The argument against commercial linkage fees
GlobeStreet.com interviews Paul Beard of Alston & Bird’s Environmental Group about the pitfalls of increasing the cost of new development. San Jose City Council will consider a commercial linkage fee this coming Tuesday.
GlobeSt.com: Why are developers so opposed to the proposed linkage fee?
Paul Beard: Most developers are opposed to the proposed linkage fee, because it is both bad policy and fundamentally unfair. First, the linkage fee will only increase the cost of residential and commercial construction, which ultimately will be passed on to buyers, renters, and lessees. Thus, the proposed fee serves only to make even less affordable the city’s already-limited supply of commercial space and housing. But worse than that, it unfairly targets developers. Developers aren’t the cause of the lack of affordable housing; they are the solution. And the proposed linkage fee only punishes their laudable efforts in supplying the city with badly needed projects, especially housing units.
GlobeSt.com: Do you think that development measures, like linkage fees are unconstitutional?
Beard: Absolutely. Any time a public agency imposes, as the condition of development, payment of some fee—in this case, for affordable housing—it must demonstrate a constitutionally close enough connection between the fee and the impacts of the project. Here, the fee is being exacted to fund affordable housing. Yet the city has no established, and cannot establish, the necessary connection. Far from causing housing to become unaffordable, residential developers’ projects are actually ameliorating that problem by supplying more housing. As for commercial developers, they are not causing housing to become less affordable, and they therefore should not be forced to pay for the city’s wrong-headed program. The fee is unconstitutional.
GlobeSt.com: What are the legal principles behind the linkage fee, and why is it the action the city is choosing to combat affordability issues? Are there other or better solutions that the city can or should use, in your opinion?
Beard: I can’t speak for the city, but the fee is misguided. It only increases the cost of providing housing, which is the exact opposite of what the city purportedly wants. A better solution is to make residential development much easier and less costly to undertake. That can take the form of fewer regulations, fewer requirements, and lower fees. If you make supplying housing easy and cheap, the supply will come, and that will naturally drive down the price of housing in the city.
This article refers to a Los Angeles City commercial linkage fee proposal.
Read the whole thing at: https://www.globest.com/
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