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Here’s LA’s plan to make developers pay for affordable housing

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They’re called linkage fees

Supannee_Hickman / Shutterstock

A plan to make real estate developers pay for affordable housing in the city of Los Angeles, where rents are sky-high, heads to the Planning Commission on Thursday in what is likely its first major step toward approval.

The so-called linkage fees would generate an estimated $75 million to $92 million each year. That money would not only fund construction of new units that are deed restricted to tenants with qualifying incomes, it would also be earmarked for rehabbing and maintaining existing affordable housing units.

LA has been under-building housing of all types. The region’s housing shortage is blamed for helping drive up the cost of rent—to an average of $2,169 in 2016, a price that’s out of reach for many middle and lower-income households.

“If we want a livable city for everyone, we need this fee,” said Lisa Payne, policy director at the Southern California Association of Nonprofit Housing. “We have so many people who can not afford a place to live decently in the city.”

In 2014, the association found that Los Angeles County was short 490,340 affordable housing units.

Other cities already in California and across the U.S., including San Francisco, Oakland, and San Diego, impose linkage fees to offset the the fact that many of the workers who fill the jobs spurred by new development can’t afford to live in market-rate units.

The fees are on the low end

LA’s fee would apply to both residential (apartments, condos) and commercial (hotels, restaurants, shops). With some exceptions, including for small mixed-use projects and single-family homes, developers in the city of LA would have to pay $5 for every square foot for commercial space they build and $12 per square foot for residential space.

Linkage fee rates imposed by other cities. San Francisco levies up to $97 per unit in multi-family housing complexes.
Via the city planning department

The city is trying to strike the right balance between raising money and not inhibiting development.

But the proposed fees are on the very low end—and even lower—than what an economic report commissioned by the city found it could feasibly charge. Published in September, the report concluded that the fees could vary from $5 to $35 per square foot for commercial and $19 to $49 per square foot for residential.

Payne says her association is advocating for a $15 fee for residential construction.

“We think given the crisis and given that residents of Los Angeles opened their pocket books around Measure HHH, developers can also do that as well,” she said.