Folsom City Council
March 24, 2026

03/24/2026 Item No.8.

Historic District Commission
Zoning Code Update – Accessory Dwelling Unit Ordinance (ZCAM26-00007) March 4, 2026
City of Folsom

Attachment 2
HCD Letter of Technical Assistance
Dated 12-5-25

03/24/2026 Item No.8.

STATE OF CALIFORNIA - BUSINESS, CONSUMER SERVICES AND HOUSING AGENCY GAVIN NEWSOM, Governor

DEPARTMENT OF HOUSING AND COMMUNITY DEVELOPMENT

DIVISION OF HOUSING POLICY DEVELOPMENT
651 Bannon Street, Suite 400
Sacramento, CA 95811
(916) 263
-2911 / FAX (916) 263-7453
www.hcd.ca.gov
December 5, 2025
Pam Johns
Contract City Planner
City of Folsom
50 Natoma Street
Folsom, CA 95630
Dear Pam Johns:

RE: City of Folsom – Accessory Dwelling Unit (ADU) Ordinance Updates – Letter of Technical Assistance
The most recent ADU ordinance on file for the City with the California Department of Housing and Community Development (HCD) is from 2020. Given the numerous changes to State ADU Law since the adoption of the ordinance, the ordinanc e may be outdated and out of compliance with State ADU Law. If H CD’s records are incorrect, and a new ordinance has been adopted, please submit it to the ADU Portal for HCD’s review.

Below are the changes to State ADU Law that have occurred in rec ent years and may warrant an update to the City’s ADU ordinance:

Updates to the ADU Handbook (2025)
• Clarifies that ADU Law prohibits deed restrictions on ADUs. A deed restriction would be an “additional standard” and thus cannot be imposed on ADUs (Gov.

Code, § 66315).
• Clarifies that homeowners’ associations (HOAs), as a third party, cannot influence the approval of an application to create an ADU. Third party reviews by an HOA or their representatives or agents would violate State ADU Law. (Gov.

Code, § 66315.) No other local ordinances, policies, or regulations may be applied in the approval or denial of an ADU or junior ADU (JADU) permit application (Gov. Code, § 66317, subd. (c)).
• Clarifies that a local agency may not require parking as a condition to permitting a JADU, even when the JADU is converted from an attached garage (Gov. Code, § 66334, subd. (a)).

03/24/2026 Item No.8.

Pam Johns, Contract City Planner

Changes to ADU Law in 2025:
• Specifies that if a JADU has shared sanitation facilities with the primary structure, owner-occupancy will be required. If the JADU does not have shared sanitation facilities, owner-occupancy will not be required (Gov. Code, § 66333, subd. (b)).
• Require rental terms for JADUs for terms longer than 30 days (Gov. Code, § 66333, subd. (g)).
• Specifies that if a local agency fails to submit an adopted ADU ordinance to HCD within the 60-day timeline or fails to respond to HCD’s findings regarding their ordinance within the 30-day timeline, that ordinance is null and void and the local agency must only apply State ADU Law when permitting ADUs (Gov.

Code, § 66326, subd. (d)).
• Revises the definition of a “junior accessory dwelling unit” to require the size of a JADU to be no more than 500 square feet of interior livable space (Gov. Code, § 66313, subd. (d)).
• Revises the limitations on impact fees to, instead, prohibit impact fees upon the development of an ADU that has 750 square feet of interior livable space or less or a JADU that has 500 square feet of interior livable space or less, and to require that any impact fee on an ADU that has more than 750 square feet of interior livable space be charged proportionately in relation to the square footage of the primary dwelling unit (Gov. Code, § 66311.5, subds. (a) – (d)). • Requires a permitting agency to determine whether an application for an ADU or JADU is complete and provide written notice of the determination not later than 15 business days after the permitting agency received the application (Gov.

Code, § 66317, subd. (a)(2)(A)).
• Requires the permitting agency to provide the applicant with a list of incomplete items and a description of how the application can be made complete in the written notice and authorizes the applicant to cure and address the application, as specified, if it is determined that an application is incomplete (Gov. Code, § 66317, subd. (a)(2)(B)).
• Requires the permitting agency to provide a process for the applicant to appeal a denied application, as provided, and requires the permitting agency to provide a final written determination by not later than 60 business days after receipt of the written appeal if a permit application is determined to be incomplete or is denied (Gov. Code, § 66317, subd. (d)(1)).
• Specifies that an ADU or JADU that contains less than 500 square feet of interior livable space does not increase assessable space. • Revises size limitations to be based on the square footage of interior living space of the ADU (Gov. Code, § 66321, subds. (b)(2)(A), (b)(2)(B), and (b)(3)). • Specifies the number of allowable ADUs per lot with a proposed or existing single-family dwelling (Gov. Code, § 66323, subd. (a).

03/24/2026 Item No.8.

Pam Johns, Contract City Planner

• Clarifies that fire sprinklers are not required for a JADU if the primary residence does not have fire sprinklers and that the addition of a JADU cannot trigger the requirement for fire sprinklers (Gov. Code, § 66323, subd. (d)). • Adds section 66333.5, which specifies that if a local agency fails to submit an adopted JADU ordinance to HCD within the 60-day timeline or fails to respond to HCD’s findings regarding their ordinance within the 30-day timeline, that ordinance is null and void and the local agency must only apply State ADU Law when processing applications for ADUs.
• Requires a local agency to issue a certificate of occupancy for an ADU constructed in a county that is subject to a proclamation of a state of emergency made by the Governor on or after February 1, 2025, even if the primary dwelling has not yet been issued a certificate of occupancy, if certain requirements are met, including that the primary dwelling was substantially damaged or destroyed by an event referenced in the state of emergency proclamation (Gov. Code, § 66328).
• Creates an exception to areas that fall under the California Coastal Act by requiring a local government or the Coastal Commission, as specified, to either approve or deny a coastal development permit application for an ADU within 60 days of receiving a completed application (Gov. Code, § 66329, subd. (a).) • Specifies that no reimbursement is required for school service charges, fees, or assessments sufficient to pay for the program or level of service within the meaning of Government Code section 17556 (Gov. Code, § 66329). • Specifies that reasonable restrictions in covenants, restrictions, and conditions, as described in the Civil Code, shall not include any fees or other financial requirements (Civil Code, § 714.3, subd. (b)).

Changes to ADU Law in 2024:
• SB 477 (Chapter 7, Statutes of 2024) made changes to the numbering of the sections of the Government Code for State ADU and JADU Laws. • Prohibits a local agency from denying a permit for an unpermitted ADU or JADU that was constructed before January 1, 2020, for building code violations, unless the local agency makes a finding that correcting the violation is necessary to comply with conditions that would otherwise deem a building substandard (Gov.

Code, § 66332, subds. (a)-(c)).
• Defines “livable space” as a space in a dwelling intended for human habitation, as the term appears in Government Code sections 66313, subdivision (e), and 66323, subdivision (a)(3)(A).
• Provides that uncovered, off-street parking spaces demolished in conjunction with the construction of an ADU do not need to be replaced (Gov. Code, § 66314, subd. (d)(11)).

03/24/2026 Item No.8.

Pam Johns, Contract City Planner

• Changes the allowable number of detached ADUs on a lot with an existing multifamily dwelling to eight detached ADUs, provided that the number of ADUs does not exceed the number of existing units on the lot (Gov. Code, § 66323, subd. (a)(4)(A)(ii)).
• Prohibits a local agency from imposing any objective development standards on 66323 Units that are not authorized by the provisions of Government Code section 66323, subdivision (a) (Gov. Code, § 66323, subd. (b)).

Changes to ADU Law in 2023:
• Sunsets a former prohibition on a local agency imposing an owner occupancy requirement on any ADU and instead prohibits a local agency from requiring owner occupancy for an ADU (Gov. Code, § 66315).
• Allows a local agency to adopt a local ordinance to allow the separate conveyance of the primary dwelling unit and ADU(s) as condominiums, subject to certain conditions (Gov. Code, §§ 66340-66342).

Changes to ADU Law in 2021:
• Allows a local agency to permit the separate conveyance of ADUs from the primary dwelling under Government Code section 66341 in certain circumstances.

Changes to ADU Law in 2020:
• Requires that an application for the creation of an ADU or JADU is deemed approved (not just subject to ministerial approval) if the local agency has not approved or denied the completed application within 60 days (Gov. Code, § 66317, subd. (a)).
• Requires ministerial approval of an application for a building permit within a residential or mixed-use zone to create one ADU and one JADU per lot (not one or the other), within the proposed or existing single-family dwelling, if certain conditions are met (Gov. Code, § 66323, subd. (a)(1)(A)). • Allows for rental or leasing of a separate interest ADU or JADU in a common interest development, notwithstanding governing documents that otherwise appear to prohibit renting or leasing of a unit, and without regard to the date of the governing documents (Civ. Code, §§ 4740, subd. (a); 4741, subd. (a)). • Allows a homeowner to create “any of the following”: one converted or attached ADU; one detached, new construction ADU; and one JADU (Gov. Code, § 66323, subds. (a)(1)-(2)). More information can be found in HCD’s 2025 ADU Handbook.

03/24/2026 Item No.8.

Pam Johns, Contract City Planner

Changes to ADU Law in 2019:
• Prohibits a local agency from including requirements on minimum lot size in development standards for ADUs (Gov. Code, § 66314, subd. (b)(1)). • Allows a local agency to designate areas where ADUs may be located based on the adequacy of water and sewer services, as well as on impacts on traffic flow and public safety (Gov. Code, § 66314, subd. (a)).
• Eliminates all owner occupancy requirements by a local agency for ADUs approved between January 1, 2020, and January 1, 2025 (Gov. Code, § 66315). • Prohibits a local agency from establishing a maximum size of an ADU of less than 850 square feet, or 1,000 square feet if the ADU contains more than one bedroom and requires approval of a permit to build an ADU of up to 800 square feet (Gov. Code, § 66321, subds. (b)(2), (b)(3)).
• Prohibits a local agency from requiring replacement of off-street parking spaces for ADUs created through the conversion of a garage, carport, or covered parking structure (Gov. Code, § 66314, subd. (d)(11)).
• Reduces the maximum ADU and JADU application review time from 120 days to 60 days (Gov. Code, §§ 66317, subd. (a); 66335, subd. (2)). • Clarifies that “public transit” includes various means of transportation that charge set fees, run on fixed routes, and are available to the public (Gov. Code, § 66313, subd. (m)).
• Adds impact fee exemptions and limitations based on the size of the ADU.

ADUs up to 750 square feet are exempt from impact fees, and ADUs that are 750 square feet or larger may be charged impact fees, but those fees must be proportional in size (by square foot) to fees charged for the primary dwelling unit (Gov. Code, § 66324, subd. (c)(1)).
• Defines of an “accessory structure” to mean a structure that is accessory and incidental to a dwelling on the same lot (Gov. Code, § 66313, subd. (b)). • Permits JADUs even where a local agency has not adopted an ordinance expressly authorizing them (Gov. Code, § 66320).
• Allows for a permitted JADU to be constructed within the walls of the proposed or existing single-family residence and eliminates the required inclusion of an existing bedroom and an interior entry into the single-family residence (Gov.

Code, § 66333, subd. (d)).
• Requires, upon application and approval, a local agency to delay enforcement against a qualifying substandard ADU for five years to allow the owner to correct the violation, so long as the violation is not a health and safety issue, as determined by the enforcement agency (Gov. Code, § 66331; HSC, § 17980.12).

03/24/2026 Item No.8.

Pam Johns, Contract City Planner

• Makes covenants, conditions, and restrictions that either effectively prohibit or unreasonably restrict the construction or use of an ADU or JADU on a lot zoned for single-family residential use void and unenforceable (Civ. Code, § 4751)).

If an existing ADU ordinance fails to meet the requirements of State ADU Law, the ordinance is “null and void” and the local jurisdiction must apply the standards set forth in State ADU Law until it adopts an ordinance that complies with state law (Gov. Code, § 66316). HCD recommends that a local jurisdiction with a noncompliant ADU ordinance repeal the ordinance to provide clarity for ADU applicants who may otherwise rely on the outdated ordinance.

HCD requests a response by January 4, 2026 with either (1) a description of how the ADU ordinance continues to comply with State ADU Law despite the changes to the law, or (2) a plan and timeline to either repeal the current ordinance or adopt an amended, compliant ordinance and submit it to HCD for review.

If you have any questions or need additional information, please contact Shasta Garcia at [email protected].

Sincerely,

Jamie Candelaria
Section Chief, ADU Policy
Housing Accountability Unit

03/24/2026 Item No.8.

03/24/2026 Item No.8.

March 4, 2026

CHANGES/MODIFICATIONS TO

HISTORIC DISTRICT COMMISSION AGENDA

Agenda Item No. 1

Zoning Code Update – Accessory Dwelling Unit Ordinance and Determination that the Project is Exempt from CEQA

Revisions to Staff Report

Correction to Title

Planning Historic District Commission Staff Report

Correction to table provided in “Ensured Consistency with Government Code Title 7, Division 1, Chapter 13 (Accessory Dwelling Units)” Section of Staff Report analysis

This is a correction to the previously provided information. State-mandated attached ADUs are not subject to height limits in Government Code Section 66323. Since this type of unit can only be a conversion of existing space of a primary dwelling unit, this unit is unable to build additional height beyond what is already existing.

Standards Changed for Compliance with Government Code
Applicability Standard Existing Requirement Proposed Compliant Requirement
State-
Mandated Attached/
Detached ADU
Front Setback 20 feet No Requirement
State-Mandated
Detached ADU Maximum Height 16 feet
16 feet; +2 feet if
within one-half mile of
a major transit stop;
+2 feet more if
matching roof pitch of
primary dwelling
State-Mandated
Attached ADU Maximum Height 16 feet 25 Feet
Non-State-Mandated
Attached ADU Side/Rear Setback Same as Zone 4 Feet

03/24/2026 Item No.8.

Correction to table provided in “Other Modifications to ADU Ordinance” Section of Staff Report analysis

This is a correction to the previously provided information. The table title and columns have been updated to clarify that the changes were not made to comply with the Government Code, but rather for other reasons within what is allowed under State Law.

The maximum height standard for non-state-mandated attached ADUs has also been corrected to reflect the proposed standard in the draft ordinance.

Standards Changed for Compliance with Government Code Other Standards Modified
Applicability Standard Existing Requirement Proposed Compliant Requirement
Non-State-
Mandated
Attached ADU
Front
Setback
Same setback as zone if
>16 feet tall and attached
to primary dwelling;
20 feet if >16 feet tall and
attached above an
accessory structure
Same setback as zone*
Non-State-
Mandated
Detached ADU
Front
Setback Same setback as zone
Shall not break the front
plane of the primary
dwelling*
(i.e., cannot be located
closer to street than the main
residence)
Non-State-
Mandated
Attached ADU
Maximum
Height
25 feet in Historic District;
30 feet elsewhere.

Height shall not exceed
height of primary dwelling.

Same height requirement as
zone; Height shall not
exceed height of primary
dwelling*
Same height requirement
as zone; 25 feet maximum
for portions that encroach
into setback area of
primary residence*
Non-State-
Mandated
Detached ADU
Maximum
Height
25 feet in Historic District;
30 feet elsewhere.

Height shall not exceed
height of primary dwelling.
25 feet; Height shall not
exceed height of primary
dwelling*
Non-State-
Mandated
Attached/
Detached ADU
Second
Story
Windows
(All ADUs)
Any second story wall
facing an abutting property
is required to incorporate
certain privacy features
Any second story window
that is within ten (10) feet or
less of the side and/or rear
property line shall
incorporate certain privacy
features
 Standard is enforceable for non-State-Mandated ADUs, unless it precludes the development of an 800 square-foot or larger ADU with 4-foot side and rear setbacks.

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03/24/2026 Item No.8.

AGENDA ITEM NO. 4
Type: Public Hearing
Date: March 18, 2026

Planning Commission Staff Report
50 Natoma Street, Council Chambers
Folsom, CA 95630

Project: Zoning Code Update – Accessory Dwelling Unit Ordinance and Determination that the Project is Exempt from CEQA
File #: ZCAM26-00007
Request: Recommend Council Repeal and Re-Enact Folsom Municipal Code Chapter 17.105 with the New Draft ADU Ordinance
Location: City-wide
Parcel(s): N/A
Staff Contact: Nathan Stroud, Associate Planner, 916-461-6220 [email protected]

Recommendation: Recommend to the City Council the repeal and replacement of Chapter 17.105 (Accessory Dwelling Units) of the Folsom Municipal Code (FMC) with Ordinance No. 1361.

Project Summary: Since the enactment of the current Accessory Dwelling Unit (ADU) Ordinance in 2020, the State has enacted several new laws affecting what the City is able to regulate for ADUs. As a result, several provisions of the City’s existing ADU standards are now in consistent with State Law. Unless the City updates the ADU Ordinance to comply with new State requirements, the City’s ADU Ordinance may be deemed null and void by the California Housing and Community Development Department (HCD). In addition, staff have identified internal inconsistencies and conflicting standards within the existing ADU Ordinance that have complicated implementation and enforcement of its requirements. The proposed Ordinance No. 1361 seeks to remedy these issues.

Accessory dwelling units, when designed well, can provide a more affordable housing option in existing areas without significantly altering the residential character of the neighborhood. Staff have prepared the attached ADU Ordinance to replace the City’s existing citywide regulations on ADUs contained in Chapter 17.105. The proposed ordinance seeks to ensure that the City’s ADU requirements are consistent with State law, that all applicable standards are objective and enforceable, and that ADUs continue to adhere to the protections of the existing ordinance for privacy, good design, and respect for neighborhood context. Accessory dwelling units, when designed well, can provide a more affordable housing option in existing areas without altering the character of the neighborhood.

The Historic District Commission considered the proposed ordinance at its March 4, 2026, hearing. At this hearing , two members of the public had questions regarding the

03/24/2026 Item No.8.

Planning Commission
Zoning Code Update – Accessory Dwelling Unit Ordinance (ZCAM26-00007) March 18, 2026
requirement that all ADUs be rented for a term longer than 30 days outlined in FMC Section 17.105.070 of the draft ordinance. This requirement exists in the City’s current ADU Ordinance, and no change has been proposed to this provision in draft Ordinance No. 1361. More information about this topic is discussed further in this staff report.

Environmental Review: The proposed project is statutorily exempt from CEQA under Section 21080.17 of the California Public Resources Code (PRC) and no further environmental review of the project is required. Under PRC Section 21080.17, CEQA does not apply to the adoption of an ordinance by a city or county to implement the provisions of Section 65852.1 of, or Article 2 (commencing with Section 66314) or Article 3 (commencing with Section 66333) of Chapter 13 of Divisio n 1 of Title 7 of the Government Code (the State ADU law). The ordinance implements ADU regulations in the City of Folsom in a manner that is consistent with the requirements of state law. As such, the adoption of the ordinance is exempt from CEQA.

NOTICE OF PUBLIC HEARING
Public notification was achieved by posting the agenda, with this agenda item being listed, at least 72 hours prior to the meeting in print and electronically. Legal advertisement of this hearing was published in the Folsom Telegraph on February 20, 2026, at least 20 days prior to the hearing date.

Attachments:

1. Ordinance No. 1361 - An Ordinance of the City of Folsom for the Repeal and Re-

Enactment of Chapter 17.105 of the Folsom Municipal Code Pertaining to Accessory Dwelling Units

2. HCD Letter of Technical Assistance, dated 12-5-25

Submitted,

PAM JOHNS
Community Development Director

03/24/2026 Item No.8.

Planning Commission
Zoning Code Update – Accessory Dwelling Unit Ordinance (ZCAM26-00007) March 18, 2026
City of Folsom

DESCRIPTION/ANALYSIS

DESCRIPTION
On December 5, 2025, the California Department of Housing and Community Development (HCD) sent a letter to the City requesting that the City repeal and update its Accessory Dwelling Unit (ADU) Ordinance to align with changes to State ADU law since the ordinance’s adoption in 2020 (refer to Attachment 2). Pursuant to Government Code Section 66326, if the City is unable to provide HCD with an updated, State - compliant ADU Ordinance, the City’s existing ordinance will be deemed null and void, and the City will be required to enforce only the State’s ADU requirements. City staff provided HCD with a timeline to adopt an updated ADU Ordinance by April 2026, which HCD accepted. If the City fails to submit and adopt an updated ordinance by that date, the City risks having its ADU Ordinance declared null and void by HCD.

Since the enactment of the current Accessory Dwelling Unit (ADU) Ordinance in 2020, the State has enacted several new laws affecting the manner in which the City can regulate ADUs. Some changes which affect the City’s existing ADU Ordinance include:

• Requirement that the City determine application completeness within 15 days of submittal, and to approve or deny an application for the creation of an ADU or JADU within 60 days. If the City fails to act within the 60 -day timeframe, the application is automatically deemed approved (SB 543, 2025) • Specifies that if the City fails to submit an adopted ADU ordinance to HCD or fails to respond to HCD’s findings regarding their ordinance, that the City’s ordinance is null and void and the City must only apply State ADU Law (SB 9, 2025) • Prohibits the City from imposing any development or design standards on ADUs created pursuant to Government Code 66323 (also known as ‘state-mandated’ or ‘state-exempt’ ADUs, or ‘66323 Units’) (SB 1211, 2024). • Expands the number of allowable detached ADUs on an existing multi-unit dwelling lot to eight, provided that the number of ADUs does not exceed the number of existing units on the lot (SB 1211, 2024).
• Prohibits the City from requiring owner occupancy for an ADU, or for a JADU with independent bathroom facilities (AB 1154, 2025).
• Prohibits requiring the replacement of uncovered off -street parking if demolished in conjunction with the construction of an ADU, and prohibits the City from imposing parking requirements for ADUs in many instances (SB 1211, 2024). • Clarifies that single-unit lots are allowed to construct at least three types of ADUs and one JADU total , for a total of up to four ADUs on a single -unit lot (SB 543, 2025)
• Requires ministerial approval of an application to create an ADU or JADU; ADUs cannot be subject to discretionary review or hearing (AB 68, 2019). • Clarifies that ADU size limits are based on the interior livable space of the unit (SB 543, 2025).

03/24/2026 Item No.8.

Planning Commission
Zoning Code Update – Accessory Dwelling Unit Ordinance (ZCAM26-00007) March 18, 2026
City of Folsom

Based on these changes, staff have prepared a new draft ADU Ordinance to ensure consistency with new State laws while maintaining and strengthening standards where the City is still able to exercise local control, such as size, height, and other objective design and development standards applied to any non-state-mandated ADU (also known as a non-66323 unit). Once adopted by the City, the City’s new ADU Ordinance will be subject to review and approval by the California Housing and Community Development Department (HCD) to have legal effect.

In addition to the draft ADU Ordinance, once approved by HCD, staff also plan to update the City’s Accessory Dwelling Unit Design Workbook to reflect the amended ADU requirements.

POLICY/RULE
The City’s draft ADU Ordinance is consistent with the City’s 2035 General Plan including the Land Use and Housing Elements. Specifically, the draft ADU Ordinance is consistent with the following City policies:

General Plan Land Use (LU) and 2021-2029 Housing Element Policies:
• LU 6.1.2 Historic Folsom Residential Areas - Preserve and protect the residential character of Historic Folsom’s residential areas.
• Policy H-1.5 - The City shall support the development of accessory dwelling units on single-family parcels.
• Policy H-2.1 - The City shall continually strive to shorten permit processing and review times to the greatest extent possible by allowing concurrent processing. • Policy H-2.2 - The City shall strive to ensure that its current development impact fee structure does not unnecessarily constrain production of residential development.
• Policy H-2.4 - The City shall provide incentives to encourage the construction of accessory dwelling units and multi-generational housing units. • Policy H-2.5 - The City shall endeavor through its development and design standards and decision making to provide consistent and predictable policy direction for residential project applicants.
• Policy H-5.1 - The City shall strive to ensure adequate and affordable housing for seniors and persons with disabilities, particularly in areas near public transportation, shopping, medical, and other essential services and facilities.

ANALYSIS
Staff is proposing Ordinance No. 1361 to replace Chapter 17.105 of the Folsom Municipal Code, as provided in Attachment 1. The draft ordinance is intended to ensure consistency with Government Code Title 7, Division 1, Chapter 13 (Accessory Dwelling Units) in

03/24/2026 Item No.8.

Planning Commission
Zoning Code Update – Accessory Dwelling Unit Ordinance (ZCAM26-00007) March 18, 2026
City of Folsom
response to HCD’s request. A general list of the changes made under the draft ordinance are provided below:

1. Ensured consistency with Government Code Title 7, Division 1, Chapter 13 (Accessory Dwelling Units) by removing any conflicting standards, updating definitions and terminology, and adding requirements regarding procedure, fees, and processing time.

2. Ordinance reorganized and consolidated for clarity, readability, and consistent formatting/terminology; addressed inconsistent standards, and ensured standards are objective and enforceable.

3. Minor modifications to objective design standards to ensure good design that respects privacy and ensures neighborhood compatibility.

4. Added objective design standards for a new Carriage House style for ADUs located in the Historic District.

5. Clarified that all ADUs are subject to a ministerial review, and are not subject to discretionary review or hearing. This includes changing the level of review for ADUs in the Historic District to a staff-level review.

6. Outlined process for a voluntary staff -level discretionary design review option for applicants to request deviations from the ADU objective design standards.

7. Updated requirements for ADUs on lots with multi-unit developments.

8. Updated the total number of ADUs allowed on multi-unit and single-unit properties, in accordance with State Law.

The intent for these changes is to ensure that the City’s ADU Ordinance is consistent with State Law and thus enforceable, and that the City’s ADU requirements are simplified and easier to understand . The draft ordinance also seeks to bolster the City’s ADU requirements to ensure continued good design that respects privacy and encourages compatibility with the neighborhood within the limits allowed under State Law. The draft ordinance also addresses issues identified during implementat ion of the existing AD U ordinance.

A more detailed description of some of the important changes is provided in the subsequent sections of this staff report.

Ensured Consistency with Government Code Title 7, Division 1, Chapter 13 (Accessory Dwelling Units)
Generally, the draft ordinance modifies the City’s ADU requirements to ensure consistency with the Government Code. Notable changes include aligning definitions and terminology with State law, clarifying the level of review for ADUs, adding new sections to address new State -mandated requirements, and removing standards that potentially conflict with State law.

Regarding definitions, a significant change involves how attached and detached ADUs

03/24/2026 Item No.8.

Planning Commission
Zoning Code Update – Accessory Dwelling Unit Ordinance (ZCAM26-00007) March 18, 2026
City of Folsom
are defined in the City’s ordinance. The existing ordinance defines attached ADUs as an ADU that is built as an expansion to an existing residence or accessory building, and a detached ADU as a new, standalone building. This definition is at odds with Stat e Law, which defines ‘attached’ and ‘detached’ in reference to whether the ADU is physically attached or detached from the primary dwelling. For example, an ADU constructed above an existing detached garage is considered a detached ADU under State Law due to its separation from the primary dwelling, however this is considered an attached ADU under the City’s existing ADU ordinance. This inconsistency results in a conflict between the standards that are applied (e.g., maximum size, height, setbacks) and Government Code requirements. The draft ordinance revises these definitions to align with the Government Code. Additional definitions have also been added or modified to reflect updated Government Code terminology, including defining ADU size based on “livable space,” which reduces ambiguity in the implementation and enforcement of ADU requirements.

Regarding the level of review, the draft ordinance also specifies that all ADUs are exempt from discretionary review or hearing, and are subject to only a ministerial review.

