Chapter 3.90
HOUSING TRUST FUND

Sections:

3.90.010    Title.

3.90.020    Findings and purpose.

3.90.030    Definitions.

3.90.040    Housing trust fund.

3.90.050    Housing trust fund fee.

3.90.060    Appeal procedure.

Appendix A

3.90.010 Title.

This chapter shall be known and cited as the “Housing Trust Fund.” (Ord. 966 § 1 (part), 2002)

3.90.020 Findings and purpose.

A.    The purpose of this chapter is to further the policies, goals and programs of the housing element of the city’s general plan and to help facilitate the development of affordable housing within the city. The city council finds that the city has become an important component in the economic makeup of the Sacramento region and that the expected future expansion of nonresidential development within the city will increase the need for workforce housing. The city council further finds that nonresidential development should contribute to the cost associated with providing affordable housing for the city’s increased workforce. These findings are based upon data included in the August 21, 2002, Affordable Housing Trust Fund Fee Technical Report prepared by Economic & Planning Systems, Inc. (hereinafter “Nexus Study”).

B.    The city council finds that providing a variety of housing options to workers of all income levels is socially and economically beneficial to the city and its residents in that it would provide opportunities for important professionals, such as teachers and public safety personnel, to live and work in the city; it would reduce transportation expenses; and would allow a larger share of an employee’s income to be spent within the community.

C.    The city council further finds that the creation and establishment of a housing trust fund as a source of revenue to assist in the development of housing to meet the housing needs of the city’s low, very low and extremely low income households is consistent with the policies and goals of the housing element of the city’s general plan and is necessary for the health and welfare of the city’s residents. Accordingly, it is the intent of the city council to establish a housing trust fund which shall be funded by an impact fee imposed on nonresidential development within the city. It is further the intent of the city council to utilize the housing trust fund to foster a mix of household incomes in residential projects assisted by the housing trust fund and to disperse affordable housing projects throughout the city to achieve a balance of housing in all neighborhoods and communities.

D.    An analysis of land use expected at buildout of the city pursuant to the general plan makes it possible to estimate the undeveloped nonresidential building square footage and the number of persons projected to be employed by such nonresidential development. These projections, along with a calculation of the required subsidy per dwelling unit and other relevant assumptions, were utilized in the Nexus Study to determine the amount of the housing impact fee. It is the intent of this chapter to create a fee in accordance with the Nexus Study calculations which will spread the cost of providing affordable housing to those who create the need for such housing without generating any surplus to the general fund.

E.    The failure to impose the conditions and regulations of this chapter relating to the payment of the housing trust fund fee as a condition of issuance of building permits would jeopardize the general health and welfare of residents and the economic growth of the community in that it would permit nonresidential development to proceed without adequate workforce housing or an adequate means to finance such housing.

F.    The housing trust fund is intended to be utilized with other sources of funding including, but not limited to, fee deferrals, fee waivers, federal tax credits, tax-exempt mortgage revenue bonds, community development block grants, and HOME funds.

G.    The fee established by this chapter is intended to be in addition to any other fees, charges or taxes required by law or the Folsom Municipal Code as a condition of development. (Ord. 1143 § 2, 2011; Ord. 966 § 1 (part), 2002)

3.90.030 Definitions.

“Addition” means adding gross square feet to an existing nonresidential development project.

“Affordability covenant” means a covenant restricting all low income, very low income and extremely low income units to remain affordable to low income, very low income and extremely low income households for no less than fifty-five years for rental units and no less than forty-five years for owner-occupied units.

“Construction” means construction of new nonresidential buildings and/or facilities.

“Director” means the director of the community development department.

“Extremely low income households” refers to the definition contained in Health and Safety Code Section 50106, including but not limited to an income limit of thirty percent of area median income, adjusted for family size and revised annually.

“Gross square feet” means the area included within the surrounding walls or fences of a building or facility as determined by the director. This area does not include garages or carports.

“Housing trust fund fee” means the fee imposed by this chapter on nonresidential development projects to fund the housing trust fund. The housing trust fund fee shall be calculated as follows: gross square feet multiplied by the applicable fee equals housing trust fund fee.

