CORRESPONDENCE FROM THE PUBLIC
City Council Regular Meeting
March 24, 2026
1536 Eureka Road o: 916 677 5717
Roseville, CA 95661 northstatebia.org
March 24, 2026
Mayor David Bass and Members of the Rocklin City Council 3970 Rocklin Rd.,
Rocklin, CA 95677
RE: Item D4, Inclusionary Housing Program and Commercial Linkage Fee Analyses
Dear Mayor Bass and Councilmembers,
On behalf of the North State Building Industry Association, we are writing regarding the proposed Inclusionary Housing Program and the supporting analysis prepared by Keyser Marston Associates.
We support the goal of increasing affordable housing production. We also acknowledge that the program laid out by the consultant is already a large improvement over the current “temporary” ordinance, which never had any clear basis in market reality or need for implementation.
However, the proposed in-lieu fee of $5.00 per square foot is still too high, not supported by the underlying math, out of step with regional practice, and will directly reduce housing affordability in Rocklin.
Based on the consultant’s own data and current market conditions, the appropriate in-lieu fee level can be derived directly. Affordable housing developers in this region consistently identify an average subsidy gap of between $50,000 and $60,000 per affordable unit. At a 5 percent inclusionary target, a 100-unit market-rate project would therefore be responsible for funding five affordable units, or approximately $300,000 in total subsidy.
Keyser Marston’s analysis indicates typical single-family unit sizes in Rocklin range from approximately 1,800 to 2,500 square feet. Using a conservative assumption of 2,200 square feet per unit, the 95 market-rate units in a 100-unit project would collectively account for about 209,000 square feet of residential floor area. Dividing the $300,000 subsidy requirement by this floor area yields an in-lieu fee of approximately $1.44 per square foot.
Even under more conservative assumptions, the resulting fee remains materially below our previously stated compromise position of $3.00 per square foot. In contrast, a $5.00 per square foot in-lieu fee would generate revenues far in excess of the actual subsidy need
associated with a 5 percent obligation and would not be reasonably calibrated to the demonstrated affordable housing cost differential.
We also have concerns with the consultant’s Residential Nexus Analysis. It posits that the connection between new market-rate residential development and affordable housing demand rests on an indirect theoretical framework: new residents increase consumption, consumption generates demand for additional services, and those services may create jobs of which some are lower-wage, thereby creating demand for affordable housing.
This framework captures a potential economic linkage, albeit dubiously. In practical application, it overstates the geographic specificity of that linkage in the Rocklin context.
Rocklin residents often obtain goods and services in neighboring cities throughout the region, diluting the assumption that new consumer spending occurs solely within Rocklin and directly creates new local lower-wage jobs. In other words, the geographic nexus between residential development in Rocklin and new locally-based low-wage employment is vastly overstated.
More importantly, the existence of lower-wage jobs is not caused by residential development; wage levels are determined by employers, broader labor markets, and economic conditions—not housing production. While one policy response to low wages could be changes to wage standards (i.e., imposing minimum wage laws), we do not endorse that approach either and raise the point only to illustrate that inclusionary zoning requirements, like wage mandates, are unproven tools that risk increasing overall costs without directly addressing underlying economic drivers.
The real-world impact of this policy is immediate and measurable. According to the most recent NAHB Priced-Out Estimates, in the Sacramento-Roseville-Folsom region, 575 households are priced out of the market for every $1,000 increase in home price. In the Sacramento-Roseville-Folsom MSA, 575 area households are priced out of new homes for every $1000 increase. While even a $3.00 per square foot increase would likely price out nearly 3800 current households (still assuming a 2200 square foot house) an additional $2 would add 1150 more to that number, totaling 4950 local area families who could no longer afford 95% of new Rocklin homes. Policies intended to support housing affordability should not simultaneously exclude large numbers of existing families from the market by increasing the cost of all new homes regardless of whether affordable units are delivered.
We are not arguing that homebuilders should have no role in addressing affordable housing. We have consistently acknowledged this is a broader societal challenge and are willing to be part of the solution. However, that participation must be grounded in economic reality. Given the data generated by the consultant, we believe that a fee of $2.50 per square foot represents a reasonable compromise. It contributes meaningfully toward affordable housing funding, aligns more closely with the actual subsidy need
(although still materially higher), and reduces the number of households priced out due to added costs.
We have also continuously acknowledged that the pressures driving this policy are the result of unfair State-level mandates and expectations that are unnecessary and unhelpful in generating high density housing in Rocklin. However, that does not mean the City should adopt an approach that exacerbates the very problem it is trying to solve. The City retains discretion in how it responds and should do so in a way that protects housing production and affordability, rather than undermining both.
One important way to do this is to provide as many compliance options as possible. While construction of affordable units on site or off site could still be an option, allowing the construction of accessory dwelling units to satisfy inclusionary requirements would also create naturally lower-cost housing in a way that is both feasible and scalable. We are aware that the city’s current approved Housing Element may need to be altered to make this possible. If it is helpful, BIA is willing to engage with the State Department of Housing and Community Development to endorse such an approach. Rocklin’s success with producing these types of units should be rewarded, not add to the complexity of meeting state demands.
Ultimately, the homebuilding industry is the only sector actively producing housing supply.
Policies that increase the cost of building homes will reduce that supply and only worsen affordability over time. Therefore, we urge the Council to reduce the in-lieu fee to $2.50 per square foot or less and incorporate flexible compliance options that will result in actual production of housing.
Sincerely,
Jeff Short
Government & Public Affairs Director
North State Building Industry Association