Chapter 17.104
INCLUSIONARY HOUSING
Sections:
17.104.010 Purpose and intent.
17.104.030 Inclusionary housing requirement.
17.104.040 Inclusionary housing plan.
17.104.050 Specific plan requirement.
17.104.060 Alternative methods to meet the inclusionary housing requirement.
17.104.070 Incentives and assistance.
17.104.080 Exempted residential development.
17.104.090 Restrictions on inclusionary units.
17.104.100 Administration of the inclusionary housing requirement.
17.104.110 Monitoring of inclusionary housing.
17.104.120 Administrative fees.
17.104.130 Taking determination.
17.104.140 Enforcement and penalties.
17.104.010 Purpose and intent.
This chapter is intended to provide that new development projects in the city contain or assist in the production of a defined percentage of housing affordable to low income and very low income households, to provide for a program of incentives, and to implement the inclusionary policies of the housing element of the city’s general plan. (Ord. 958 § 2 (part), 2002)
17.104.020 Definitions.
“Adjusted basis” means the adjustment to the basis of a home for purposes of determining capital gains. Adjusted basis shall be defined and determined consistently with the Internal Revenue Service publication 523 “Selling Your Home.”
“Affordable” means rented at an affordable rent or sold at an affordable housing price.
“Affordable housing price” means a sales price at which low income or very low income households as provided in this chapter can qualify for the purchase of for-sale inclusionary units. A sales price shall be considered affordable only if each owner-occupied housing monthly payment is equal to or less than one-twelfth of thirty-five percent of gross income for the specified income level of the household (i.e., very low or low). For purposes of such calculation, housing expenses shall include mortgage principal and interest, taxes, insurance, and assessments. For purposes of this section, the interest rate shall be calculated based on an average of three major California lending institutions for thirty-year fixed rate FHA PAR financing.
“Affordable rent” means (1) for a unit whose occupancy is restricted to a low income household, that the monthly rent consists of no more than one-twelfth of thirty-five percent of eighty percent of the median income applicable to Sacramento County less a reasonable allowance for utilities; and (2) for a unit whose occupancy is restricted to a very low income household, that the monthly rent consists of no more than one-twelfth of thirty-five percent of fifty percent of the median income applicable to Sacramento County less a reasonable allowance for utilities. In each case, the median income applicable to Sacramento County is as determined annually by the United States Department of Housing and Urban Development, adjusted for household size.
“Affordable rental agreement” means legal restrictions by which the rents for rental inclusionary units will be set at such rates to ensure that rents remain affordable for a period of thirty years or longer.
“City” means the city of Folsom.
“Community development director” means the director of the community development department of the city, or his or her designee.
“Condominium” means and includes:
1. “Condominium” as defined by Section 783 of the Civil Code;
2. “Community apartment project” as defined by Section 11004 of the Business and Professions Code;
3. “Stock cooperative” as defined by Section 11003.2 of the Business and Professions Code; and
4. “Planned development” as defined by Section 11003 of the Business and Professions Code.
The term “condominium” specifically includes, but is not limited to, the conversion of any existing structure for sale pursuant to a method described in subsections (1) through (4) of this definition.
“Condominium conversion” or “conversion” means a change in the ownership of a parcel or parcels of property, together with structures thereon, whereby the parcel or parcels and structures previously used as rental units are changed to condominium ownership.
“Condominium project” or “project” includes the real property and any structures thereon, or any structures to be constructed thereon, which are to be divided into condominium ownership.
“Condominium unit” or “units” means the individual spaces within a condominium project owned as individual estates.
“Density bonus” means increases in density in a development project above the density otherwise permitted for the applicable land use designation as provided in the Folsom Municipal Code or in an amount specified in this chapter.
“Developer” means any person, firm, partnership, association, joint venture, corporation, or any entity or combination of entities which seeks the city’s approvals for all or part of a development project. “Developer” includes “owner.”
“Development agreement” means an agreement entered into between the city and developer pursuant to Section 65864 of the Government Code.
“Development project” means any residential real estate project or mixed residential and commercial real estate project consisting of residential units, including homes, multifamily residences or other residential structures. Projects at one location undertaken in phases, stages or otherwise developed in distinct sections shall be considered a single development project for purposes of this section. Development projects are those projects for which the developer is applying for new legislative entitlements which are not otherwise exempt under the provisions of this chapter.
“Dwelling unit” means a residential unit within a development project.
“External subsidy” means any source of funds that is not local public funding, including federal or state grants, loans, bond funds, tax credits or other tax-based subsidy.
“Final decision-making body” means the entity with final approval authority on the development project.
“First-time home buyer” means that neither the purchaser nor spouse has owned a home during the past three years, or that the purchaser meets at least one of the following criteria:
1. The purchaser is a displaced homemaker, defined as a person who has not worked full-time for at least three years, worked primarily without remuneration to care for the home and family, is unemployed or underemployed, is experiencing difficulty in obtaining or upgrading employment, and, while a homemaker, owned a home with a previous spouse;
2. The purchaser is single (unmarried or legally separated), has one or more minor children of whom purchaser has custody, and, while previously married, owned a home with a previous spouse; or
3. The purchaser owns or owned, during the past three years, a mobile home or trailer which is/was not permanently affixed to a permanent foundation as their principal residence.
“Housing trust fund” means the fund created and administered by the city for use on affordable housing projects in the city.
“Inclusionary housing agreement” or “agreement” means the agreement described in Section 17.104.100 between a developer and the city setting forth the manner in which the inclusionary housing requirement will be met in the development project.
