(AP Photo/Nick Ut, File)
Two years ago, Los Angeles Mayor Eric Garcetti proposed a linkage fee to help finance affordable housing — a mechanism utilized by governments in San Francisco, San Diego and Oakland that some officials claim will raise around $100 million each year. Last week, however, a City Council committee delayed a vote on the mayor’s plan until the end of July — or even later in the year.
“The delay follows criticism from business groups and some academics who say the fee would slow construction in a city grappling with a housing crisis,” the Los Angeles Times reports.
Officials are under pressure to come up with citywide policies to curb homelessness, which has risen 20 percent over 2016 levels, according to the paper. Garcetti had been counting on $20 million from the fee this year — but that would take approval from the council.
According to the Times:
The proposed fee would apply to new homes, office buildings, apartment towers and other construction — charging $5 per square foot for commercial development and $12 for residential. Residential projects with five or fewer units would be charged $1 per square foot.
Several types of development, including some grocery stores, smaller homes and certain affordable housing projects, are exempted.
In cases in which a home or building is torn down and replaced with a larger one, the proposed fee applies to the amount of increased square footage.
Supporters argue that the fee is especially necessary in 2017, thanks to federal budget cuts. A program that supplies $20 million of the $28 million collected annually by the city has been proposed for elimination by the president. But critics believe that a fee making construction more expensive will slow production, while only a few residents will benefit from the subsidy. They also argue that it will scare away businesses.
In May, linkage fees were banned by the state senate in Texas. Austin had been considering the financing tool in a plan to raise $600 million over 10 years to buy and preserve affordable housing for minorities, according to the Austin-American Statesman. The tool was framed as a “tax on new development to subsidize low-income housing in other areas” by the senator who introduced the state bill. An amendment stated that other means to address affordable housing, like density bonuses, would still be allowed.
Boulder, Colorado, has been a resolute supporter of linkage fees, however. In February, a November decision to raise the per-square-foot fee on commercial development by roughly 25 percent was reaffirmed by the City Council. The city had been considering a lower fee, the paper reports, but the election of Donald Trump stirred support for the increase.
“We have clearly seen the direction this administration is going, and it’s not going to be beneficial for affordable housing,” one council member said.