The draft ordinance also adds new sections regarding additional requirements mandated by State Law. This includes a new “Processing Time” section which outlines the State - mandated review timeframe for ADU applications. In accordance with Government Code Section 66317, the City must deem an application to "create or serve" an ADU complete or incomplete within 15 business days after receipt of the application. Additionally, the City must approve or deny a complete application within 60 days of receipt of a complete application. If the City fails to make a determination within 60 days, the State law requires that the ADU application is deemed approved. A new “Fee Requirements” section has also been added to consolidate all fee requirements of the existing ordinance, and ensures consistency with State Law. This includes limiting development impact fees for ADUs larger than 750 square -feet, and prohibiting the imposition of connection fees or capacity charges for ADUs not constructed alongside a new primary dwelling.

Finally, the draft ordinance removes or revises requirements that conflict with State Law.

For example, the existing ordinance requires attached ADUs to comply with the side setback standards of the underlying zoning district; however, State law requires t hat attached ADUs be permitted with side and rear setbacks of no more than four feet. This standard has since been updated to be consistent with State Law. The draft ordinance also includes language stating that, in the event of a conflict between State la w and the local ordinance, State law shall prevail. This provision is intended to account for future changes to State ADU law. Additionally, while development standards such as lot coverage and setbacks may continue to apply to non -State-mandated ADUs (i.e., ADUs not covered by Government Code Section 66323) , the ordinance states that these standards may not preclude the development of at least one 800 -square-foot ADU with four-foot side and rear setbacks, as required under State law.

Some standards that were modified in order to be consistent with State Law are shown in the table below; other standards that were modified are discussed in the other sections of this report:

03/24/2026 Item No.8.

Planning Commission
Zoning Code Update – Accessory Dwelling Unit Ordinance (ZCAM26-00007) March 18, 2026
City of Folsom
Standards Changed for Compliance with Government Code
Applicability Standard Existing Requirement Proposed Compliant Requirement
State-
Mandated Attached/
Detached ADU
Front Setback 20 feet No Requirement
State-Mandated
Detached ADU Maximum Height 16 feet
16 feet; +2 feet if
within one-half mile of
a major transit stop;
+2 feet more if
matching roof pitch of
primary dwelling
Non-State-Mandated
Attached ADU Side/Rear Setback Same as Zone 4 feet

Reformatted Chapter 17.105 of Folsom Municipal Code
In order to provide greater clarity regarding ADU requirements, certain provisions and sections of FMC 17.105 have been relocated and consolidated. Whereas the existing ADU Ordinance spread development standards across multiple different sections, the proposed draft ordinance consolidated all applicable development standards into singular, ADU-type specific sections with a standardized format. This framework reduces the number of sections an applicant needs to review to understand the ADU requirements prior to designing a project, and reduces the number of conflicting standards within the ordinance.

Design Standards Made Objective Where Necessary
Government Code Section 66314 requires that a local ADU ordinance utilize only objective standards, which are defined as “standards that involve no personal or subjective judgment by a public official” and are clearly stated in the ADU ordinance. For example, requiring “wide roof eaves” is not objective, however requiring a “roof eave of at least 1.5 foot in width” is an objective and enforceable standard. Staff have updated the design standards for ADUs as needed to ensure that they are objective and enforceable by provi ding measurable requirements, replacing the use of “may be required” with “shall be required”, and removing other language indicating subjective interpretation. This has not substantively changed the existing requirements, but instead makes them clearer and more enforceable.

Standardized Requirements, Fixed Inconsistencies and Conflicts The existing ADU ordinance contains conflicting or inconsistent standards which need to be addressed to provide clarity for property owners. This includes height maximums that conflicted with different sections of the ordinance and with the Government Code, varied and confusing setback standards, and conflicts between the Historic District and general ADU Design Standards. Where possible, the draft ordinance provide s uniform and consistent development standards based on the type of accessory dwelling unit w ithout substantively changing the requirement from the existing ordinance, with changes where needed to comply with State Law.

03/24/2026 Item No.8.

Planning Commission
Zoning Code Update – Accessory Dwelling Unit Ordinance (ZCAM26-00007) March 18, 2026
City of Folsom

Added New Carriage House Style Option for Historic District Accessory Dwelling Units
A new architectural style named the “Carriage House” style is proposed in the draft ordinance for Historic District ADUs to provide design standards for an above -garage ADU option. This additional style was added based on previous ADU projects in the Historic District, which frequently included a new garage with an above-garage ADU. The new style encourages the above-garage ADU to be built within the roof gable to limit the visual massing of the two -story structure, requires that exterior materials match th e primary dwelling, and ensures that the garage itself has an appearance that imitates a traditional carriage house.

Clarification and Modification of Review Authority
Under Government Code Section 66316, the City is required to provide a ministerial approval process for all ADUs in the City’s ADU Ordinance . Further, Government Code Section 66317 requires that ADU reviews be considered ministerially without discretionary review or a hearing. The draft ordinance has been updated consistent with this requirement, which applies to all types of ADUs, including both state mandated ADUs (e.g., those ADUs covered by Government Code Section 66323) and non -State- mandated ADUs.

In effect, this changes the level of review for ADUs in the Historic District. Whereas the City’s existing ADU Ordinance states that non -state-mandated ADUs require review by the Historic District Commission with a public hearing, the draft ordinance requires that all ADUs City -wide, including in the Historic District, are a staff -level ministerial review without public hearing, as required under State Law.

Standard Design Review Option for Deviations from Design Standards An optional standard design review process has been added to allow applicants to request deviations from the objective design standards provided in the draft ordinance .

The intent is to provide flexibility to property owners to propose alternative and acceptable designs that may not necessarily satisfy the objective design standards outlined in the Folsom Municipal Code , such as if an alternative architectural style is proposed that is not from the approved list for ADUs within the Historic District , but is a style consistent with the 1850 and 1950 era of the Historic District . The project would undergo the standard staff-level design review process, which includes determining that it complies with all applicable design standards , such as the Historic District Design and Development Guidelines for example, and that it is compatible with the overall design character of the neighborhood, among other required findings.

The draft ordinance provides for an objective and ministerial process by default, as required by Government Code Section 66316, and this alternative, voluntary and optional discretionary process is intended to provide the applicant more flexibility should a good alternative design be proposed that does not necessarily adhere to the objective standards. However, this would be a staff-level design review process so that the City can continue to comply with the 60 day timeline required for ADU approvals, as specified

03/24/2026 Item No.8.

Planning Commission
Zoning Code Update – Accessory Dwelling Unit Ordinance (ZCAM26-00007) March 18, 2026
City of Folsom
in Government Code Section 66317.

Expanded Standards for Accessory Dwelling Units in Multi-Unit Developments To provide clarity regarding the objective development standards applicable to ADUs constructed on multi-unit lots, the draft ordinance includes standards, as allowed in the Government Code , for setbacks, height, parcel coverage, and size. The formatting is similar to that of the development standards for ADUs constructed on single -unit properties.

Updated Total Number of ADUs allowed on Single-Unit and Multi-Unit Properties Pursuant to Government Code Sections 66323 and 66317, State law allows single -unit lots to contain at least three ADUs and one JADU. This includes one newly constructed detached ADU, one ADU created entirely through the conversion of existing building space, one JADU, and one additi onal ADU, either attached or detached, provided it complies with the City’s ADU Ordinance.

In addition, existing multi -unit developments are permitted to convert non -livable space into ADUs, up to a maximum of 25 percent of the number of existing primary dwelling units, and may also construct up to eight new detached ADUs so long as the number of ADUs does not exceed the number of existing units . Proposed new multi -unit developments may construct up to two detached ADUs.

Other Modifications to ADU Ordinance
The following additional modifications have been made to the ordinance, consistent with State law:

Other Standards Modified
Applicability Standard Existing Requirement Proposed Requirement Non-State-
Mandated
Attached ADU
Front
Setback
Same setback as zone if
>16 feet tall and attached
to primary dwelling;
20 feet if >16 feet tall and
attached above an
accessory structure
Same setback as zone*
Non-State-
Mandated
Detached ADU
Front
Setback Same setback as zone
Shall not break the front
plane of the primary
dwelling*
(i.e., cannot be located
closer to street than the main
residence)
Non-State-
Mandated
Attached ADU
Maximum
Height
25 feet in Historic District;
30 feet elsewhere.

Height shall not exceed
height of primary dwelling.

Same height requirement as
zone; 25 feet maximum for
portions that encroach into
setback area of primary
residence*
Non-State-
Mandated
Detached ADU
Maximum
Height
25 feet in Historic District;
30 feet elsewhere.

Height shall not exceed
height of primary dwelling.
25 feet; Height shall not
exceed height of primary
dwelling*

03/24/2026 Item No.8.

Planning Commission
Zoning Code Update – Accessory Dwelling Unit Ordinance (ZCAM26-00007) March 18, 2026
City of Folsom
Other Standards Modified
Applicability Standard Existing Requirement Proposed Requirement Non-State-
Mandated
Attached/
Detached ADU
Second
Story
Windows
(All ADUs)
Any second story wall
facing an abutting property
is required to incorporate
certain privacy features
Any second story window
that is within ten (10) feet or
less of the side and/or rear
property line shall
incorporate certain privacy
features
 Standard is enforceable for non-State-Mandated ADUs, unless it precludes the development of an 800 square-foot or larger ADU with 4-foot side and rear setbacks.

Historic District Commission Hearing
The Historic District Commission considered this item at their March 4, 2026, meeting.

After the staff presentation on Ordinance No. 1361, the Commission asked for clarification regarding some of the new State ADU requirements related to the number of ADUs allowed for multi -family developments, the 60 day review timeline for ADUs, and the option for applicants to deviate from the objective design standards through a standard, staff-level design review process. During public comment , two Folsom residents had questions regarding FMC Section 17.105.070 of the draft ordinance, which requires that for all ADUs, the rental term be for a period longer than 30 days. The commentors asked how the City would treat existing nonconforming short term rentals of ADUs, and whether the City would consider modifying the language to allow for short term rentals in ADUs.

Draft Ordinance No. 1361 does not propose to change this requirement, which exists in the City’s current ADU ordinance adopted in 2020. Further, Government Code Section 66323 requires that state-mandated ADUs be rented for a term longer than 30 days. AB 1154 (2025), which took effect on January 1, 2026, further expanded this requirement to include JADUs. The State of California has indicated through continued legislation that the intent for the encouragement of ADUs is to create more long-term housing units, which the City of Folsom reflected in the existing ADU ordinance adopted in 2020. As this policy decision was already made by the City in 2020, and is supported by State legislation, the proposed draft ordinance does not propose any changes to this requirement. Regarding enforcement for existing nonconforming short term rentals in ADUs, staff will look into the issue and reach out to the commentors to discuss their options.

The Historic District Commission voted to recommend approval of Ordinance No. 1361 to the City Council, subject to the findings included in this report (5-0-0-2: 5 votes in support, 0 opposed, 0 recusal, and 2 members absent).

Since the hearing, some minor grammatical changes have been made to Ordinance No. 1361, however this does not substantively change the ordinance requirements or process.

Conclusion
The draft ordinance is not intended to drastically change the requirements applied to ADUs in the City of Folsom, but attempts to maintain, to the extent allowed by State Law,

03/24/2026 Item No.8.

Planning Commission
Zoning Code Update – Accessory Dwelling Unit Ordinance (ZCAM26-00007) March 18, 2026
City of Folsom
existing ADU requirements. The draft ordinance also attempts to standardize ADU requirements to streamline the process , and strengthen standards where needed to ensure better outcomes in design. Some significant changes include changing the level of review for ADUs in the Historic District to staff -level in order to comply with State requirements, increasing the number of allowed ADUs for single - and multi -unit properties, clarifying that all non-state-mandated ADUs require design review by the City, and reformatting the ordinance.

General Plan Consistency
The draft ADU ordinance is consistent with the City of Folsom General Plan policies by promoting the development of ADUs, streamlining the ADU review process, and maintaining neighborhood compatibility within the limits of State law. The draft ordinance incentivizes the development of ADUs (as required in Policies H -1.5 and H -2.4) by providing a ministerial review process, as required for all ADUs, and clarifying development standards. By ensuring that impact fees apply only where allowed by State law, the draft ordinance does not unnecessarily constrain the production of residential development in accordance with Policy H-2.2.

In conjunction, the draft ordinance incentivizes the production of ADUs, providing more options for adequate and affordable housing for seniors and persons with disabilities (as required in Policy H -5.1). Regarding the General Plan policies related to effi ciency and predictability (Policies H-2.1 and H-2.5), the draft ordinance also simplifies, clarifies, and consolidates requirements to provide a clear pathway to ADU development and outline required processing timelines for applications. Finally, by ensuri ng that the design standards, including the Historic District ADU design standards, are objective and enforceable, the draft ordinance also supports Policy LU 6.1.2.

ENVIRONMENTAL REVIEW
Pursuant to Section 21080.17 of the California Public Resources Code, the adoption of the ordinance is statutorily exempt from the California Environmental Quality Act (CEQA). Under PRC Section 21080.17, CEQA does not apply to the adoption of an ordinance by a city or county to implement the provisions of Section 65852.1 of, or Article 2 (commencing with Section 66314) or Article 3 (commencing with Section 66333) of Chapter 13 of Division 1 of Title 7 of the Government Code (the State ADU law). The ordinance implements ADU regulations in the City of Folsom in a manner that is consistent with the requirements of state law. As such, the adoption of the ordinance is exempt from CEQA.

NOTICE OF PUBLIC HEARING
Public notification was achieved by posting the agenda, with this agenda item being listed, at least 72 hours prior to the meeting in print and electronically. Legal advertisement of this hearing was published in the Folsom Telegraph on February 20, 2026, at least 20 days prior to the hearing date.

RECOMMENDATION
Staff recommends that the Commission approves a recommendation to City Council supporting the repeal and replacement of the existing Chapter 17.105 in Title 17 of the

03/24/2026 Item No.8.

Planning Commission
Zoning Code Update – Accessory Dwelling Unit Ordinance (ZCAM26-00007) March 18, 2026
City of Folsom
Folsom Municipal Code (FMC) with the new draft Accessory Dwelling Unit Ordinance No. 1361.

COMMISSION ACTION
MOVE TO RECOMMEND CITY COUNCIL APPROVAL OF ORDINANCE NO. 1361, AN

ORDINANCE OF THE CITY OF FOLSOM FOR THE REPEAL AND RE-ENACTMENT OF CHAPTER 17.105 OF THE FOLSOM MUNICIPAL CODE PERTAINING TO ACCESSORY DWELLING UNITS , PROVIDED IN ATTACHMENT 1, BASED ON THE FOLLOWING FINDINGS (FINDINGS A-C).

GENERAL FINDINGS
A. NOTICE OF PUBLIC HEARING HAS BEEN GIVEN AT THE TIME AND IN THE MANNER REQUIRED BY STATE LAW AND CITY CODE.

B. THE PROPOSED AMENDMENTS ARE CONSISTENT WITH THE GENERAL PLAN, AND THE ZONING CODE OF THE CITY.

CEQA FINDING
C. THE PROPOSED ORDINANCE IS STATUTORILY EXEMPT FROM
ENVIRONMENTAL REVIEW UNDER SECTION 21080.17 OF THE CALIFORNIA

PUBLIC RESOURCES CODE BECAUSE CEQA DOES NOT APPLY TO THE

ADOPTION OF AN ORDINANCE TO IMPLEMENT THE PROVISIONS OF SECTION 65852.1 OF, OR ARTICLE 2 (COMMENCING WITH SECTION 66314) OR ARTICLE 3 (COMMENCING WITH SECTION 66333) OF CHAPTER 13 OF DIVISION 1 OF TITLE 7 OF THE GOVERNMENT CODE.

03/24/2026 Item No.8.

Planning Commission
Zoning Code Update – Accessory Dwelling Unit Ordinance (ZCAM26-00007) March 18, 2026
City of Folsom

Attachment 1
Ordinance No. 1361 - An Ordinance of the City of
Folsom for the Repeal and Re-Enactment of Chapter

17.105 of the Folsom Municipal Code Pertaining to
Accessory Dwelling Units

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Ordinance No. 1361

ORDINANCE NO. 1361

AN ORDINANCE OF THE CITY OF FOLSOM FOR THE REPEAL AND RE- ENACTMENT OF CHAPTER 17.105 OF THE FOLSOM MUNICIPAL CODE

PERTAINING TO ACCESSORY DWELLING UNITS

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

SECTION 1 PURPOSE

The purpose of this ordinance is to amend the Folsom Municipal Code to conform with new State law regulations pertaining to Accessory Dwelling Units adopted since 2020.

SECTION 2 REPEAL AND RE-ENACTMENT TO CODE

Chapter 17.105 of the Folsom Municipal Code is hereby repealed and re-enacted to read as follows:

Chapter 17.105

ACCESSORY DWELLING UNITS
Sections:

17.105.010 Purpose, Applicability and Where Permitted.

17.105.020 Definitions.

17.105.030 Types.

17.105.040 Density and Consistency.

17.105.050 Processing Time and Submittal Requirements.

17.105.060 Fee Requirements.

17.105.070 Rental and Sale Limitations.

17.105.080 Conditions for Nonconforming Uses and Structures.

17.105.090 Accessory Dwelling Units Subject to Mandatory Approval.

17.105.110 Accessory Dwelling Units Subject to Design Review

17.105.120 Limitation on the Number of Accessory Dwelling Units.

17.105.130 Standards Applicable to All Accessory Dwelling Units.

17.105.140 Single-Unit Developments: Attached Accessory Dwelling Unit Standards.

17.105.150 Single-Unit Developments: Detached Accessory Dwelling Unit Standards.

17.105.160 Single-Unit Developments: Junior Accessory Dwelling Unit Standards.

17.105.170 Two-Unit and Multi-Unit developments: Accessory Dwelling Unit Standards.

17.105.180 Parking Requirements.

17.105.190 All Zones—Design Standards.

17.105.200 Historic District Zones—Design Standards.

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Ordinance No. 1361

17.105.010 Purpose, Applicability and Where Permitted.

A. Purpose. This chapter establishes regulations and procedures for reviewing and permitting accessory dwelling units in conformance with California Government Code Title 7, Division 1, Chapter 13.

B. Applicability. Any construction, establishment, alteration, enlargement, or modification of an accessory dwelling unit shall comply with the requirements of this chapter and the city’s building and fire codes, as modified by Government Code Title 7, Division 1, Chapter 13.

For the purposes of this chapter, accessory dwelling units include attached, detached, and junior accessory dwelling units.

C. Building Permit Required. Any accessory dwelling unit or junior accessory dwelling unit shall require a building permit, subject to all the standard application and processing fees and procedures that apply to building permits generally.

D. Where Permitted. Accessory dwelling units are allowed on parcels zoned to allow for single- unit, two-unit, and/or multi-unit residential uses where such a parcel includes a proposed or existing primary dwelling unit. Junior accessory dwelling units are allowed on parcels zoned to allow for single-unit residential uses where such parcel includes a proposed or existing primary dwelling unit.

17.105.020 Definitions.

A. “Accessory dwelling unit” (ADU) means an attached or a detached residential dwelling unit that provides complete independent living facilities for one (1) or more persons and is located on a lot with a proposed or existing primary residence. It shall include permanent provisions for living, sleeping, eating, cooking, and sanitation on the same parcel as the single-unit or multi-unit dwelling is or will be situated, and include a permanent foundation and has a permanent connection to utility services. An accessory dwelling unit also includes the following:

1. An efficiency unit, as defined in Section 17958.1 of the Health and Safety Code.

2. A manufactured home, as defined in Section 18007 of the Health and Safety Code.

B. “Accessory building” means a detached subordinate building, the use of which is incidental to that of the main building on the same lot, or to the use of the land, such as a detached garage, shed or barn, etc.

C. “Car share” means a program that allows customers hourly access to shared vehicles from a dedicated home location, with the vehicles required to be returned to that same location at the end of the trip.

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Ordinance No. 1361

D. “Discretionary review” means the review of an application that involves a decision-makers judgement, and may involve public hearing and/or environmental review. Approvals are granted at the discretion of the City decision-maker. Discretionary review typically applies to projects which may have an impact to the surrounding area, require more analysis, and/or necessitate public feedback.

E. “Efficiency kitchen” is defined for purposes of establishing a junior accessory dwelling unit as a cooking facility that includes all of the following:

1. A cooking facility with appliances; and

2. A food preparation counter; and

3. Storage cabinets that are of reasonable size in relation to the size of the junior accessory dwelling unit.

F. “Independent living facilities” means a residential dwelling unit having permanent provisions for living, sleeping, eating, cooking, and sanitation.

G. “Junior accessory dwelling unit” (JADU) means a unit that is no more than five-hundred (500) square feet in size and contained entirely within a single-unit dwelling. A JADU may include separate sanitation facilities or may share sanitation facilities with the existing structure.

H. “Livable space” means a space in a dwelling intended for human habitation, including living, sleeping, eating, cooking, or sanitation.

I. “Living area” means the interior habitable area of a dwelling unit, including basements and attics, but does not include a garage or any accessory building.

J. “Ministerial review” means review of an application at a staff-level for compliance to clear and objective requirements, and does not involve public hearing. If an application subject to ministerial review meets all of the City’s requirements, then it shall be approved by staff.

Ministerial reviews are exempt from the California Environmental Quality Act (CEQA) and cannot be appealed.

K. “New construction” means the creation of new built space that did not previously exist. This includes a wholly new building, or an addition that increases the space beyond the existing building where new space was not previously a part of the building.

L. “Nonconforming zoning condition” means a physical improvement on a property that does not conform with current zoning standards.

M. “Objective standards” means standards that involve no personal or subjective judgment by a public official and are uniformly verifiable by reference to an external

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Ordinance No. 1361

and uniform benchmark or criterion available and knowable by both the development applicant or proponent and the public official prior to submittal.

N. “Passageway” means a pathway that is unobstructed clear to the sky and extends from a street or alley to one (1) entrance of the accessory dwelling unit.

O. “Primary dwelling unit” means the single-unit dwelling or each multi-unit dwelling unit, but does not include an accessory dwelling unit or junior accessory dwelling unit. An attached garage is considered part of the primary dwelling unit.

P. “Public transit” means a location, including but not limited to a bus stop or train station, where the public may access buses, trains, subway, and other forms of transportation that charge set fares, run on fixed routes, and are available to the public.

Q. “Single-unit, two-unit, and multi-unit” mean the same, respectively, as single-family, duplex, and multi-family residential units.

R. “Spindle work detailing” means a decorative element created by shaping wood on a spindle lathe to create symmetrical, repeating patterns like beads, coves, rings, and tapers.

Spindlework detailing was often used as decorative spindles, balusters, posts, and trim on railings, porches, staircases, and other architectural features.

S. “66323 unit” means accessory dwelling units that must be approved ministerially in accordance with Government Code Section 66323.

T. “Tandem parking” means two or more automobiles parked on a driveway or in any other location on a parcel, lined up behind one another.

Tandem Parking

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Ordinance No. 1361

17.105.030 Types.

An accessory dwelling unit approved under this chapter shall be one of the following types:

A. Attached. An accessory dwelling unit that meets the requirements of this chapter, and that is created as a result of new construction or conversion which is attached to an existing or proposed primary dwelling unit, such as through a shared structural wall, floor, ceiling, or roof. An attached accessory dwelling unit may also include, in part or in whole, a conversion of space within an existing primary dwelling unit, and/or an addition to an existing or proposed primary dwelling unit.

B. Detached. An accessory dwelling unit that meets the requirements of this chapter, and that is created as a result of new construction or conversion which is detached and separate from an existing or proposed primary dwelling unit on the same parcel. A detached accessory dwelling unit may also include, in part or in whole, a conversion of space within an existing accessory building, and/or an addition to an existing or proposed accessory building, and/or a newly constructed standalone accessory dwelling unit.

C. Junior Accessory Dwelling Unit. An accessory dwelling unit that is a unit that meets all the following requirements in addition to the requirements of this chapter:

1. Is no more than five-hundred (500) square feet in size; and

2. Is contained entirely within a proposed or existing single-unit primary dwelling; and

3. Has a separate entrance from the main entrance to the proposed or existing single-unit primary dwelling; and

4. Has a bathroom that is either shared with or separate from those of the single-unit primary dwelling; and

5. Includes an efficiency kitchen.

17.105.040 Density and Consistency.

An accessory dwelling unit that conforms to the requirements of this chapter shall:

A. Not be considered for the purposes of evaluating the density requirements established in the General Plan.

B. Be found consistent with the existing General Plan designation and zoning for the lot.

C. Not be considered a new residential use for the purpose of calculating local agency connection fees of capacity charges for utilities, including water and sewer service.

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Ordinance No. 1361

D. Not be considered in the application of any local ordinance, policy, or program to limit residential growth.

17.105.050 Processing Time and Submittal Requirements.

A. Processing time of an application for an accessory dwelling unit shall comply with Government Code Section 66317 and the standards below. Processing time of an application for a junior accessory dwelling unit shall comply with Government Code Section 66335 and the standards below. Where conflict occurs between the regulations of this section and the Government Code, the Government Code regulations shall apply.

1. Within fifteen (15) business days after the City receives an application, the City shall provide written notice whether the application is complete or incomplete.

a. If the City determines an application is incomplete, the City shall provide the applicant with a list of incomplete items, and a description of how the application can be made complete. The list and description shall be provided with the written notice, as required by paragraph (1).

b. After receiving a notice that the application is incomplete, an applicant may cure and address the items deemed incomplete by the City.

c. In the review of an application submitted pursuant to subparagraph (b), the City shall not require the application to include an item that was not included in the list required by subparagraph (a).

d. If an applicant submits supplemental information pursuant to subparagraph (b), the City shall determine whether the supplemental information has remedied all incomplete items listed in the determination issued pursuant to subparagraph (a). This additional application is subject to the timelines and requirements specified in paragraph (1).

e. If the City does not make a timely determination as required by this paragraph, the application or resubmitted application shall be deemed to be complete for the purposes of this paragraph.

2. An application to create an accessory dwelling unit or junior accessory dwelling unit shall be approved or denied within sixty (60) days of submission of a complete application, unless:

a. The application to create an accessory dwelling unit or junior accessory dwelling unit is submitted concurrently with an application to create a new primary dwelling unit on the parcel, in which case the City shall not act on the application for the accessory

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Ordinance No. 1361

dwelling unit or junior accessory dwelling unit until the City acts on the application for the new primary dwelling unit, but the application to create an accessory dwelling unit or junior accessory dwelling unit shall still be considered ministerially; or

b. The applicant requests a delay, in which case the sixty (60) day time period shall be tolled for the period of delay.

3. If the City has not acted upon the completed application for an accessory dwelling unit or junior accessory dwelling unit within sixty (60) days, and none of the above exceptions are met, then the application for the accessory dwelling unit or junior accessory dwelling unit shall be deemed approved.

B. Submittal Requirements. The application for an accessory dwelling unit or junior accessory dwelling unit shall be submitted to the Community Development Director. An accessory dwelling unit or junior accessory dwelling unit shall be reviewed for compliance with the standards of this chapter through the planning process, if required, in addition to the established building permit process.

C. Denial/Remedies. If the City denies an application for an accessory dwelling unit or junior accessory dwelling unit, the City will provide in writing a full set of comments within sixty (60) days to the applicant from the date the City received a complete application with a list of items that are defective, deficient, or not compliant, and a description of how the application can be remedied by the applicant. When the primary dwelling is proposed concurrently with the accessory dwelling unit, more than sixty (60) days can be taken by the City.