“Inclusionary housing plan” means the plan described in Section 17.104.040 setting forth the manner in which the developer proposes to implement the inclusionary housing requirement or alternatives permitted in this chapter within the development project.
“Inclusionary housing requirement” means the provision of the inclusionary housing units in a development project as specified in Section 17.104.030 of this chapter.
“Inclusionary housing unit or inclusionary unit” means an ownership or rental dwelling unit developed as a part of the inclusionary housing requirement of a development project as provided in this chapter.
“Inclusionary incentives” means the fee waivers or reductions, planning and building standards waivers or reductions, regulatory incentives or concessions, and density bonuses provided by the city to a development project to assist in the provision of the inclusionary housing requirement.
“Initial owner” means the first person or persons to purchase a new for-sale inclusionary unit for his, her or their primary residence.
“Land dedication fee” means a fee paid to the housing trust fund of the city of Folsom for purposes of affordable housing in the city as a method of meeting the inclusionary housing requirement for a development project as provided in Section 17.104.030.
“Legislative entitlements” means and includes general and community plan amendments, zoning and rezoning, planned development permits and conditions and amendments thereto, tentative and final maps and development agreements.
“Low income household” means a household whose income does not exceed eighty percent of median income applicable to Sacramento County, adjusted for family size as published and annually updated by the United States Department of Housing and Urban Development.
“Market rate” means not restricted to an affordable housing price or affordable rent.
“Moderate income household” means a household whose income does not exceed one hundred twenty percent of median income applicable to Sacramento County, adjusted for family size as published and annually updated by the United States Department of Housing and Urban Development.
“Multifamily residential” means residential units at duplex, halfplex or greater intensity, planned, approved, or built on land planned or zoned for other than single-family residential.
“Off-site” means outside of the boundaries of a development project, but within the city limits of the city of Folsom.
“One location” means all adjacent land owned or controlled by the same owner or a related owner, the property lines of which are contiguous at any point, or the property lines of which are separated only by a public or private street, road, or other public or private right-of-way.
“Owner” means and includes the person, persons, partnership, joint venture, association, corporation, or public or private entity having sufficient proprietary interest in real property to commence, maintain, and operate a development project.
“Project level approval” means and includes a tentative subdivision map, a parcel map, a planned development permit, or other administrative or adjudicatory approval or determination in connection with a development project.
“Related owner” means a person or entity, including but not limited to partnerships, limited liability corporations, limited partnerships and corporations, which has any of the following relationships with an owner: (1) they share the majority of members of their governing boards; (2) they share two or more officers; (3) they are owned or controlled by the same majority shareholder(s) or general partner(s); (4) they are in a parent-subsidiary relationship; or (5) the person is a sibling, offspring or parent of an individual owner. For purposes of this definition, a controlling interest means fifty percent or more of the voting power of a corporation, and a parent-subsidiary relationship exists when one corporation owns, directly or indirectly, fifty percent or more of the voting power of another corporation. For purposes of this definition, a person and any general partnership in which the person is a general partner, or a person and any corporation in which the person owns a controlling interest, shall be treated as one and the same.
“Residential project” means the entirety of market rate residential development in a development project subject to the requirement to provide an inclusionary housing requirement as specified in this chapter.
“Single-family residential” means planned, approved or built on land planned or zoned solely for a permitted residential density of one unit per parcel. Where such a planning or zoning single-family designation also allows as a conditional use duplexes, halfplexes, second units, or similar uses, the designation is nonetheless considered single-family residential for purposes of the inclusionary housing requirement and the other provisions of this chapter.
“Very low income household” means a household whose income does not exceed fifty percent of the median income, adjusted for household size, applicable to Sacramento County, as published and periodically updated by the United States Department of Housing and Urban Development.
“Zoning code” means Title 17 of the Folsom Municipal Code as it may be amended from time to time. (Ord. 1033 § 2 (part), 2005: Ord. 958 § 2 (part), 2002)
17.104.030 Inclusionary housing requirement.
A. Number and Affordability of Inclusionary Units. All for-sale development projects consisting of ten or more units, including condominium conversion projects, as well as residential rental projects of ten or more units receiving funding assistance from the city or that are otherwise subject to a voluntary affordable housing agreement with the city, shall include inclusionary housing units equal to ten percent of the total number of units in the project, excluding density bonus units. The ten percent shall consist of three percent very low income units and seven percent low income units.
When four or fewer inclusionary units are required, the inclusionary units shall be provided in the following manner: one inclusionary unit: one low income unit; two inclusionary units: one low income unit and one very low income unit; three inclusionary units: two low income units and one very low income unit; four inclusionary units: three low income units and one very low income unit.
1. Calculation of Units Required. Where the number of units required to be constructed in the development project or condominium conversion project results in a percentage other than a whole number, the developer shall round to the nearest whole number the resulting percentage from the total inclusionary housing requirement calculated as provided in this chapter and provide only the whole units resulting from the inclusionary housing requirement calculation. If, after rounding to the nearest whole number, the total number of inclusionary units provided is less than ten percent of the total project units, any difference in units shall be provided as low income units.
2. Various Methods for Compliance. The inclusionary housing requirement may be satisfied by: including the units within the development project; providing an alternative as set forth in Section 17.104.060; providing the units off site; dedicating land for other affordable development projects; acquisition, rehabilitation, and conversion of existing market rate units; conversion of existing market rate units; paying an in-lieu fee as described in this chapter; other methods as approved by the city council that meet the intent of this chapter; or a combination of these methods or other alternatives set forth in this chapter.