“Interior remodel” means any improvement that results in a change in use of a previously occupied building or facility and that increases employee density.

“Low income households” refers to the definition contained in Health and Safety Code Section 50079.5, including but not limited to an income limit of eighty percent of area median income, adjusted for family size and revised annually.

“Mixed use project” means, for purposes of this chapter, any privately owned project which includes both nonresidential and residential uses.

“Nonresidential development project” means any privately owned project that involves the construction, addition, rehabilitation, or interior remodeling of buildings or facilities, including mixed use projects, whose proposed use is or includes a commercial, industrial, or other nonresidential use.

“Rehabilitation” means rehabilitation, the value of which constitutes twenty-five percent of the after-rehabilitation value of the dwelling unit or units, inclusive of the land value.

“Very low income households” refers to the definition contained in Health and Safety Code Section 50105, including but not limited to an income limit of fifty percent of area median income, adjusted for family size and revised annually. (Ord. 1176 § 2, 2013; Ord. 1143 § 3, 2011: Ord. 966 § 1 (part), 2002)

3.90.040 Housing trust fund.

A.    Establishment. There is hereby established a housing trust fund. The housing trust fund shall receive all monies contributed pursuant to Section 3.90.050 and may receive income from other sources. The housing trust fund shall be administered, in accordance with this chapter, by the director and the finance director.

B.    Use and Disbursement of Monies in the Fund. Monies in the housing trust fund shall be used to promote the goals and policies of the housing element of the general plan; to implement any housing assistance plan, program, or guidelines adopted by the city council; and to increase and improve the supply of housing affordable to low and very low income households, with priority given to residential projects which include very low income units, as well as other housing related purposes. Housing trust funds may be used for loans, grants, equity participation or other funding mechanisms to accomplish these purposes. The housing trust fund may be used to cover administrative, legal, consulting, or other housing related expenses, which are not reimbursed to the city through processing fees.

C.    Application for Assistance. An applicant may file an application with the planning, inspections and permitting department to request financial assistance for the construction or rehabilitation of extremely low income, very low income and low income dwelling units. The application shall be in a form approved by the director and shall specify the number of extremely low, very low and low income units to be included in the project. The application shall also include all documentation and information deemed necessary by the director for the evaluation of the application. The city council shall approve or deny all applications for financial assistance from the housing trust fund. In reviewing the applications, the city council may consider, among other factors: (1) the extent to which housing trust fund assistance affects the feasibility of a project; (2) the demonstrated need for housing trust fund assistance; (3) other sources of financial assistance, including, but not limited to, fee deferrals and waivers; and (4) the extent to which the particular development project achieves the intent and purpose of this chapter.

D.    Housing Trust Fund Agreement and Security. City council approval of housing trust fund assistance will require the applicant to enter into a housing trust fund agreement, in a form satisfactory to the city attorney, that will at a minimum be: (1) site and project specific; (2) provide for the enforcement of the provisions of this chapter; (3) bind applicant’s successors in interest; (4) require the recordation of affordability covenants; and (5) be recorded with the Sacramento County recorder’s office. In addition and as applicable, the applicant shall be required to provide security in a form approved by the city attorney and to execute separate subordination agreements for each encumbrance or deed of trust other than those which secure repayment of acquisition or construction financing existing at the time of execution of the housing trust fund agreement.

E.    Annual Evaluation. The director and finance director shall report, on an annual basis, to the city council on the status of activities undertaken with the housing trust fund. The report shall include a statement of income, expenses, disbursements, and other uses of the housing trust fund. The report shall also state the number of extremely low income, very low income and low income units constructed or assisted during that year and the amount of such assistance.

F.    Processing Fees. The planning, inspections and permitting department shall collect an application processing fee (or fees) which shall be established by city council resolution. (Ord. 1176 § 3, 2013; Ord. 1143 §§ 4 – 6, 2011; Ord. 966 § 1 (part), 2002)

3.90.050 Housing trust fund fee.

A.    Application. Unless otherwise set forth in this chapter, all nonresidential development projects shall pay a housing trust fund fee. The housing trust fund fees are hereby set in the amounts set forth in Appendix A, which appears at the end of this chapter. The fees established by this chapter are in addition to any other fees, charges or taxes that are required by law or the Folsom Municipal Code as a condition of development.