D. Appeals. Appeals of a determination of incompleteness or a denial of an application by the Community Development Director may be made to the Planning Commission in accordance with Folsom Municipal Code Chapter 17.04, with the modification that all appeals of determinations made under this Chapter shall be decided within sixty (60) business days after receipt of the appeal. The Planning Commission’s decision on appeals of determinations made under this Chapter is final and may not be further appealed.

17.105.060 Fee Requirements.

A. Application and Permit Fees. All accessory dwelling units shall be subject to all standard application and processing fees that apply to building permits. If the accessory dwelling unit is required to undergo review through the planning process, the application is subject to a required application fee established by council resolution.

B. Connection Fees or Capacity Charges. An accessory dwelling unit or junior accessory dwelling unit shall not be considered a new residential use for the purposes of calculating connection fees or capacity charges for utilities, including water and sewer service, unless the accessory dwelling unit was constructed with a new single-unit dwelling.

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Ordinance No. 1361

C. Impact Fees.

1. For the purposes of this subsection, impact fees do not include any connection fee or capacity charge for water or sewer service.

2. No City-imposed impact fees shall be charged to an accessory dwelling unit that is seven- hundred-fifty (750) square feet or less in floor area, or a junior accessory dwelling unit that has five hundred (500) square feet or less in floor area.

3. For accessory dwelling units more than seven-hundred-fifty (750) square feet, city- imposed impact fees shall be charged proportionately in relation to the square footage of the primary dwelling unit (e.g., the floor area of the accessory dwelling unit, divided by the floor area of the primary dwelling unit, times the typical fee amount charged for a new dwelling).
a. If any agency or special district other than the city imposes impact fees collected by the city, the city shall collect such fees in accordance with such agency’s or district’s fee schedule.

17.105.070 Rental and Sale Limitations.

A. Long-Term Rentals Only. An accessory dwelling unit and junior accessory dwelling unit may be rented separately from the primary residence; however, the rental shall be for a term of thirty (30) days or longer. Occupancy of the accessory dwelling unit or junior accessory dwelling unit shall not be allowed until the City approves the occupancy of the primary dwelling unit.

B. Sale or Conveyance. An accessory dwelling unit may be sold or conveyed separately from the primary dwelling unit to a qualified buyer, as defined in Government Code Section 66341, if all the requirements of Government Code Section 66341 are met.

17.105.080 Conditions for Nonconforming Uses and Structures.

A. Nonconforming Conditions. Notwithstanding Chapter 17.64 of the Folsom Municipal Code, until January 1, 2030 or until a date specified in Health and Safety Code Section 17980.12, whichever is later, an owner of an accessory dwelling unit that receives a notice to correct violations or abate nuisances, in relation to the accessory dwelling unit, may request a delay of up to five (5) years in enforcement of a building standard, as long as the violation is not a health and safety issue as determined by the City, subject to compliance with Government Code Section 66331 and Health and Safety Code Section 17980.12 and the following conditions:

1. The accessory dwelling unit was built before January 1, 2020; or

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2. The accessory dwelling unit was built on or after January 1, 2020 during a time when the City had a noncompliant accessory dwelling unit ordinance, but the ordinance is compliant at the time the request is made.

B. The City shall not deny an application for a permit to create an accessory dwelling unit or junior accessory dwelling unit due to the failure to correct nonconforming zoning conditions, building code violations, or unpermitted structures that do not present a threat to public health and safety and are not affected by the construction of the accessory dwelling unit in compliance with Government Code Sections 66322 and 66336.

17.105.090 Accessory Dwelling Units Subject to Mandatory Approval.

The city shall approve any application for an accessory dwelling unit as described in this section and specified in Government Code Section 66323, referred to as a “66323 Unit”. Approval or denial of an accessory dwelling unit specified in Government Code Section 66323 is a ministerial action not subject to discretionary review. The following types of 66323 Units are exempt from the design standards of this chapter and exempt from design review, however they are subject to applicable standards of Government Code Title 7, Division 1, Chapter 13:

A. Any accessory dwelling unit on a lot with an existing or proposed single-unit primary dwelling that is a conversion of the space of a proposed or existing single-unit primary dwelling, and may include an expansion of not more than one-hundred fifty (150) square feet beyond the physical dimensions of the building for the sole purpose of accommodating ingress and egress;
B. Any accessory dwelling unit on a lot with an existing or proposed single-unit primary dwelling that is a conversion of the space of an existing accessory building, and may include an expansion of not more than one-hundred fifty (150) square feet beyond the physical dimensions of the building for the sole purpose of accommodating ingress and egress; C. Any junior accessory dwelling unit;
D. Any new construction detached accessory dwelling unit on a lot with an existing or proposed single-unit primary dwelling that is eight hundred (800) square feet or smaller in size, has a peak height above finished grade as allowed under the conditions specified in Government Code section 66321, and has a minimum four (4) foot wide side and rear yard setbacks; E. Any accessory dwelling unit that is a conversion of a portion of an existing multi-unit dwelling building that is not used as livable space;
F. Any new construction detached accessory dwelling unit on a lot with an existing or proposed multi-unit primary dwelling that has a peak height above finished grade as allowed under the

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conditions specified in Government Code section 66321, and has a minimum four (4) foot wide side and rear yard setbacks.

17.105.110 Accessory Dwelling Units Subject to Design Review

A. Ministerial Design Review Required. All accessory dwelling units which are not 66323 Units shall be subject to the objective design standards in Section 17.105.190 or 17.105.200, as applicable. Compliance with the objective design standards listed in Sections 17.105.190 and

17.105.200 shall be conducted in accordance with the ministerial design review process outlined in FMC 17.06.045, except as otherwise noted in this section. The city shall ministerially approve any application for an accessory dwelling unit subject to design review if all requirements in this chapter are met.

1. Review Authority. All accessory dwelling units shall be reviewed by the Community Development Director.
a. If a proposed detached accessory dwelling unit project includes proposed new garage space, the proposed new garage space shall be reviewed concurrently with the accessory dwelling unit through a ministerial design review process.

2. Design Review Findings. Notwithstanding the findings of FMC 17.06, in approving or denying an application for ministerial design review under this chapter, the Community Development Director shall make the finding that the accessory dwelling unit complies with the objective design and development standards of this chapter.

B. Deviations from Design Standards. A request to deviate from the design standards contained in FMC 17.105.190 or FMC 17.105.200 may be made by application for design review, in accordance with the standard design review process outlined in FMC 17.06, except as otherwise noted in this section.

1. Review Authority. Any deviations for accessory dwelling units from the objective design standards of this chapter shall be reviewed by the Community Development Director.

17.105.120 Limitation on the Number of Accessory Dwelling Units.

A. The number of accessory dwelling units allowed shall comply with Government Code Title 7, Division 1, Chapter 13, as listed below. Where conflict occurs between the regulations of this section and the Government Code, the Government Code regulations shall apply.

1. Accessory dwelling units are permitted in single-unit developments with an existing or proposed single-unit dwelling as long as the units satisfy the requirements of this chapter and the number does not exceed, per single-unit lot:
a. One (1) attached or detached accessory dwelling unit that complies with the requirements of this chapter; and

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b. One (1) accessory dwelling unit that is located within the proposed or existing space of a single-unit dwelling, or located within the existing space of an accessory building, consistent with Government Code section 66323(a)(1); and c. One (1) junior accessory dwelling unit consistent with Government Code section 66323(a)(1); and
d. One (1) new construction detached accessory dwelling unit consistent with Government Code section 66323(a)(2).

2. Accessory dwelling units are permitted in multi-unit developments with an existing or proposed multi-unit dwelling as long as the units satisfy the requirements of this chapter and the number does not exceed:
a. At least one (1) accessory dwelling unit that is a conversion of portions of existing multi-unit dwelling structures that are not used as livable space, up to a maximum of 25% of the original number of approved primary units within the development. When calculating the required number of allowed accessory dwelling units, any fractions of units shall be rounded to the next larger whole number. b. Up to two (2) detached accessory dwelling units on a lot that has proposed multi-unit dwellings, or up to eight (8) detached accessory dwelling units on a lot that has existing multi-unit dwellings provided that the number of accessory dwelling units does not exceed the number of existing dwelling units on the lot.

3. Notwithstanding the above, no more than two units (including ADUs and JADUs) on a parcel created through a Senate Bill (SB) 9 (Chapter 162, Statues of 2021) lot split shall be allowed (Government Code section 66411.7(j)(1)).

17.105.130 Standards Applicable to All Accessory Dwelling Units.

The following standards shall apply to all accessory dwelling units. Where conflict occurs between the regulations of this section and the Government Code, the Government Code regulations shall apply:

A. Passageways. No passageway, breezeway, or similar connection between structures on the parcel shall be required in conjunction with the construction of an accessory dwelling unit.

B. Utility Connections. All accessory dwelling units shall be connected to public utilities or their equivalent, including water, electric, and sewer services.

1. The city shall not require the applicant to install a new or separate utility connection directly between the attached or detached accessory dwelling unit and the utility unless the utility connection is required by the utility provider. The applicant may voluntarily install a new or separate utility connection, subject to the approval of the utility provider.

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Any utility charges or fees must be consistent with California Government Code Section 66311.5
C. Septic System. If allowed by the city pursuant to FMC 13.20, the accessory dwelling unit may connect to an onsite water-treatment system. The owner shall include with the application a percolation test completed within the last five (5) years or, if the percolation test has been recertified, within the last ten (10) years. Such test must demonstrate the ability of the site to accommodate waste discharge associated with the accessory dwelling unit.

D. Open Space. Accessory dwelling units shall not encroach into required open space areas on a residentially-zoned parcel. This requirement shall not apply to a 66323 unit.

E. Addressing. An accessory dwelling unit shall have its own address according to the City’s standard addressing procedure.

17.105.140 Single-Unit Developments: Attached Accessory Dwelling Unit Standards.

A. 66323 Units. An attached accessory dwelling unit shall qualify as a 66323 Unit if it meets all of the following requirements, in accordance with Government Code Section 66323:

1. Location. Is a conversion of the space of a proposed or existing single-unit primary dwelling that may include an expansion of not more than one-hundred fifty (150) square feet beyond the physical dimensions of the building for the sole purpose of accommodating ingress and egress.

2. Size. Size shall be measured based on the interior living space of the accessory dwelling unit. At a minimum meets the requirements of an efficiency unit (one-hundred-fifty (150) square feet minimum).

3. Setbacks. Has side and rear setbacks that comply with applicable building and fire codes.

4. Access. Has exterior access that is independent of that for the proposed or existing primary dwelling unit.

B. All Other Attached Accessory Dwelling Units. An attached accessory dwelling unit that is not a 66323 Unit shall meet all of the following requirements:

1. Location. Is located on a single-unit parcel with an existing or proposed primary dwelling unit, and shares at least one common structural wall, floor, ceiling, or roof with the primary dwelling unit.

2. Size. Size shall be measured based on the interior living space of the accessory dwelling unit. At a minimum meets the requirements of an efficiency unit (one-hundred-fifty (150) square feet minimum), and at a maximum does not exceed eight-hundred-fifty (850) square feet if it has no more than one (1) bedroom, or one-thousand (1,000) square feet if

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it has two (2) or more bedrooms. Subject to the foregoing maximum size limitation, the total floor area of an attached accessory dwelling unit shall not exceed fifty (50) percent of the existing primary dwelling unit.

3. Setbacks. Has a front yard setback that conforms to the front setback for the zone in which the attached accessory dwelling unit is located, has side and rear setbacks of at least four (4) feet, and complies with applicable building and fire codes. a. Setback Exceptions. Any portion of an accessory dwelling unit that is a conversion of the space of an existing primary dwelling unit may maintain the same setbacks as that of the existing primary dwelling unit; however, the accessory dwelling unit must comply with applicable fire and building codes.

4. Parcel Coverage. For any attached accessory dwelling unit, the parcel coverage standard and pervious surface standard, if applicable, for the zone in which it is located shall apply.
a. Rear Yard Coverage. Notwithstanding the parcel coverage standard, the area covered by an accessory dwelling unit shall not exceed forty (40) percent of the rear yard. b. Parcel Coverage Exceptions. No adjustment to the existing parcel coverage and pervious surface standard, if applicable, is required for any portion of an accessory dwelling unit that is a conversion of the space of an existing primary dwelling unit; however, the accessory dwelling unit must comply with applicable fire and building codes.

5. Height. Height shall not exceed the height standard for the zone in which the attached accessory dwelling unit is located.
a. Additional Height Restrictions. Notwithstanding the height standard, any portion of an attached accessory dwelling unit that encroaches into the required setback area for the primary dwelling unit shall not exceed twenty-five (25) feet. b. Height Exceptions. Any portion of an accessory dwelling unit that is a conversion of the space of an existing primary dwelling unit may maintain the same height as that of the existing primary dwelling unit; however, the accessory dwelling unit must comply with applicable fire and building codes.

6. Access. Has exterior access that is independent of that for the proposed or existing primary dwelling unit. The entrance to the accessory dwelling unit shall be located on a different side of the building from the entrance to the primary dwelling unit, except as may be required to comply with applicable fire and building codes.

C. Additional Requirements.

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1. Design Standards. Any accessory dwelling unit must comply with the design standards set forth in Sections 17.105.190 and 17.105.200 for an accessory dwelling unit in the historic district, or Section 17.105.190 for an accessory dwelling unit located outside of the historic district.
a. Design Standard Exceptions. Design Standards shall not apply to 66323 Units specified in Government Code section 66323

2. Exceptions. Notwithstanding the standards of this section, in no event shall any of the standards of this section preclude the development of at least an eight-hundred (800) square foot accessory dwelling unit with four (4) foot side and rear setbacks, in compliance with all other development standards.

17.105.150 Single-Unit Developments: Detached Accessory Dwelling Unit Standards.

A. 66323 Units. A detached accessory dwelling unit shall qualify as a 66323 Unit if it meets either of the following requirements, in accordance with Government Code Section 66323:

1. New Construction Detached 66323 Units:
a. Location. Is detached from the primary dwelling unit and is entirely new construction. b. Size. Size shall be measured based on the interior living space of the accessory dwelling unit. At a minimum meets the requirements of an efficiency unit (one- hundred-fifty (150) square feet minimum), and at a maximum shall not exceed eight- hundred (800) square feet.
c. Setbacks. Has side and rear setbacks of four (4) feet, and complies with applicable building and fire codes.
i. Setback Exceptions. Any portion of an accessory dwelling unit that is a conversion of the space of an existing accessory building may maintain the same setbacks as that of the existing accessory building; however, the accessory dwelling unit must comply with applicable fire and building codes. d. Height. Has a peak height above finished grade as allowed under the conditions specified in Government Code Section 66321.
i. Height Exceptions. Any portion of an accessory dwelling unit that is a conversion of the space of an existing accessory building may maintain the same height as that of the existing accessory building; however, the accessory dwelling unit must comply with applicable fire and building codes.

2. Converted Detached 66323 Units:

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a. Location. Is detached from the primary dwelling unit and is a conversion of the space of an existing accessory building that may include an expansion of not more than one- hundred fifty (150) square feet beyond the physical dimensions of the building for the sole purpose of accommodating ingress and egress.
b. Size. Size shall be measured based on the interior living space of the accessory dwelling unit. At a minimum meets the requirements of an efficiency unit (one- hundred-fifty (150) square feet minimum).
c. Setbacks. Has side and rear setbacks that comply with applicable building and fire codes.
i. Setback Exceptions. Any portion of an accessory dwelling unit that is a conversion of the space of an existing accessory building may maintain the same setbacks as that of the existing accessory building; however, the accessory dwelling unit must comply with applicable fire and building codes.

B. All Other Detached Accessory Dwelling Units. A detached accessory dwelling unit that is not a 66323 Unit shall meet all of the following requirements:

1. Location. Is located on a single-unit parcel with an existing or proposed primary dwelling unit, and is detached from the primary dwelling unit.

2. Size. Size shall be measured based on the interior living space of the accessory dwelling unit. At a minimum meets the requirements of an efficiency unit (one-hundred-fifty (150) square feet minimum), and at a maximum shall not exceed eight-hundred-fifty (850) square feet if it has no more than one (1) bedroom or one-thousand (1,000) square feet if it has two (2) or more bedrooms.

3. Setbacks. Has side and rear setbacks of at least four (4) feet, and complies with applicable building and fire codes. In no case shall the accessory dwelling unit break the front plane of the primary dwelling unit. Detached accessory dwelling units shall be located at least six (6) feet from the primary dwelling unit or an accessory building on the same parcel other than a fence or a wall.
a. Setback Exceptions.
i. Any portion of an accessory dwelling unit that is a conversion of the space of an existing accessory building may maintain the same setbacks as that of the existing accessory building; however, the accessory dwelling unit must comply with applicable fire and building codes.
ii. Notwithstanding Chapter 17.64 of the Folsom Municipal Code, any accessory dwelling unit constructed that is built on top of an existing accessory building with side and/or rear setback of less than four (4) feet may maintain the same side

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and/or rear setback of that accessory building; however, the accessory dwelling unit must comply with applicable fire and building codes. Notwithstanding this exception, in no case shall the accessory dwelling unit break the front plane of the primary dwelling unit.

4. Parcel Coverage. For any detached accessory dwelling unit, the parcel coverage standard and pervious surface standard, if applicable, for the zone in which it is located shall apply.
a. Rear Yard Coverage. Notwithstanding the parcel coverage standard, the area covered by an accessory dwelling unit shall not exceed forty (40) percent of the rear yard. b. Parcel Coverage Exceptions. No adjustment to the existing parcel coverage and pervious surface standard, if applicable, is required for any portion of an accessory dwelling unit that is a conversion of the space of an existing accessory building; however, the accessory dwelling unit must comply with applicable fire and building codes.

5. Height. Height shall not exceed twenty-five (25) feet or the height of the residence, whichever is less.

a. Accessory Dwelling Units near a Listed Historic Structure. Any accessory dwelling unit proposed for construction on or within fifty (50) feet of the property line of a parcel containing a structure listed on a State or Federal register of historic resources shall have a peak height above finished grade of as allowed under the conditions specified in Government Code section 66321.
b. Height Exceptions. Any portion of an accessory dwelling unit that is a conversion of the space of an existing accessory building may maintain the same height as that of the existing accessory building; however, the accessory dwelling unit must comply with applicable fire and building codes.

6. Access. The entrance to the accessory dwelling unit shall be located on a different side of the building from the entrance to the primary dwelling unit, except as may be required to comply with applicable fire and building codes.

C. Additional Requirements.

1. Design Standards. Any accessory dwelling unit must comply with the design standards set forth in Sections 17.105.190 and 17.105.200 for an accessory dwelling unit in the historic district, or Section 17.105.190 for an accessory dwelling unit located outside of the historic district.
a. Design Standard Exceptions. Design Standards shall not apply to 66323 Units specified in Government Code Section 66323.

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2. Exceptions. Notwithstanding the standards of this section, in no event shall any of the standards of this section preclude the development of at least an eight-hundred (800) square foot accessory dwelling unit with four (4) foot side and rear setbacks, in compliance with all other development standards.

17.105.160 Single-Unit Developments: Junior Accessory Dwelling Unit Standards.

A. Generally. A junior accessory dwelling unit shall be allowed on a single-unit parcel with a proposed or existing primary dwelling unit, if the junior accessory dwelling unit meets all the following requirements:

1. Location. Is entirely within the proposed space of a primary dwelling unit or within the existing space of a primary dwelling unit.

2. Size. Size shall be measured based on the interior living space of the junior accessory dwelling unit. At a minimum meets the requirements of an efficiency unit (one-hundred- fifty (150) square feet minimum), and at a maximum does not exceed five-hundred (500) square feet.

3. Setbacks. No adjustment to the existing setback is required for an existing space that is converted to a junior accessory dwelling unit; however, the junior accessory dwelling unit must comply with applicable fire and building codes.

4. Parcel Coverage. No adjustment to the existing parcel coverage and pervious surface standard, if applicable, is required for an existing space that is converted to a junior accessory dwelling unit; however, the junior accessory dwelling unit must comply with applicable fire and building codes.

5. Height. No adjustment to the existing height is required for an existing space that is converted to a junior accessory dwelling unit. The height of the existing primary dwelling unit being converted to a junior accessory dwelling unit shall not be increased.

6. Access. Has exterior access that is independent of that for the proposed or existing primary dwelling unit. The entrance to the junior accessory dwelling unit shall be located on a different side of the building from the entrance to the primary dwelling unit, except as may be required to comply with applicable fire and building codes. If the junior accessory dwelling unit does not include separate sanitation facilities, the junior accessory dwelling unit shall also include interior entry to the main living area of the primary dwelling unit.

B. Additional Requirements.

1. Efficiency Kitchen. The junior accessory dwelling unit shall include an efficiency kitchen.

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2. Design Standards. No design standards shall be applied.

3. Deed Restriction. Prior to issuance of a building permit for a junior accessory dwelling unit, a deed restriction shall be recorded in the chain of title of the single-unit property.

The form of the deed restriction shall be approved by the city attorney and shall provide that:
a. The junior accessory dwelling units shall not be sold separately from the primary dwelling unit.
b. The junior accessory dwelling units are restricted to the approved size and other attributes allowed by this chapter.
c. The deed restriction shall run with the land and shall be enforced against future property owners.

4. Owner Occupancy Requirements. All junior accessory dwelling units that have shared sanitation facilities shall be subject to an owner occupancy requirement. A person with legal or equitable title to the primary dwelling unit shall reside on the property in either the primary dwelling unit or junior accessory dwelling unit as that person’s legal domicile and permanent residence.
a. Exceptions. Owner occupancy shall not be required if the junior accessory dwelling unit has separate sanitation facilities from the primary dwelling unit, or if the owner is a governmental agency, land trust, or nonprofit housing organization.

17.105.170 Two-Unit and Multi-Unit Dwellings: Accessory Dwelling Unit Standards.

Accessory dwelling units, in accordance with Government Code Section 66323, are permitted on a lot with existing or proposed two-unit and multi-unit dwellings as follows:

A. Generally. An accessory dwelling unit conversion shall be allowed on a parcel with an existing multi-unit dwelling, if the accessory dwelling unit conversion meets all the following requirements:

1. Location. Is converted from portions of a multi-unit dwelling that are not used as livable space, including but not limited to storage rooms, boiler rooms, passageways, attics, basements, or garages, provided that any such space converted to an accessory dwelling unit complies with minimum state building standards for dwellings.

2. Size. Size shall be measured based on the interior living space of the accessory dwelling unit. At a minimum meets the requirements of an efficiency unit (one-hundred-fifty (150) square feet minimum).

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3. Setbacks. No adjustment to the existing setback is required for the space that is converted to an accessory dwelling unit; however, the accessory dwelling unit conversion must comply with applicable fire and building codes.

4. Parcel Coverage. No adjustment to the existing parcel coverage and pervious surface standard, if applicable, is required for an existing space that is converted to an accessory dwelling unit; however, the converted accessory dwelling unit must comply with applicable fire and building codes.

5. Height. No adjustment to the existing height is required for the space that is converted to an accessory dwelling unit. The height of the existing multi-unit dwelling being converted to an accessory dwelling unit shall not be increased.

6. Design Standards. No design standards shall be applied.

B. Generally. A detached accessory dwelling unit shall be allowed on a parcel with an existing or proposed two-unit or multi-unit dwelling, if the detached accessory dwelling unit meets all the following requirements:

1. Location. Is detached from the two-unit or multi-unit dwelling. The detached accessory dwelling unit may be attached to an accessory building or other detached accessory dwelling unit.

2. Size. Size shall be measured based on the interior living space of the accessory dwelling unit. At a minimum meets the requirements of an efficiency unit (one-hundred-fifty (150) square feet minimum), and at a maximum shall not exceed eight-hundred (800) square feet.

3. Setbacks. Has side and rear setbacks of at least four (4) feet, and complies with applicable building and fire codes.

4. Parcel Coverage. Accessory dwelling units that are eight-hundred (800) square feet or smaller shall not be required to adhere to the parcel coverage standard and pervious surface standard, if applicable.

5. Height. Has a peak height above finished grade as allowed under the conditions specified in Government Code Section 66321.

6. Design Standards. No design standards shall be applied.

17.105.180 Parking Requirements
Off-street parking space shall be provided in accordance with the following:

A. Requirement. One (1) additional off-street parking space shall be required per accessory dwelling unit or per bedroom, whichever is less.

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1. Parking may be provided in front and/or side setback areas on a driveway, or as tandem parking on a driveway. Parking spaces may also be provided through a mechanical vehicle parking lift if located in an enclosed parking garage.

B. Exceptions. Additional parking for an accessory dwelling unit is not required in the following instances:

1. The accessory dwelling unit is located within one-half (0.5) mile walking distance of public transit, as defined in Section 17.105.020, including transit stations and bus stations.

2. The accessory dwelling unit is located within the historic district.

3. The accessory dwelling unit is a part of the proposed or existing primary dwelling unit (e.g., attached accessory dwelling unit or junior accessory dwelling unit), or an existing accessory building (e.g., detached accessory dwelling unit addition to an accessory building).

4. When on-street parking permits are required by the city but not offered to the occupant of the accessory dwelling unit.

5. When there is a car share vehicle located within one (1) block of the accessory dwelling unit.

6. When a permit application for an accessory dwelling unit is submitted with a permit application to create a new single-unit dwelling or multi-unit dwelling on the same lot, provided that the accessory dwelling unit or the parcel satisfies any other criteria listed in this subdivision.

C. Replacement Parking Not Required. When a garage, carport, uncovered parking space, or covered parking structure is removed in conjunction with the construction or conversion of an accessory dwelling unit, replacement parking is not required.

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Acceptable Location of Parking for Accessory Dwelling Units

17.105.190 All Zones—Design Standards.

A. Applicability. An accessory dwelling unit shall comply with objective standards for accessory dwelling units in this section or any other objective design standards for accessory dwelling units, as adopted by resolution of the city council. The following objective design standards shall apply to all accessory dwelling units that are not 66323 Units specified in Government Code section 66323.

B. Exterior Walls.

1. Attached accessory dwelling units shall utilize the same exterior wall materials, including accent materials, as the existing or proposed primary dwelling unit.

2. Detached accessory dwelling units shall utilize at least two (2) different exterior wall materials.

C. Windows. The accessory dwelling unit shall incorporate at least one of the following features: windows, projections, bays, or recessed elements. Additionally, windows are subject to the following requirements:

1. Any second story window that is within ten (10) feet or less of the side and/or rear property line shall have translucent glazing, or be one of the following window types:

Transom windows, clerestory windows, or false windows.

D. Roof Pitch. The accessory dwelling unit shall have the same roof pitch as the primary dwelling unit but may vary by up to 2/12 more or 2/12 less than the roof pitch of the primary

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dwelling unit. However, if the unit is located in the historic district, it must follow the roof pitch requirements for design style allowed in that zone or subarea specified in FMC

17.105.200.

E. Accessory dwelling units above the main story. If the accessory dwelling unit is two-stories, or is constructed on the second story or higher of an existing or proposed building, the following requirements shall apply:

1. Form and Massing. The building massing of the accessory dwelling unit shall be designed according to the following requirements:

a. Attached accessory dwelling units shall utilize at least one (1) of the following:

i. Recessed or projecting windows, doors, or parts of the wall. Recessed windows and doors shall project a minimum of six (6) inches or shall be recessed a minimum of six (6) inches. Any projection must be behind the parcel side or rear yard setback line.

ii. Cantilevered areas so long as area does not extend beyond the side or rear yard setback.

iii. At least two different roof forms, such as a mix of different roof types (e.g., hipped, gabled, shed, etc.).

b. Detached accessory dwelling units shall utilize at least one (1) of the following:

i. Different building materials for each of the stories.

ii. Recessed or projecting windows, doors, or parts of the wall. Recessed windows and doors shall project a minimum of six (6) inches or shall be recessed a minimum of six (6) inches. Any projection must be behind the parcel side or rear yard setback line.

iii. Cantilevered areas so long as area does not extend beyond the side or rear yard setback.

iv. At least two different roof forms, such as a mix of different roof types (e.g., hipped, gabled, shed, etc.).

