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RESOLUTION NO. _______
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF FOSTER CITY
AUTHORIZING THE MAYOR TO EXECUTE AN AGREEMENT WITH HEART OF SAN MATEO COUNTY (“HEART”) TO ADMINISTER THE AFFORDABLE ADU LOAN PROGRAM IN AN AMOUNT NOT TO EXCEED $1,160,510 FOR THE
IMPLEMENTATION OF HOUSING ELEMENT PROGRAM H-D-4-B ADU/JADU FINANCIAL INCENTIVE PROGRAM; APPROVE AN APPROPRIATION OF $1,160,510 FROM THE COMMERCIAL LINKAGE FEE FUND (FUND 137) TO 137-0847-419-42-51,
AND FIND THE AGREEMENT AND PROGRAM EXEMPT FROM REVIEW UNDER THE
CALIFORNIA ENVIRONMENTAL QUALITY ACT (CEQA) BECAUSE (I) THE
AFFORDABLE ADU LOAN PROGRAM WAS ANALYZED AS PART OF THE ENVIRONMENT IMPACT REPORT (EIR) FOR THE 6TH CYCLE HOUSING ELEMENT (2023-2031) AND SAFETY ELEMENT UPDATE (SCH 2022010509); (II) CERTAIN ADU
APPROVALS ARE CATEGORICALLY EXEMPT PURSUANT TO PUBLIC RESOURCES CODE § 21080(B)(1) AND CEQA GUIDELINES § 15268; AND (III) CERTAIN ADUS
THAT ARE NOT APPROVED MINISTERIALLY ARE EXEMPT FROM CEQA PURSUANT TO CEQA GUIDELINES SECTION 15301(CLASS 1-EXISTING
FACILITIES)
CITY OF FOSTER CITY
WHEREAS, the Housing Element is an integral part of the Foster City General Plan that identifies the City’s housing needs, states the City’s goals and objectives regarding housing production, rehabilitation, preservation, and conservation to meet those needs, and defines the policies and programs; and WHEREAS, Government Code Section 65400 requires each jurisdiction to prepare an annual progress report (APR), due to the California Department of Housing Community Development (HCD) by April 1, on the jurisdiction’s status and progress in implementing its housing element; and
WHEREAS, the Housing Element includes Program H-D-4-b, ADU/JADU Financial Incentive Program, to provide or partner with another organization to provide a financial incentive program for single-family homeowners to construct an ADU/JADU that is restricted for lower income households for 10-15 years, with an additional incentive amount for units subject to a preference for identified categories of special need people who would benefit from coordinated onsite services, including but not limited to people with disabilities, and a quantified objective to finance eight (8) ADUs by 2031; and WHEREAS, the Program has been named as the Affordable ADU Loan Program (“Program”); and
WHEREAS, the implementation of the program allows for collaboration with third parties; and
WHEREAS, on December 23, 2025 staff issued a request for proposals for an Affordable ADU Program, posted it on the City’s website, and an email soliciting proposals 4 6
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was sent to multiple recipients, including the Housing Endowment and Regional Trust (HEART) of San Mateo County (”HEART”), Meriwest Credit Union, Habitat for Humanity Greater San Francisco (HGSF), Housing Leadership Council of San Mateo County, and several Bay Area ADU builders/developers and ADU sales and installation companies; and
WHEREAS, the Program includes three (3) incentives, including a) the opportunity for Foster City homeowners to obtain interest-free 20-year loans of $125,000 to build or purchase and install an Accessory Dwelling Unit (ADU) with deferred payments for 10 years, provided the homeowner agrees to a 10-year deed restriction on the ADU requiring the ADU to be rented at low income rates to lower income occupants earning less than 80% of Area Median Income during the deed restriction period; and b) a higher loan amount of $150,000 for homeowners who rent their ADUs with a preference for those with special needs during the deed restricted period, and other provisions as set forth in the Program and Underwriting Guidelines attached hereto; and c) expedited permitting for the ADUs; and the Program includes additional requirements as set forth in the Program Guidelines; and
WHEREAS, staff received three responses, from HEART, Habitat For Humanity Greater San Francisco, and The Mortgage Office; and
WHEREAS, staff reviewed the proposals and selected HEART due to the proposed cost of program implementation, experience managing similar loan programs; and submittal of a proposal that meets all required program objectives; and WHEREAS, staff is proposing a three (3)-year agreement with HEART, with a maximum amount of $1,160,510, including loan funds of $1,100,000 for eight (8) loans and program administration fees of $60,510, and a renewal option for an additional three (3) years for program administration; and
WHEREAS, there is approximately $10,174,993.56 million available in the fund balance for Fund 137, which is sufficient to absorb this supplemental appropriation.
NOW, THEREFORE, BE IT RESOLVED that the City Council of the City of Foster City does hereby:
1. Authorize the Mayor to execute an Agreement with Housing Endowment and Regional Trust of San Mateo County for a three (3) year term in an amount not to exceed $1,160,510 for the Affordable ADU Loan Program to issue and manage eight (8) loans for eligible Foster City homeowners to build or purchase and install below market rate ADUs with 10-year deed restrictions that require the homeowner to rent the ADU at low income rates to eligible lower income households earning less than 80% of Area Median Income, in the form attached hereto with minor amendments that may be approved by the City Attorney.
2. Approve the appropriation of $1,160,510 from Fund 137 to account number 137-0847-419-42-51.
3.The Council finds the Agreement exempt from the CEQA as the Affordable ADU Loan Program was analyzed as part of the Environment Impact Report 4 6
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(EIR) for the 6th Cycle Housing Element (2023-2031) and Safety Element Update, adopted environmental findings, and adopted a Standard Conditions of Approval and Mitigation Monitoring and Reporting Program (SCH 2022010509), and no further environmental review for the program is necessary because no substantial changes are proposed and no new information is known that would warrant a subsequent EIR pursuant to CEQA Guidelines section 15162, or an addendum pursuant to CEQA Guidelines section 15164; and, this program would facilitate the construction of ADUs. Certain ADU approvals would be categorically exempt pursuant to Public Resources Code § 21080(b)(1) and CEQA Guidelines § 15268 because the projects would be approved ministerially. Ministerial projects are exempt from the requirements of CEQA. Additionally, certain ADUs that are not approved ministerially would be exempt from CEQA pursuant to CEQA Guidelines section 15301(Class 1-Existing Facilities) as an addition to an existing structure and 15303 (Class 3-New Construction or Conversion of Small Structures) as construction of new, small facilities or structures.
PASSED AND ADOPTED as a Resolution by the City Council of the City of Foster City at the Regular Meeting held on the 4th day of May 2026, by the following vote:
AYES:
NOES:
ABSENT:
ABSTAIN:
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ART KIESEL, MAYOR
ATTEST:
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PRISCILLA SCHAUS, CITY CLERK