First reading of updated agreement advances the project with a new timeline and protections for future development in the heart of Folsom’s Historic District
After years of delays, one of Historic Folsom’s much anticipated developments is moving to its second phase.
The Folsom City Council unanimously advanced the first reading of an updated development agreement Tuesday night for Historic Folsom Station, clearing another hurdle for the long-awaited Granite House while establishing new deadlines for completing the remaining pieces of the development surrounding the public plaza.
The agreement does more than move Granite House forward. City officials said it also gives Folsom an important layer of contractual control over what ultimately gets built on the remaining privately owned sites at a time when changes in state housing law have raised concerns about how much authority cities retain over the height, density and design of certain housing projects near transit.
That concern took on added significance after an unsuccessful effort to pass AB 2415, legislation supported by local preservation advocates and city officials that sought additional protections for Folsom’s Historic District. During Tuesday’s discussion, city officials, residents and the developer repeatedly returned to the importance of keeping the remaining properties within the long-established Historic Folsom Station development plan.
The Granite House is expected to be the next building constructed, followed by Sutter Row and the Leidesdorff Building. Together, they represent the unfinished portions of a vision for the Railroad Block that dates back more than two decades.
One of the four private buildings, the Roundhouse, has been completed. It now houses Scott’s Seafood Roundhouse and Willamette Wineworks.
Planning Manager Desmond Parrington acknowledged the long road Tuesday while walking the council through an agreement designed to give both the city and developer a clearer path forward.
“This project has been on the books since 2006,” Parrington said.
The city’s master conceptual plan for the Railroad Block was approved in 2004, followed by a development agreement in 2006 and approvals for four mixed-use buildings in 2007.
In 2008, the developer completed the sitework for the building pad, and by 2009, the Granite House building plans were ready for permit issuance. However, with the construction of the Sutter Streetscape and façade improvements, the city and the developer agreed to delay the Granite House until the work was complete to provide the streetscape contractor adequate staging area and minimize construction impacts to the Historic District businesses.
By 2011, the streetscape was nearing completion, and the developer had received purchase deposits for 75% of the loft condominiums and was ready to start construction. However, to balance the state’s budget, California dissolved redevelopment agencies and transferred agency assets to the state, including Historic Folsom Station. In late 2014, the developer was finally allowed to purchase the parcels from the state. Since Scott’s Seafood had been waiting for several years, it was decided that the Roundhouse would be built before the Granite House.
With the delay, the Roundhouse building shell plans were required to be redrawn and resubmitted to meet building code updates, and Scott’s Seafood and Willamette Wineworks tenant improvement plans were prepared and submitted. The city approved the building plans for issuance in 2017, and the developer commenced construction.
After the Roundhouse was completed, attention turned back to the Granite House. To meet building code updates, the Granite House plans were also required to be redrawn, submitted and approved for permit issuance. In 2023, the Granite House plans were approved for issuance and the project was bid. Unfortunately, construction costs and fees had increased substantially since it was originally scheduled for construction in 2011, and suburban condominium values had not increased sufficiently to offset the increased costs.
In 2024, the plan was revised to convert the parking inside the building to commercial space, increase the residential units from 30 to 32 and lease the residential units rather than sell them to generate additional revenue to offset the higher construction costs and fees. The Historic District Commission unanimously approved the revised plan. Updated building plans were submitted to the city in 2025 and approved for permit issuance in 2026, subject to the amending of the development agreement.
According to Parrington, replacing what would have been ground-floor parking facing the Historic Folsom plaza with restaurants, retail and office space could dramatically improve the building’s relationship with the plaza, replacing views of the parking garage with storefront windows, outdoor seating and businesses that bring people directly into the space throughout the day and evening.
“From an urban planning standpoint, that’s a much better design,” Parrington said. “It helps to achieve and activate that plaza, enhances security, because you have people watching that plaza day in and day out.”
During Tuesday’s discussion, a council member with an architectural background called the conversion of the first floor from parking to active uses “the happiest accident of the whole thing,” saying it would bring foot traffic and new life to a portion of the district that has waited years for development.
The changes do come with a parking tradeoff. However, the existing parking garage was part of the original railroad block master plan to replace the surface parking and provide parking for the development project today.
The original agreement reserved 23 spaces in the city-owned 315-space parking garage for Historic Folsom Station. The new agreement increases that number to 32 spaces, essentially one for each residential unit in the Granite House. Removing Granite House’s internal garage reduces the overall number of off-street spaces planned within the four private development parcels from 80 to 50.
Parrington explained that refusing those additional nine garage spaces could actually result in a larger loss of public parking.
The developer owns the undeveloped Leidesdorff and Sutter Row sites, which are currently being made available for public parking through agreements with the city. If the additional garage spaces were not provided, Parrington said the developer could use one of those properties for private tenant parking instead, taking considerably more spaces out of public circulation and potentially delaying development of that parcel even longer.
Councilmember Aquino said she supported the additional spaces but asked that all or most of the reserved parking be placed on the top floor of the city garage, where residents have raised concerns about unwanted activity.