2. Staircases. Staircases necessary to access a second story accessory dwelling unit shall comply with the following requirements:

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a. Location. The staircase shall be located internal to the building, or along the edge of the building.

b. Setback. Has side and rear setbacks that comply with applicable building and fire codes.

c. Design. The staircase shall be enclosed. If located along the edge of a building, the staircase exterior walls shall use the same colors and materials as used for the exterior of the building.

3. Balconies. One (1) second-story balcony is allowed, not to exceed twenty (20) square feet. Balconies shall not be located in the setback areas of the primary dwelling unit.

F. Design Style Deviations. Applicants for accessory dwelling units may seek a waiver from a required design standard listed in this section by requesting a design review in accordance with FMC 17.105.110.

17.105.200 Historic District Zones—Design Standards.

A. Applicability. In addition to the provisions of Section 17.105.190, if located in a historic district, an accessory dwelling unit shall comply with objective standards for accessory dwelling units in this section or any other objective design standards for accessory dwelling units, as adopted by resolution of the city council. The following objective design standards shall apply to all accessory dwelling units that are not 66323 Units specified in Government Code section 66323.

B. Architectural Style. The architectural styles in the historic district reflect the types of design during the period from the 1850s to 1950s. The applicant for an accessory dwelling unit shall select an allowed architectural style for the historic district zone or subarea in which it is located and shall meet all required design elements. Acceptable styles by zone and subarea are as follows:

1. Figueroa Subarea: Queen Anne, Delta, Italianate, Spanish Eclectic, Craftsman, and Carriage House Styles.

2. Central Subarea: Queen Anne, Delta, Italianate, Spanish Eclectic, Craftsman, and Carriage House Styles.

3. Persifer-Dean Subarea: 1950s Ranch, Spanish Eclectic, Delta, and Craftsman Styles.

4. The Preserve Subarea: Craftsman, Delta, Spanish Eclectic Styles.

5. River Way Subarea: Delta, Spanish Eclectic, Craftsman Styles.

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6. All other subareas: Queen Anne, Delta, Italianate, Spanish Eclectic, Craftsman and Carriage House Styles.

C. Required Design Elements. The specified design elements for each architectural style are set forth as follows:

1. Carriage House Style

a. Limitations. This type may only be used for detached accessory dwelling units which include existing or proposed garage space.

b. Massing/Form. This style may include garage space on the main story not to exceed eight-hundred (800) square-feet. The garage portion shall comply with the zoning requirements of the property.

i. Second Story. If a second story is used, the second story shall be located within the roof attic space. The second story shall not include any cantilever space above the main story.

c. Roofs. Roof shall have a side-gable, side-gambrel, or hip roof and incorporate the following elements:

i. Roof Pitch. Roof pitch shall be between 4/12 and 12/12 for gabled roofs. If a gambrel roof is used, the roof pitch for the lower roof leg (i.e., the lower portion of the roof slope) shall be between 22/12 and 26/12 and the upper roof leg (i.e., upper portion of the roof slope) shall be between 5/12 and 8/12; the upper and lower roof legs shall be equal in length.

ii. Roof Detailing. A window or vent shall be provided on the gable or gambrel ends.

iii. Optional. Shed or gabled roof dormer(s) may be used; wall dormers are not permitted. A singular square-cupola or tower may be used, but shall not exceed the overall height maximum of the structure and shall not exceed four (4) square feet in size.

d. Windows. Windows shall be square or vertically proportioned rectangular windows with a traditional multi-pane grid.

e. Exterior Walls. Exterior walls shall utilize the same siding materials of the primary dwelling unit, including the use of accent materials. If trim is used on the primary dwelling unit, the same type and width of trim shall be used.

03/24/2026 Item No.8.

Ordinance No. 1361

f. Garage Door. The garage door shall incorporate the following features:

i. Garage doors shall be a single-car door in size (i.e., two-car garage doors prohibited);

ii. Black metal hinges and handle door hardware;

iii. Wood board construction, or be of a material shaped to imitate wood board construction;

iv. If windows are used, windows shall include rectangular grids and shall be located on the upper third of the garage door; and

v. If panels are used, panels shall be narrow and rectangular and extend from bottom of door to top of door. If windows are also used, the panels shall extend from bottom of door to bottom of windows.

2. Craftsman Style.

a. Roofs. Roofs shall be front-gabled, side-gabled, or cross-gabled and incorporate the following elements:

i. Roof Pitch. The roof pitch shall be between 3/12 and 8/12.

ii. Roof Detailing. The roof shall have unenclosed eave overhangs. Exposed roof rafter and/or braces under the gables (i.e., knee braces or corbels, etc.) shall be included.

iii. Optional. Shed or gabled roof dormers may be used.

b. Windows. All windows on the front elevation shall be single- or double-hung sash windows with at least three (3) small panes above one (1) large pane (e.g., three (3) small panes over one (1) large pane, six (6) small panes over one (1) large pane window, etc.).

c. Exterior Walls. Exterior walls shall be horizontal lap or shingle siding that is two-and- one-half (2.5) to six (6) inches wide, or board and batten siding, or shingle siding, or stone and mortar, or brick and mortar, or a mix of the siding options mentioned. Fiber cement board and shingles may be used in place of wood siding or shingles.

d. Optional Porch. If an entry porch is provided, the porch shall be located under the roofline and supported by tapered or square columns with square bases that extend to the ground.

03/24/2026 Item No.8.

Ordinance No. 1361

3. Queen Anne Style.

a. Roofs. Roofs shall be hipped and/or gabled and incorporate the following elements:

i. Roof Pitch. The roof pitch shall be between 8/12 and 18/12.

ii. Roof Detailing. Front-gables, if used, shall include scalloped shingles with a window or vent.

iii. Optional. Multiple gables and dormers may be used.

b. Windows. All windows on the front elevation shall be single- or double-hung sash windows with small panes above one (1) large. All windows on the building shall be vertically proportioned, with a minimum height of two (2) feet for every one (1) foot of width, and a maximum height of three-and-one-half (3.5) feet for every one (1) foot of width.

c. Exterior Walls. Exterior walls shall be horizontal lap siding that is between two-and- one-half (2.5) to six (6) inches wide and/or shingle siding. Fiber cement siding may be used in place of wood siding.

d. Optional Porch. If an entry porch is provided, the porch shall include turned spindle columns and railing. Porches may also include the use of spindlework detailing.

e. Optional Features. Chamfered bay windows may be used. This feature is defined as an architectural projection that is either attached to the ground or projects from the building façade, contains windows that cover at least sixty percent (60%) of the projecting faces with glass area, and has side faces that are angled (chamfered) back toward the building rather than forming a right-angled corner.

4. Delta Style.

a. Roofs. The roof shall be a single-front gabled roof and incorporate the following elements:

i. Roof Pitch. The roof pitch shall be between 6/12 to 12/12.

ii. Roof Detailing. A rectangular vent shall be utilized at ends of the front-facing gable. The roof shall have soffited eaves.

b. Windows. All windows on the building shall be vertically proportioned, with a minimum height of two (2) feet for every one (1) foot of width. The window shall

03/24/2026 Item No.8.

Ordinance No. 1361

include flat trim measuring no more than three-and-one-half (3.5) inches side surrounding all sides of the window.

c. Exterior Walls. Exterior walls shall be horizontal clapboard siding that is between two-and-one-half (2.5) to six (6) inches wide, or board and batten siding. Fiber cement siding may be used in place of wood siding.

d. Optional Porch. If an entry porch is provided, the porch shall have a roof pitch that is no greater than 4/12, supported by square posts not to exceed 10 inches wide that extend to the ground, and include railing. Porches may also include the use of spindlework detailing.

5. Italianate Style.

a. Roofs. The roof shall be a hipped roof and incorporate the following elements.

i. Roof Pitch. The roof pitch shall be between 3/12 and 6/12.

ii. Roof Detailing. The roof shall have eave overhangs that are at least twelve (12) inches, supported by large, decorative roof brackets under an ornamental cornice.

iii. Optional. A singular square-cupola or tower may be used, but shall not exceed the overall height maximum of the structure and shall not exceed six (6) square feet in size.

b. Windows. All windows on the building shall be vertically proportioned, with a minimum height of two (2) feet for every one (1) foot of width, and a maximum height of three-and-one-half (3.5) feet for every one (1) foot of width.

c. Exterior Walls. Exterior walls shall be horizontal lap siding that is between four (4) to six (6) inches side, brick and mortar, or board-and-batten siding. Fiber cement siding may be used in place of wood siding.

d. Optional Porch. If an entry porch is provided, the porch shall be a wrap-around porch (or smaller entry porch) with double columns.

e. Optional Features. Angled bay cut-away forms and windows may be used on the front elevation. Paneled wood doors may also be used.

6. Spanish Eclectic Style (also known as Spanish Revival).

a. Roofs. The roof shall be cross-gabled, hipped, or a combined hipped-and-gabled roof and incorporate the following elements:

03/24/2026 Item No.8.

Ordinance No. 1361

i. Roof Pitch. The roof pitch shall be between 2/12 and 5/12.

ii. Roof Detailing. The roof shall be red tile, include red tile vents on open gables, and shall not have a roof eave overhang that exceeds four (4) inches.

b. Windows. All windows shall be recessed casement windows. On the front elevation, one (1) window with a rounded arch shall be provided that is larger than any other window on the building.

c. Exterior Walls. Exterior walls shall be stucco.

d. Doors. Exterior doors shall be recessed, and be either wood plank or wood paneled doors. A rounded arch shall be provided over the main door.

e. Optional Porch. If a porch is provided, the porch shall be uncovered.

7. 1950s Ranch Style.

a. Roofs. The roof shall be cross-gabled, side-gabled, hipped, or cross-hipped and incorporate the following elements:

i. Roof Pitch. The roof pitch shall be between 3/12 and 5/12.

ii. Roof Detailing. The roof shall have soffited eaves.

b. Exterior Walls. Exterior walls shall be smooth stucco, horizontal lap siding, shingles, board-and-batten, stone, brick and mortar, or a combination of these materials. Fiber cement siding may be used in place of wood siding.

c. Optional Window Detailing. Windows may include open shutters.

d. Optional Porch. If an entry porch is provided, the porch shall not be greater than one- hundred (100) square-feet in size.

D. Design Style Deviations. Applicants for accessory dwelling units may seek a waiver from a required design standard listed in this section by requesting a design review in accordance with FMC 17.105.110.

SECTION 3 SCOPE

Except as set forth in this ordinance, all other provisions of the Folsom Municipal Code shall remain in full force and effect.

03/24/2026 Item No.8.

Ordinance No. 1361

SECTION 4 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.

SECTION 5 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 March 24, 2026 and the second reading occurred at the regular meeting of the City Council on April 14, 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 14th day of April, 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

03/24/2026 Item No.8.

Planning Commission
Zoning Code Update – Accessory Dwelling Unit Ordinance (ZCAM26-00007) March 18, 2026
City of Folsom

Attachment 2
HCD Letter of Technical Assistance
Dated 12-5-25

03/24/2026 Item No.8.

STATE OF CALIFORNIA - BUSINESS, CONSUMER SERVICES AND HOUSING AGENCY GAVIN NEWSOM, Governor

DEPARTMENT OF HOUSING AND COMMUNITY DEVELOPMENT

DIVISION OF HOUSING POLICY DEVELOPMENT
651 Bannon Street, Suite 400
Sacramento, CA 95811
(916) 263
-2911 / FAX (916) 263-7453
www.hcd.ca.gov
December 5, 2025
Pam Johns
Contract City Planner
City of Folsom
50 Natoma Street
Folsom, CA 95630
Dear Pam Johns:

RE: City of Folsom – Accessory Dwelling Unit (ADU) Ordinance Updates – Letter of Technical Assistance
The most recent ADU ordinance on file for the City with the California Department of Housing and Community Development (HCD) is from 2020. Given the numerous changes to State ADU Law since the adoption of the ordinance, the ordinanc e may be outdated and out of compliance with State ADU Law. If H CD’s records are incorrect, and a new ordinance has been adopted, please submit it to the ADU Portal for HCD’s review.

Below are the changes to State ADU Law that have occurred in rec ent years and may warrant an update to the City’s ADU ordinance:

Updates to the ADU Handbook (2025)
• Clarifies that ADU Law prohibits deed restrictions on ADUs. A deed restriction would be an “additional standard” and thus cannot be imposed on ADUs (Gov.

Code, § 66315).
• Clarifies that homeowners’ associations (HOAs), as a third party, cannot influence the approval of an application to create an ADU. Third party reviews by an HOA or their representatives or agents would violate State ADU Law. (Gov.

Code, § 66315.) No other local ordinances, policies, or regulations may be applied in the approval or denial of an ADU or junior ADU (JADU) permit application (Gov. Code, § 66317, subd. (c)).
• Clarifies that a local agency may not require parking as a condition to permitting a JADU, even when the JADU is converted from an attached garage (Gov. Code, § 66334, subd. (a)).

03/24/2026 Item No.8.

Pam Johns, Contract City Planner

Changes to ADU Law in 2025:
• Specifies that if a JADU has shared sanitation facilities with the primary structure, owner-occupancy will be required. If the JADU does not have shared sanitation facilities, owner-occupancy will not be required (Gov. Code, § 66333, subd. (b)).
• Require rental terms for JADUs for terms longer than 30 days (Gov. Code, § 66333, subd. (g)).
• Specifies that if a local agency fails to submit an adopted ADU ordinance to HCD within the 60-day timeline or fails to respond to HCD’s findings regarding their ordinance within the 30-day timeline, that ordinance is null and void and the local agency must only apply State ADU Law when permitting ADUs (Gov.

Code, § 66326, subd. (d)).
• Revises the definition of a “junior accessory dwelling unit” to require the size of a JADU to be no more than 500 square feet of interior livable space (Gov. Code, § 66313, subd. (d)).
• Revises the limitations on impact fees to, instead, prohibit impact fees upon the development of an ADU that has 750 square feet of interior livable space or less or a JADU that has 500 square feet of interior livable space or less, and to require that any impact fee on an ADU that has more than 750 square feet of interior livable space be charged proportionately in relation to the square footage of the primary dwelling unit (Gov. Code, § 66311.5, subds. (a) – (d)). • Requires a permitting agency to determine whether an application for an ADU or JADU is complete and provide written notice of the determination not later than 15 business days after the permitting agency received the application (Gov.

Code, § 66317, subd. (a)(2)(A)).
• Requires the permitting agency to provide the applicant with a list of incomplete items and a description of how the application can be made complete in the written notice and authorizes the applicant to cure and address the application, as specified, if it is determined that an application is incomplete (Gov. Code, § 66317, subd. (a)(2)(B)).
• Requires the permitting agency to provide a process for the applicant to appeal a denied application, as provided, and requires the permitting agency to provide a final written determination by not later than 60 business days after receipt of the written appeal if a permit application is determined to be incomplete or is denied (Gov. Code, § 66317, subd. (d)(1)).
• Specifies that an ADU or JADU that contains less than 500 square feet of interior livable space does not increase assessable space. • Revises size limitations to be based on the square footage of interior living space of the ADU (Gov. Code, § 66321, subds. (b)(2)(A), (b)(2)(B), and (b)(3)). • Specifies the number of allowable ADUs per lot with a proposed or existing single-family dwelling (Gov. Code, § 66323, subd. (a).

03/24/2026 Item No.8.

Pam Johns, Contract City Planner

• Clarifies that fire sprinklers are not required for a JADU if the primary residence does not have fire sprinklers and that the addition of a JADU cannot trigger the requirement for fire sprinklers (Gov. Code, § 66323, subd. (d)). • Adds section 66333.5, which specifies that if a local agency fails to submit an adopted JADU ordinance to HCD within the 60-day timeline or fails to respond to HCD’s findings regarding their ordinance within the 30-day timeline, that ordinance is null and void and the local agency must only apply State ADU Law when processing applications for ADUs.
• Requires a local agency to issue a certificate of occupancy for an ADU constructed in a county that is subject to a proclamation of a state of emergency made by the Governor on or after February 1, 2025, even if the primary dwelling has not yet been issued a certificate of occupancy, if certain requirements are met, including that the primary dwelling was substantially damaged or destroyed by an event referenced in the state of emergency proclamation (Gov. Code, § 66328).
• Creates an exception to areas that fall under the California Coastal Act by requiring a local government or the Coastal Commission, as specified, to either approve or deny a coastal development permit application for an ADU within 60 days of receiving a completed application (Gov. Code, § 66329, subd. (a).) • Specifies that no reimbursement is required for school service charges, fees, or assessments sufficient to pay for the program or level of service within the meaning of Government Code section 17556 (Gov. Code, § 66329). • Specifies that reasonable restrictions in covenants, restrictions, and conditions, as described in the Civil Code, shall not include any fees or other financial requirements (Civil Code, § 714.3, subd. (b)).

Changes to ADU Law in 2024:
• SB 477 (Chapter 7, Statutes of 2024) made changes to the numbering of the sections of the Government Code for State ADU and JADU Laws. • Prohibits a local agency from denying a permit for an unpermitted ADU or JADU that was constructed before January 1, 2020, for building code violations, unless the local agency makes a finding that correcting the violation is necessary to comply with conditions that would otherwise deem a building substandard (Gov.

Code, § 66332, subds. (a)-(c)).
• Defines “livable space” as a space in a dwelling intended for human habitation, as the term appears in Government Code sections 66313, subdivision (e), and 66323, subdivision (a)(3)(A).
• Provides that uncovered, off-street parking spaces demolished in conjunction with the construction of an ADU do not need to be replaced (Gov. Code, § 66314, subd. (d)(11)).

03/24/2026 Item No.8.

Pam Johns, Contract City Planner

• Changes the allowable number of detached ADUs on a lot with an existing multifamily dwelling to eight detached ADUs, provided that the number of ADUs does not exceed the number of existing units on the lot (Gov. Code, § 66323, subd. (a)(4)(A)(ii)).
• Prohibits a local agency from imposing any objective development standards on 66323 Units that are not authorized by the provisions of Government Code section 66323, subdivision (a) (Gov. Code, § 66323, subd. (b)).

Changes to ADU Law in 2023:
• Sunsets a former prohibition on a local agency imposing an owner occupancy requirement on any ADU and instead prohibits a local agency from requiring owner occupancy for an ADU (Gov. Code, § 66315).
• Allows a local agency to adopt a local ordinance to allow the separate conveyance of the primary dwelling unit and ADU(s) as condominiums, subject to certain conditions (Gov. Code, §§ 66340-66342).

Changes to ADU Law in 2021:
• Allows a local agency to permit the separate conveyance of ADUs from the primary dwelling under Government Code section 66341 in certain circumstances.

Changes to ADU Law in 2020:
• Requires that an application for the creation of an ADU or JADU is deemed approved (not just subject to ministerial approval) if the local agency has not approved or denied the completed application within 60 days (Gov. Code, § 66317, subd. (a)).
• Requires ministerial approval of an application for a building permit within a residential or mixed-use zone to create one ADU and one JADU per lot (not one or the other), within the proposed or existing single-family dwelling, if certain conditions are met (Gov. Code, § 66323, subd. (a)(1)(A)). • Allows for rental or leasing of a separate interest ADU or JADU in a common interest development, notwithstanding governing documents that otherwise appear to prohibit renting or leasing of a unit, and without regard to the date of the governing documents (Civ. Code, §§ 4740, subd. (a); 4741, subd. (a)). • Allows a homeowner to create “any of the following”: one converted or attached ADU; one detached, new construction ADU; and one JADU (Gov. Code, § 66323, subds. (a)(1)-(2)). More information can be found in HCD’s 2025 ADU Handbook.

03/24/2026 Item No.8.

Pam Johns, Contract City Planner

Changes to ADU Law in 2019:
• Prohibits a local agency from including requirements on minimum lot size in development standards for ADUs (Gov. Code, § 66314, subd. (b)(1)). • Allows a local agency to designate areas where ADUs may be located based on the adequacy of water and sewer services, as well as on impacts on traffic flow and public safety (Gov. Code, § 66314, subd. (a)).
• Eliminates all owner occupancy requirements by a local agency for ADUs approved between January 1, 2020, and January 1, 2025 (Gov. Code, § 66315). • Prohibits a local agency from establishing a maximum size of an ADU of less than 850 square feet, or 1,000 square feet if the ADU contains more than one bedroom and requires approval of a permit to build an ADU of up to 800 square feet (Gov. Code, § 66321, subds. (b)(2), (b)(3)).
• Prohibits a local agency from requiring replacement of off-street parking spaces for ADUs created through the conversion of a garage, carport, or covered parking structure (Gov. Code, § 66314, subd. (d)(11)).
• Reduces the maximum ADU and JADU application review time from 120 days to 60 days (Gov. Code, §§ 66317, subd. (a); 66335, subd. (2)). • Clarifies that “public transit” includes various means of transportation that charge set fees, run on fixed routes, and are available to the public (Gov. Code, § 66313, subd. (m)).
• Adds impact fee exemptions and limitations based on the size of the ADU.

ADUs up to 750 square feet are exempt from impact fees, and ADUs that are 750 square feet or larger may be charged impact fees, but those fees must be proportional in size (by square foot) to fees charged for the primary dwelling unit (Gov. Code, § 66324, subd. (c)(1)).
• Defines of an “accessory structure” to mean a structure that is accessory and incidental to a dwelling on the same lot (Gov. Code, § 66313, subd. (b)). • Permits JADUs even where a local agency has not adopted an ordinance expressly authorizing them (Gov. Code, § 66320).
• Allows for a permitted JADU to be constructed within the walls of the proposed or existing single-family residence and eliminates the required inclusion of an existing bedroom and an interior entry into the single-family residence (Gov.

Code, § 66333, subd. (d)).
• Requires, upon application and approval, a local agency to delay enforcement against a qualifying substandard ADU for five years to allow the owner to correct the violation, so long as the violation is not a health and safety issue, as determined by the enforcement agency (Gov. Code, § 66331; HSC, § 17980.12).

03/24/2026 Item No.8.

Pam Johns, Contract City Planner

• Makes covenants, conditions, and restrictions that either effectively prohibit or unreasonably restrict the construction or use of an ADU or JADU on a lot zoned for single-family residential use void and unenforceable (Civ. Code, § 4751)).

If an existing ADU ordinance fails to meet the requirements of State ADU Law, the ordinance is “null and void” and the local jurisdiction must apply the standards set forth in State ADU Law until it adopts an ordinance that complies with state law (Gov. Code, § 66316). HCD recommends that a local jurisdiction with a noncompliant ADU ordinance repeal the ordinance to provide clarity for ADU applicants who may otherwise rely on the outdated ordinance.

HCD requests a response by January 4, 2026 with either (1) a description of how the ADU ordinance continues to comply with State ADU Law despite the changes to the law, or (2) a plan and timeline to either repeal the current ordinance or adopt an amended, compliant ordinance and submit it to HCD for review.

If you have any questions or need additional information, please contact Shasta Garcia at [email protected].

Sincerely,

Jamie Candelaria
Section Chief, ADU Policy
Housing Accountability Unit

03/24/2026 Item No.8.

03/24/2026 Item No.8.

March 18, 2026

CHANGES/MODIFICATIONS TO

PLANNING COMMISSION AGENDA

Agenda Item No. 4

Zoning Code Update – Accessory Dwelling Unit Ordinance and Determination that the Project is Exempt from CEQA

Revisions to Ordinance No. 1361 (Attachment 1)

Revision to FMC 17.105.190(E)(1)(b) (All Zones – Design Standards)

The following revision applies to the additional design requirements for two story detached ADUs. Currently, the City requires that two story detached ADUs incorporate one of four different design options to break up the massing of the ADU; however, staff proposed to change this to require the incorporation of at least two of the four options.

This change is intended to encourage applicants to further break up the massing of two story ADUs through an additional design element.

b. Detached accessory dwelling units shall utilize at least one (1) two (2) of the following:

i. Different primary siding materials for each of the stories.

ii. Recessed or projecting windows, doors, or parts of the wall. Recessed windows and doors shall project a minimum of six (6) inches or shall be recessed a minimum of six (6) inches. Any projection must be behind the parcel side or rear yard setback line.

iii. Cantilevered areas so long as area does not extend beyond the side or rear yard setback.

iv. At least two different roof forms, such as a mix of different roof types (e.g., hipped, gabled, shed, etc.) on the building.

03/24/2026 Item No.8.

Folsom City Council
Staff Report

1 MEETING DATE:

3/24/2026
AGENDA SECTION:

New Business
SUBJECT: Receive a Presentation from the City’s Independent Auditor and Receive and File the City of Folsom Annual Comprehensive Financial Report for the Year Ended June 30, 2025

FROM: Finance Department

RECOMMENDATION / CITY COUNCIL ACTION

It is recommended that the City Council receive a presentation from the City’s independent auditor and receive and file the City of Folsom Fiscal Year 2024–25 Annual Comprehensive Financial Report. A bound hard copy of the report will be provided the night of the Council meeting.

BACKGROUND / ISSUE

Each year the City is audited by an independent certified public accountant that renders a written opinion as to the accuracy and completeness of the Annual Comprehensive Financial Report (ACFR). The City of Folsom received an unqualified opinion on the financial statements from Badawi & Associates Certified Public Accountants for the year ended June 30, 2025.

The City also submits the ACFR to the Government Finance Officers Association (GFOA) for consideration in their Certificate of Achievement for Excellence in Financial Reporting Program. The City received this award for Fiscal Year 202 4-25 and we expect the report to earn the award again this year.

ATTACHMENT

1. City o f Folsom Annual Comprehensive Financial Report for Fiscal Year Ended June 30, 2025

03/24/2026 Item No.9.
2 Submitted,

Stacey Tamagni
Finance Director/CFO

03/24/2026 Item No.9.

Attachment 1

03/24/2026 Item No.9.

The City of
Folsom California

Annual Comprehensive Financial Report
Fiscal Year Ended June 30, 2025 Page 236
03/24/2026 Item No.9.

03/24/2026 Item No.9.

ANNUAL COMPREHENSIVE

FINANCIAL REPORT

Fiscal Year Ended June 30, 2025

CITY OF FOLSOM, CALIFORNIA

Prepared by the Office of Management & Budget
Financial Services Division

Stacey Tamagni
Finance Director

03/24/2026 Item No.9.

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INTRODUCTORY SECTION

03/24/2026 Item No.9.

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03/24/2026 Item No.9.

