LA City Council Approves New Fees for Housing Crisis Relief
Posted: Wednesday, December 13, 2017 – 1:46 PM
(CNS) – The Los Angeles City Council Wednesday unanimously approved the creation of an affordable housing linkage fee — one of the most hotly debated proposals to come through City Hall in recent times.
Although some council members and key business leaders expressed hesitation while it was dissected at four Planning and Land Use Management Committee meetings, the council ultimately came together in unison to approve the fee as a way to help fight the housing crisis and rising rents in the city.
“This is an important moment. I’m thrilled to be a part of it,” Councilman Bob Blumenfield said.
Under the approved ordinance, commercial and residential developers will have to pay a fee for every square foot of new construction, generating an estimated $100 million per year to be used to provide affordable housing units.
Skeptics of the proposal fretted that it could discourage development overall or that poor tenants would suffer as landlords passed the cost of the fee onto them.
Councilman Jose Huizar, who chairs the Planning Committee, told City News Service before the vote that the fee is lower than what some studies had shown developers could absorb, which helped reduce the level of opposition in the business community.
“We don’t think that there will be any slowdown in growth. We could have charged more in this fee, but we chose not to, and we did that purposefully so that we have a large buffer there that will not discourage any development,” he said.
A report by the Department of City Planning and Housing and Community Investment Department estimates the fee could raise between $93.7 million and $114.3 million per year, with a tiered structure ranging from $8 to $15 per square foot for residential projects and $3 to $5 for commercial ones, depending on the market value of the neighborhood.
Councilmen Mike Bonin and David Ryu introduced an amendment to the motion that directs city staff to present an analysis within 60 days of the market impacts of increasing the fee in high market areas to $18.
Huizar pointed out that the city’s affordable housing trust fund contained around $100 million in 2010, but has nearly dried up as state and federal contributions have plummeted.
“… We are one of the last large cities in the country that doesn’t have (a) consistent revenue stream to build affordable housing,” Huizar said.
Councilman Mitchell Englander expressed some criticism of the fee at one meeting, but later said he had always supported a linkage fee, and that it had just been a question of finding the “sweet spot” that doesn’t slow development.
Councilman Gil Cedillo suggested he wasn’t necessarily against the fee, but cast some doubt on how effective it could be.
“If we think this is the whole solution, we are really making a mistake,” Cedillo told City News Service in June.
But last week, Cedillo waived consideration of the linkage fee from his Housing Committee, which cleared the path for it to be voted on before the end of the year.
Fredy Ceja, an aide to Cedilla, said then that the councilman “supports the proposed ordinance which creates one more policy tool toward addressing our city’s affordable housing crisis.”
Other California cities such as Oakland, San Diego and San Francisco have a linkage fee, as do other cities around the country.
“When I was in college, Boston established an affordable housing linkage fee,” Bonin said in August. “… I remember the headlines in the Boston Globe — the sky was going to fall and the world was going to end, housing would stop and the boom in Boston would end. It didn’t happen.”
Groups that argued that the fee will slow down housing include the Los Angeles Area Chamber of Commerce, which said the “business community strongly supports affordable and workforce housing, but this proposal will make low- and middle-class housing more expensive to build and more expensive to rent or own.”
Los Angeles Mayor Eric Garcetti set a goal in 2014 of constructing more than 100,000 units in Los Angeles by 2021 as a way to combat a housing shortage that has contributed to rising rents and an increase in homelessness in the city.