B. Implementation. The developer shall propose an inclusionary housing plan as provided in this chapter and incorporate the agreed upon plan into conditions on the project and an inclusionary housing agreement as provided in this chapter.
C. Unit Size. The inclusionary housing requirement shall accommodate diverse family sizes by including a mix of studio, one-, two- and/or three-bedroom units and the mix of inclusionary unit sizes shall generally accommodate the household sizes identified in the city’s general plan, unless otherwise negotiated in the inclusionary housing agreement. A developer may propose an alternative mix of the size of units as part of its inclusionary housing plan.
1. Projects of forty residential units or less are exempt from the unit size requirement.
D. Exterior Appearance. Inclusionary units shall be visually compatible with and shall have similar external building materials and finishes as the market rate units in the immediate neighborhood.
E. Access to Common Amenities. Tenants and residents of inclusionary units shall be provided the same rights and access to common amenities in the development project as tenants and residents occupying market rate units.
F. Smaller Parts of Larger Projects. The city shall not approve projects which reasonably appear to be smaller parts of a greater project and have the effect of circumventing the requirements of this chapter. (Ord. 1273 § 2, 2017; Ord. 1177 § 2, 2013: Ord. 1033 § 2 (part), 2005: Ord. 958 § 2 (part), 2002)
17.104.040 Inclusionary housing plan.
A. Submittal Requirements. The inclusionary housing plan must include:
1. The method by which the developer intends to comply with the requirements of this chapter. The developer shall describe the location of the inclusionary units within the development project, unit sizes, and any incentives requested.
2. Where an alternative to constructing inclusionary units on-site is intended, the developer shall provide the following information:
a. Detailed information on the proposed parcel(s), site, or existing market rate units including the location, assessor’s parcel number(s), size, color photographs, an appraisal of the property dated within the prior six months, known information on physical, environmental or other constraints affecting the use of the property, and known information regarding the positive aspects of the use of the property for affordable housing including proximity to schools, transit routes, shopping and other services.
b. Site Suitability. The site proposed to fulfill the inclusionary housing requirement must be suitable from the perspective of size, configuration, physical characteristics, physical and environmental constraints, access, location, adjacent use, proximity to other affordable housing units and other relevant planning criteria.
c. Current market rate rents, condition of units, and vacancy rate information for alternatives proposing to fulfill the inclusionary housing requirement through conversion of market rate units or acquisition, rehabilitation, and conversion of market rate units.
d. A written representation that the proposed parcel(s), site, or existing market rate units is/are available and capable of being dedicated to the city by the developer and that the site and/or units shall be deed restricted as affordable housing.
3. Timing of Development. The inclusionary housing plan and inclusionary housing agreement shall include a phasing plan that provides a schedule for the timely development of the inclusionary units as the residential project is built out. In instances where the developer demonstrates that phasing, other than concurrent with market rate units, is necessary in order to account for the different financing and funding environments, economies of scale, or infrastructure needs applicable to the development project, a phasing plan shall be provided that includes definitive dates for construction and does not inhibit the intent of this chapter to create affordable housing units. The community development director shall review the phasing plan and reasons for phasing and make recommendations to the final decision-making body on the timing of the development. The city may condition projects seeking alternative phasing to require posting of bonds, cash deposits, or other securities satisfactory to the city (i.e., deed restriction, development agreement, or withholding of building permit) in an amount sufficient to assure timely construction of the required inclusionary units and to require construction of the units within a specified period of time.
B. Community Development Director’s Scope of Authority. The community development director shall be responsible for review of the inclusionary housing plan submitted by the developer, preparation of the inclusionary housing agreement and providing recommendations on these items and other matters as provided in this chapter to the planning commission for action by the planning commission. In any case where the final authority on a project rests with the planning commission or the city council, the community development director shall make recommendations to the planning commission or the city council.
C. Standard for Approval. The community development director shall recommend approval of the inclusionary housing plan, provided the inclusionary housing plan meets all the requirements of this chapter and is included in the inclusionary housing agreement, and based upon a determination by the community development director that the inclusionary housing plan would meet the intent of this chapter. Factors to be considered by the community development director in his/her determination to recommend approval, conditional approval or rejection of the proposed inclusionary housing plan include the criterion provided in this section and Sections 17.104.030 and 17.104.060, the suitability of the proposed site for single- or multifamily affordable housing, the availability of and access to infrastructure, schools, shopping and transit, current zoning of the property, and proximity to and concentration of other affordable housing locations. If a method other than on-site development is proposed to meet the inclusionary housing requirement, the proposed method must further the goal of the ordinance codified in this chapter and provide no less units or opportunity for creation of units than if the units had been included within the development project. The recommendation of the community development director shall be included in the staff report to the final decision-making body who shall approve, reject or modify the inclusionary housing plan. (Ord. 1033 § 2 (part), 2005: Ord. 958 § 2 (part), 2002)
17.104.050 Specific plan requirement.
A. Number and Affordability of Inclusionary Units. All specific plans approved pursuant to Chapter 17.37 on or after the effective date of the ordinance codified in this chapter and which are not otherwise exempt shall include three percent of the dwelling units restricted to and affordable to very low income households and seven percent of the dwelling units restricted to and affordable to low income households (inclusionary housing requirement).
1. The inclusionary housing requirement required by this section shall be determined at the specific plan stage, rather than on a project by project basis. Where the inclusionary component is not included in the specific plan, it shall be included with individual projects as provided in this section.