CITY OF FOLSOM, CALIFORNIA

TABLE OF CONTENTS
I

NTRODUCTORY SECTION
Table of Contents ...................................................................................................................................... i-iv Letter of Transmittal ................................................................................................................................ v-viii Certificate of Achievement for Excellence in Financial Reporting – Government Finance Officers Association ................................................................................................................. ix Organizational Chart .................................................................................................................................... x City Council and City Officials ..................................................................................................................... xi

FINANCIAL SECTION
INDEPENDENT AUDITOR’S REPORT .................................................................................................... 1-3 MANAGEMENT’S DISCUSSION AND ANALYSIS ................................................................................ 5-19

BASIC FINANCIAL STATEMENTS
Government-wide Financial Statements:

Statement of Net Position ..................................................................................................................... 25 Statement of Activities ..................................................................................................................... 26-27 Fund Financial Statements:

Balance Sheet – Governmental Funds ............................................................................................ 30-31 Reconciliation of the Balance Sheet of Governmental Funds to the Statement of Net Position ..................................................................................................... 32 Statement of Revenues, Expenditures, and Changes in Fund Balances – Governmental Funds ................................................................................................................. 34-35 Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balances of Governmental Funds to the Statement of Activities ....................................... 36 Statement of Fund Net Position – Proprietary Funds ....................................................................... 38-39 Statement of Revenues, Expenses, and Changes in Fund Net Position – Proprietary Funds .......... 40-41 Statement of Cash Flows – Proprietary Funds ................................................................................. 42-45 Statement of Fiduciary Net Position – Trust & Custodial Funds ............................................................ 47 Statement of Changes in Fiduciary Net Position – Trust & Custodial Funds ......................................... 48 Notes to the Basic Financial Statements ............................................................................................. 51-105

REQUIRED SUPPLEMENTARY INFORMATION
Schedule of Changes in the Net Pension Liability and Related Ratios – Last 10 Years ..................... 108-109 Schedule of Contributions – Last 10 Years ........................................................................................ 110-111 Schedule Of Changes in the City’s Net OPEB Liability and Related Ratios ....................................... 112-113 Schedule Of Investment Returns - OPEB ................................................................................................. 114 Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual General Fund ........................................................................................................ 115 Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual Folsom Housing Special Revenue Fund ............................................................... 116 Note to Required Supplementary Information ........................................................................................... 117 i

03/24/2026 Item No.9.

CITY OF FOLSOM, CALIFORNIA

TABLE OF CONTENTS
O

THER SUPPLEMENTARY INFORMATION
Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual Folsom Public Financing Authority Debt Service Fund .......................................... 121 Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual Folsom Ranch Financing Authority Debt Service Fund ......................................... 122 Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual Transportation Improvement Capital Projects Fund .............................................. 123 Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual FPA Capital Improvement ..................................................................................... 124 Note to other supplementary information .................................................................................................. 125

COMBINING AND INDIVIDUAL FUND FINANCIAL STATEMENTS AND SCHEDULES NON-

MAJOR GOVERNMENTAL FUNDS
Combining Balance Sheet ........................................................................................................................ 129 Combining Statement of Revenues, Expenditures and Changes in Fund Balances ................................. 130

NON-MAJOR SPECIAL REVENUE FUNDS
Combining Balance Sheet ................................................................................................................. 134-137 Combining Statement of Revenues, Expenditures and Changes in Fund Balance ............................ 138-141 Planning Services Special Revenue Fund – Schedule of Revenues, Expenditures and Changes in Fund Balance – Budget and Actual ........................................................................... 142 Transportation Tax Special Revenue Fund – Schedule of Revenues, Expenditures and Changes in Fund Balance – Budget and Actual ........................................................................... 143 Park Dedication (Quimby) Special Revenue Fund – Schedule of Revenues, Expenditures and Changes in Fund Balance – Budget and Actual ..................................................... 144 Traffic Congestion Special Revenue Fund – Schedule of Revenues, Expenditures and Changes in Fund Balance – Budget and Actual ..................................................... 145 Gas Tax Special Revenue Fund – Schedule of Revenues, Expenditures and Changes in Fund Balance – Budget and Actual ........................................................................... 146 Light and Landscape, and Maintenance Districts Special Revenue Fund – Schedule of Revenues, Expenditures and Changes in Fund Balance – Budget and Actual ............................... 147 Transportation System Management Special Revenue Fund – Schedule of Revenues, Expenditures and Changes in Fund Balance – Budget and Actual ..................................................... 148 Community Development Block Grant Special Revenue Fund – Schedule of Revenues, Expenditures and Changes in Fund Balance – Budget and Actual ..................................................... 149 Humbug Willow Creek Special Revenue Fund – Schedule of Revenues, Expenditures and Changes in Fund Balance – Budget and Actual ........................................................................... 150 General Plan Amendment Special Revenue Fund – Schedule of Revenues, Expenditures and Changes in Fund Balance – Budget and Actual ........................................................................... 151 Tree Planting Special Revenue Fund – Schedule of Revenues, Expenditures and Changes in Fund Balance – Budget and Actual ........................................................................... 152 Zoo Special Revenue Fund – Schedule of Revenues, Expenditures and Changes in Fund Balance – Budget and Actual ........................................................................... 153 Other Special Revenue Fund – Schedule of Revenues, Expenditures and Changes in Fund Balance – Budget and Actual ........................................................................... 154 ii

03/24/2026 Item No.9.

CITY OF FOLSOM, CALIFORNIA

TABLE OF CONTENTS
NO

N-MAJOR DEBT SERVICE FUNDS
Combining Balance Sheet ................................................................................................................. 156-157 Combining Statement of Revenues, Expenditures and Changes in Fund Balance ............................ 158-159 1915 Assessment Districts Debt Service Fund – Schedule of Revenues, Expenditures and Changes in Fund Balance – Budget and Actual ........................................................................... 160 Community Correctional Facility Debt Service Fund – Schedule of Revenues, Expenditures and Changes in Fund Balance – Budget and Actual ........................................................................... 161 City Parks and Signals Debt Service Fund – Schedule of Revenues, Expenditures and Changes in Fund Balance – Budget and Actual ........................................................................... 162 General Obligation School Facilities Debt Service Fund – Schedule of Revenues, Expenditures and Changes in Fund Balance – Budget and Actual ..................................................... 163 Recreation Facility Debt Service Fund – Schedule of Revenues, Expenditures and Changes in Fund Balance – Budget and Actual ........................................................................... 164

NON-MAJOR CAPITAL PROJECTS FUNDS
Combining Balance Sheet ................................................................................................................. 168-170 Combining Statement of Revenues, Expenditures and Changes in Fund Balance ............................ 172-174

PERMANENT FUND
Balance Sheet .......................................................................................................................................... 176 Statement of Revenues, Expenditures and Changes in Fund Balance ..................................................... 177 Wetland/Open Space Maintenance Permanent Fund – Schedule of Revenues, Expenditures and Changes in Fund Balance – Budget and Actual ........................................................................... 178

NON-MAJOR ENTERPRISE FUNDS
Combining Statement of Net Position ....................................................................................................... 180 Combining Statement of Revenues, Expenditures and Changes in Fund Net Position ............................. 181 Combining Statement of Cash Flows ....................................................................................................... 182

INTERNAL SERVICE FUNDS
Combining Statement of Net Position ....................................................................................................... 184 Combining Statement of Revenues, Expenditures and Changes in Fund Net Position ............................. 185 Combining Statement of Cash Flows ....................................................................................................... 186

CUSTODIAL FUNDS
Combining Statement of Net Position ................................................................................................ 188-192 Combining Statement of Changes in Fiduciary Net Position .............................................................. 194-198 iii

03/24/2026 Item No.9.

CITY OF FOLSOM, CALIFORNIA

TABLE OF CONTENTS
S

TATISTICAL SECTION
Net Position by Component – Last Ten Fiscal Years ................................................................................ 203 Changes in Net Position – Last Ten Fiscal Years .............................................................................. 204-205 Fund Balances, Governmental Funds – Last Ten Fiscal Years ................................................................ 206 Changes in Fund Balances, Governmental Funds – Last Ten Fiscal Years ...................................... 208-209 Assessed Value and Estimated Actual Value of Taxable Property – Last Ten Fiscal Years ...................................................................................................................... 210 Taxable Transactions by Category – Last Ten Calendar Years ................................................................ 211 Direct and Overlapping Property Tax Rates – Last Ten Fiscal Years ....................................................... 212 Principal Property Tax Payers – Current Year and Ten Years Ago ........................................................... 213 Property Tax Levies and Collections – Last Ten Fiscal Years .................................................................. 214 Ratio of Outstanding Debt by Type – Last Ten Fiscal Years .............................................................. 216-217 Ratios of General Bonded Debt Outstanding – Last Ten Fiscal Years ...................................................... 218 Debt Capacity Information, Direct and Overlapping – Last Ten Fiscal Years ............................................ 219 Legal Debt Margin – Fiscal Year 2017, With Ten Year Trend Analysis ..................................................... 220 Pledge Revenue Bond Coverage – Last Ten Fiscal Years ................................................................ 222-223 Demographic and Economic Information – Last Ten Calendar Years ....................................................... 224 Principal Employers – Current Fiscal Year ............................................................................................... 225 Government Employment Information – Last Ten Fiscal Years ................................................................ 226 Operating Indicators by Function/Program – Last Ten Fiscal Years ......................................................... 227 Capital Asset and Infrastructure Statistics by Function/Program – Last Ten Fiscal Years ............................................................................................................... 228-229 Miscellaneous Statistics – Last Ten Fiscal Years ..................................................................................... 230 iv

03/24/2026 Item No.9.

February 13, 2026
Honorable Mayor, Members of the City Council, and Citizens City of Folsom, California:

The Annual Comprehensive Financial Report for the fiscal year ended June 30, 2025 is submitted for Council review in accordance with Section 3.02.160 of the Folsom Municipal Code and published as a matter of public record for interested citizens. This transmittal letter provides information regarding the economy and the governing structure in Folsom. An overview of the City’s financial activities for the fiscal year is discussed in detail in Management’s Discussion and Analysis section of Annual Comprehensive Financial Report. While the independent auditor has expressed an opinion on the financial statements contained in this report, management assumes full responsibility for the completeness and reliability of all the information presented in this report. To provide a reasonable basis for making these representations, management has established a comprehensive internal control framework that is designed to protect the City’s assets from loss, theft, or misuse; to compile sufficient reliable information for the preparation of the City’s financial statements in conformity with Generally Accepted Accounting Principles (GAAP); and to comply with applicable laws and regulations. As the cost of internal control should not exceed anticipated benefits, the objective is to provide reasonable, rather than absolute, assurance that the financial statements are free of any material misstatements. As management, we assert that, to the best of our knowledge and belief, this financial report is complete and reliable in all material respects.

FOLSOM GOVERNMENT – The City of Folsom was founded in 1856, incorporated in 1946, and chartered in 1990. Folsom is a “full-service” charter City, serving a population of roughly 93,000. The city is approximately 110 miles northeast of San Francisco and 20 miles east of Sacramento. The City is located along the eastern end of the Highway 50 corridor in an area of the Sacramento Valley that has experienced considerable growth over the past 17 years.

The City’s primary governing body is the City Council, composed of five members who are elected at large and serve four-year terms. The City transitioned to a by-district election system effective with the November 2022 municipal election. The City operates under a Council-Manager form of government, and Council Members annually choose a mayor and vice mayor from among their members. The City Manager is appointed by the City Council and administers the daily affairs of the City and carries out City Council policies.

The City provides a full range of services, including police, fire, emergency medical response, public works, planning, and building inspections. In addition, the City operates a library and various parks and recreation facilities, including a zoo sanctuary and aquatic center. The City also provides water, wastewater, and solid waste utility services. v

03/24/2026 Item No.9.

The Annual Comprehensive Financial Report presents the financial status of the City and its component units, the Folsom Public Financing Authority (FPFA) and the Folsom Ranch Financing Authority (FRFA), which are separable legal entities included in this report because of the significance of their operational or financial relationship with the City. The FPFA and FRFA are reported on a blended basis as part of the primary government because the boards are composed of City Council Members or they are, in substance, part of the City’s operations. The FPFA and FRFA are entities created to issue bonds to finance City projects. Also included in the Annual Comprehensive Financial Report, as a separate Statement of Fiduciary Position, is the activities of the Redevelopment Agency (RDA) Successor Private Purpose Trust Fund and the Folsom Other Post Employment Benefit Obligation Trust Fund.

The Folsom Municipal Code requires that the City Council adopt an annual budget by resolution by fund and program by affirmative vote of at least three members, on or before the last working day of the last month of the current fiscal year for the ensuing fiscal year. Once approved by City Council, this annual budget serves as the foundation for the City’s financial planning and control. Budgets are adopted on a basis consistent with GAAP. The City maintains budgetary controls to ensure compliance with legal provisions embodied in the annual appropriated budget approved by the City Council.

Activities of all funds are included in the annual appropriated budget. The level of budgetary control at which expenditures cannot legally exceed the appropriated amount is at the fund level. This means that expenditures cannot legally exceed the amount appropriated by the City Council. Additional budgetary information can be found in Note 1 to the financial statements or at the City of Folsom’s website.

LOCAL ECONOMY -
The local economy in the City of Folsom has continued to grow, although at a slower pace than in the years prior to the pandemic. Fiscal Year 2024-25 General Fund revenues increased by $2.9 million over fiscal year 2023-24, with property taxes up 7.1%, reflecting higher sales prices and new home construction in the Folsom Plan Area. However, sales taxes decreased slightly, by 2.5% from the prior year. General Fund expenses increased over the prior year by $7.9 million. The General Fund unassigned fund balanced increased to $25.3 million or 20.58% of expenditures. Per the City Council’s fund balanced policy, unassigned fund balance in excess of 20% of expenditures is to be transferred to the city’s Capital Facility Rehab Fund upon the completion of the annual financial audit.

As of June 30, 2025, California’s unemployment rate has continued to inch up over the past year. The California Employment Development Department listed the June 2025 unemployment rate for the State and County at 5.4% and 5.3%, respectively. Folsom’s unemployment rate was 3.9%. A comparison to one year ago placed the State and County at 5.2% and 4.7% respectively and Folsom at 3.8%. The number of people employed in Folsom changed from 38,521 in June 2024 to 40,700 in June 2025.

The average Folsom home value is $747K, down 2.9% over the past year and goes pending in around 32 days. In 2025 there were 640 homes sold. It is projected that the number of sales and home prices will remain flat in fiscal year 2026 because of higher mortgage costs.

IMPACTS OF STATE ECONOMY - In addition to regional and local impacts, the City continues to monitor the impact of the State of California’s fiscal issues. In addition, economic growth in California will likely be impacted by continued efforts by the Federal Reserve to tame inflation.

LONG-TERM FINANCIAL PLANNING – The City prepares a five-year financial plan to project revenue and expenditure trends for the next five years and this is part of the vi

03/24/2026 Item No.9.
annual b
udget. A Five-Year Financial Forecast was developed for fiscal year 2026-27 through fiscal year 2030-31 as part of the fiscal year 2025-26 budget development process. A financial forecast, even with fluctuating economic variables, can assist with identification of long-term financial trends, causes of fiscal imbalances, future fiscal challenges, opportunities, and potential requirements, all of which may assist in keeping the City on a continuing path of fiscal sustainability. While it is challenging to accurately forecast revenues due to the variable nature of the revenue sources and their connection to regional, State, national, and international economic conditions, it is possible to identify reasonable financial trends and provide a conceptual financial picture that will be useful to the City’s decision-making. The Forecast guides the City as it continues to confront the need to balance expenditures and revenues.

In summary, revenue growth is projected to increase an average of 3.9% each year as sales tax trends continue to flatten. Expenditures are projected to increase roughly 4.8% per year. Due to the sensitivity of all the revenue and expenditure trends, which is compounded by the potential of an economic slowdown, in any given year, we may be faced with a surplus or a shortage as we prepare the budget for that year. The fiscal environment will have to be closely monitored and managed, as the margins between revenues and expenditures are narrow.

Our goal is to ensure that the financial stability of the City is sustainable into the future.

These efforts will be guided by the desire to explore all opportunities for collaboration, partnerships, consolidations, and restructuring, both internally and externally, as a means of enhancing the cost-effectiveness of services and functions to the community.

As we have done in the past, the key to sustainability is managing expenditure growth.

RELEVANT FINANCIAL POLICIES – The City Council has established a financial and budgetary policy framework which is reviewed and updated as necessary by the City Council. A comprehensive and consistent set of financial and budgetary policies provide a basis for sound financial planning, identifies appropriate directions for service-level developments, aids budgetary decision-making, and serves as an overall framework to guide financial management and operations of the City.

The City’s adoption of financial policies also promotes public confidence and increases the City’s credibility in the eyes of bond rating agencies and potential investors. Such policies also provide the resources to react to potential financial emergencies in a sensible manner.

INDEPENDENT AUDIT - The City of Folsom’s financial statements have been audited by Badawi & Associates, a firm of licensed certified public accountants. The goal of the audit is to obtain reasonable assurance that the financial statements are free of material misstatements. Badawi & Associates concluded, based on the audit, that there was a reasonable basis for rendering an unmodified opinion for the fiscal year ended June 30, 2025, and that the financial statements are presented in conformity with generally accepted accounting principles (GAAP). The Independent Auditor’s Report is presented as the first component of the financial section of this report.

Federal and state financial assistance received by the City is audited under the provisions of the Single Audit Act of 1996, as amended. The Single Audit was designed to meet the special needs of federal grantor agencies. This report is available in the City’s separately issued “Single Audit Report”. Copies of this report may be obtained from the City of Folsom’s Office of Management and Budget at 50 Natoma Street, Folsom, CA 95630 or on the City’s website at www.folsom.ca.us. vii

03/24/2026 Item No.9.

SUMM
ARY
Awards: The City received the award for the prior fiscal year Annual Comprehensive Financial Report from the Government Finance Officers Association (GFOA) for “excellence in financial reporting” The current certificate appears immediately after the transmittal letter.

The fiscal year 2024-25 Annual Comprehensive Financial Report has been submitted to the GFOA award program and management believes that, once again, it will meet the criteria for this distinguished reporting award.

Acknowledgement: The Annual Comprehensive Financial Report reflects the hard work, talent, and commitment of the entire staff of the Office of Management and Budget, and particularly, Sarah Cason for leading the project, Valerie Gabriel, Katie Stangland, and Adam Devlin for their special contributions. Special thanks as well to staff in other City departments who assisted and contributed to the preparation of this report.

Finally, we are very grateful for the dedication and leadership of the Mayor and Council Members who have consistently set prudent financial goals, supported excellence in all aspects of financial management, and challenged us to perform and succeed at the highest levels.

Respectfully submitted,
Bryan Whitemyer
City Manager
Stacey Tamagni
Finance Director/CFO
viii

03/24/2026 Item No.9.

Government Finance Officers Association
Certificate of
Achievement
for Excellence
in Financial
Reporting
Presented to
City of Folsom
California
For its Annual Comprehensive
Financial Report
For the Fiscal Year Ended
June 30, 2024
Executive Director/CEO
ix

03/24/2026 Item No.9.

City Organizational Chart
Citizens
City Council
City Manager
Economic Develo
pment
Public Information
City Attorney City Clerk
Office of Human Resources
Administration
Risk Management
Office of Management and
Budget
Information Technology
Customer Counter
Parks & Recreation
Department
Municipal Landscaping
Facilities Maintenance
Community
Development
Code Enforcement
Environmental &
Water Resources
Department
Water
Wastewater
Fire Department
HazMat
Police Department
Animal Care Services
Public Works
Solid Waste
Fleet
Library Services
x

03/24/2026 Item No.9.

CITY OF FOLSOM
CITY COUNCIL and CITY OFFICIALS
Sarah Aqunio, Mayor
Justin Raithel, Mike Kozlowski
Vice Mayor
An
na Rohrbough Barbara Leary

CITY OFFICIALS
Bryan Whitemyer, City Manager
Stacey Tamagni, Finance Director
xi

03/24/2026 Item No.9.

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03/24/2026 Item No.9.

FINANCIAL SECTION

03/24/2026 Item No.9.

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03/24/2026 Item No.9.

INDEPENDENT AUDITOR’S REPORT

To the Honorable Mayor and Members of the City Council
of the City of Folsom
Folsom, California

Report on the Audit of the Financial Statements

Opinions

We have audited the accompanying financial statements of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of City of Folsom, California (City), as of and for the year ended June 30, 2025, and the related notes to the financial statements, which collectively comprise the City’s basic financial statements as listed in the table of contents.

In our opinion, the accompanying financial statements present fairly, in all material respects, the respective financial position of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the City, as of June 30, 2025, and the respective changes in financial position and, where applicable, cash flows thereof for the year then ended in accordance with accounting principles generally accepted in the United States of America.

Basis for Opinions

We conducted our audit in accordance with auditing standards generally accepted in the United States of America (GAAS) and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of our report. We are required to be independent of the City and to meet our other ethical responsibilities, in accordance with the relevant ethical requirements relating to our audit. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions.

Responsibilities of Management for the Financial Statements

Management is responsible for the preparation and fair presentation of the financial statements in accordance with accounting principles generally accepted in the United States of America, and for the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, management is required to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the City’s ability to continue as a going concern for twelve months beyond the financial statement date, including any currently known information that may raise substantial doubt shortly thereafter.

03/24/2026 Item No.9.

To the Honorable Mayor and Members of the City Council
of the City of Folsom
Folsom, California

Auditor’s Responsibilities for the Audit of the Financial Statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinions.

Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted in accordance with GAAS will always detect a material misstatement when it exists. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Misstatements are considered material if there is a substantial likelihood that, individually or in the aggregate, they would influence the judgment made by a reasonable user based on the financial statements.

In performing an audit in accordance with GAAS, we:

 Exercise professional judgment and maintain professional skepticism throughout the audit.  Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, and design and perform audit procedures responsive to those risks. Such procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.  Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the City’s internal control. Accordingly, no such opinion is expressed.  Evaluate the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluate the overall presentation of the financial statements.  Conclude whether, in our judgment, there are conditions or events, considered in the aggregate, that raise substantial doubt about the City’s ability to continue as a going concern for a reasonable period of time.

We are required to communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit, significant audit findings, and certain internal control–related matters that we identified during the audit.

Required Supplementary Information

Accounting principles generally accepted in the United States of America require that management’s discussion and analysis on pages 5-19, and pension information, OPEB information, and budgetary comparison information on pages 108-117 be presented to supplement the basic financial statements. Such information is the responsibility of management and, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management’s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance.

2

03/24/2026 Item No.9.

To the Honorable Mayor and Members of the City Council
of the City of Folsom
Folsom, California

Supplementary Information

Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the City’s basic financial statements. The combining and individual fund financial statements and schedules, and other supplementary information on pages 121-198, are presented for purposes of additional analysis and are not a required part of the basic financial statements.

The combining and individual fund financial statements and schedules and other supplementary information on pages 121-198 are the responsibility of management and were derived from and relates directly to the underlying accounting and other records used to prepare the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the combining and individual fund financial statements and schedules and other supplementary information on pages 121-198 is fairly stated, in all material respects, in relation to the basic financial statements as a whole.

Other Information

Management is responsible for the other information included in the annual comprehensive financial report. The other information comprises the introductory and statistical section included in the annual report but does not include the basic financial statements and our auditor's report thereon. Our opinions on the basic financial statements do not cover the other information, and we do not express an opinion or any form of assurance thereon. In connection with our audit of the basic financial statements, our responsibility is to read the other information and consider whether a material inconsistency exists between the other information and the financial statements, or the other information otherwise appears to be materially misstated. If, based on the work performed, we conclude that an uncorrected material misstatement of the other information exists, we are required to describe it in our report.

Other Reporting Required by Government Auditing Standards

In accordance with Government Auditing Standards , we have also issued our report dated February 13, 2026 on our consideration of the City’s internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the City’s internal control over financial reporting and compliance.

Badawi & Associates, CPAs
Emeryville, California
February 13, 2026
3

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4

03/24/2026 Item No.9.

MANAGEMENT’S DISCUSSION AND ANALYSIS
____________________________________________________________________________________________

This section of the City’s Annual Comprehensive Financial Report presents a narrative overview and analysis of the City’s financial activities for the fiscal year ended June 30, 2025. We encourage readers to consider the information presented here in conjunction with the transmittal letter on Page v and the City’s basic financial statements.

FINANCIAL HIGHLIGHTS

 The total assets and deferred outflows of resources of the City exceeded its total liabilities and deferred inflows of resources at the close of FY 2025 by $730,258,274 (net position). Of this amount, ($267,780,635) is unrestricted, $354,274,822 is restricted for specific purposes, and $643,764,087 is the net investment in capital assets.

 The City’s total net position increased $70,768,147 or 11%, during FY 2025. The increase in was mostly due to the $57.8 million in capital contributions, $47.4 million in additions to capital assets, offset by $37.4 million of new bond issuance.

 The City’s total long-term liabilities increased by $32.7 million compared to the prior year, or

16.5%. The increase consists primarily of additions of $37.4 million of revenue bonds and $6.6 million in compensated absences, offset by reductions of $14.7 million in scheduled principal payments, capital lease payments, and adjustments to compensated absences.

OVERVIEW OF THE FINANCIAL STATEMENTS

This discussion and analysis is intended to serve as an introduction to the City of Folsom’s basic financial statements. The City of Folsom’s basic financial statements are comprised of three components: 1) government-wide financial statements, 2) fund financial statements, and 3) notes to the financial statements. This report also contains other supplementary information in addition to the basic financial statements themselves.

Government-wide Financial Statements consist of the following two financial statements: the Statement of Net Position and the Statement of Activities. Both of these statements were prepared using accounting methods similar to those used by private-sector companies, the economic resources measurement focus and the accrual basis of accounting.

The statement of net position presents information on all of the City’s assets, deferred outflows of resources, liabilities, and deferred inflows of resources with the difference between them reported as net position. Over time, increases or decreases in net position may serve as a useful indicator of whether the financial position of the City is improving or deteriorating.

The statement of activities, on the other hand, provides information on how the City’s net position changed during the most recent fiscal year. All changes in net position are reported as soon as the underlying event giving rise to the change occurs, regardless of the timing of related cash flows. Thus, revenues and expenses are reported in this statement for some items that will result in cash flows in future fiscal periods, such as revenues pertaining to uncollected taxes and expenses pertaining to earned but unused annual and sick leave.

Both of these government-wide financial statements distinguish functions of the City that are principally supported by taxes and intergovernmental revenues ( governmental activities) from other functions that are intended to recover all or in part a portion of their costs through user fees and charges ( business-type activities) . The governmental activities of the City include general government, public safety, public ways and facilities, community services and culture and recreation. The business-type activities of the City include water, wastewater, solid waste, and facilities augmentation.
5

03/24/2026 Item No.9.

MANAGEMENT’S DISCUSSION AND ANALYSIS – (Continued)
____________________________________________________________________________________________

Two component units, the Folsom Public Financing Authority and the Folsom Ranch Financing Authority, are included in our basic financial statements and are legally separate entities for which the City is financially accountable, and they have the same board as the City Council.

Complete financial statements of the Folsom Public Financing Authority and the Folsom Ranch Financing Authority may be obtained from the Office of Management and Budget of the City at 50 Natoma Street, Folsom, CA 95630.

Fund Financial Statements
The fund financial statements report on groupings of related funds that are used to maintain control over resources that have been segregated for specific activities or objectives. A fund is a separate accounting entity with a self-balancing set of accounts.

Like other state and local governments, the City uses fund accounting to ensure and demonstrate finance related legal compliance. The focus of governmental and proprietary fund financial statements is on major funds. All of the funds of the City can be divided into three categories: governmental funds, proprietary funds, and fiduciary funds.

Governmental Funds – Governmental funds include most of the City’s basic services and are used to account for essentially the same functions reported as governmental activities in the government-wide financial statements. However, unlike the government-wide financial statements, governmental funds financial statements are prepared using the current financial resources measurement focus and modified accrual basis of accounting.

Because the focus of governmental funds is narrower than that of the government-wide financial statements, it is useful to compare the information presented for governmental funds with similar information presented for governmental activities in the government-wide financial statements.

By doing so, readers may better understand the long-term impact of the government’s near term financing decisions. Reconciliations are prepared for the governmental funds’ Balance Sheet and the governmental funds’ Statement of Revenues, Expenditures and Changes in Fund Balances to facilitate comparisons between governmental funds and governmental activities.