B.    Exemptions.

1.    The housing trust fund fee requirement does not apply to projects that fall within one or more of the following categories:

a.    Residential uses (dwelling only) as set forth in Title 17, including the gross square footage dedicated solely to residential use in a mixed use project; or

b.    Any project which has a vested right to develop pursuant to contract or state law without the payment of the housing trust fund fee; or

c.    Uses operated by nonprofit organizations which provide food storage or meal service to lower income households, or which provide temporary emergency shelter or transitional housing; or

d.    Uses operated by nonprofit organizations which provide essential services (such as medical or emergency care) without cost to the recipient, and serve primarily lower income households; or

e.    Any reconstruction of a building which was damaged or destroyed by fire or natural catastrophes so long as the square footage of the building is not increased; or

f.    Nonresidential uses in mixed use projects which include dwelling units affordable to extremely low, very low and low income households. (For each extremely low, very low income and low income dwelling unit included in the mixed use project, ten thousand gross square feet of nonresidential use shall be exempt from the housing trust fund fee. Such exemption is project specific and contingent upon execution and recordation of affordability covenants for each extremely low income, very low income and low income dwelling unit.)

g.    The following uses:

i.    Child care center (with six or fewer children);

ii.    Christmas tree sales lot;

iii.    Church;

iv.    Commercial recreational vehicle storage;

v.    Mini storage/individual storage/locker buildings;

vi.    Mobile recycling units;

vii.    Mortuary/crematorium;

viii.    Parking lot, garage or facility;

ix.    Private schools (nonprofit);

x.    Public utility yard;

xi.    Small recyclable material collection facility;

xii.    Temporary parking lot.

2.    Nothing in this chapter shall prohibit these regulations and requirements from applying to an exempt project if: (1) existing entitlements or vested rights expire prior to the issuance of a building permit (or if no building permit is required, any use or discretionary permit); or (2) existing entitlements or vested rights are extended or modified; or (3) there is a change in use to a nonexempt use.

C.    Payment of Fee as a Condition of Issuance of a Building Permit. Except as provided elsewhere in this chapter, no building permit (or if no building permit is required, any use or discretionary permit) shall be issued for any nonresidential development project unless and until: (1) the applicable housing trust fund fee is paid to the city; or (2) the project is certified by the director as being exempt from the provisions of this chapter. Upon application to and approval by the director, the housing trust fund fee may be deferred to the final inspection of the building subject to the fee, with all deferred housing trust fund fees due at the time of final inspection on the first building in the project. Compliance with this chapter shall be a condition of approval for all development entitlements and permits required for a nonresidential development project.

D.    Calculation of Fee.

1.    The housing trust fund fee applicable to a nonresidential development project shall be determined and computed by the director upon application for each building permit (or if no building permit is required, for any use or discretionary permit) using the housing trust fund fee schedule set forth in Appendix A. The fees are based upon the determinations in the Nexus Study regarding: (1) the use of the fee and the type of development on which the fee is imposed; (2) the need for affordable housing created by nonresidential development projects; and (3) the reasonable cost of the housing demand attributable to nonresidential development projects.

2.    Applications for building permits (or if no building permit is required, any use or discretionary permit) for any nonresidential development project shall include: (1) a statement of the total gross square feet of the building or facilities; (2) plans and documentation, as required by the director, to support the statement of gross square footage; and (3) the intended use or uses for the nonresidential development project by gross square feet.

3.    For purposes of this chapter, the housing trust fund fees for an interior remodel shall be the fee applicable to the new use, less any housing trust fund fees that were previously paid based on the prior use of the building or facilities if such fees were paid within the previous five-year period. Housing trust fund fees for an addition shall be the fees applicable to the use within such addition.

