SHA is pleased to announce that it has recently reached a settlement of its lawsuit against the City of Folsom which was initiated because the City suspended its Inclusionary Housing Ordinance which was necessary to meet the City’s affordable housing goals. Please read the summary of the lawsuit below, which details the many accomplishments gained from the settlement. SHA appreciates the City’s willingness to work with SHA to resolve this case and is hopeful that this commitment to housing for families from all economic backgrounds continues.

A) Specifically what parties sued and under what grounds:

With representation from Legal Services of Northern California (LSNC), Public Interest Law Project (PILP), and Western Center on Law and Poverty (WCLP), SHA brought the suit listing five causes of actions, two of which were about the Inclusionary Housing Ordinance. The issues the lawsuit raised were:

1) The City’s action to sunset the Inclusionary Housing Ordinance was inconsistent with its Housing Element, which expressly relied upon the Ordinance to achieve its affordable housing goals.

2) Alternatively, the City failed to amend its Housing Element to include any alternative mechanism to meet its housing goals when it repealed the Inclusionary Program.

The other claims involved the City’s failure to implement several other Housing Element programs, its failure to increase the density on many sites that the City had identified as adequate to meet its Regional Housing Needs Assessment (RHNA), and the City’s failure to amend its zoning code to allow for emergency shelters.

B) What were the outcomes?

After SHA filed the lawsuit in April 2011, the City amended its zoning code to comply with state law and permit emergency shelters by right and ultimately implemented the density increase program, along with many other key programs identified in SHA’s Petition. As a result of those actions as well as other preliminary court proceedings, four of the original five claims resolved before the court ultimately heard the merits of the case in June 2012.

In July 2012, the court ruled in SHA’s favor and found that the City’s action suspending its Inclusionary Housing Ordinance was inconsistent with the housing element and was void. The City appealed and took the position that the appeal halted the trial court’s decision, pending a ruling by the appellate court.

After mediation between the City and SHA earlier this year, the parties reached a mutually acceptable agreement in late March which resulted in the City recently dismissing its appeal

The settlement also had the following results:

1) The City amended its Housing Element and modified its Inclusionary Ordinance to reduce the percentages of low and very low income housing production requirements and to also permit an in lieu fee option.

2) The City will amend its Housing Trust Fund Program to ensure that 50% of any in lieu fees collected will be targeted for actual construction or rehab of multi-family residences in Folsom, with rents affordable to low and very low income families and that are required to remain affordable at those income levels for at least 30 years.

3) The City has agreed to consider an amendment to the Housing Trust Fund to increase the Housing Trust Fund Fee (aka commercial linkage fee) over two years, and to provide that all funds generated from the increase will be subject to the same uses and restrictions as the in lieu fees.

4) The City also will publish annually a Housing Trust Fund Report that discloses all deposits and expenditures of the Fund, together with related information.

5) The City also committed to consider an outreach program for the next Housing Element planning period that is designed to attract non-profit developers to Folsom.

6) The City will make a grant to a developer of $15,000 within the next five years for the construction of very low income multi-family housing that will remain affordable for at least 30 years.

7) Finally, the City agreed to pay reasonable fees and costs of the lawsuit and dismissed its appeal of the trial court ruling.