The primary differences between the government-wide and fund financial statements relate to noncurrent assets such as land and buildings and improvements, and non-current liabilities, such as bonded debt and amounts owed for compensated absences and capital lease obligations, which are reported in the government-wide statements but not in the fund financial statements.

In FY 2025, an increase of $70,768,147 in net position in the government-wide financial statements was reported. An increase of $49,389,805 in fund balance was reported in the fund financial statements for FY 2025. Refer to the “Reconciliation of the Statement of Revenues, Expenditures and Changes in Fund Balances of Governmental Funds to the Statement of Activities” for details on the factors contributing to this difference.

Fund - a separate
accounting entity with a self-
balancing set of accounts.

Focus is on major funds.

Provides information
regarding the three major
categories of all City Funds:

Gov ernmental, Proprietary,
and Fiduciary.
6

03/24/2026 Item No.9.

MANAGEMENT’S DISCUSSION AND ANALYSIS – (Continued)
____________________________________________________________________________________________

Information is presented separately in the governmental funds balance sheet and in the governmental funds statement of revenues, expenditures and changes in fund balances for the General Fund, Folsom Housing Special Revenue Fund, Folsom Public Financing Authority Debt

Service Fund, Folsom Ranch Financing Authority Debt Service Fund, FPA Capital Improvement Fund, and the Transportation Improvement Capital Projects Fund which are considered major funds.

The City maintains several individual governmental funds organized according to their type (special revenue, debt service, capital projects, and permanent funds). Data from the remaining governmental funds are combined into a single aggregated presentation and referred to as “Other Non-Major Governmental Funds”. Individual fund data for each of these non-major other governmental funds is provided in the form of combining statements elsewhere in this report.

Proprietary funds are generally used to account for services for which the City charges customers – either outside customers, or internal units of departments of the City. Proprietary funds are used to report the same functions presented as business-type activities in the government-wide financial statements. These funds provide the same type of information as shown in the government-wide financial statements, only in more detail. The City uses proprietary funds to account for the Water, Wastewater, Solid Waste, and Facilities Augmentation activities.

Fiduciary funds are used to account for resources held for the benefit of parties outside the City. The City’s trust and custodial funds are reported as fiduciary funds. Since the resources of these funds are not available to support the City’s own programs, they are not reflected in the government-wide financial statements. The trust funds are used to account for activity related to the dissolution of the former Redevelopment Agency and for the Other Post Employment Benefits Trust. The accounting used for fiduciary funds is the same as proprietary funds.

Notes to the Basic Financial Statements provide additional information that is essential to a full understanding of the data provided in the government-wide and fund financial statements.

To find a specific note, refer to the Table of Contents.

Required Supplementary Information is presented concerning the City’s budgetary comparisons for the General Fund, Folsom Housing Special Revenue Fund and the City’s post- employment health care benefit schedules to show progress in funding its obligation to provide these benefits, and schedules to show the net pension liability for the City’s pension plans, and contributions made to the plans and other post employment liability of the OPEB plan.

Other Supplementary Information is presented concerning the City’s budgetary comparisons for the Folsom Public Financing Debt Service Fund.

The combining and individual fund statements and schedules referred to earlier provide information for non-major governmental funds and fiduciary funds. They are presented immediately following the other supplemental information. 7

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GOVERNMENT-WIDE FINANCIAL ANALYSIS
As noted earlier, net position may serve as a useful indicator of a government’s financial position. At June 30, 2025, the City’s combined net position (governmental and business-type activities) totaled $730,258,274, an increase of 11% from June 30, 2024. The City’s net position is broken out into three categories: net investment in capital assets totaling $643,764,087 (e.g., land, buildings and improvements, machinery, and equipment) less any related debt used to acquire those assets that is still outstanding, restricted for specific purposes totaling $354,274,822 and unrestricted totaling $(267,780,635). The City uses capital assets to provide services to citizens; consequently, these assets are not available for future spending. Although the City’s investment in its capital assets is reported net of related debt, it should be noted that the resources needed to repay this debt must be provided from other sources, since the capital assets themselves cannot typically be used to liquidate these liabilities.

June 30, 2025
2025 2024 2025 2024 2025 2024
Assets
Current and other 509,123,218$ $449,237,245 102,815,197$ $87,823,764 611,938,415$ $537,061,009 Capital assets, net 436,865,184 409,937,747 220,036,913 199,585,084 656,902,097 609,522,831 Total assets 945,988,402 $859,174,992 322,852,110 $287,408,848 1,268,840,512 $1,146,583,840 Deferred Outflows of Resources
Deferred outflows related to pensions 36,693,334 43,388,012 7,399,193 9,882,908 44,092,527 53,270,920 Deferred outflows related to OPEB 7,678,889 2,730,469 798,667 238,512 8,477,556 2,968,981 Deferred amounts on refunding - - 390,999 436,725 390,999 436,725 44,372,223 46,118,481 8,588,859 10,558,145 52,961,082 56,676,626 Liabilities
Other liabilities 294,768,193 289,283,891 53,295,839 54,884,508 348,064,032 344,168,399 Long-term liabilities 218,528,240 179,154,081 12,046,784 13,235,347 230,575,024 192,389,428 Total liabilities 513,296,433 468,437,972 65,342,623 68,119,855 578,639,056 536,557,827 Deferred Inflows of Resources
Deferred inflows related to pensions 39,771 58,709 - - 39,771 58,709 Deferred inflows related to OPEB 1,635,747 1,417,918 247,977 223,320 1,883,724 1,641,238 Deferred inflows related to Leases 10,980,769 9,054,046 - - 10,980,769 9,054,046 Deferred amounts on refunding - 34,598 - - - 34,598 12,656,287 10,565,271 247,977 223,320 12,904,264 10,788,591 Net position
Net investment in capital assets 434,168,258 406,723,010 209,595,829 187,062,805 643,764,087 593,785,815 Restricted 354,274,822 120,427,242 - 48,875 354,274,822 120,476,117 Unrestricted (324,035,175) (100,860,022) 56,254,540 42,512,138 (267,780,635) (58,347,884) Total net position 464,407,905$ 426,290,230$ 265,850,369$ 229,623,818$ 730,258,274$ 655,914,048$ Net Position - Primary Government
Governmental Activities Business-type Activities Total

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Analysis of Activities: The following table indicates the changes in net position for governmental and business-type activities:

For the Year Ended June 30, 2025
2025 2024 2025 2024 2025 2024
Revenues
Program revenues
Charges for services 61,679,810$ $77,164,086 61,572,234$ $59,794,932 123,252,044$ 136,959,018$ Operating grants and contributions 12,037,823 16,427,409 2,333,785 4,872,950 14,371,608 21,300,359 Capital grants and contributions 46,345,123 21,541,584 21,457,547 6,392,764 67,802,670 27,934,348 General revenues
Property taxes 43,965,065 41,045,572 - - 43,965,065 41,045,572 Sales and use tax 26,938,575 27,636,132 - - 26,938,575 27,636,132 Other taxes 4,727,955 4,527,162 - - 4,727,955 4,527,162 Investment earnings (loss) 4,844,082 12,203,978 5,083,335 4,224,861 9,927,417 16,428,839 Miscellaneous 2,212,399 1,947,816 - - 2,212,399 1,947,816 Total Revenues 202,750,832 202,493,739 90,446,901 75,285,507 293,197,733 277,779,246 Governmental Activities Business-type Activities Total
Changes in Net Position - Primary Government

For the Year Ended June 30, 2025
2025 2024 2025 2024 2025 2024
Expenses
General government 25,362,364 27,557,788 - - 25,362,364 27,557,788 Public safety 67,966,243 60,464,040 - - 67,966,243 60,464,040 Public ways and facilities 36,651,557 36,428,359 - - 36,651,557 36,428,359 Community services 8,698,359 8,584,405 - - 8,698,359 8,584,405 Culture and recreation 25,696,796 22,759,801 - - 25,696,796 22,759,801 Interest and fiscal charges 8,059,464 6,228,317 - - 8,059,464 6,228,317 Water - - 20,451,080 19,616,845 20,451,080 19,616,845 Wastewater - - 7,781,909 10,284,019 7,781,909 10,284,019 Solid waste - - 21,761,814 19,908,340 21,761,814 19,908,340 Facilities augmentation - - - 60,424 - 60,424 Total expenses 172,434,783 162,022,710 49,994,803 49,869,628 222,429,586 211,892,338 Increase/decrease in net position
before transfers and extraordinary item 30,316,049 40,471,029 40,452,098 - 25,415,879 70,768,147 65,886,908 Transfers 3,826,574 3,197,412 (3,826,574) (3,197,412) - - Change in net position 34,142,623 43,668,441 36,625,524 22,218,467 70,768,147 65,886,908 Net position, beginning of year 430,265,282 382,621,789 229,224,845 207,405,351 659,490,127 590,027,140 Net position, end of year 464,407,905$ 426,290,230$ 265,850,369$ 229,623,818$ 730,258,274$ 655,914,048$ Changes in Net Assets - Primary Government - (Continued) Governmental Activities Business-type Activities Total

Governmental activities: The City’s governmental activities rely on several sources of revenue to finance ongoing operations. Charges for Services and Property and Sales Taxes comprised the largest revenue source for the City followed by Capital Grants and Contributions. Charges for Services are revenues that arise from charges to customers or applicants who purchase, use, or directly benefit from the goods, services, or privileges provided. Examples of the types of services that fall under this category include building licenses and permits, business licenses, impact fees and park and recreation fees. Capital Grants and Contributions are monies received from parties outside the City and are generally restricted for use in capital activity.

At the end of FY 2025, total revenues for the governmental activities, excluding transfers from the business-type activities of $3.8 million, was $202,750,832, an increase of approximately $257k from the previous year mostly due to increases in Capital Grants and Property Tax revenue offset by decreases in Charges for Services and Investment Earnings due to the GASB 72 adjustment. Expenses totaled $172,434,783, an increase of $10.4 million or 6% from the prior year. After transfers and special items, revenues exceeded expenses and thus governmental activities increased the City’s net position by $34,142,623.

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Overall program revenues increased by approximately $4.9 million. General revenues saw an overall decrease of approximately $4.7 million. The following chart presents a comparison of expenses by function and the associated program revenues for governmental activities:

The chart below presents the percentage of total revenues by source for governmental activities.

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03/24/2026 Item No.9.

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Business-type activities: The City has four business-type activities: Water, Wastewater, Solid Waste, and Facilities Augmentation. In keeping with the intent of recovering all or a significant portion of their cost through user fees and charges, business-type activities reported Charges for Services as their largest source of revenues. Capital Grants and Contributions, as well as Operating Grants and Contributions, were the other revenue sources. Capital Grants and Contributions include revenues received from developers for capital infrastructure.

Business-type activities increased the City’s net position by $36,625,524. At the end of FY 2025, business-type activities reported total revenues, excluding transfers in from governmental activities, of $90,446,901, an increase of $15.2 million from the prior year. The total expenses amounted to $49,994,803, which reflects a minimal increase of $125K compared to the previous year. The program revenues (Charges for Services, Operating Grants and Contributions, and Capital Grants and Contributions) financed the majority of expenses recorded for the business- type activities. Other factors concerning the finances of the City’s five enterprise funds are discussed in the Proprietary Funds section of the “Financial Analysis of the City’s Funds.”

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The following chart shows expenses by function and the associated program revenues for the business-type activities.

FINANCIAL ANALYSIS OF THE CITY’S FUNDS

As noted earlier the City uses fund accounting to ensure and demonstrate legal compliance and to aid financial management by segregating transactions related to certain government functions or activities.

Governmental funds: The focus of the City’s governmental funds is to provide information on near-term inflows, outflows and balances of resources that are available for spending. Such information is useful in assessing the City’s financial requirements. In particular, unassigned fund balance may serve as a useful measure of a government’s net resources available for spending at the end of the fiscal year. Types of governmental funds reported by the City include the General Fund, Special Revenue Funds, Debt Service Funds, Capital Projects Funds and Permanent Funds.

At the end of the current fiscal year, the City’s governmental funds reported combined fund balances of $442,676,071 an increase of $49,389,805 during FY 2025. The increase is mostly due to activity in the Transportation Improvement Capital Fund, Folsom Ranch Financing Authority related to bond issuances and related GASB 72 adjustments. Of the total fund balance, $25,167,804 (5.7%) of this total amount constitutes unassigned fund balance, which is available for spending at the City’s discretion. The remainder of the balance is nonspendable, restricted, committed or assigned to indicate that it is not available for new spending. Refer to Note 12 in the basic financial statements for a detailed breakout of fund balance within the five categories.

Revenues and other financing sources for governmental funds totaled approximately $211.1 million for the fiscal year ended June 30, 2025, which represents an increase of 2% from the 12

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fiscal year ended June 30, 2024. The increase is mostly due to new bond issuance.

Expenditures and other financing uses for governmental functions totaled $161.7 million, an increase of 2% from the prior year.

Comparative Analysis of Changes in Fund Balances

The following schedule presents a summary of revenues and other financing sources, expenditures and other financing uses, and the net changes in fund balances for the governmental funds for the current and previous fiscal years.

GOVERNMENTAL FUNDS

COMPARATIVE SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES For the Year Ended June 30, 2025
2025 2024 2025 2024 2025 2024
General Fund 123,927,462$ 119,239,543$ 126,652,342$ 115,609,504$ (2,724,880)$ 3,630,039$ Folsom Housing - Special Revenue Fund 6,014,477 6,721,058 504,982 496,704 5,509,495 6,224,354 Folsom Public Financing Authority 527,125 1,166,236 3,983,195 4,047,233 (3,456,070) (2,880,997) Folsom Ranch Financing Authority 39,137,626 18,838,144 8,212,599 6,729,165 30,925,027 12,108,979 FPA Capital Improvement 11,108,117 17,292,150 8,967,587 13,126,238 2,140,530 4,165,912 Transportation Improvement Fund 10,877,633 18,901,090 4,136,027 7,005,835 6,741,606 11,895,255 Other Governmental Funds 19,521,574 24,306,217 9,267,477 11,039,590 10,254,097 13,266,627 Total 211,114,014$ 206,464,438$ 161,724,209$ 158,054,269$ 49,389,805$ 48,410,169$ Revenues and Other Expenditures and Other Net Change in Financing Sources Financing Uses Fund Balances

In the governmental funds, expenditure-driven grants are recognized as revenue when the qualifying expenditures have been incurred and all other grant requirements have been met and when the revenue is measurable and available. As expenditures increase, revenues increase proportionately, subject to availability. In addition to the effects of expenditure-driven grants, the following information provides significant reasons for the change in fund balance.

Analysis of Major Governmental Funds

General Fund

The General Fund is the primary operating fund of the City. At the end of FY 2025 there was a decrease in fund balance of $2.7 million which resulted in a nonspendable fund balance of $1.6 million, an assigned fund balance of $3.8 million, restricted amount of $900k and unassigned fund balance of $25.3 million. As a measure of the General Fund’s liquidity, it may be useful to compare both unassigned fund balance and total fund balance to total fund expenditures.

Unassigned fund balance represents 20% of total General Fund expenditures and transfers out of $126,652,342 while total fund balance represents 25% of that same amount.

General Fund revenues of $117.6 million were up $2.9 million or 2.5% higher than FY 2024 revenues of $114.7 million. The table below provides a revenue comparison between FY 2025 versus FY 2024.

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2025 2024 $ Change % Change
Property taxes 43,965,065$ 41,045,572$ 2,919,493$ 7.1% Sales & use taxes 26,938,575 27,636,132 (697,557) -2.5% Transient occupancy 2,598,048 2,521,841 76,207 3.0% Real Property transfer 878,847 797,839 81,008 10.2% Other 1,251,060 1,207,483 43,577 3.6% Licenses and permits 3,885,168 4,977,444 (1,092,276) -21.9% Vehicle license fees 10,421,709 9,829,629 592,080 6.0% Intergovernmental 3,402,954 4,195,514 (792,560) -18.9% Charges for current services 20,828,022 18,125,595 2,702,427 14.9% Fines and forfeitures 150,269 207,365 (57,096) -27.5% Interest 2,508,275 2,891,036 (382,761) -13.2% Miscellaneous 739,205 1,276,153 (536,948) -42.1% Total 117,567,197$ 114,711,603$ 2,855,594$ 2.5%

Property tax revenues increased 7.1% over the prior fiscal year, due to increasing home value.

Charges for current services revenue increased $2.7 million or 14.9% over last year mostly due to increased engineering inspection fees and increased emergency medical service fees.

Vehicle license fees increased $592K or 6% over the last year.

General fund expenditures of $123,087,357 excluding transfers out, increased by $7.9 million or

6.8% over prior year expenditures of $115,222,380. This is due to increased spending across most functions due to increase in costs for services.

Expenditures 2025 2024 $ variance % variance
General government 20,732,237$ $19,458,822 1,273,415$ 6.5% Public safety 59,119,899 54,648,543 4,471,356 8.2% Public ways and facilities 8,353,401 7,846,599 506,802 6.5% Community services 7,897,809 8,601,555 (703,746) -8.2% Culture and recreation 19,558,374 18,935,103 623,271 3.3% Capital Outlay 6,583,345 4,962,482 1,620,863 32.7% Debt service principal payments 721,244 765,047 (43,803) -5.7% Debt Service - Interest + Fiscal Change 121,048 4,229 116,819 2762.3% Total 123,087,357$ $115,222,380 7,864,977$ 6.8%

The following shows the ending and net change in fund balance for governmental funds for the current and previous year.

Comparative Fund Balance - Governmental Funds
2025 2024 Net Change
General Fund 31,669,517$ 34,394,397$ (2,724,880)$ Folsom Housing - Special Revenue Fund 53,766,116 48,256,621 5,509,495 Folsom Public Financing Authority 25,214,332 28,670,402 (3,456,070) Folsom Ranch Financing Authority 170,413,935 139,488,908 30,925,027 FPA Capital Improvement 45,456,930 43,316,400 2,140,530 Transportation Improvement Fund 43,996,058 37,254,452 6,741,606 Other Governmental Funds 72,159,183 61,905,086 10,254,097 Total 442,676,071$ 393,286,266$ 49,389,805$

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Folsom Housing Special Revenue Fund

The Folsom Housing Special Revenue Fund was created in FY 2012 after the City elected to retain the Housing function of the former RDA. This fund accounts for the Housing activities of the City that were previously accounted for in the Redevelopment Special Revenue Fund. For FY 2025, the fund reported revenues of $6 million and expenditures / transfers of $505k, increasing fund balance by $5.5 million.

Folsom Public Financing Authority Debt Service Fund

The Folsom Public Financing Authority’s (FPFA) governmental debt service fund provides information on near-term inflows, outflows and balances of spendable resources. Such information is useful in assessing the Authority’s financing requirements. The Authority’s governmental debt service fund balance decreased $3.5 million during 2025.

Revenues for FPFA’s governmental functions overall totaled $527k in FY 2025, and represent a decrease of $639k in comparison with the prior fiscal year. This is mostly due to investment earnings related to GASB 72 adjustments. Expenditures for governmental functions, totaling $4 million, are consistent with the prior fiscal year. For additional information please refer to Note 9 of this report and the separately issued financial statements.

Folsom Ranch Financing Authority Debt Service Fund

The Folsom Ranch Financing Authority’s (FRFA) governmental debt service fund provides information on near-term inflows, outflows and balances of spendable resources. Such information is useful in assessing the Authority’s financing requirements. The Authority’s governmental debt service fund balance increased $30.9 million during 2025. This increase was mostly due to the new bond issuance of $37.4 million, offset by a decrease in investment earnings related to GASB 72 adjustments.

Revenues for FRFA’s governmental functions overall totaled ($595k) in FY 2025, and represent a decrease of $8.5 million in comparison with the prior fiscal year. This is mostly due to the investment earnings related to GASB 72 adjustments. Expenditures for governmental functions, totaling $8.2 million, increased by $1.5 million from the prior fiscal year. For additional information please refer to Note 9 of this report and the separately issued financial statements.

Transportation Improvement Capital Projects Fund

The Transportation Improvement Capital Projects Fund is used to account for long-term major road projects financed through developer mitigation charges and Measure A funding.

Expenditures and transfers in the Transportation Improvement Capital Projects Fund were $4.1 million in fiscal year 2025, a decrease of $2.9 million from the prior fiscal year.

FPA Capital Improvement Fund

The FPA Capital Improvement Fund is used to account for general capital facilities, library, municipal services center, police, fire, parks, and trails projects in the Folsom Plan Area financed from the collection of Impact fees. Revenues were $11.1 million in fiscal year 2025. 15

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Expenditures and transfers in the FPA Capital Improvement Fund were $9 million in fiscal year 2025.

Proprietary Funds

Water Fund

Net position of the Water Fund increased $20.5 million in fiscal year 2025. Operating revenue for fiscal year 2025 was $19.5 million, a decrease of $1.1 million due to unfavorable water usage levels throughout the year. Operating expenses increased $881K to $20.1 million. Net transfers were $1.1 million, an increase of $186K from prior year levels. As of June 30, 2025, the fund’s net position was $149.7 million, of which $128.2 million was the net investment in capital assets, while the remaining $21.5 million was unrestricted.

Wastewater Fund

Operating revenues were at $12.5 million, an increase of $421k from the prior year. This increase is mostly due to an increase in customers in the Folsom Plan Area in fiscal year 2025.

Expenses were at $7.8 million, a decrease of $2.5 million from the prior year. The net result was operating income of $4.7 million. Other items which affected net position were capital contributions of $2.5 million and other non-operating revenue of $1.7 million. The total increase to net position in fiscal year 2025 was $8.1 million, leaving a balance of $92.9 million. As of June 30, 2025, of the Fund’s net position, $72.9 million was the net investment in capital assets, and the remaining $20 million was unrestricted.

Solid Waste Fund

Operating revenues were at $29.5 million, an increase of $2.4 million from the prior year. This increase is mostly due to a rate increase that occurred in July 2024. Operating expenses were at $21.8 million, an increase of $1.9 million from the prior year. The net result was operating income of $7.8 million. The total increase to net position in FY 2025 was $8.1 million, leaving a balance of $23.3 million. As of June 30, 2025, of the Fund’s net position, $8.5 million was the net investment in capital assets, and the remaining $14.8 million was unrestricted.

The following schedule presents a summary of operating and nonoperating revenues, capital contributions and transfers, operating and nonoperating expenses and transfers, and the net change in net position for the proprietary funds for the current and previous fiscal years.

2025 2024 2025 2024 2025 2024
Water 42,000,086$ 28,971,940$ 21,505,033$ 20,559,968$ 20,495,053 $ 8,411,972$ Wastewater 16,668,137 16,622,318 8,606,888 10,991,549 8,061,249 5,630,769 Solid Waste 31,776,948 29,763,610 23,708,990 21,530,506 8,067,958 8,233,104 Other Enterprise Funds 1,730 3,196 466 60,574 1,264 (57,378) Total 90,446,901$ 75,361,064$ 53,821,377$ 53,142,597$ 36,625,524 $ 22,218,467 $ & Transfers & Transfers Net Position
Operating Revenues, Nonoperating Operating Expenses,
Revenues, Capital Contributions Nonoperating Expenses Net Change in

GENERAL FUND BUDGETARY HIGHLIGHTS

Over the course of the year, the City Council revised the City budget to adjust appropriations for use of prior year department carryover.

The Council has a policy of including a 1% contingency line item in the Annual Budget. As in years past, the FY 2025 budget includes this line item. This contingency amount is to be used 16

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for unforeseen transactions such as revenue shortfalls, required over expenditure of the budget, emergency events, and any authorized but unbudgeted activities.

Revenues were $117.6 million or 100% of budgeted amounts. Total revenues were aligned with the budget.

CAPITAL ASSET AND DEBT ADMINISTRATION

Capital Assets:

The City’s investment in capital assets for its governmental and business-type activities grew as of June 30, 2025, and amounted to $656.9 million (net of accumulated depreciation). This investment in capital assets includes land, buildings and improvements, vehicles and equipment construction in progress, and intangible assets. The total increase in the City’s capital assets for the current fiscal year was 7.8%, as shown in the following table. Capital assets for the governmental and business-type activities are presented below to illustrate the changes from the prior year:

Capital assets
(Net of Depreciation)
June 30, 2025
2025 2024 2025 2024 2025 2024
Land 19,691,947$ $19,691,947 815,270$ $815,270 20,507,217$ 20,507,217$ Construction in progress 3,872,844 15,227,473 9,212,581 14,208,931 13,085,425 29,436,405 Buildings 38,163,432 29,768,250 349,568 370,695 38,513,000 30,138,945 Improvements 367,342,807 337,773,976 197,174,463 173,008,252 564,517,270 510,782,228 Equipment 5,375,277 4,772,752 12,485,031 11,141,336 17,860,308 15,914,088 Intangible Asset 2,418,877 2,703,349 - 40,600 2,418,877 2,743,949 Total capital assets 436,865,184$ $409,937,747 220,036,913$ $199,585,084 656,902,097$ 609,522,831$ Governmental Business-type
Activities Activities Total

This year’s major capital asset additions included the following:

• Equipment purchases of $7 million for various vehicles and machinery • Construction expenditures of $10.6 million for Fire Station # 34 • Construction expenditures of $9.7 million FPA Prospector Park additions • Construction expenditures of $6.7 million for Sewer Evaluation & Capacity Plan on Folsom Blvd
• Water infrastructure improvements of $6.6 million for the Folsom Plan Area • Construction expenditures of $2.7 million for the Natoma Street Police Department

Additional information on the City’s capital assets can be found in Note 6 of this report.

Long-term Liabilities

As of June 30, 2025, the City had $218,528,240 of outstanding long-term liabilities related to governmental activities and $12,046,784 of long-term liabilities related to business-type activities, for a total of $230,575,024. The City’s total long-term liabilities increased by $32.7 million compared to the prior year, or 16.5%. During the year, $8 million of long-term debt was retired, offset by an addition of $37.4 million of revenue bonds, $1.1 million of subscription- based information technology arrangements (SBITAs), and $2.3 million in issuance discounts/premiums. The City’s liabilities are in the form of general obligation bonds, certificates of participation, revenue bonds, long-term lease obligations, capital lease obligations, 17

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compensated absences, long term loans, SBITAs, and deferred amounts for issuance discounts, premiums and refundings.

The following table summarizes the City’s long-term liabilities at June 30, 2025:

LONG-TERM LIABILITIES
June 30, 2025
2025 2024 (restated) 2025 2024 (restated) 2025 2024 (restated) Revenue bonds 172,920,000$ 136,705,000$ 3,865,000$ 4,745,000$ 176,785,000$ 141,450,000$ Notes from direct borrowings and direct placements 26,090,000 29,090,000 6,512,000 7,176,000 32,602,000 36,266,000 City Hall & Fire Station Lease Obligation 420,692 622,815 - - 420,692 622,815 Capital lease obligations - 45,996 - 32,445 - 78,441 SBITA payables 2,276,234 2,511,329 - - 2,276,234 2,511,329 Compensated absences 6,722,066 7,006,545 1,214,701 1,144,489 7,936,767 8,151,034 Less: Discounts/premiums 10,099,248 8,253,424 455,083 568,834 10,554,331 8,822,258 Total 218,528,240$ 184,235,109$ 12,046,784$ 13,666,768$ 230,575,024$ 197,901,877$ Activities Activities Total
Governmental Business-type

Please refer to Note 9 in the Notes to the Basic Financial Statements for more detailed information on long-term liability activity of the City.

Credit Rating

As of June 30, 2025 the City’s Water Bonds are rated AA/Stable by Standard & Poor’s.