2. The specific plan shall include an inclusionary housing plan that establishes, as a minimum but not limited to, the following:
a. The number of market rate units in the specific plan.
b. The inclusionary housing requirement for very low and low income units over the entire specific plan.
c. The location of multifamily parcels (if applicable), subdivisions and/or mixed-use development sites designated to receive the inclusionary units.
d. The requirements for an inclusionary housing plan specified in Section 17.104.040.
3. If the specific plan is initiated by developer(s) or property owners, the implementation of this section shall be through the inclusionary housing agreement signed and approved at the time of adoption of the specific plan.
4. A general provision requiring that an inclusionary housing agreement shall be made a condition of all future discretionary permits for development within the specific plan. The provision shall establish that all relevant terms and conditions of any inclusionary housing agreement shall be filed and recorded as a restriction on the project as a whole and those individual lots, units, or projects which are designated as inclusionary units. The inclusionary housing agreement shall be consistent with Section 17.104.100.
5. Every existing specific plan proposed for amendment shall incorporate into the amended specific plan an inclusionary housing plan, consistent with this section. (Ord. 1177 § 3, 2013: Ord. 958 § 2 (part), 2002)
17.104.060 Alternative methods to meet the inclusionary housing requirement.
Alternatives to the on-site construction of the inclusionary housing requirement shall be encouraged and allowed in order to meet the housing needs for low and very low income households, consistent with the criteria in subsections A through I of this section. Alternatives may include:
A. Land Dedication. The developer may dedicate sufficient land within the city of Folsom on which to construct at least the same number of units and infrastructure to support that number of units as the developer would be required to construct on site subject to the inclusionary housing requirement; provided, that the site will support the same number of units the developer is required to construct, has zoning of a minimum density necessary to accommodate the inclusionary housing requirement, that the site is acceptable to the city, and that the site is restricted for affordable housing. The developer shall dedicate the land to the city, an affordable housing developer, or special needs developer acceptable to the city at no cost to the city.
B. Off-Site Construction (“Off-Site”). The developer may develop housing to satisfy the inclusionary housing requirement at an off-site location within the city of Folsom.
C. Acquisition, Rehabilitation, and Conversion of Market Rate Units. The developer may propose to acquire and rehabilitate existing market rate units in the city of Folsom which are at or above existing affordable rents, which require repair, rehabilitation, modernization or other work, and convert those units to affordable for-sale housing units.
D. Conversion of Market Rate Units. A developer may propose to convert existing market rate units in the city of Folsom which do not require rehabilitation and are at or above existing affordable rents to affordable for-sale housing units by way of deed restrictions, recorded covenants or other legal mechanisms to assure that the units remain affordable housing units.
E. Deleted.
F. Inclusionary Housing Credits. A developer may use inclusionary housing credits, as defined in this chapter, to meet the inclusionary housing requirement.
G. In-Lieu Fee. A developer may pay an in-lieu fee calculated as follows to satisfy all of the inclusionary housing requirements: multiply one percent of the lowest priced for-sale residential unit in the proposed subdivision by the total number of for-sale residential units in the proposed subdivision. For custom lot subdivisions where only lots will be sold, multiply one-half percent of the estimated cost of the least expensive homes anticipated for the proposed subdivision by the total number of for-sale lots in the proposed subdivision. The in-lieu fee is payable at the time of the building permit on a per-unit basis, and may be deferred upon application by the developer and approval in the city’s sole and complete discretion pursuant to Section 16.80.030. Once the in-lieu fee has been set for an initial twelve months, the amount of the fee shall be evaluated on January 1st of each following year. In the event the lowest priced for-sale residential unit or anticipated home in the subdivision changes by ten percent or more, the amount of the in-lieu fee shall be adjusted to the new amount using the formula set forth above, applicable prospectively to the remaining units or lots in the subdivision.
H. Combination. Combination of the above alternatives.
I. Other Alternatives. Other alternatives proposed by the developer which are accepted by the city and meet the requirements and intent of this chapter. (Ord. 1243 § 2, 2015; Ord. 1177 § 4, 2013: Ord. 958 § 2 (part), 2002)
17.104.070 Incentives and assistance.
A. Request for Incentives and Assistance. The developer of a development project which is subject to the inclusionary housing provisions of this chapter may request, and the city, in its sole discretion, may grant or deny the provision of inclusionary incentives as set forth in this section and other provisions of the Folsom Municipal Code.
B. Fee Waivers or Deferrals. The city may grant to a developer a program of waivers, reductions or deferrals of development fees, administrative and financing fees for inclusionary units as provided in Chapter 16.60 of the Folsom Municipal Code.
C. Modification of Planning and Public Works Development Standards. To the extent feasible in light of the uses, design, and infrastructure needs of the development project, modifications for inclusionary units may include: (1) applicable public works development standards contained in the Folsom Municipal Code, such as alternative standards relating to road widths and parking; and (2) applicable planning standards contained elsewhere in this code such as minimum lot size, alternative housing types, lot coverage, locational and other requirements for approval of duplexes and half-plexes. Nothing in this provision is intended to permit deviation from the nature and character of buildings erected in the historic district and design shall be consistent with the design guidelines adopted for that portion of the city.
D. Density Bonuses. The city may grant to a developer fulfilling its inclusionary housing requirement through either on site or off-site development a density bonus as provided in Chapter 17.102 of the Folsom Municipal Code. As referenced in Chapter 17.102 of the Folsom Municipal Code, the definition of “housing development” shall be interpreted to include both the market rate and inclusionary unit components of a development project.
