Inclusionary Housing and
Commercial Linkage Fee Analyses
City of Rocklin
March 24, 2026
Purpose of the Study
2 ❖ Inform Revised Inclusionary Housing Ordinance
➢ Evaluate Onsite Obligations
➢ Determine Appropriate In-Lieu Fee Levels
➢ Conduct Nexus Analysis to Provide Context
❖ Conduct Commercial Linkage Fee Analysis to Support Potential Affordable Housing Fee on Non-Residential Development
❖ Draft Ordinance for City Review and Adoption
Inclusionary Housing Analysis
❖ RHNA Obligations & Progress
❖ Financial Feasibility Analysis
➢ Onsite Obligations
➢ In-Lieu Fees
❖ Residential Nexus Analysis
❖ Survey of Other Jurisdictions
❖ Recommendations
3 Regional Housing Needs Allocation (RHNA)
4 RHNA Obligations, 2021-2029 Housing Element Planning Period Income Category (% of AMI) Number of Units Percent of Units Very Low (< 50% AMI) 1,911 34%
Low (50 – 80%) 1,151 20%
Moderate (80 – 120%) 771 14%
Above Moderate (Over 120%) 1,828 32%
Total 5,661 100%
❖ Largest gaps are in Very Low and Low-Income unit categories City of Rocklin Permitted Housing Units 2018- 2025, By Income Level Very Low Low Moderate Above Moderate Total
Total, 2018-2025 166 247 320 2,537 3,270
Percent 5% 8% 10% 78% 100%
Remaining Needed Units 1,745 904 451 -709
Residential Financial Feasibility Analysis
❖ Identify prototype projects
❖ Model development economics of prototypes
❖ Evaluate potential impact of range of
inclusionary requirements and in-lieu fees on
financial feasibility
5 Market Rate Residential Prototypes
6 Low Density
Single Family
Detached
Medium Density
Single Family
Detached
Medium High
Density Single
Family Detached
Single Family
Attached
Rental
Apartments
Density 3 dua 5 dua 12 dua 18 dua 25 dua
Average Unit 3,400 sf 2,500 sf 1,800 sf 1,600 sf 975 sf
4.5 BRs 3.75 BRs 3.0 BRs 3.0 BRs 1.8 BRs
No. Stories 1 to 2 2 2 2 to 3 3
Parking type 2-car garage 2-car garage 2-car garages 2-car garages Surface /
Carports
(2.1 sp/unit)
Sales Price/Rent $1,300,000 $950,000 $675,000 $550,000 $2,750
7 Affordable Sales Prices / Rents
1. Affordable units assume a 10% downpayment.
2. Market rate units assume a 20% downpayment.
Area Median Income (AMI) for 4-person household is
$120,800 per year
Low Density Single
Family Detached
Medium Density
Single Family
Detached
Medium High
Density Single
Family Detached
Townhome Rental
Apartments
Market Rate Sales Price/Rent $1,300,000 $950,000 $675,000 $550,000 $2,750 Household Income Req’d2 $302,000 $224,000 $162,000 $136,000 $115,000 Area Median Income
(weighted by # of BRs) $135,300 $128,050 $120,800 $120,800 $106,300 % of AMI to Afford New Unit 223% 175% 134% 113% 108%
Affordable Sales Prices1 and Rents
Moderate (110% AMI) $513,100 $489,500 $466,100 $460,100 $2,797 /mo Low Income (70% AMI) $244,050 $234,975 $226,200 $220,000 Low Income (60% AMI) $1,468 /mo
Very Low Income (50% AMI) $151,850 $147,775 $143,800 $137,600 $1,202 /mo 8 Land &
Sitework
Construction &
Indirects
Fees and
permits
Profit
$0
$100
$200
$300
$400
$500
$600
$700
Net Sale Price Cost/Unit
Thousands per unit
Total
Cost
Feasibility Analysis:
Total Development Costs
❖ Land & Sitework
❖ Direct
Construction
❖ Fees & Permits
❖ Other Indirects
❖ Profit
Sources: local development
community, published market data
and cost estimates, City staff, KMA
experience in other jurisdictions
9 Feasibility Analysis:
Target Returns & Outcomes
Feasible – Generally feasible and likely to
develop. Total development costs + profit
are within 3% of meeting target returns.
Marginal Feasibility – Weaker feasibility,
may require some improvement to move
forward (higher rents or prices, lower costs,
etc.) Within 7% of target returns.
Challenged – More challenging feasibility.
Not likely to move forward without more
significant improvements to pro forma.
More than 7% beneath target returns.