Parrington said the developer was open to the idea and noted that any improvements necessary to designate or secure the reserved spaces — including striping, signs or potentially a gate — would be the developer’s responsibility, not the city’s.
For a project with a history measured in decades, another significant part of Tuesday’s action involves accountability.
The previous agreement provided considerably more flexibility for extending development schedules. Under the amended version, city manager-approved extensions generally would be limited to one year for each project.
If construction has not started within 270 days of a commencement date established in the schedule of performance, the developer would be required to provide the city with a construction feasibility report and an updated financing plan demonstrating that the project remains viable and has a path toward financing.
Failure to provide a satisfactory report and financing plan would constitute a default under the agreement.
The accountability works both ways. City staff also has timelines to meet, and if the city falls behind on its review, the developer could receive additional time corresponding to the city-caused delay, up to another year. Parrington said staff has reviewed those deadlines and believes they are reasonable and achievable.
Parrington said the amendment provides “a fair and reasonable timeline,” establishes performance standards and limits the number of available extensions.
It also, he said, provides “a clear path forward” for completing the overall project.
But one of the more consequential parts of Tuesday’s discussion centered on what could happen to these properties if they someday fell outside that development framework.
Parrington told the council that under state transit-oriented housing provisions, an affordable housing project on the properties could potentially be developed at minimum densities of 100 units per acre or higher and at a considerably greater height than the buildings envisioned under the Historic Folsom Station plan.
He said that could mean “a five- to potentially six-story building.”
Developer Jerry Bernau told the council his interpretation of current state law, which took effect July 1, 2026, could allow even greater height on portions of the property. He said the Granite House could potentially reach eight stories by right with the possibility of nine with a density bonus, while the other two sites are allowed six stories by right with the possibility of nine stories with density bonuses.
Those comments described what Parrington and Bernau said could potentially occur under state housing laws rather than what is currently proposed for the properties. The project before the city remains governed by the Historic Folsom Station development agreement and its established design framework.
For Bernau, keeping that agreement in place is one reason Tuesday’s action matters beyond simply getting Granite House built.
“I think this development agreement can give the community a contract with us that makes sure that we follow the Historic District Design and Development guidelines and uphold the community process that we’ve done for several decades now,” Bernau said.
The issue became particularly important as the council considered removing an unusual provision from the old agreement that allowed Folsom to buy the properties back in the event of a developer default.
At first glance, giving up a city buyback right could appear to remove a layer of protection. Staff explained Tuesday that under today’s laws and lending environment, keeping it could create a different set of problems.
Parrington said the provision complicates financing because lenders could find themselves behind the city’s repurchase rights. If Folsom actually exercised the option and reacquired the properties, the properties would also become subject to California’s Surplus Land Act.
“If the city was to exercise its right and take back the properties, then those properties are subject to the Surplus Land Act,” Parrington said.
He told the council the law would require the city to first make the properties available for affordable housing development and said the sites could be particularly attractive for that purpose because of their potential competitiveness for tax-credit financing. The city staff report similarly identifies the Surplus Land Act as a reason for removing the repurchase provision.
Parrington also said reacquiring the former redevelopment properties could require review by the county oversight board.
The possibility drew particular attention from residents concerned about preserving the scale and appearance of Historic Folsom.
Loretta Hettinger, who spoke during the public hearing, emphasized that her concern was not affordable housing itself, but whether the city could continue requiring historic design standards if development occurred outside the existing agreement.
“There’s nothing wrong with affordable housing per se,” Hettinger said. “The problem is that unless state law changes, the city would not be able to require that the affordable housing utilize historic design.”
“This site needs all the protection you can give it,” she added.
Jim Snook, who said he has been in the district for 41 years, urged the council to keep the existing developer and project moving after so many years, pointing to Bernau’s previous work in the district and the Roundhouse as examples.
“I think it would be tragic if we pass this up,” Snook said.
Mike Reynolds told the council the Granite House changes had also gone through the residents association and received strong support. He said activating the west end of the district has been a longstanding goal.
“If there’s any project that’s an imperative for the historic district, it’s this one,” Reynolds said. “We just gotta get it off the ground.”
Bernau, who has remained with the project through its many iterations, said the updated agreement provides the certainty needed to pursue financing while maintaining the architectural approach envisioned for the property.
The agreement also gives Granite House a limited opportunity to continue under the 2019 building code cycle rather than forcing another redesign under the 2025 code. That allowance would remain available for up to two years, provided the project moves forward without additional major changes or delays. Otherwise, the developer would have to resubmit under the newer code.
The council ultimately voted unanimously to introduce Ordinance No. 1378 and conduct its first reading.
The ordinance is expected to return to the council Oct. 13 for its second reading. The council is also expected to consider the Granite House design approval and, separately, an approximately $119,000 fee credit related to property taxes the developer has paid since 2014. The city had previously agreed to reimburse those taxes in exchange for allowing the privately owned properties to be used for public parking.
After years of seeing portions of the Railroad Block remain as undeveloped lots and temporary parking, Tuesday’s vote does not mean construction begins tomorrow. But it moves Granite House another meaningful step through the process and puts firmer expectations around what happens next. More information about the Granite House can be found at www.folsomstation.com.
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