E. Inclusionary Housing Credits. A developer may submit as part of the inclusionary housing plan a proposal to provide more affordable housing units or donate additional land in connection with a development project than the 15 percent required under this chapter, and may credit the additional amount of land or additional number of affordable housing units against future projects subject to the provisions of this chapter which are proposed in the city. Credits may be transferred or sold to any other person or entity subject to compliance with following conditions:
1. The transfer or sale of the credits shall not interfere with one of the goals of the ordinance codified in this chapter which is to provide affordable housing dispersed throughout the city of Folsom.
2. Any credits must be applied to another development project within 5 years of issuance of a certificate of occupancy for the inclusionary unit(s) or implementation of an alternative method of meeting the inclusionary housing requirement (i.e., land dedication) which gives rise to the credit. For purposes of this section, “applied” shall mean that the credits are committed for use at a development project and included in a developer’s proposed inclusionary housing plan. A developer who has not used, transferred or sold credits within the time specified in this section may apply to the city for a 1 year extension on the life of the credits. A request for extension of credits shall be reviewed by the city council who shall grant or deny the request for extension. The city council shall consider progress and efforts the developer has made to utilize the credits during the previous 5 years, the impact on affordable housing if the extension is granted, any proposals for use of the credits should the extension be granted and other relevant factors.
3. Inclusionary units receiving monetary subsidies through the city shall not receive credits unless the city has been reimbursed for its financial assistance.
F. Mixed Use. In order to provide additional opportunity for development of inclusionary units, residential development that would fully or partially fulfill the inclusionary housing requirement of a development project may be implemented in conjunction with commercial or office use in the central business (C-2), general commercial (C-3), and business and professional office (BP) zoning districts as consistent with applicable provisions of the Folsom Municipal Code.
G. Local Public Funding. The developer may apply to the Folsom Redevelopment Agency (RDA) for local public funding to assist in the financing and development of the inclusionary housing requirement.
H. Local Public Subsidy. The developer of the development project may apply to the Folsom Redevelopment Agency (RDA) or to the administrator of the housing trust fund for local public subsidy.
1. Inclusionary units provided through the acquisition, rehabilitation, and conversion alternative shall be eligible for funding assistance through the city’s substantial rehabilitation program. (Ord. 1177 § 5, 2013; Ord. 958 § 2 (part), 2002)
17.104.080 Exempted residential development.
The following development projects are exempt from this chapter and generate no obligation to provide an inclusionary housing requirement:
A. Residential projects proposed to contain nine or fewer market rate units.
B. Parcels covered by development agreements which legally restrict the imposing of this chapter; however, nothing shall preclude modification of any development agreements with the consent of the property owner.
C. Parcels which have tentative subdivision or final maps approved prior to September 24, 2002.
D. Parcels where the developer can demonstrate that it has acquired vested rights to develop the property such that the city cannot legally require compliance with the provisions of this chapter. (Ord. 958 § 2 (part), 2002)
17.104.090 Restrictions on inclusionary units.
Each inclusionary unit created as a result of the ordinance codified in this chapter shall have limitations governing its occupancy and its sale and/or resale. The purpose of these limitations is to preserve the long-term affordability and to ensure its continued availability for income-eligible households.
A. Duration of Affordability for Rental Inclusionary Units. Rental inclusionary units under subsections (C)(1) and (2) of this section shall remain affordable for a period of no less than thirty years from the recordation of the affordable rental agreement unless state law requires a longer period. The affordable rental agreement shall be recorded no later than the issuance of the first building permit for the rental inclusionary project under subsection (C)(1) of this section, and prior to the first day of rental of the inclusionary unit under subsection (C)(2) of this section. Rental units under subsection (C)(2) of this section shall be rented to an income-eligible person at the same income level of the original for-sale affordable housing price.
B. Affordability and Resale of For-Sale Units.
1. Sale and Resale to an Income-Eligible Person—Exception. After the initial sale of inclusionary for-sale units at a price affordable to the target income level group, inclusionary for-sale units shall remain affordable to subsequent income-eligible buyers pursuant to a resale restriction with a term of twenty years, or longer if required by state law or other provisions of this code. The initial owner shall be a first-time home buyer as defined in this chapter. Subsequent owners are not required to be a first-time home buyer. The resale restriction shall require that the unit will be sold, by the initial owner and any subsequent owner, at the same affordable housing price income level as originally sold and will remain at that income level for the duration of the resale restriction term. For example, a home that was sold to the initial owner at a very low income level shall be sold to a subsequent owner who qualifies at the very low income level.
a. If the owner is unable to sell the inclusionary unit within sixty days of offering and advertising the unit for sale, the owner may offer to sell the unit to the city at the affordable housing price at the time of offer. If the city or its assignee does not complete the purchase of the unit within ninety days of the owner’s offer of sale to the city, the resale obligations of this section shall terminate; however, the provisions of this section relating to recapture upon sale shall continue to apply and remain in full force and effect.