For Sale Units
Target Profit: 10% of
sales revenue
Rental Units
Target Return: 6.25%
return on cost
10 Financial Feasibility Findings:
No Affordable Housing Obligation
Unit Size
Sales Price /
Developer
Investment
Supported
Total
Development Cost
Surplus /
(Gap)
Surplus /
(Gap) as %
of Total
Dev Cost
Feasibility
Conclusion
Low Density Single
Family Detached 3,400 sf $1,300,000 $1,267,000 $33,000 3% Feasible Medium Density Single
Family Detached 2,500 sf $950,000 $933,000 $17,000 2% Feasible Medium High Density
Single Family Detached 1,800 sf $675,000 $664,000 $11,000 2% Feasible Townhome 1,600 sf $550,000 $598,000 ($48,000) -8% Challenged Apartments 750 sf $339,000 $374,000 ($35,000) -9% Challenged Financial Feasibility Scenarios Tested
❖ Onsite Obligations
For Sale
▪ 5% at Low
▪ 10% at Moderate
▪ 10% at Low
▪ 10% at Very Low
▪ 15% at Low
❖ In-lieu Fees
▪ $5 per square foot
▪ $10 per square foot
▪ 5% of units offsite (per unit fee = gap of LIHTC unit) ▪ 10% of units offsite (per unit fee = gap of LIHTC unit ▪ 15% of units offsite (per unit fee = gap of LIHTC unit) 11 Rental
▪ 5% Low
▪ 10% Low
▪ 10% Very Low
▪ 15% Low
12 Financial Feasibility Findings:
With Affordable Housing Obligations
Low Density
SFD
Medium
Density SFD
Medium High
Density SFD
Base Case – No Inclusionary Obligation Feasible Feasible Feasible 5% Onsite at Low Income Feasible Feasible Feasible
10% Onsite at Moderate Income Feasible Feasible Feasible 10% Onsite at Low Income Marginal Marginal Marginal
10% Onsite at Very Low Income Marginal Marginal Marginal 15% Onsite at Low Income Challenged Challenged Challenged In-Lieu Fee @ $5 psf Feasible Feasible Feasible
In-Lieu Fee @ $10 psf Feasible Feasible Feasible
Equivalent Per Square Foot Fee
In-Lieu Fee @ 5% Offsite (City-Funded Units) $1.97 $2.68 $3.72 In-Lieu Fee @ 10% Offsite (City-Funded Units) $3.94 $5.36 $7.44 In-Lieu Fee @ 15% Offsite (City-Funded Units) $5.91 $8.04 $11.17 Townhomes & Apartments: Base Case has Challenged Feasibility. Scenarios modeling onsite obligations and in-lieu fee options also result in Challenged feasibility.
Per Square Foot Equivalent Compliance Costs:
For-Sale Prototypes
13 Low Density Single Family
Detached
Medium Density Single
Family Detached
Medium High Density
Single Family Detached
Square Feet Per Unit 3,400 sf 2,500 sf 1,800 sf
psf per unit psf per unit psf per unit
5% Onsite at Low $13.44 $45,700 $12.38 $31,000 $10.86 $19,500 10% Onsite at Moderate $20.06 $68,200 $15.98 $40,000 $10.11 $18,200 10% Onsite at Low $26.91 $91,500 $24.80 $62,000 $21.66 $39,000 10% Onsite at Very Low $29.15 $99,100 $27.67 $69,200 $25.42 $45,800 15% Onsite at Low $40.41 $137,400 $37.22 $93,100 $32.46 $58,400 In-Lieu Fee @ $5 psf $5.00 $17,000 $5.00 $12,500 $5.00 $9,000 In-Lieu Fee @ $10 psf $10.00 $34,000 $10.00 $25,000 $10.00 $18,000 In-Lieu Fee @ 5% Offsite $1.97 $6,700 $2.68 $6,700 $3.72 $6,700 In-Lieu Fee @ 10% Offsite $3.94 $13,400 $5.36 $13,400 $7.44 $13,400 In-Lieu Fee @ 15% Offsite $5.91 $20,100 $8.04 $20,100 $11.17 $20,100 Residential Nexus Analysis
❖ Quantifies impact of new market rate housing
on demand for affordable housing
❖ Not a legal requirement, but provides
additional context for establishing inclusionary
housing requirements
14 Conceptual Framework of Residential Nexus Analysis
15 New Housing
Units
Creates demand for
goods and services,
which generates jobs
New Jobs
and Pay
Levels
A share of new jobs
are lower paying
Added
Affordable
Housing
Need
Number of new
affordable units to
house workers that
qualify
Inclusionary
Percentage to
Mitigate
Affordable
Housing Need
Percent affordable
units to address added
demand
16 Residential Nexus Analysis: Inclusionary Percentages Low Density Single
Family Detached
Medium Density
Single Family
Detached
Medium High
Density Single
Family Detached
Single Family
Attached
Rental
Apartments
Up to 80% AMI 14.8% 12.3% 10.2% 8.7% 7.1%
80% to 120% AMI 5.1% 4.4% 3.6% 3.2% 2.7%
Total (Up to 120% AMI) 19.9% 16.6% 13.8% 11.8% 9.7%
Low Density Single
Family Detached
Medium Density
Single Family
Detached
Medium High
Density Single
Family Detached
Single Family
Attached
Rental
Apartments
Up to 80% AMI 17 units 14 units 11 units 9 units 8 units Up to 120% AMI 25 units 20 units 16 units `13 units 11 units Affordable Unit Demand Per 100 Market Rate Units – Cumulative Through Inclusionary Percentages Sufficient to Mitigate Impacts Inclusionary Requirements in Neighboring
Jurisdictions
17 Jurisdictions • City of Sacramento, Roseville, Loomis, Folsom, Elk Grove and Placer County Onsite
Requirement /
Option
• Many have a 10% onsite option or requirement. Only Loomis requires onsite units.