The City typically opted to purchase bond insurance from monoline insurers to enhance its credit rating to AAA. A bond insurance policy guarantees payment of principal and interest on bonds due for payment should the City fail to make a bond payment. With the financial crisis of 2008, many monoline insurers were downgraded, making the purchase of such insurance less advantageous

A large portion of the City’s financings have been through the issuance of special assessment district debt. These district bonds, issued per the Mello-Roos Community Facilities act of 1982 and the Marks-Roos Local Bond Pooling Act of 1985, are land secured financings where developments are not yet completed at the time of issuance, and are therefore not rated at the time of the original issuance. However, as these individual developments have matured, many of these financings within the City have been refunded and have subsequently received ratings.

ECONOMIC FACTORS AND NEXT YEAR’S BUDGET

Economic Factors

Current economic projections project slowing economic growth as the Federal Reserve works to tame inflation. The City’s focus remains on maintaining a prudent reserve balance and addressing deferred maintenance, while facing continued budget constraints. These constraints include:

• The trend of sales tax growth flattening.

• Rising costs for both operational expenses such as contracts and supplies as well as increased employee wages and benefits costs.

18

03/24/2026 Item No.9.

MANAGEMENT’S DISCUSSION AND ANALYSIS – (Continued)
____________________________________________________________________________________________

Next Year’s Budget

The City closed the fiscal year with a total General Fund balance of $31,669,517, and an unassigned fund balance of $25,335,749, or 20% of expenditures. Revenue growth in coming years is expected to be slow and City management will continue to monitor the General Fund’s position and report to Council on a quarterly basis.

The General Fund budget for FY 2025-26 appropriates approximately $123 million, consistent with the prior year final expenditures. General Fund revenue for FY 2025-26 is projected to be $120 million, approximately a $4.6 million increase from FY 2025. Management’s efforts will focus on closely monitoring expenses and utilizing existing resources as efficiently and effectively as possible.

CONTACTING THE CITY’S FINANCIAL MANAGEMENT

This financial report is designed to provide our citizens, taxpayers, customers, investors, and creditors with a general overview of the City’s finances. We hope that the preceding information has provided you with a general overview of the City’s overall financial status. For questions or comments concerning any of the information provided in this report or requests for additional financial information should be addressed to the Chief Financial Officer, 50 Natoma Street, Folsom, CA 95630, (916) 461-6000 or visit the City’s website at www.folsom.ca.us. 19

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03/24/2026 Item No.9.

BASIC FINANCIAL STATEMENTS

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03/24/2026 Item No.9.

GOVERNMENT-WIDE

FINANCIAL STATEMENTS
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03/24/2026 Item No.9.

Governmental Business-Type
Activities Activities Total
ASSETS:

Cash and investments 240,848,070$ 95,053,297$ 335,901,367$ Receivables, net of allowances for uncollectibles 64,363,596 7,756,442 72,120,038 Due from other governments 3,300,062 4,932 3,304,994 Inventory 541,520 - 541,520 Prepaids 1,001,253 - 1,001,253 Deposits 3,027,693 - 3,027,693 Restricted assets - cash and investments 557,300 526 557,826 Investments held in trust 195,483,724 - 195,483,724 Capital assets, net of accumulated depreciation:

Nondepreciable 23,564,791 10,027,851 33,592,642 Depreciable 413,300,393 210,009,062 623,309,455 Total assets 945,988,402 322,852,110 1,268,840,512 DEFERRED OUTFLOWS OF RESOURCES:

Deferred outflows related to pensions 36,693,334 7,399,193 44,092,527 Deferred outflows related to OPEB 7,678,889 798,667 8,477,556 Deferred amounts on refunding - 390,999 390,999 Total deferred outflows of resources 44,372,223 8,588,859 52,961,082 LIABILITIES:

Accounts payable 6,548,354 2,266,601 8,814,955 Wages payable 3,814,286 622,971 4,437,257 Interest payable 3,125,574 22,418 3,147,992 Due to other governments - 4,861,423 4,861,423 Unearned revenue 22,409,370 3,407,734 25,817,104 Deposit payable 289,554 - 289,554 Long-term liabilities (due within one year):

Other long-term liabilities due within one year 9,643,778 1,781,387 11,425,165 Long-term liabilities (due in more one year):

Net pension liability 165,343,300 33,408,715 198,752,015 Net other postemployment benefits (OPEB) liability 93,237,755 8,705,977 101,943,732 Other long-term liabilities due in more than one year 208,884,462 10,265,397 219,149,859 Total liabilities 513,296,433 65,342,623 578,639,056 DEFERRED INFLOWS OF RESOURCES:

Deferred inflows related to pensions 39,771 - 39,771 Deferred inflows related to OPEB 1,635,747 247,977 1,883,724 Deferred inflows related to leases 10,980,769 - 10,980,769 Total deferred inflows of resources 12,656,287 247,977 12,904,264 NET POSITION:

Net investment in capital assets 434,168,258 209,595,829 643,764,087 Restricted for:

Nonexpendable: Wetlands/Open space 499,531 - 499,531 Capital Projects 78,133,102 - 78,133,102 Debt service 197,451,919 - 197,451,919 Low and moderate income housing 53,923,445 - 53,923,445 Transportation/streets 11,713,515 - 11,713,515 Lighting and landscape assessment districts 11,098,177 - 11,098,177 Other Special Revenue 1,455,133 - 1,455,133 Unrestricted (324,035,175) 56,254,540 (267,780,635) Total net position 464,407,905$ 265,850,369$ 730,258,274$ Primary Government
CITY OF FOLSOM, CALIFORNIA_________________

STATEMENT OF NET POSITION
JUNE 30, 2025
The notes to the basic financial statements are an integral part of this statement. 25

03/24/2026 Item No.9.

Operating Capital
Charges for Grants and Grants and
Expenses Services Contributions Contributions
PRIMARY GOVERNMENT:

Governmental activities:

General government 25,362,364$ 11,944,618$ 966,010$ 9,033,553$ Public safety 67,966,243 4,270,554 327,853 - Public ways and facilities 36,651,557 21,593,535 10,737,655 37,074,277 Community services 8,698,359 19,340,036 6,305 - Culture and recreation 25,696,796 4,531,067 - 237,293 Interest on long-term debt 8,059,464 - - - Total governmental
activities 172,434,783 61,679,810 12,037,823 46,345,123 Business-type activities:

Water 20,451,080 19,541,616 1,528,344 18,952,753 Wastewater 7,781,909 12,507,788 75,036 2,504,794 Solid Waste 21,761,814 29,522,830 730,405 - Total business-type
activities 49,994,803 61,572,234 2,333,785 21,457,547 TOTAL 222,429,586$ 123,252,044$ 14,371,608$ 67,802,670$ GENERAL REVENUES:

Taxes:

Property
Sales and use
Other
Investment earnings (loss)
Miscellaneous
Transfers
Total general revenues and transfers
Change in net position
Net position, beginning of year
Restatements
Net position, beginning of year, as restated
Net position, end of year

FUNCTIONS/PROGRAMS
Program Revenues
CITY OF FOLSOM, CALIFORNIA_______________

STATEMENT OF ACTIVITIES
FOR THE YEAR ENDED JUNE 30, 2025
The notes to the basic financial statements are an integral part of this statement. 26

03/24/2026 Item No.9.

Governmental Business-Type
Activities Activities Total
PRIMARY GOVERNMENT:

Governmental activities:
(3,418,183)$ -$ (3,418,183)$ General government (63,367,836) - (63,367,836) Public safety 32,753,910 - 32,753,910 Public ways and facilities 10,647,982 - 10,647,982 Community services (20,928,436) - (20,928,436) Culture and recreation (8,059,464) - (8,059,464) Interest and fiscal charges Total governmental
(52,372,027) - (52,372,027) activities Business-type activities:
- 19,571,633 19,571,633 Water - 7,305,709 7,305,709 Wastewater - 8,491,421 8,491,421 Solid Waste Total business-type
- 35,368,763 35,368,763 activities (52,372,027) 35,368,763 (17,003,264) TOTAL GENERAL REVENUES:

Taxes:
43,965,065 - 43,965,065 Property 26,938,575 - 26,938,575 Sales and use 4,727,955 - 4,727,955 Other 4,844,082 5,083,335 9,927,417 Investment earnings (loss) 2,212,399 - 2,212,399 Miscellaneous 3,826,574 (3,826,574) - Transfers 86,514,650 1,256,761 87,771,411 Total general revenues and transfers 34,142,623 36,625,524 70,768,147 Change in net position 426,290,230 229,623,818 655,914,048 Net position, beginning of year 3,975,052 (398,973) 3,576,079 Restatements 430,265,282 229,224,845 659,490,127 Net position, beginning of year, as restated 464,407,905$ 265,850,369$ 730,258,274$ Net position, end of year Changes in Net Position
Net (Expense) Revenue and
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03/24/2026 Item No.9.

FUND

FINANCIAL STATEMENTS
Governmental Fund Financial Statements
Proprietary Fund Financial Statements
Fiduciary Fund Financial Statements
29

03/24/2026 Item No.9.

General
Fund
Folsom
Housing
Special
Revenue Fund
Folsom Public
Financing
Authority
Debt Service
Fund
Folsom Ranch
Financing
Authority
Debt Service
Fund
ASSETS
Cash and cash equivalents 50,150,793$ 23,855,591$ 141,962$ 1$ Cash with fiscal agent - - 1,331 - Receivables, net 19,181,024 36,132,979 1,249 - Insurance deposits 4,824 - - - Due from other funds 105,047 - - - Prepaids 1,001,253 - - - Due from other governments 2,546,474 - - - Inventory 541,520 - - - Investments held in trust - - 25,069,790 170,413,934 Restricted assets:

Cash and cash equivalents - - - - Total assets 73,530,935$ 59,988,570$ 25,214,332$ 170,413,935$

LIABILITIES, DEFERRED INFLOWS OF

RESOURCES AND FUND BALANCES

Liabilities:

Accounts payable 4,942,223$ 23,857$ -$ -$ Wages payable 2,977,368 - - - Due to other funds - - - - Advances from other funds 1,040,452 - - - Unearned revenue 21,918,349 - - - Deposits payable 2,257 - - - Total liabilities 30,880,649 23,857 - - Deferred Inflows of Resources
Deferred inflows related to leases 10,980,769 - - - Deferred inflows -unavailable revenue - 6,198,597 - - Total deferred inflows of resources 10,980,769 6,198,597 - -

Fund Balances:

Nonspendable 1,547,597 - - - Restricted 940,579 53,766,116 25,214,332 170,413,935 Committed - - - - Assigned 3,845,592 - - - Unassigned 25,335,749 - - - Total fund balances 31,669,517 53,766,116 25,214,332 170,413,935 Total liabilities, deferred inflows of
resources and fund balances 73,530,935$ 59,988,570$ 25,214,332$ 170,413,935$ JUNE 30, 2025

BALANCE SHEET - GOVERNMENTAL FUNDS
CITY OF FOLSOM, CALIFORNIA_________________
See accompanying Notes to Basic Financial Statements.
30

03/24/2026 Item No.9.

Transportation
Improvement
Capital Projects
Fund
FPA Capital
Improvement
Nonmajor
Governmental
Funds
Total
Governmental
Funds
ASSETS
42,911,998$ 43,715,432$ 66,762,490$ 227,538,267$ Cash and cash equivalents - - 230,117 231,448 Cash with fiscal agent 1,121,683 625,410 7,130,354 64,192,699 Receivables, Net - 1,483,747 - 1,488,571 Insurance deposits - - - 105,047 Due from other funds - - - 1,001,253 Prepaids - - 753,588 3,300,062 Due from other governments - - - 541,520 Inventory - - - 195,483,724 Investments held in trust Restricted assets:
205,000 - 352,300 557,300 Cash and cash equivalents 44,238,681$ 45,824,589$ 75,228,849$ 494,439,891$ Total assets

LIABILITIES, DEFERRED INFLOWS OF

RESOURCES AND FUND BALANCES

Liabilities:
242,623$ 367,659$ 886,424$ 6,462,786$ Accounts payable - - - 2,977,368 Wages payable - - 76,490 76,490 Due to other funds - - - 1,040,452 Advances from other funds - - 491,021 22,409,370 Unearned revenue - - 287,297 289,554 Deposits payable 242,623 367,659 1,741,232 33,256,020 Total liabilities Deferred Inflows of Resources
- - - 10,980,769 Deferred inflows related to leases - - 1,328,434 7,527,031 Deferred inflows -unavailable revenue - - 1,328,434 18,507,800 Total deferred inflows of resources

Fund Balances:
- - 499,531 2,047,128 Nonspendable 43,996,058 45,456,930 61,393,529 401,181,479 Restricted - - 10,434,068 10,434,068 Committed - - - 3,845,592 Assigned - - (167,945) 25,167,804 Unassigned 43,996,058 45,456,930 72,159,183 442,676,071 Total fund balances Total liabilities, deferred inflows of
44,238,681$ 45,824,589$ 75,228,849$ 494,439,891$ resources and fund balances 31

03/24/2026 Item No.9.

Amounts reported for governmental activities in the statement of net position are different because:

Total fund balances - total governmental funds 442,676,071$ Capital assets used in governmental activities are not current financial resources and therefore are not reported in the Governmental Funds' balance sheet Nondepreciable capital assets 23,564,791
Depreciable capital assets, net 413,300,393
Deferred outflows - amount related to pensions 36,693,334 Deferred outflows - amount related to OPEB 7,678,889
Unavailable revenue recorded in the fund financial statements resulting from activities in which revenues were earned but funds were not available are reclassified as revenues in the Government-Wide Financial Statements. 7,527,031
Net unmatured long-term debt (excluding SBITA) (209,529,940) Certain accrued liabilities are not due and payable in the current period and, therefore, are not reported in the governmental funds as follows:

Compensated absences (6,722,066)
Net post-employment benefit liability (OPEB) (93,237,755) Net pension liability (165,343,300)
Subscription Payable (2,276,234)
Interest Payable (3,125,574)
Deferred inflows - amount related to pensions (39,771)
Deferred inflows - amount related to OPEB (1,635,747)
Internal service funds are used by management to charge the costs of fleet management, management information services, facilities costs, and insurance, to individual funds. The assets and liabilities of the Internal Service Funds are included in the governmental activities in the Government-Wide Statement of Net Position. 14,877,783 Net position of governmental activities 464,407,905$
JUNE 30, 2025
CITY OF FOLSOM, CALIFORNIA_____________

RECONCILIATION OF THE BALANCE SHEET OF GOVERNMENTAL FUNDS

TO THE STATEMENT OF NET POSITION
See accompanying Notes to Basic Financial Statements.
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03/24/2026 Item No.9.

General
Fund
Folsom
Housing
Special
Revenue Fund
Folsom Public
Financing
Authority
Debt Service
Fund
Folsom Ranch
Financing
Authority
Debt Service
Fund
REVENUES:

Taxes:

Property tax 43,965,065$ -$ -$ -$ Sales and use tax 26,938,575 - - - Transient occupancy tax 2,598,048 - - - Real property transfer 878,847 - - - Other taxes 1,251,060 - - - License and permits 3,885,168 - - - Vehicle license fees 10,421,709 - - - Intergovernmental 3,402,954 801,691 983,195 6,987,599 Charges for current services 20,828,022 32,874 - - Fines and forfeitures 150,269 3,845,010 - - Assessment collections - - - - Investment income (loss) 2,508,275 1,326,089 (456,070) (7,582,419) Miscellaneous 739,205 8,813 - - Total revenues 117,567,197 6,014,477 527,125 (594,820) EXPENDITURES:

Current:

General government 20,732,237 492,919 - - Public safety 59,119,899 - - - Public ways and facilities 8,353,401 - - - Community services 7,897,809 - - - Culture and recreation 19,558,374 - - - Capital outlay 6,583,345 - - - Debt service:

Principal payments 721,244 - 3,202,123 1,225,000 Interest and fiscal charges 121,048 - 781,072 6,987,599 Total expenditures 123,087,357 492,919 3,983,195 8,212,599

EXCESS (DEFICIENCY) OF REVENUES
OVER (UNDER) EXPENDITURES (5,520,160) 5,521,558 (3,456,070) (8,807,419) OTHER FINANCING SOURCES (USES):

Bond issuance-principal - - - 37,440,000 Bond issuance-premium - - - 2,292,446 SBITA proceeds 1,105,365 - - - Transfers in 5,254,900 - - - Transfers out (3,564,985) (12,063) - - Total other financing sources (uses) 2,795,280 (12,063) - 39,732,446 NET CHANGE IN FUND BALANCES (2,724,880) 5,509,495 (3,456,070) 30,925,027 FUND BALANCES, BEGINNING OF YEAR 34,394,397 48,256,621 28,670,402 139,488,908 FUND BALANCES, END OF YEAR 31,669,517$ 53,766,116$ 25,214,332$ 170,413,935$

CITY OF FOLSOM, CALIFORNIA

STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN

FUND BALANCES - GOVERNMENTAL FUNDS
FOR THE YEAR ENDED JUNE 30, 2025
_________________
See accompanying Notes to Basic Financial Statements.
34

03/24/2026 Item No.9.

Transportation
Improvement
Capital
Projects Fund
FPA Capital
Improvement
Nonmajor
Governmental
Funds
Total
Governmental
Funds
REVENUES:

Taxes:
-$ -$ -$ 43,965,065$ Property tax - - - 26,938,575 Sales and use tax - - - 2,598,048 Transient occupancy tax - - - 878,847 Real property transfer - - - 1,251,060 Other taxes - - 12,663 3,897,831 License and permits - - - 10,421,709 Vehicle license fees 4,562,179 - 5,386,681 22,124,299 Intergovernmental 3,857,718 8,470,208 9,801,497 42,990,319 Charges for current services - - 216,913 4,212,192 Fines and forfeitures - - 246 246 Assessment collections 2,445,832 2,637,909 3,156,888 4,036,504 Investment income (loss) 11,904 - 105,098 865,020 Miscellaneous 10,877,633 11,108,117 18,679,986 164,179,715 Total revenues EXPENDITURES:

Current:
- 230,384 397,495 21,853,035 General government - 10,182 68,622 59,198,703 Public safety 1,219,108 460,784 6,159,987 16,193,280 Public ways and facilities - - - 7,897,809 Community services - 5,155 157,526 19,721,055 Culture and recreation 2,738,148 8,179,121 1,334,044 18,834,658 Capital outlay Debt service:
- - - 5,148,367 Principal payments - - - 7,889,719 Interest and fiscal charges 3,957,256 8,885,626 8,117,674 156,736,626 Total expenditures

EXCESS (DEFICIENCY) OF REVENUES
6,920,377 2,222,491 10,562,312 7,443,089 OVER (UNDER) EXPENDITURES OTHER FINANCING SOURCES (USES):
- - - 37,440,000 Bond issuance-principal - - - 2,292,446 Bond issuance-premium - - - 1,105,365 SBITA proceeds - - 841,588 6,096,488 Transfers in (178,771) (81,961) (1,149,803) (4,987,583) Transfers out (178,771) (81,961) (308,215) 41,946,716 Total other financing sources (uses) 6,741,606 2,140,530 10,254,097 49,389,805 NET CHANGE IN FUND BALANCES 37,254,452 43,316,400 61,905,086 393,286,266 FUND BALANCES, BEGINNING OF YEAR 43,996,058$ 45,456,930$ 72,159,183$ 442,676,071$ FUND BALANCES, END OF YEAR 35

03/24/2026 Item No.9.

Amounts reported for governmental activities in the statement of activities are different because:

Net change in fund balances - total governmental funds 49,389,805$ Governmental funds report capital outlay as expenditures. However, in the statement of activities the costs of these assets are allocated over their estimated useful lives and reported as depreciation expense. Capital outlays and depreciation expense are as follows:

Capitalized capital outlays 17,299,300
Depreciation expense (26,677,934)
(Loss)/Gain on disposal of capital assets (5,501)
Governmental funds do not report contributed capital, whereas this revenue is reported in the Government-Wide Statement of Activities 36,311,572 Premiums, discounts, and other charges related to long-term debt are expended in the year of issuance by governmental funds. However, these costs are deferred and amortized in the statement of activities. This amount reflects the amortization of premiums, discounts, and other deferred charges. 481,220 Governmental funds report pension contributions as expenditures. However, in the Statement of Activities, pension expense is measured as the change in net pension liability and the amortization of deferred outflows and inflows related to pensions.

This amount represents the net change in pension related amounts. (8,232,411) Governmental funds report OPEB contributions as expenditures. However, in the Statement of Activities, OPEB expense is measured as the change in net OPEB liability and the amortization of deferred outflows and inflows related to OPEB. This amount represents the net change in OPEB related amounts. (2,522,289) Long-term debt proceeds provide current financial resources to governmental funds, but issuing debt increases long-term liabilities in the Statement of Net Position.

Repayment of debt principal is an expenditure in the governmental funds, but the repayment reduces long-term liabilities in the Statement of Net Position.

Principal repayments on long term debt 5,182,477
Change in compensated absences 284,479
SBITA proceeds (1,105,365)
Issuance of long-term debt (39,732,446)
Change in accrued interest (650,965) (36,021,820) Some receivables are deferred in the governmental funds because the amounts do not represent current financial resources that are recognized under the accrual basis in the statement of activities. This amount represents the change in deferred inflows of unavailable revenue and loans receivable. 1,659,114 Internal service funds are used by management to charge the costs of fleet management, management information services, facilities costs, and insurance, to individual funds. The net revenue (expense) of certain activities of the Internal Service Funds is reported with Governmental Activities. 2,461,567 CHANGE IN NET POSITION OF GOVERNMENTAL ACTIVITIES 34,142,623$ TO THE STATEMENT OF ACTIVITIES FOR THE YEAR ENDED JUNE 30, 2025 CITY OF FOLSOM, CALIFORNIA_______________

RECONCILIATION OF THE STATEMENT OF REVENUES,

EXPENDITURES, AND CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS See accompanying Notes to Basic Financial Statements.
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03/24/2026 Item No.9.

Water Wastewater
Solid
Waste
ASSETS
Current Assets:

Cash and cash equivalents 35,844,504$ 29,766,895$ 29,392,827$ Receivables, net of allowances 4,976,494 1,945,545 833,335 Due from other governments - 4,932 - Advances to other funds - - - Insurance deposits - - - Total current assets 40,820,998 31,717,372 30,226,162 Noncurrent Assets:

Restricted assets:

Cash with fiscal agent 526 - - Capital assets 232,487,447 110,333,152 24,037,035 Accumulated depreciation (93,813,017) (37,413,587) (15,594,117) Total noncurrent assets 138,674,956 72,919,565 8,442,918 Total assets 179,495,954 104,636,937 38,669,080

DEFERRED OUTFLOWS OF RESOURCES
Deferred outflows related to pension 2,462,634 1,630,256 3,306,303 Deferred outflows related to OPEB 345,311 97,511 355,845 Deferred outflows related to refunding 390,999 - - Total deferred outflows of resources 3,198,944 1,727,767 3,662,148

LIABILITIES
Current liabilities:

Accounts payable 1,710,974 101,501 454,126 Wages payable 227,661 131,972 263,338 Interest Payable 22,418 - - Due to other funds - - - Due to other governments - 4,861,423 - Unearned revenue 3,407,162 (3,863) 4,435 Accrued compensated absences,
payable within one year 90,185 35,393 71,809 Long term debt, due within one year 1,584,000 - - Total current liabilities 7,042,400 5,126,426 793,708 Noncurrent liabilities:

Net pension liability 11,852,204 7,495,460 14,061,051 Accrued compensated absences,
payable after one year 464,803 182,415 370,096 Net OPEB liability 4,297,704 647,723 3,760,550 Long-term debt, due after one year
net of unamortized premiums/discounts 9,248,083 - - Total noncurrent liabilities 25,862,794 8,325,598 18,191,697 Total liabilities 32,905,194 13,452,024 18,985,405

DEFERRED INFLOWS OF RESOURCES
Deferred inflows related to OPEB 127,757 27,111 93,109 Total deferred inflows of resources 127,757 27,111 93,109

NET POSITION
Net investment in capital assets 128,233,346 72,919,565 8,442,918 Unrestricted 21,428,601 19,966,004 14,809,796 Total net position (deficit) 149,661,947$ 92,885,569$ 23,252,714$

BUSINESS-TYPE ACTIVITIES -

ENTERPRISE FUNDS
CITY OF FOLSOM, CALIFORNIA_______________

STATEMENT OF NET POSITION

PROPRIETARY FUNDS
JUNE 30, 2025
See accompanying Notes to Basic Financial Statements.
38

03/24/2026 Item No.9.

Other
Non-major
Enterprise
Funds Totals
ASSETS
Current Assets:
49,071$ 95,053,297$ 13,078,355$ Cash and cash equivalents 1,068 7,756,442 170,897 Receivables, net of allowances - 4,932 - Due from other governments - - 1,040,452 Advances to other funds - - 1,539,122 Insurance deposits 50,139 102,814,671 15,828,826 Total current assets Noncurrent Assets:

Restricted assets:
- 526 - Cash with fiscal agent - 366,857,634 2,234,348 Capital assets - (146,820,721) (2,234,348) Accumulated depreciation - 220,037,439 - Total noncurrent assets 50,139 322,852,110 15,828,826 Total assets DEFERRED OUTFLOWS OF RESOURCES - 7,399,193 - Deferred outflows related to pension - 798,667 - Deferred outflows related to OPEB - 390,999 - Deferred outflows related to refunding - 8,588,859 - Total deferred outflows of resources LIABILITIES Current liabilities:
- 2,266,601 85,568 Accounts payable - 622,971 836,918 Wages payable - 22,418 - Interest Payable - - 28,557 Due to other funds - 4,861,423 - Due to other governments - 3,407,734 - Unearned revenue Accrued compensated absences,
- 197,387 - payable within one year - 1,584,000 - Long term debt, due within one year - 12,962,534 951,043 Total current liabilities Noncurrent liabilities:
- 33,408,715 - Net pension liability Accrued compensated absences,
- 1,017,314 - payable after one year - 8,705,977 - Net OPEB liability Long-term debt, due after one year
- 9,248,083 - net of unamortized premiums/discounts - 52,380,089 - Total noncurrent liabilities - 65,342,623 951,043 Total liabilities DEFERRED INFLOWS OF RESOURCES - 247,977 - Deferred inflows related to OPEB - 247,977 - Total deferred inflows of resources

NET POSITION
- 209,595,829 - Net investment in capital assets 50,139 56,254,540 14,877,783 Unrestricted 50,139$ 265,850,369$ 14,877,783$ Total net position (deficit) Governmental
Activities
Internal Service
Funds

BUSINESS-TYPE ACTIVITIES -

ENTERPRISE FUNDS
39

03/24/2026 Item No.9.