4.    The housing trust fund fee for a building permit (or if no building permit is required, any use or discretionary permit) for a building exceeding two hundred thousand gross square feet which is part of a nonresidential development project shall be computed, on a per building permit basis, as follows:

Gross Square Feet

Housing Trust Fund Fee

First 200,000

100%

200,001—250,000

75%

250,001—300,000

50%

300,001 and above

25%

E.    Inflationary Adjustment. At the discretion of the city council by resolution the housing trust fund fees established by this chapter may be adjusted for inflation on or about January 1st of each year by a percentage equal to the increase, if any, in construction costs since the prior year as determined by the director based upon Engineering News Record (or similar publication) construction cost index.

F.    Alternative to Payment of Housing Trust Fund Fee. As an alternative to payment of the housing trust fund fee, the developer of a nonresidential development project may submit a proposal to the director to mitigate the impacts of such development through the construction or rehabilitation of extremely low income, very low income and low income dwelling units or the dedication of land for the construction of extremely low income, very low income and low income dwelling units. The city council shall approve or deny all applications for the construction or rehabilitation of units or the dedication of land. A proposal for the construction of units or the dedication of land may be approved if (1) the city council finds that the proposed alternative will increase and/or improve the supply of housing affordable to extremely low, very low and low income households to an equal or greater extent than payment of the housing trust fund fee; and (2) the developer enters into a housing trust fund agreement with the city, in a form approved by the city attorney.

G.    Special Uses. The developer of any nonresidential development project may apply to the director for a reduced or adjusted housing trust fund fee based upon a special use and the absence of any reasonable relationship or nexus between the impacts of the project and the amount of the fee. The application shall be made in writing and filed with the director in conjunction with the application for a building permit for a nonresidential development project (or if no building permit is required, any use or discretionary permit). The application shall state in detail the factual basis for the claim of reduction or adjustment and the amount of the proposed reduction or adjustment. The director shall consider the application and render his/her decision in writing not later than fifteen calendar days after the filing of the application. No reduction or adjustment shall be granted unless the following findings are made to justify the grant of an adjustment or reduction: (1) the building size is an inappropriate indicator of employee density; (2) the applicant has demonstrated that the use will employ less than twenty-five percent of the employees typically employed in a building or facility of the proposed size and use; and (3) the project will have a minimal impact on housing demand within the city. The project proponent or applicant applying for a reduced or adjusted fee shall have the burden of proof, by a preponderance of the evidence, that a reasonable relationship or nexus is lacking between the fee and the impacts of the particular project. (Ord. 1176 §§ 4, 5, 2013; Ord. 1143 § 7, 2011; Ord. 966 § 1 (part), 2002)

3.90.060 Appeal procedure.

A.    Administrative Appeal. Any person aggrieved by a decision of the director may, within ten calendar days thereafter, appeal the decision in writing to the city council by filing an appeal with the city clerk. The city council shall consider such appeals within forty-five calendar days after filing. No building permit (or if no building permit is required, any use or discretionary permit) shall be issued for the project until a final decision pursuant to this section has been made. No application for a building permit (or if no building permit is required, any use or discretionary permit) shall be considered final or complete for purposes of the Permit Streamlining Act (Government Code Section 65920 et seq.), or any other purpose, until a final decision pursuant to this section has been made.

B.    Protests and Legal Actions. Notwithstanding the provisions of subsection A of this section, a project proponent or applicant may pay the housing trust fund fee “under protest” and receive a building permit (or if no building permit is required, any use or discretionary permit) in accordance with the provisions and requirements of Government Code Section 66020.

C.    Change in Use, Zoning or Land Use Designation. In the event of any reduction or adjustment in the housing trust fund fee granted pursuant to this section, any later change in the use, zoning or land use designation for the property involved shall subject the owner to payment of the then applicable housing trust fund fee for such new use(s), zoning or land use designation, whether or not a building permit is required. (Ord. 966 § 1 (part), 2002)

APPENDIX A HOUSING TRUST FUND FEE SCHEDULE

Use Category

Feet per
Gross Square Foot

Office

$1.70

Retail

$1.70

Light Industrial

$1.70

Heavy Industrial/Manufacturing

$1.70

Light Industrial/Manufacturing

$1.70

(Res. 10296, 2019; Res. 9146, 2013)