2. Recapture upon Sale. If the inclusionary unit does not sell within sixty days of offering and advertising the unit for sale and if the city does not acquire the inclusionary unit as specified in this section, the inclusionary unit may be sold at the current market price, and the seller shall pay to the city housing trust fund all proceeds from the sale of the unit less a percentage of profit, if any, as provided in this section. For purposes of this section, “profit” is defined as the net proceeds from the sale after deducting loan(s), ordinary expenses attributed to the seller, including real estate commissions not to exceed six percent, and after deducting the current affordable housing price. If the owner has made improvements to the home, profit shall be determined by deducting the adjusted basis of the home, or the current affordable housing price, whichever is higher.
a. The percentage of profit retained by the owner shall vary according to the number of years an owner owns the residential unit. The percentage of profit to be allocated to the owner is provided as follows:
|
Years Current Owner Owned Residence |
Percentage of Profit to Current Owner |
Percent Profit Paid to the City’s Housing Trust Fund |
|---|---|---|
|
Less than 1 |
10 |
90 |
|
Less than 2 |
20 |
80 |
|
Less than 3 |
30 |
70 |
|
Less than 4 |
40 |
60 |
|
5 or more |
50 |
50 |
3. Evaluation of Owner’s Repayment Ability. On a biannual basis, owners of for-sale inclusionary units who have acquired a second mortgage or other secondary financing or loan provided by the city will be evaluated by the city housing coordinator as to their ability to initiate repayment procedures. Where the city determines the owner’s household income exceeds the affordable income level applicable to the inclusionary unit, the city may require repayment according to the terms provided in the deed of trust or other financing document(s).
4. Guidelines. The city may adopt guidelines for the administration of this program by resolution of the city council.
5. Home Ownership Incentive. The city and/or the RDA may establish guidelines by resolution to create incentives for home ownership, including partial loan forgiveness provisions relating to loans or second trust deeds provided by the city depending on the length of time a qualified owner has occupied the residence.
C. Occupancy Requirement.
1. Rental Units. Any person(s) who occupies a rental inclusionary unit produced or acquired with funding assistance from the city or is otherwise subject to a voluntary affordable housing agreement between the city and the unit’s developer shall occupy that unit as his or her principal residence and shall annually certify that he/she qualifies for the applicable affordable rent level. The city’s housing coordinator shall annually initiate this certification process. If and when any person(s) who rents an inclusionary unit no longer qualifies at the applicable affordable rent and income levels, that person(s) shall be required to quit the unit or pay the market rate for the unit provided another rental unit is made available at the income level of the inclusionary unit.
2. For-Sale Units. Except as provided in this section, an initial owner who purchases a for-sale inclusionary unit shall occupy that unit as his or her principal residence. The inclusionary housing agreement shall provide that a for-sale inclusionary unit may be rented or leased only after the owner, initial or subsequent, has resided in the inclusionary unit for a period of not less than two years. If the owner rents or leases the inclusionary unit, the renter or lessee shall be an income-eligible person at the same income level of the original for-sale affordable housing price. For example, if the initial owner bought the unit at the very low income housing price, the unit shall be rented to tenants of very low income household.
a. Any person offering a for-sale inclusionary unit for rent or lease shall notify the city housing coordinator in writing, prior to the renting of the unit, that the unit is offered for rent or lease. Any person offering a for-sale inclusionary unit for rent or lease shall notify prospective tenants of the income eligibility requirements.
b. If the city has provided loans, incentives or other deeds of trust on a for-sale inclusionary unit, the city may include provisions, based on the ability of the owner to repay the loan or other financing instrument, in the deeds of trust to require repayment of the note secured by that deed of trust if the property is not owner occupied.
c. If the city has provided loans, financial assistance or other incentives to purchaser of a for-sale inclusionary unit, the city shall require, in a recorded affordability covenant, that the unit, if rented or leased by the owner, initial or subsequent, pursuant to subsection (C)(2) of this section, shall be rented at an affordable rent level no greater a rental rate than the affordable rent level currently in effect. Any person(s) who occupies a rental inclusionary unit shall occupy that unit as his or her principal residence and shall annually certify that he/she qualifies for the applicable affordable rent level. The city’s housing coordinator shall annually initiate this certification process. If and when any person(s) who rents an inclusionary unit no longer qualifies at the applicable affordable rent and income levels, that person(s) shall be required to quit the unit or pay the market rate for the unit provided another rental unit is made available at the income level of the inclusionary unit.
3. Converted Units. Units which are converted from market rate units shall follow the requirements of subsections A, B, and C of this section based on the type of converted residential unit applicable.
4. Resident or Work Eligibility for Affordable Housing Units. To the extent permissible under applicable state and federal law, people who work and/or reside in the city of Folsom shall have priority over other persons to rent or purchase inclusionary units constructed pursuant to the provisions of this chapter. Priority shall be established according to the following provisions:
a. Work. First priority shall first be given to qualified applicants who work in the city of Folsom. To qualify as a person who works in the city of Folsom, the person responsible for renting or purchasing the inclusionary housing unit must demonstrate that both of the following criteria have been met:
i. Type of Work. The applicant must have worked in the city of Folsom for a minimum of one year immediately preceding the date of application. Work is defined for purposes of this section as owning or operating a business, employment for wages or salary for an employer located in the city of Folsom, contract employment where the actual work is conducted at a city of Folsom location, or commission work where the applicant’s principal location from which he/she worked is located in the city of Folsom.
ii. Hours of Work. The applicant must have been employed in the city of Folsom an average of at least twenty hours per week over the course of the qualifying year.
b. Resident. Second priority shall be given to a qualified applicant(s) for rental or for-sale units who is a resident of the city of Folsom. To qualify as a resident of the city of Folsom, the person responsible for renting or purchasing the inclusionary unit must have their principal place of residence in the city of Folsom for a minimum of one year immediately preceding the date of application.
c. Where no applicants meet the priority criteria set forth above, the inclusionary housing units may be made available to other qualified applicants.
d. The owner or manager of inclusionary units, which are offered for rent, sale, or lease, shall require the applicant to provide proof that he/she meets the occupancy and income criteria set forth in this chapter. (Ord. 1177 § 6, 2013: Ord. 958 § 2 (part), 2002)
17.104.100 Administration of the inclusionary housing requirement.
A. Proposed Inclusionary Housing Plan. At the time of and as part of the application for the first legislative entitlement, the developer of a development project shall submit a draft inclusionary housing plan consistent with the requirements of Section 17.104.040.
