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Update – City of Los Angeles Affordable Housing Linkage Fee

The City of Los Angeles continues to move toward the adoption of an ordinance that establishes an Affordable Housing Linkage Fee (Ordinance). As currently proposed, the key provisions of the Ordinance are as follows:

  • It applies to any new building permit or entitlement application submitted on or after 180 days after the Ordinance’s formal adoption date. Any such application submitted before that will not be subject to the Ordinance.
  • If the project does not qualify under any of the available exemptions, the Ordinance mandates a “linkage fee” of $5.00 per square foot for non-residential uses, $12.00 per square foot for residential uses with 6 or more units, and $1.00 per square foot for residential uses with 5 or less units. Note that the applicable deductions/credits may reduce such fees.
  • It provides exemptions and deductions/credits for certain projects. In particular, no linkage fee would be required with respect to affordable units that meet specified requirements. Also, the first 25,000 square feet of nonresidential floor area in a mixed-use building would be excluded from the fee obligation.
  • The linkage fee would be annually adjusted for inflation.

The current text of the Ordinance can be found by clicking here.

Previously, on February 23, 2017, the City Planning Commission unanimously recommended approval of the Ordinance. Then, last weekthe Planning and Land Use Management Committee of the City Council (PLUM) heard nearly three hours of testimony from over 50 speakers in a packed room full of constituents and representatives from a wide range of community and business organizations.

After hearing the testimony, PLUM members, who include Councilmembers Huizar, Harris-Dawson, Cedillo, Englander and Price, requested that the Department of City Planning (“DCP”) and the Housing Community Investment Department (“HCID”) provide additional information and analysis with regard to a number of issues and report back to PLUM. Those requests include the following:

  • Provide a framework for the expenditure plan for the Housing Impact Trust Fund created by the Ordinance.
  • Further analysis whether the current “one size fits all” linkage fees for residential and nonresidential uses is appropriate for communities with varying incomes and demographics.
  • Prepare an assessment of the overall need for affordable housing units with more numerical data and the impact of potential cuts in federal funding.
  • Clarify the definition of certain terms (e.g., affordable vs. market-rate housing).

PLUM continued consideration of the proposed linkage fee to early August (after its July recess), at which time DCP and HCID are expected to report back with the requested information and analysis.

We will continue to follow the progress of the Ordinance and are available to discuss its potential impact on your development projects and programs.

For further information, the full audio and agenda from last week’s PLUM meeting can be found here.

*Nashia Lalani is a Land Use Planner with Sheppard Mullin

Copyright © 2017, Sheppard Mullin Richter & Hampton LLP.

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About this Author

Jack Rubens, Real Estate, Land Use, Environmental, Lawyer, Sheppard Mullin
Partner

Jack H. Rubens is a partner in the Real Estate, Land Use and Environmental Practice Group in the firm’s Los Angeles office. He has also served as Chairman of the firm’s Pro Bono Committee.

Areas of Practice

Mr. Rubens has a diverse land use, land use litigation and real estate transactional practice. Over his 30 years at Sheppard Mullin, he has helped urban and retail developers, homebuilders and many other clients secure land use and zoning entitlements for a broad...

213-617-4216
Kira N. Teshima, Sheppard Mullin Law Firm, Real Estate Attorney
Associate

Kira Teshima is an associate in the Real Estate, Environmental, and Land Use and Natural Resources Practice Group in the firm's Los Angeles office. 

Ms. Teshima’s practice focuses on land use and real estate matters. Ms. Teshima assists developers, large and small businesses, property owners and other private parties in complying with the California Environmental Quality Act (CEQA) and planning and zoning regulations; obtaining and negotiating development entitlements and regulatory approvals; drafting real estate transactional documents and easements; and government advocacy. Ms. Teshima has worked on a variety of complex housing, mixed-use development and utility scale energy projects throughout California. She also represents developers and management in traditional labor law issues, including union negotiations. Ms. Teshima advises clients on several state and federal land use and environmental laws, including CEQA, the National Environmental Policy Act, the California Coastal Act, the Subdivision Map Act, the California Public Records Act and other State and local development regulations.

213-617-4234