Background

The City collects development impact fees to finance the design, construction, installation, and acquisition of public infrastructure or to recover the costs of adding capacity in existing public infrastructure. While development impact fees are necessary to support public infrastructure, they may also create a financial barrier to the construction of affordable housing.

The City’s Reduced Impact Fees for Affordable Housing Units Program (also referred to as the “Zero-Dollar Rate” Program helps reduce this barrier by reducing eligible development impact fees for qualifying affordable dwelling units, subject to program requirements and available funding.

The program was originally established by City Council Resolution 2018-0428. City Council subsequently adopted Resolution 2019-0185, which rescinded the 2018 resolution and continued the program with additional clarification regarding affordability requirements.

On June 25, 2024, the City Council passed Resolution 2024-0233, which approved additional modifications to the program.

Eligibility

To qualify for the program, a dwelling unit must meet the affordability requirements established by Resolution No. 2019-0185.

The City must receive confirmation from the appropriate agency (SHRA, CADA, etc.) that the affordable dwelling units meet the following criteria:

Rental Units

A qualifying rental unit must:

• Be occupied by a low- or moderate-income household, as defined in California Health and Safety Code section 50093 (i.e. 80% AMI or 120% AMI);
• Be offered at an affordable rent, as defined in California Health and Safety Code section 50053; and
• Remain affordable for a period of at least 30 years through a deed restriction.

For-Sale Units

A qualifying for-sale unit must:

• Be sold at an affordable housing price, as defined in Sacramento City Code section 17.712.020;
• Be occupied by a low-income household, as defined in California Health and Safety Code section 50079.5 (i.e. 80% AMI); and
• Remain affordable for a period of at least 30 years through a deed restriction.

The affordability restriction must generally be documented through a recorded regulatory agreement between the property owner and the City, SHRA, or another local, state, or federal agency.

Fee Reduction and Program Funding

This is funded through the City’s annual budget, which allocates $3 million each year from the General Fund/Measure U. Program funds are generally available on a first come first-served basis, subject to available funding and the following provisions:

• Eligible development impact fees may be reduced by up to $10,000 per qualifying affordable dwelling unit.
• Projects receiving LIHTC or Homekey funding may request that available program funds be reserved when the project receives its funding award.
• For projects containing both affordable and market-rate units, fee reductions are applied proportionately based on the number of qualifying affordable dwelling units in the project.

Because program funding is limited, applicants are encouraged to contact City staff early in the development review process regarding anticipated eligibility and funding availability.

Development Impact Fees Eligible for Reduction

List of residential rates Reduced for Affordable Dwelling Units:

• 65th Street Area impact fees (Ch. 18.56, Article V);
  
• Central City impact fees (Ch. 18.56 Article VIII);
• Combined sewer development fee (Ch. 13.08.490);
• Jacinto Creek Planning Area Impact Fee (Ch. 18.56, Article VII)
• North Natomas planning area development fees (Ch. 18.24)
• Park development impact fees (Ch. 18.56, Article II)
• Railyards impact fees Ch 18.56 (Article IX)
• River District impact fee (Ch. 18.56 Article VI)
• Sewer development fee (Ch. 13.08.480)
  
• Storm drainage development impact fee (Ch. 13.16.125)
• Water system development fee (Ch. 13.04.820) 
• Willowcreek Impact Fee (Ch. 18.56, Article VI)
• River District Fee (Ch. 18.56, Article VI)

How to Apply

Applicants seeking a development impact fee reduction should submit the application (Form CDD-0410) and documentation demonstrating that the proposed affordable dwelling units satisfy the program requirements.

City staff may coordinate with SHRA, CADA, or another applicable agency to confirm affordability requirements and determine program eligibility.

Because program funding is limited, applicants are encouraged to contact City staff early in the development review process regarding anticipated eligibility and funding availability.