B. Action on Inclusionary Housing Plan. The inclusionary housing plan shall be subject to the same review and approval as the legislative entitlements. No legislative entitlement shall be granted without an approved inclusionary housing plan. The elements of the inclusionary housing plan shall be incorporated into the terms and conditions of the applicable legislative entitlements and project-level approvals.
1. Amendment of Inclusionary Housing Plan. The community development director shall have the authority to approve amendments of the inclusionary housing plan to reflect changes in the underlying development project. Where the proposed amendment(s) will result in a change in the phasing or timing of development of the inclusionary units, the amendment must be reviewed under the criteria in Section 17.104.040(A)(3).
2. Amendment Process. Amendments which will result in the modification of conditions shall be subject to notice, review, approval and appeal in the same manner as the original approval.
C. Inclusionary Housing Agreement.
1. Requirement. No project-level approval may be issued by the city without an inclusionary housing agreement executed by the owner and recorded against the property, the developer (if not owner) and the community development director, and approved by the city attorney; provided, that a tentative subdivision map or tentative parcel map may be approved prior to execution or recordation of an inclusionary housing agreement if (a) an inclusionary housing plan including a phasing plan has been approved; (b) any tentative map or parcel map contains conditions that enforce the applicable phasing and other requirements of the housing plan; and (c) the legislative entitlements contain provisions that condition approval of planned development permits, plan review, or building permits on execution and recordation of, and compliance with, an inclusionary housing agreement.
2. Contents. The agreement shall be consistent with the inclusionary housing plan, and shall indicate ownership information, the number and size of very low and low income units, the developer of the inclusionary units, the phasing and construction scheduling of the inclusionary units, commitments for inclusionary incentives and any other information required by the city relative to the inclusionary housing requirement. In the case of alternatives to the inclusionary housing requirement, the agreement shall also contain the information required in this chapter pertaining to the alternative.
3. Information Required from Developer. The developer of the development project shall present to the city: (a) plans, schematics, and details of phasing of the residential project as a whole, including the inclusionary housing requirement; (b) the name and address of the entity which will develop the inclusionary housing requirement if not the developer; (c) in the case of land dedication, an executed irrevocable offer of dedication at no cost to the city; (d) in the case of off-site location, the evidence of control or ownership of the site required in this chapter; and (e) any other information reasonably required by the city in connection with the agreement.
4. Incentives. The community development director shall recommend to the final decision-making body which inclusionary incentives, if any have been requested by the developer, the city will make available in connection with the development project as provided in this chapter. The inclusionary housing agreement shall specify the nature of the incentives provided.
5. Incorporation into Project-Level Approvals and Recordation. The developer obligations and the inclusionary incentives in the agreement shall be incorporated into the applicable project-level approvals. The executed agreement shall be recorded as a covenant running with the land against the real property of the residential project and, in the case of off-site inclusionary units, against the real property on which such inclusionary units are to be located.
D. Affordable Rental and Affordable Housing Agreements. Upon approval of the entitlements for a for-sale development project which shall include inclusionary units, or a residential rental development project to be produced with funding assistance from the city or is otherwise subject to a voluntary affordable housing agreement with the city, the developer shall record with the county recorder’s office an affordable rent agreement or affordable housing agreement against the parcels identified in the inclusionary housing plan for the inclusionary units. Where the inclusionary unit is a for-sale unit within a development project, the developer shall record the affordable housing agreement relating to the lot(s) within the development project which are to be inclusionary units prior to the issuance of a building permit on any lot(s) within the development project.
E. Administration of Affordability for Rental Inclusionary Housing. The owner of rental inclusionary units or for-sale inclusionary units offered for rent pursuant to Section 17.104.090(C)(2) shall be responsible for certifying the income of tenant to the city at the time of initial rental and annually thereafter. The owner of a for-sale inclusionary unit shall certify to the city the income of the initial purchaser and shall certify to the city that the initial purchaser is a first-time home buyer. The owner of rental inclusionary units shall apply the same rental terms and conditions (except rent levels, deposits and income requirements) to tenants of inclusionary units as are applied to all other tenants, except as otherwise required to comply with government subsidy programs. Discrimination based on subsidies received by the prospective tenant is prohibited. The city shall keep confidential the personal identifying information of the household members occupying an inclusionary unit.
F. Reserved.
G. Guidelines. The community development director may develop and adopt additional guidelines as necessary for the implementation of this chapter consistent with the terms contained herein and consistent with any guidelines adopted by the city council as provided in this chapter.
H. Appeal. Where the provisions of this chapter vest the community development director with final decision-making authority, any applicant aggrieved by the decision of the community development director may appeal that decision to the planning commission. Any appeal of a decision of the community development director must be filed with the community development department within ten calendar days of the date the decision is rendered by the community development director. The community development department shall set the appeal before the planning commission at the next regularly scheduled planning commission meeting, but in no case less than ten calendar days after the community development director’s decision. (Ord. 1273 § 3, 2017; Ord. 1177 § 7, 2013: Ord. 1033 § 2 (part), 2005: Ord. 958 § 2 (part), 2002)
17.104.110 Monitoring of inclusionary housing.
A. Developers. Developers that have an inclusionary housing agreement requiring the provision of inclusionary housing units will be monitored by the city annually to assure compliance with the inclusionary housing agreement.