• Affordability: City of Sacramento – Low; Loomis and Folsom – Low and Very Low; Placer County – Moderate, Low and Very Low.
• Folsom has no requirement on rental units
• Roseville and Rancho Cordova do not have inclusionary programs Fee
Requirement /
Option
• Sacramento: $3.56 per square foot
• Folsom: $3.00 per square foot
• Loomis: not yet adopted. Considering a fee only to fund fractional unit requirement
• Elk Grove: $3,812 - $6,354 per market rate unit
• Placer County: $2.73 per square foot
ADUs as an Option for Meeting Inclusionary
Housing Obligation
Planning Commission indicated interest in ADUs being an option for meeting inclusionary requirement
Preliminary Research:
• Some jurisdictions permit developers to meet inclusionary obligations by building ADUs • Placer County is one example
• ADUs can be used to meet RHNA and can be reported on annual statement once a building permit has been issued
• City has received guidance from HCD that Rocklin may claim only 5 ADUs per year toward meeting RHNA
• City anticipates that actual number of new ADUs will exceed 5 per year by a significant margin
• If City is interested in pursuing this an option, additional research will need to be undertaken to devise a system that is:
• equitable to all developers
• a meaningful tool to meet the City’s policy objectives 18 Draft Recommendations: Residential
❖ Establish an inclusionary housing obligation with
an in-lieu fee option
❖ Onsite obligation: 5% of units at Low Income
❖ Allow in-lieu fee, by right: $5.00 per square foot of market rate units
❖ Consider a reduced fee on multi-family units until
market conditions strengthen
❖ Exempt projects with 9 or fewer units
19 Commercial Linkage Fee Analysis
❖ Non-residential nexus analysis
❖ Quantifies impact of new non-residential
development on demand for affordable housing
❖ Establishes maximum legally supportable fee
levels for an affordable housing impact fee on
non-residential development
❖ Complies with California Mitigation Fee Act
20 Conceptual Framework of Non-Residential Nexus Analysis 21 New Non-
Residential
Development
Generates new employees
New Jobs
and Pay
Levels
A share of new jobs
are lower paying
Added
Affordable
Housing
Need
Number of new
affordable units to
house workers that
qualify
Cost to
Mitigate
Affordable
Housing
Need
Cost to create new
affordable units to
address added
demand
Non-Residential Nexus Analysis:
Maximum Legally Supportable Impact Fees
22 Affordability Gap
Per Unit
Retail/
Commercial Office Hotel/
Lodging Warehouse Light
Industrial
Research &
Develop.
Up to 30% AMI $199,000 $4.30 $2.80 $1.70 $0.60 $1.30 $0.60 30% - 50% AMI $121,000 $33.50 $15.10 $12.60 $7.00 $9.00 $3.20 50% - 80% AMI $81,000 $19.60 $24.90 $8.90 $4.80 $9.70 $8.20 80% - 120% AMI $89,900 $15.10 $28.20 $5.90 $4.70 $8.80 $16.20 Total Mitigation Cost/
Maximum Supported Fee $72.50 $71.00 $29.10 $17.10 $28.80 $28.20 Nexus Cost Per Sq. Ft. of Building Area
Commercial Linkage Fees in Neighboring
Jurisdictions
23 ❖ No fees in Roseville or Western Placer County
❖ Folsom - $2.05 psf
❖ Highest fee in Sacramento: $3.33 psf of office space
❖ Highest fee in County of Sacramento: $3.00 psf of office or hotel space
❖ Highest fee in Elk Grove: $3.11 psf of hotel space
❖ Highest fee in Citrus Heights: $2.28 psf of hotel
❖ Highest fee in Rancho Cordova: $0.97 psf of office
Draft Recommendations: Non-Residential
❖ If CC elects to adopt non-residential fees, KMA
recommends fees similar to neighboring jurisdictions
❖ Office, hotel, commercial: $2.75 - $3.00 psf
❖ Research and Development, industrial, warehouse:
$1.00 - $2.00 psf
❖ Could apply reduced fee in the downtown
❖ Could exempt small projects, e.g, <5,000 sf
24 Next
Steps*
25 • Tonight: City Council reviews Draft Report
and provides direction
If so requested, KMA will prepare Draft Ordinance &
Fee Resolution
• April 7: Planning Commission reviews draft
ordinance
• April 28: City Council reviews draft
ordinance and fee resolution
*All dates are tentative
Supplementary Slides
26 Financial Feasibility of Prototypes: For Sale
27 Financial Feasibility of Prototypes: Rental
28