Folsom reviews mid‑cycle housing element progress, funding as lower‑income targets lag

Stephanie Henry, senior planner in the Community Development Department, told the Folsom City Council on Aug. 26 that the city has been tracking its progress halfway through the eight‑year housing element cycle and is prioritizing funding and program work for the second half of the cycle. "As of fiscal year end June 2025, the city's total, housing fund for projects was approximately $23,000,000," Henry said.

Henry reviewed Folsom’s Regional Housing Needs Allocation (RHNA) performance through 2024 and said the city has done well in the moderate and above‑moderate income categories but is behind on lower‑income segments. "We still have some movement in the lower RHNA allocations. But, there's still a significant shortfall as far as trying to meet that target," she said. She said two new affordable housing developments are expected to deliver 187 lower‑income units but noted the "very high lower income RHNA targets pose a significant challenge."

The presentation outlined completed and ongoing housing element programs. Henry said Program H2 expanded residential capacity by more than 6,000 units through general plan amendments and that parcel owners in the Folsom Plan area agreed to deed‑restrict several multifamily sites to accommodate about 900 affordable units in the future. She also cited Program H16, which sold surplus land to Habitat for Humanity and enabled 10 for‑sale affordable units on Percifer Street. Of 34 total programs, staff reported five fully completed, eight partially completed, and five not yet initiated.

Henry reviewed local, state and federal funding sources used to support affordable housing. She said the city collected roughly $3.8 million in inclusionary housing fees in the most recent fiscal year and about $171,000 in housing trust fund fees tied to commercial development. She also said Folsom received $2.5 million in Homekey funds in 2020 for a 25‑unit Bidwell Street studio project and that the city receives about $161,000 annually from Sacramento County’s PLHA allocation. "In 2025, current and anticipated future allocations totaling up to $810,000 were committed to Habitat for Humanity to support the Percifer Street affordable housing project," Henry said.

Council members asked for clarification about loan repayment timelines for the city’s gap‑financing loans. Stacy (Community Development staff) said most loans defer repayments for 10 to 15 years and that the city generally expects to begin receiving residual cash‑flow based payments around year 20 for the majority of projects. Henry explained loans typically capture a portion of developer surplus cash flow—often about 50%—and staff has recently been negotiating longer payback horizons (for example, moving toward 35‑year payback periods rather than the prior 50‑year structures).

Several council members pressed staff about accessory dwelling units (ADUs): how many are actually affordable, how the city counts ADUs for RHNA reporting, and whether the city should create incentives or a pre‑approved ADU plan program. Henry said the city estimates ADU affordability using square footage and regional survey methodology accepted by HCD because direct rent data is often unavailable. Desmond Perrington, planning manager, said the city could establish pre‑approved ADU plans but would need funding to create and maintain them.

Council members discussed priorities for housing funds, and several voiced interest in a diversified strategy: preserve existing housing stock through home‑rehabilitation programs, accelerate ADU production with incentives, prioritize local residents and local workers in future projects, and consider tools to promote homeownership such as down‑payment assistance or low‑interest loans. Henry said staff will return later in the year with items including an update to the inclusionary housing ordinance and a workshop on objective development standards for multifamily and mixed‑use development.

Henry closed by asking for council direction on prioritization; council members generally endorsed pursuing ADU incentives, home rehabilitation funding, and targeted funding for missing‑middle housing while retaining flexibility to leverage state and regional competitive grants.

Ending: Henry said staff will return with proposals for ordinance updates, a workshop on objective standards, and additional implementation items for council consideration in coming months.