B. Inclusionary Units. Units will be monitored by the city to verify that the units are and will remain affordable.
1. Rental Inclusionary Unit. Owners of the rental inclusionary units produced with funding assistance from the city or that are otherwise subject to a voluntary affordable housing agreement with the city will be monitored by the city annually to certify that tenant(s) occupying the unit(s) are income qualified to remain in the unit and that the rent is at or below the affordable rent as stipulated in Section 17.104.090. Owners of the for-sale inclusionary units offered for rent will be monitored by the city annually to certify that tenant(s) occupying the unit(s) are income qualified to remain in the unit. The city shall further monitor approximately ten percent of tenants annually by: (a) requiring the owner submit a copy of the signed rental or lease agreement to verify the rental rate, and (b) independently verifying that the tenant is income-eligible to reside in the inclusionary unit.
2. For-Sale Inclusionary Unit. Owners of for-sale inclusionary units will be monitored by the city to certify that the unit: (a) if sold during the monitoring period, was sold at an affordable for-sale price and to an income qualifying person, (b) is being occupied by the original income-qualifying buyer, and (c) if the unit is being rented or leased it is to an income-eligible household for a rental rate that is at or below the affordable rent as stipulated in Section 17.104.090.
C. Reporting. An annual reporting mechanism shall be created by the city to identify the number of inclusionary units, by very low or low income, that have been required by inclusionary housing agreements during the annual reporting period, the number of inclusionary units, by very low or low income, planned for creation in inclusionary housing agreements during the annual reporting period, the number of inclusionary units, by very low or low income, created during the annual reporting period, and the number of inclusionary housing credits, by very low and low income, both made available and used during the annual reporting period. The report shall also include the results of the monitoring of developers and inclusionary units in subsections A and B of this section and any corrective actions taken if the units were not being rented, sold, or occupied as stipulated in Section 17.104.090. The report shall identify in shortfall between the number of inclusionary units planned for creation and the number of units actually created. This information may be used for future change and amendments to the ordinance codified in this chapter. (Ord. 1177 § 8, 2013; Ord. 958 § 2 (part), 2002)
17.104.120 Administrative fees.
The city council may, by resolution, establish reasonable fees and deposits to defray cost of processing applications, proposals and for the administration of this chapter. (Ord. 958 § 2 (part), 2002)
17.104.130 Taking determination.
A. Commencing upon execution of the inclusionary housing agreement and within fifteen days thereafter, a developer may request a determination that the requirements of this chapter, taken together with the inclusionary incentives, as applied to the residential project through the inclusionary housing agreement, would legally constitute a taking of property of the residential project without just compensation under the California or federal Constitutions. If the developer and the city have been unable to reach agreement on the terms of an inclusionary housing agreement, the applicable draft for purposes of the taking determination shall be the final draft proposed by the city which the developer may execute under protest without recordation. The developer has the burden of providing economic information and other evidence necessary to establish that application of the provisions of the inclusionary housing agreement to the residential project would constitute a taking of the property of the proposed residential project without just compensation.
B. The community development director shall make the takings determination based on all information provided to him/her. The community development director’s determination shall be a final decision subject to appeal as provided in this chapter. In making the taking determination, the community development director shall assume each of the following: (1) incorporation of the inclusionary housing requirement in the residential project; (2) application of the inclusionary incentives; (3) incorporation into the residential project of the most cost-efficient product type for the inclusionary units; and (4) external funding where reasonably likely to occur.
C. If it is determined by the community development director that the application of the provisions of this chapter through the inclusionary housing agreement would be a taking, the inclusionary housing plan and the inclusionary housing agreement shall be reviewed by the decision-making body to be modified to reduce the obligations in the inclusionary housing requirement to the extent, and only to the extent, necessary to avoid a taking. If it is determined by the community development director that no taking would occur though application of the inclusionary housing agreement to the residential project, the requirements of this chapter remain applicable, and no project-level approval shall be issued unless the developer has executed and recorded the inclusionary housing agreement as proposed by the city. (Ord. 1033 § 2 (part), 2005: Ord. 958 § 2 (part), 2002)
17.104.140 Enforcement and penalties.
It shall be unlawful to sell any inclusionary unit without compliance with each and every provision of this chapter. It shall be unlawful to offer for lease or rent, or to enter into a lease or rental agreement, or to collect lease or rental payments without compliance with each and every provision of this chapter. Any person who violates any provision of this chapter shall be guilty of a misdemeanor and/or an administrative violation punishable as follows:
A. A violation of this chapter shall be an administrative violation as defined in Section 1.08.020. In addition to enforcement as set forth in Chapters 1.08 through 1.10, inclusive, any violation of this chapter shall be punishable as a misdemeanor, which shall be punishable by a fine not to exceed one thousand dollars or by imprisonment in the county jail for not more than six months, or by both such fine and imprisonment.
B. Notwithstanding the procedure for administrative violations provided in Chapters 1.08 through 1.10, no notice to correct as provided in Section 1.09.023 shall be required prior to issuance of a notice of administrative violation.
C. Each of the sanctions for administrative violations identified in Section 1.09.013 shall be available for enforcement of this chapter.
D. Based on the criteria for the imposition of administrative violations set forth in Section 1.09.014, a violation of this chapter shall be deemed a Level B violation, as that term is described in Section 1.09.012. The range of monetary sanctions available for a violation of this chapter shall be as set forth in Section 1.09.012(A).
E. Any person who violates any provision of this chapter shall be guilty of a separate offense for each and every day which any such person commits, continues, permits, or causes a violation thereof and, shall be punished accordingly. (Ord. 958 § 2 (part), 2002)