimated the number of employees those aggregate wages represent. EPS calculated the number of workers supported by that spending using the average wage per worker from the 2017 Economic Census, the most recent dataset available. After accounting for CPI adjustments to reflect 2025 dollars, these wages ranged from a low of roughly $22,600 per year for workers in the Food Services industry to a high of almost $132,500 in Legal Services.

A range of occupations and incomes exist in a given industry sector. For instance, the methodology used to generate Table A-12, Table A-13, Table A-14, and Table A-15 in Appendix A distinguishes between the typical incomes of workers in different types of retail stores (e.g., “food and beverage stores” versus “general merchandise stores”), rather than assuming all retail sector workers earn the same income. However, the average wage is used for each sub-category of industry employment and represents a reasonable proxy for the range of incomes in that group. While some employees will have higher wages and require lower subsidies, others will have lower incomes and require higher subsidies. Using the average approximates the total housing subsidy needed by workers in that industry.

To calculate the number of households supported by the expenditures of market- rate housing units, EPS estimated the employees’ household formation rates.

Importantly, employees generated from the increase in housing units do not all form households; some employees, in the retail and food services industries in particular, are young workers and do not form households. Data from the Bureau of Labor Statistics indicates that 12.5 percent of retail/restaurant workers are aged 16 to 19, but an average of only 1.9 percent of workers in the workforce overall. EPS applied these discounts to household formation by type of business to get a more accurate calculation of households formed by the employees and the average total incomes of those households.

To get the overall household income rather than the individual workers, the wages of workers forming households were multiplied by the average of approximately

1.65 workers per working household in Folsom.
14 This assumption implies the
workers in a given household will have roughly equivalent pay per hour. While certainly there will often be some variation in wages per employee within a household, on average this assumption is reasonable because it implies comparable levels of education and training among all workers in a household. The average household incomes then are allocated to various income categories to estimate the

14 Workers per working household based on American Community Survey (ACS) Census data as of 2023. Although ACS data reported is based on historical figures, these figures can vary somewhat based on ongoing revisions to the ACS data.