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Council approves ‘linkage fees’ on developers to pay for affordable housing

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The new fees could bring in over $100 million annually

Development in Downtown LA
Under the fee system, developers of new residential projects would pay up to $15 per square foot.
RoidRanger | Shutterstock

Editor's Note: This post was originally published December 13, 2017, and has been updated to reflect current planning department estimates for the number of homes that could be constructed under the linkage fee program.

Los Angeles Mayor Eric Garcetti’s proposal to charge fees to developers that would pay for affordable housing won the full support of the City Council on Wednesday.

“This is simply one tool that is needed to deal with a friggin’ huge problem,” Councilmember Gil Cedillo said just before the unanimous vote to approve the measure.

In the works for more than two years, the new “linkage fee” is expected to bring in up to $104.4 million annually, according to the planning department. That revenue would be used to finance construction or preservation of between 1,699 and 1,767 units of affordable housing per year—significantly more than the 1,353 units built in all of 2015.

A coalition of housing advocates and religious leaders gathered with councilmembers José Huizar, Mike Bonin, and David Ryu outside City Hall this morning to support the measure, which they argued would help address a housing shortage that’s contributed to soaring rents and rising levels of homelessness.

A recent report from the nonprofit California Housing Partnership Corporation found that Los Angeles would need to build more than 500,000 units of affordable housing in order to meet demand from very low and extremely low-income earners.

The fees charged to developers of residential buildings would be between $8 and $15 per square foot, while commercial developers would pay $3 to $5 per square foot for new projects.

Developers and business groups have argued that the fees, similar to those charged in other California cities like San Diego and San Fransisco, would discourage new construction—exacerbating the city’s housing shortage.

Critics of the measure, however, were nowhere to be found at City Hall Wednesday, where a large crowd of supporters packed the council chambers.

Iisha Jones, resident manager at Venice Community Housing told the council that the nonprofit affordable housing provider was in desperate need of new units for residents struggling to find housing.

“People are waiting years for an opportunity [to find housing] and may never get a chance,” she said.

“You only have to step outside to see we have a housing crisis,” said local resident Vicki Kirschenbaum. “Developers benefit greatly from projects in our city; it’s time they give back.”

Many in attendance at the meeting urged the council to adopt a motion increasing fees to $18 per square foot in pricey “high market” areas like Hollywood and West LA. The council asked city staff to study the feasibility of making this change in the future.

Councilmember Joe Buscaino said that a tiered fee structure could attract more construction in lower income areas that developers might otherwise ignore.

“I want a piece of that action,” he said, referring to new projects rising outside of his southern council district. “From Watts to the waterfront, we have to develop.”

The council also asked staff to report back on the possibility of exempting housing built for middle-income earners (those making between 80 percent and 120 percent of LA’s median income) from the linkage fees.

Equipped with a new source of funding, the city should have an easier time meeting Mayor Garcetti’s goal of building 100,000 units of housing by 2021, but the cash won’t start rolling in just yet.

Under the ordinance approved Wednesday, the city won’t start collecting fees from developers for another 120 days, with fees gradually being phased in over the next year after that.