Water Wastewater
Solid
Waste
OPERATING REVENUES:

Charges for services 19,541,616$ 12,507,788$ 29,522,830$ Total operating revenues 19,541,616 12,507,788 29,522,830 OPERATING EXPENSES:

Employee services 7,353,973 4,100,208 9,196,409 Utilities 1,062,135 108,344 55,185
Supplies 2,021,099 283,240 1,493,420
Maintenance and operations 643,640 237,042 1,448,121 Contractual services 1,948,712 314,031 5,726,693 Depreciation 5,441,094 2,739,032 2,929,008 Other 1,634,694 - 912,914
Total operating expenses 20,105,347 7,781,897 21,761,750 OPERATING INCOME (LOSS) (563,731) 4,725,891 7,761,080 NONOPERATING REVENUES (EXPENSES):

Investment income 1,977,373 1,580,519 1,523,713 Interest expense (345,733) (12) (64) Other 1,323,926 - 289,071
Impact fees 204,418 75,036 367,825 Intergovernmental - - 73,509 Total nonoperating revenues (expenses) 3,159,984 1,655,543 2,254,054 Income before contributions and transfers 2,596,253 6,381,434 10,015,134 CONTRIBUTIONS AND TRANSFERS:

Capital contributions 18,952,753 2,504,794 - Transfers in - - - Transfers out (1,053,953) (824,979) (1,947,176) Total contributions and transfers 17,898,800 1,679,815 (1,947,176) CHANGE IN NET POSITION 20,495,053 8,061,249 8,067,958 NET POSITION (DEFICIT), BEGINNING OF YEAR 129,384,540 84,914,422 15,275,981 RESTATEMENTS (217,646) (90,102) (91,225) NET POSITION (DEFICIT), BEGINNING OF YEAR, AS RESTATED 129,166,894 84,824,320 15,184,756 NET POSITION (DEFICIT), END OF YEAR 149,661,947$ 92,885,569$ 23,252,714$ CITY OF FOLSOM, CALIFORNIA_______________

STATEMENT OF REVENUES, EXPENSES AND CHANGES IN FUND NET POSITION

PROPRIETARY FUNDS
FOR THE YEAR ENDED JUNE 30, 2025

BUSINESS-TYPE ACTIVITIES -

ENTERPRISE FUNDS
See accompanying Notes to Basic Financial Statements.
40

03/24/2026 Item No.9.

Other
Non-major
Enterprise
Funds Totals
OPERATING REVENUES:
-$ 61,572,234$ 24,195,153$ Charges for services - 61,572,234 24,195,153 Total operating revenues OPERATING EXPENSES:
- 20,650,590 25,058,461 Employee services - 1,225,664 - Utilities - 3,797,759 - Supplies - 2,328,803 - Maintenance and operations - 7,989,436 - Contractual services - 11,109,134 - Depreciation - 2,547,608 - Other - 49,648,994 25,058,461 Total operating expenses - 11,923,240 (863,308) OPERATING INCOME (LOSS) NONOPERATING REVENUES (EXPENSES):
1,730 5,083,335 444,934 Investment income - (345,809) - Interest expense - 1,612,997 162,272 Other - 647,279 - Impact fees - 73,509 - Intergovernmental 1,730 7,071,311 607,206 Total nonoperating revenues (expenses) 1,730 18,994,551 (256,102) Income before contributions and transfers CONTRIBUTIONS AND TRANSFERS:
- 21,457,547 - Capital contributions - - 2,723,397 Transfers in (466) (3,826,574) (5,728) Transfers out (466) 17,630,973 2,717,669 CONTRIBUTIONS AND TRANSFERS 1,264 36,625,524 2,461,567 CHANGE IN NET POSITION 48,875 229,623,818 12,416,216 NET POSITION (DEFICIT), BEGINNING OF YEAR - (398,973) - RESTATEMENTS 48,875 229,224,845 12,416,216 NET POSITION (DEFICIT), BEGINNING OF YEAR, AS RESTATED 50,139$ 265,850,369$ 14,877,783$ NET POSITION (DEFICIT, END OF YEAR Governmental
Activities
Internal
Service Funds

BUSINESS-TYPE ACTIVITIES -

ENTERPRISE FUNDS
41

03/24/2026 Item No.9.

Water Wastewater
Solid
Waste
CASH FLOWS FROM OPERATING ACTIVITIES:

Receipts from customers and users 20,607,594$ 12,661,900$ 29,393,723$ Payments to suppliers (6,501,360) (2,050,976) (8,795,154) Payments to employees (6,326,775) (3,555,978) (8,107,336) Cash received (used) from other sources (1,634,694) - (912,914) Net cash provided by (used in) operating activities 6,144,765 7,054,946 11,578,319 CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES:

Transfers from other funds - - - Transfers to other funds (1,053,953) (824,979) (1,947,176) Other 1,323,926 - 289,071
Impact fees 204,418 75,036 367,825 Intergovernmental revenues received - - 73,509 Net cash provided by (used in) noncapital financing activities 474,391 (749,943) (1,216,771) CASH FLOWS FROM CAPITAL FINANCING ACTIVITIES:

Acquisition and construction
of capital assets (3,705,236) (3,542,896) (2,855,284) Principal paid on capital debt and leases (1,549,467) (2,139) (24,819) Interest paid on capital debt (417,684) (12) (64) Net cash provided by (used in) capital financing activities (5,672,387) (3,545,047) (2,880,167) CASH FLOWS FROM INVESTING ACTIVITIES:

Interest and dividends (paid) on investments 1,977,373 1,580,519 1,523,713 Net cash provided by (used in) investing activities 1,977,373 1,580,519 1,523,713 CHANGE IN CASH AND CASH EQUIVALENTS 2,924,142 4,340,475 9,005,094 CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR 32,920,888 25,426,420 20,387,733 CASH AND CASH EQUIVALENTS, END OF YEAR 35,845,030$ 29,766,895$ 29,392,827$ CITY OF FOLSOM, CALIFORNIA_______________

STATEMENT OF CASH FLOWS

PROPRIETARY FUNDS
FOR THE YEAR ENDED JUNE 30, 2025

BUSINESS-TYPE ACTIVITIES -

ENTERPRISE FUNDS
See accompanying Notes to Basic Financial Statements.
42

03/24/2026 Item No.9.

Other
Non-major
Enterprise
Funds Totals
CASH FLOWS FROM OPERATING ACTIVITIES:
145$ 62,663,362$ 24,188,058$ Receipts from customers and users - (17,347,490) (14,372) Payments to suppliers - (17,990,089) (24,999,183) Payments to employees - (2,547,608) - Cash received (used) from other sources 145 24,778,175 (825,497) Net cash provided by (used in) operating activities CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES:
- - 2,891,601 Transfers from other funds (466) (3,826,574) 264,281 Transfers to other funds - 1,612,997 - Other - 647,279 - Impact fees - 73,509 - Intergovernmental revenues received (466) (1,492,789) 3,155,882 Net cash provided by (used in) noncapital financing activities CASH FLOWS FROM CAPITAL FINANCING ACTIVITIES:

Acquisition and construction
- (10,103,416) - of capital assets - (1,576,425) - Principal paid on capital debt and leases - (417,760) - Interest paid on capital debt - (12,097,601) - Net cash provided by (used in) capital financing activities CASH FLOWS FROM INVESTING ACTIVITIES:
1,730 5,083,335 617,633 Interest and dividends (paid) on investments 1,730 5,083,335 617,633 Net cash provided by (used in) investing activities 1,409 16,271,120 2,948,018 CHANGE IN CASH AND CASH EQUIVALENTS 47,662 78,782,703 10,130,337 CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR 49,071$ 95,053,823$ 13,078,355$ CASH AND CASH EQUIVALENTS, END OF YEAR Governmental
Activities
Internal
Service Funds

BUSINESS-TYPE ACTIVITIES -

ENTERPRISE FUNDS
43

03/24/2026 Item No.9.

Water Wastewater
Solid
Waste

RECONCILIATION OF OPERATING INCOME (LOSS) TO NET
CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES:

Operating income (loss) (563,731)$ 4,725,891$ 7,761,080$ Adjustments to reconcile operating income (loss) to
net cash provided by (used in) operating activities:

Depreciation 5,441,094 2,739,032 2,929,008 Increase (decrease) in:

Accounts receivable 1,183,989 218,955 (129,107) Due from other governments - 5,705 - Deferred outflows of resources related to pension 937,412 544,764 1,001,539 Deferred outflows of resources related to OPEB (236,165) (72,668) (251,322) Accounts payable (825,774) (836,938) (71,735) Wages payable 14,858 18,731 12,845 Due to other governments - (271,381) - Unearned revenue (118,011) (70,548) - Accrued compensated absences 35,179 (11,588) 46,624 Net pension liability (80,629) (44,716) (100,036) Net OPEB liability 346,147 106,508 368,361 Deferred inflows of resources related to OPEB 10,396 3,199 11,062 Net cash provided by (used in) operating activities 6,144,765$ 7,054,946$ 11,578,319$ CITY OF FOLSOM, CALIFORNIA_______________

COMBINING STATEMENT OF CASH FLOWS

PROPRIETARY FUNDS (CONTINUED)
FOR THE YEAR ENDED JUNE 30, 2025

BUSINESS-TYPE ACTIVITIES -

ENTERPRISE FUNDS
See accompanying Notes to Basic Financial Statements.
44

03/24/2026 Item No.9.

Other
Non-major
Enterprise
Funds Totals

RECONCILIATION OF OPERATING INCOME (LOSS) TO NET
CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES:
-$ 11,923,240$ (863,308)$ Operating income (loss) Adjustments to reconcile operating income (loss) to
net cash provided by (used in) operating activities:
- 11,109,134 - Depreciation Increase (decrease) in:
145 1,273,982 (7,095) Accounts receivable - 5,705 - Due from other governments - 2,483,715 - Deferred outflows of resources related to pension - (560,155) - Deferred outflows of resources related to OPEB - (1,734,447) (14,372) Accounts payable - 46,434 59,278 Wages payable - (271,381) - Due to other governments - (188,559) - Unearned revenue - 70,215 - Accrued compensated absences - (225,381) - Net pension liability - 821,016 - Net OPEB liability - 24,657 - Deferred inflows of resources related to OPEB 145$ 24,778,175$ (825,497)$ Net cash provided by (used in) operating activities Governmental
Activities
Internal
Service Funds

BUSINESS-TYPE ACTIVITIES -

ENTERPRISE FUNDS
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03/24/2026 Item No.9.

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46

03/24/2026 Item No.9.

Other Post
Employment
Benefits Trust
Fund
RDA
Successor
Private
Purpose Trust
Fund
Custodial
Funds
ASSETS:

Cash and cash equivalents -$ 7,291,955$ 40,324,617$ OPEB Plan Investments:

Fixed income securities 6,117,561 - - Domestic equity funds 4,570,596 - - International equity funds 987,017 - - Real estate partnership 602,229 - - Cash equivalents 18,700 - - Receivables:

Accrued interest - 75,274 284,674 Loans - 3,905 -
Due from other governments - - 384,134 Capital assets:

Non-depreciable - 133,967 - Depreciable - 59,767 - Less: accumulated depreciation - (59,767) - Restricted assets:

Cash with fiscal agent - 461 41,494,707 Total assets 12,296,103 7,505,562 82,488,132 DEFERRED OUTFLOWS OF RESOURCES:

Deferred amount on refunding - 5,622,306 -

LIABILITIES

Accounts payable 18,701 80 7,771,021 Interest Payable - 519,812 - Rebatable arbitrage - - 495 Long-term liabilities:

Due within one year - 2,570,000 - Due in more than one year - 35,434,073 - Total liabilities 18,701 38,523,965 7,771,516

NET POSITION
Net position restricted for OPEB benefits 12,277,402$
Restricted for RDA enforceable obligations (25,396,097)$ Restricted for individuals, organizations, and other
governments 74,716,616$

CITY OF FOLSOM, CALIFORNIA

STATEMENT OF FIDUCIARY NET POSITION

FIDUCIARY FUNDS
JUNE 30, 2025
_______________
See accompanying Notes to Basic Financial Statements.
47

03/24/2026 Item No.9.

Other Post
Employment
Benefits Trust
Fund
RDA
Successor
Private
Purpose Trust
Fund
Custodial
Funds
ADDITIONS:

Tax incremenent revenues -$ 3,832,327$ -$ Assessment collection - - 20,316,984 Mello-Roos bonds - - 37,440,000 Transportation fees - - 3,739,786 Contributions from the City 6,457,278 - - Investment earnings 1,227,575 365,811 5,379,216 Total additions 7,684,853 4,198,138 66,875,986 DEDUCTIONS: Benefit payments 5,957,277 - - Payments to assessment bond holders - - 14,258,278 Other expenses - 163,404 32,379,363 Interest and fiscal charges - 1,261,202 - Total deductions 5,957,277 1,424,606 46,637,641 CHANGE IN NET POSITION 1,727,576 2,773,532 20,238,345 NET POSITION (DEFICIT), BEGINNING OF YEAR 10,549,826 (28,169,629) 54,478,271 NET POSITION (DEFICIT), END OF YEAR 12,277,402$ (25,396,097)$ 74,716,616$

CITY OF FOLSOM, CALIFORNIA

STATEMENT OF CHANGES IN FIDUCIARY NET POSITION

FIDUCIARY FUNDS
FOR THE YEAR ENDED JUNE 30, 2025
_______________
See accompanying Notes to Basic Financial Statements.
48

03/24/2026 Item No.9.

NOTES TO THE BASIC FINANCIAL STATEMENTS

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03/24/2026 Item No.9.

City of Folsom

NOTES TO THE BASIC FINANCIAL STATEMENTS
FOR THE YEAR ENDED JUNE 30, 2025

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Reporting Entity – The City of Folsom, California (City) was incorporated in 1946 under the general laws of the State of California. The City’s charter was adopted on March 6, 1990. The City operates under a Council-Manager form of government consisting of five elected council members including the mayor and a council appointed City Manager. The City provides the following services as authorized by its charter: public safety (Police and Fire), highways and streets, water, wastewater, solid waste, storm water utility, public improvements, parks and recreation, planning and zoning and general administration.

As required by accounting principles generally accepted in the United States of America these financial statements present the government and its component unit, an entity for which the government is considered to be financially accountable. Blended component units, although legally separate entities are, in substance, part of the government’s operations and so financial data from these entities are combined with financial data of the primary government. The blended component unit has a year-end of June 30.

Blended Component Units

In order to facilitate the financing of public improvements, as well as other facilities and improvements which will be funded through the issuance of tax-exempt bonds, the City Council established two joint powers authorities. One with the Folsom Redevelopment Agency (RDA), known as the Folsom Public Financing Authority (FPFA) on September 19, 1988, and one with the Folsom South of 50 Parking Authority, known as the Folsom Ranch Financing Authority (FRFA) on March 10, 2015. They were established pursuant to the provisions of the joint powers laws of the state of California, as set forth in Article 1, Chapter 5, Division 7 of Title 1 of the California Government Code (commencing with Government Code Section 6500).

Recent legislative changes required the dissolution of the RDA but it has been determined by legal counsel that the changes do not affect the FPFA and its continued existence and no change in the structure is required.

The FPFA and the FRFA are authorized, but not limited, to issue bonds pursuant to the provisions of the Marks-Roos Local Bond Pooling Act of 1985, as set forth in Article 4, Chapter 5, Division 7, Title 1, of the California Government Code (commencing with Government Code Section 6584) for the purpose of financing facilities and improvements. The FPFA and the FRFA are reported in the City’s fund financial statements as debt service funds. Leases between the primary government and blended component units are eliminated. Amounts held for repayment of the local obligation bonds are reported as investments held in trust of the FPFA and FRFA.

The City accounts for the various debt service and capital projects funds resulting from the bonds issued. The long-term borrowing is used to provide the interim financing for accomplishing the purposes described above. The Authority’s primary source of revenue for repayment of the debt, other than loans and advances from the City, are from the assessment of a “special tax” against the property owners within the district and project areas. Collections of the special tax are deposited with the fiscal agent for the debt service of the bonds.

Separate audited component unit financial statements for the FPFA and FRFA may be obtained from the administration office as follows: Folsom Public Financing Authority or Folsom Ranch Financing Authority of the City of Folsom, 50 Natoma Street, Folsom, CA 95630.

51

03/24/2026 Item No.9.

City of Folsom

NOTES TO THE BASIC FINANCIAL STATEMENTS (Continued)
FOR THE YEAR ENDED JUNE 30, 2025

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued Fiduciary-type Component Unit – The City of Folsom OPEB Trust is used to account for contributions and investment income restricted to pay medical premium benefits for retired City employees. The investment fund is governed by the City of Folsom Retirement Board of Authority. The Plan’s benefit payments are restricted to eligible employees who retired from the City of Folsom eligible for the Other Post-Employment benefits. Contribution provisions are established by the City Council. Eligibility, administration and certain other tasks are the responsibility of the Folsom Retirement Board of Authority.

Joint Powers Agencies – The City also has ownership interests in the Northern California Cities Self Insurance Fund (NCCSIF). This entity has not met the component unit criteria stated above, and its financial information is not combined with that of the City, although the City’s deposit in this entity has been included in the financial statements as insurance deposits.

Government-wide and Fund Financial Statements – The government-wide financial statements (i.e. the statement of net position and statement of activities) report information on all of the nonfiduciary activities of the primary government and its component units. For the most part, the effect of interfund activity has been eliminated from the government-wide financial statements. Governmental activities , which normally are supported by taxes and intergovernmental revenues, are reported separately from business-type activities, which rely to a significant extent on fees and charges for support.

The statement of activities demonstrates the degree to which the direct expenses of a given function or segment are offset by program revenues. Direct expenses are those that are clearly identifiable with a specific function or segment. Program revenues include 1) charges to customers or applicants who purchase, use, or directly benefit from goods, services, or privileges provided by a given function or segment, and 2) grants and contributions that are restricted to meeting the operational or capital requirements of a particular function or segment.

Taxes and other items not properly included among program revenues are reported instead as general revenues.

Separate financial statements are provided for governmental funds, proprietary funds, and fiduciary funds, even though the latter are excluded from the government-wide financial statements. Major individual governmental funds and major individual enterprise funds are reported in separate columns in the fund financial statements.

Measurement Focus, Basis of Accounting and Basis of Presentation

The government-wide financial statements are reported using the economic resources measurement focus and the accrual basis of accounting , as are the proprietary funds financial statements. Revenues are recorded when earned and expenses are recorded when a liability is incurred, regardless of the timing of related cash flows. Property taxes are recognized as revenues in the year for which they are levied. Grants and similar items are recognized as revenue as soon as all eligibility requirements are met.

Fiduciary funds, however, are unlike other funds as they are used to account for assets that the City holds on behalf of others as their agent. The City reports Custodial funds, which use the economic resources measurement focus, an OPEB Trust fund, and a private-purpose trust fund, which use the economic resources measurement focus. The fiduciary funds use the accrual method of accounting to report assets, liabilities and fiduciary net position. 52

03/24/2026 Item No.9.

City of Folsom

NOTES TO THE BASIC FINANCIAL STATEMENTS (Continued)
FOR THE YEAR ENDED JUNE 30, 2025

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued Revenues are recognized for utility funds based on billings rendered to customers. The City accrues revenues for services provided but not yet billed at the end of a monthly fiscal period.

Governmental fund financial statements are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Under this method, revenues are recognized when measurable and available. Taxes (other than sales taxes), interest, and charges for services are accrued when the receipt occurs within sixty days of the end of the accounting period so as to be both measurable and available. Licenses, permits, fines, forfeitures and other revenues are considered to be measurable and available only when cash is received by the City. Sales tax are accrued when their receipt occurs within one-hundred twenty days of the end of the accounting period. Grant revenues are accrued when their receipt occurs within one-hundred eighty days of the end of the accounting period. Expenditures generally are recorded when a liability is incurred, as under accrual accounting. However, debt service expenditures, as well as expenditures related to compensated absences and claims and judgments are recorded only when payment is due. Proceeds of general long-term debt and leases are reported as other financing sources.

The City reports the following major governmental funds:

The General Fund is the primary operating fund of the City. It accounts for all financial resources of the general government, except those required to be accounted for in another fund.

The Folsom Housing Special Revenue Fund is used to account for the restricted or committed revenues and expenditures of a portion of the City’s Low-Income Housing activities. Revenues are received from loan repayments, interest earnings and Inclusionary Housing Fees.

The Folsom Public Financing Authority Debt Service Fund is used to account for the proceeds of specific revenues that are legally restricted for expenditures for specified purposes, including housing and community development.

The Folsom Ranch Financing Authority Debt Service Fund is used to account for the proceeds of specific revenues that are legally restricted for expenditures for specified purposes, including housing and community development.

The Transportation Improvement Capital Projects Fund is used to account for long-term major road projects financed from developer mitigation charges and Measure A funding.

The FPA Capital Improvement Fund is used to account for general capital facilities, library, municipal services center, police, fire, parks, and trails projects in the Folsom Plan Area financed from the collection of impact fees.

The City reports the following major enterprise funds:

Water Enterprise Fund is used to account for water utility operations of the City.

Wastewater Enterprise Fund is used to account for wastewater utility operations of the City.

Solid Waste Enterprise Fund is used to account for solid waste utility operations of the City. 53

03/24/2026 Item No.9.

City of Folsom

NOTES TO THE BASIC FINANCIAL STATEMENTS (Continued)
FOR THE YEAR ENDED JUNE 30, 2025

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued Additionally, the City reports the following fund types:

Internal Service Funds, made up of the Equipment Replacement, Risk Management Compensated Leaves funds, are used to account for replacement of general governmental equipment and administration of employee benefits.

Fiduciary Funds: Custodial funds account for assets held in custodial funds by the City as an agent for various bonded assessment districts. The Private Purpose Trust fund is for reporting activity of the Redevelopment Successor Private Purpose Trust Fund. The OPEB Trust Fund is used to account for Other Post-Employment Benefits.

As a general rule the effect of interfund activity has been eliminated from the government-wide financial statements. Exceptions to this general rule are exchange or exchange-like transactions between functions of the government. Elimination of these charges would distort the direct costs and program revenues reported for the various functions concerned.

Amounts reported as program revenues include 1) charges to customers or applicants for goods, services, or privileges provided, 2) operating grants and contributions, and 3) capital grants and contributions including special assessments. Internally dedicated resources are reported as general revenues rather than as program revenue. Likewise, general revenues include all taxes.

Proprietary funds distinguish operating revenues and expenses from nonoperating items.

Operating revenues and expenses generally result from providing services and producing and delivering goods in connection with a proprietary fund’s principal ongoing operations. The principle operating revenues of the City’s enterprise funds and internal service funds are charges to customers or other funds for sales and services. Operating expenses for enterprise funds and internal service funds include the cost of sales and services, administrative expenses, and depreciation on capital assets. All revenues and expenses not meeting this definition are reported as nonoperating revenues and expenses.

When both restricted and unrestricted resources are available for use, it is the City’s policy to use restricted resources first, and then unrestricted resources as they are needed.

Budgetary Data

The City’s annual budget is adopted by the City Council on or before the last working day of the last month of the fiscal year on a basis consistent with U.S. generally accepted accounting principles. If the City Council fails to adopt the budget by this date the budget proposed by the City Manager shall be deemed adopted. The City Manager may transfer monies between departments and divisions, and programs and accounts within departments and divisions, but only the Council by resolution may transfer monies between funds and from un-appropriated balances or fund balances to any fund or appropriation account. The level of control (i.e., the level at which expenditures may not legally exceed appropriation) is the fund. All appropriations remaining at year-end lapse, except purchases in progress, open project appropriations and unexpended grant appropriations.

54

03/24/2026 Item No.9.

City of Folsom

NOTES TO THE BASIC FINANCIAL STATEMENTS (Continued)
FOR THE YEAR ENDED JUNE 30, 2025

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued Budget information is adopted on an annual basis for the General Fund, special revenue funds and debt service funds. The budget is adopted on a project length basis for capital projects funds. The following procedures are followed in establishing the budgetary data reflected in the financial statements:

A. Department Heads prepare a budget request based upon the previous year's expenditures.

B. Meetings are held between the Department Heads, Chief Financial Officer, and the City Manager for the purpose of reviewing and prioritizing budget requests.

C. The City Manager submits the proposed city budget to the City Council, who makes decisions regarding department budgets.

D. Transfers between funds and changes in the total budget must be approved by the City Council.

Financial Statement Elements

Cash, Cash Equivalents and Investments – City investments are recorded at fair value, in accordance with generally accepted accounting principles. The City pools cash resources from all funds in order to facilitate the management of cash and achieve the goal of obtaining the highest yield with the greatest safety and least risk. The balance in the pooled cash account is available to meet current operating requirements. Cash in excess of current requirements is invested in various interest-bearing accounts and other investments for varying terms.

The City participates in an external investment pool managed by the State of California titled California Local Agency Investment Fund (LAIF), established under California State Statute, which has invested a portion of the pool funds in Structured Notes and Asset-Backed Securities.

LAIF is not registered with the Securities and Exchange Commission. LAIF falls under the regulatory oversight of the State of California. Based on information obtained from the State of California, the investment in LAIF has been recorded at fair value.

For purposes of the statement of cash flows, the City considers all highly liquid investments (including restricted assets) with a maturity of 90 days or less to be cash and cash equivalents.

Cash and cash equivalents include: LAIF, demand deposits, short-term highly liquid investments including Treasury bills, commercial paper, certificates of deposit, money market funds, and cash management pools. Cash held with fiscal agents with a maturity of three months or greater are not included as cash and cash equivalents.

In accordance with generally accepted accounting principles, certain disclosure requirements, if applicable, for Deposits and Investment Risks are specified in the following areas:

 Interest Rate Risk
 Credit Risk
 Custodial Credit Risk
 Concentrations of Credit Risk

In addition, other disclosures are specified including use of certain methods to present deposits and investments, highly sensitive investments, credit quality at year-end and other disclosures.

55

03/24/2026 Item No.9.

City of Folsom

NOTES TO THE BASIC FINANCIAL STATEMENTS (Continued)
FOR THE YEAR ENDED JUNE 30, 2025

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued The City categorizes the fair value measurements of its investments based on the hierarchy established by generally accepted accounting principles. The fair value hierarchy, which has three levels, is based on the valuation inputs used to measure an asset's fair value: Level 1 inputs are quoted prices in active markets for identical assets; Level 2 inputs are significant other observable inputs; Level 3 inputs are significant unobservable inputs.

Property Taxes – Article XIII of the California Constitution (Proposition 13) limits ad valorem taxes on real property to one percent of value plus taxes necessary to pay indebtedness approved by voters prior to July 1, 1978. The Article also established the 1975/76 assessed valuation as the base and limits annual increases to the cost of living, not to exceed two percent, for each year thereafter. Property may also be reassessed to full market value after sale, transfer of ownership, or completion of new construction. The State is prohibited under the Article from imposing new ad valorem, sales, or transactions taxes on real property. Local government may impose special taxes (except on real property) with the approval of two-thirds of the qualified electors. Property taxes are receivable and recorded in the fiscal year for which the tax is levied. Revenue is recognized when measurable and available. Property taxes collected in advance are recorded as deferred revenue and recognized in the year they become available. The County of Sacramento levies, bills and collects property taxes for the City.

Property taxes paid to the City by the County within 60 days after the end of the fiscal year are “available” and are, therefore, recognized as revenue.

Secured and unsecured property taxes are levied based on the assessed value as of March 1, the lien date, of the preceding fiscal year. Secured property tax is levied on September 30 and due in two installments, on November 1 and February 1. Collection dates are December 10 and April 10, which are also the delinquent dates.

Receivables and Payables – Taxes (other than sales taxes) related to the current fiscal year are accrued as revenue and accounts receivable and considered available if received within sixty days of year-end. Federal and State grants are considered receivable and accrued as revenue when reimbursable costs are incurred under the accrual basis of accounting in the government-wide statement of net position. Loans receivable represent lending to support low and moderate income housing units. The amount recognized as revenue under the modified accrual basis is limited to the amount that is deemed measurable and collectible.

Activity between funds that is representative of lending/borrowing arrangements outstanding at the end of the fiscal year is referred to as either “due to/from other funds” (i.e., the current portion of interfund loans) or “advances to/from other funds” (i.e., the non-current portion of interfund loans). Any residual balances outstanding between the governmental activities and business-type activities are reported in the government-wide financial statements as “internal balances.”

Advances between funds, as reported in the fund financial statements, are offset by a reservation of fund balance for noncurrent assets in governmental funds to indicate they do not constitute resources available for appropriation.

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