Affordable Housing Linkage Fee Background

BACKGROUND

Affordable housing is one of the biggest issues facing the City of Los Angeles and is a priority of Mayor Eric Garcetti and the Los Angeles City Council. Prior to adoption, Los Angeles was one of few major U.S. cities with housing affordability concerns that did not have either a permanent source of local funding for affordable housing or an inclusionary housing policy. As a result, the City devoted less per capita in housing funding than most other major cities.

Many cities have instituted fees on commercial and market‐rate residential development that are used solely to help build affordable housing for lower‐income residents. These cities include San Diego, Oakland, San Francisco, Seattle, Boston, and others. The fees are justified due to the link, or nexus, between new developments and the demand for affordable housing they create through added low wage workers.

DEVELOPMENT PROJECTS SUBJECT TO THE AFFORDABLE HOUSING LINKAGE FEE

Projects that meet the definition of a Development Project and do not qualify for any of the exemptions listed in LAMC 19.18 B.2 are subject to payment of the Linkage Fee. Development Project is defined in the AHLF Ordinance as any activity involving or requiring the issuance of a building permit that results in:

1. A project that results in additional dwelling units or guest rooms;

2. A project that results in additional nonresidential floor area;

3. A single-family residential project that results in a net increase of more than 1,500 square feet of floor area, unless not sold within three years; or

4. A change of use from nonresidential to residential

FEE STRUCTURE

Residential Fee
Ranges from $8 to $18 per square foot for single-family (SF) homes and 6+ unit multifamily (MF) buildings, depending on market area. Ranges from $1 to $18 per square foot for small multifamily buildings with 2-5 units, depending on market area.

Nonresidential Fee
Ranges from $3 to $5 per square foot, depending on market area.

Residential Market AreaNon-Residential Market Area
(Click map to download larger image)


*Linkage Fee Schedule as of June 29, 2018

FEE PAYMENT INSTRUCTIONS

Phase-In Timeline

The fee is phased-in based on the date by which a building permit application or a complete planning entitlement is submitted, whichever is first.

Feb. 17, 2018: Effective date of AHLF Ordinance - no fee applies
June 18, 2018: One-third of full fee amount is in effect
Dec. 20, 2018: Two-thirds of full fee amount is in effect
June 17, 2019: Full fee amount is in effect

Projects are exempt from the fee if a building permit application has been submitted to the Los Angeles Department of Building and Safety or a complete entitlement application has been submitted to the Department of City Planning City of Los Angeles (whichever is first) prior to June 18, 2018.

Fee Calculation

For each Development Project, the Linkage Fee is calculated by the Department of Building and Safety as follows:

  1. The amount of new or added floor area in the Development Project devoted to the uses described in the Linkage Fee Schedule below (after subtracting any eligible demolished floor area as defined in LAMC 12.03 within the prior year).
  2. Multiplied by the amount of the applicable fee, depending on the market area in which the project is located, and type of project, at the time the building permit for the Development Project is issued,
  3. Multiplied by the applicable phase-in ratio (⅓ or ⅔, based on when a building permit application or a complete planning or zoning entitlement is submitted). This phase-in ratio is applicable only during the initial phase-in period.
  4. Minus any applicable deductions or credits.

Payment of Linkage Fee
The Linkage Fee is due and payable prior to the issuance of a building permit. The fee amount is based on the fee schedule and market area maps in effect at the time the building permit for the Development Project is issued.

Adjustments to the Fees
Fees will be adjusted annually for inflation beginning July 1, 2019 using the Consumer Price Index (CPIU). The market areas may be updated by City Council every five years beginning July 1, 2023.

EXEMPTIONS AND DEDUCTIONS/CREDITS

Exemptions
The following types of projects may be exempt from the payment of the Linkage Fee. Please see the ordinance language to verify the applicability of the exemption:

  • Multifamily housing projects with at least the following shares of affordable housing, as determined by HCIDLA ,and as calculated based on the total number of units:
    • 40% moderate income units, or 20% low income units, or 11% very low income units, or 8% extremely low income units.
    • Other on-site affordable housing or fee payments in excess of the AHLF requirements.
    • Affordable housing required by the Mello Act, Central City West SP, or Measure JJJ (LAMC 11.5.11).
  • Non-residential developments less than 15,000 square feet.
  • Single-family detached homes (or additions) that result in less than 1,500 of net square feet. Additional floor area in excess of this amount is also exempt if the home remains under the same ownership for three years from the issuance of a building permit. If not exempt, all net new floor area added to a site is charged the fee.
  • Developments constructed by or on behalf of a government agency or public institution like public schools, public museums and homeless shelters, as well as private elementary or high-schools.
  • Hospitals.
  • Accessory Dwelling Units (ADUs).
  • Grocery stores, if there is not an existing one within one-third mile of the project.
  • Adaptive Reuse projects involving a designated Historic-Cultural Monument with no increase in floor area.
  • Non-residential floor area located in the SLATE-Z South LA Transit Empowerment Zone (Promise Zone) within first three years of effective date of ordinance.

Deductions/Credits
The following types of projects may be eligible for a deduction or credit on the otherwise payable fee:

  • Applicable fee credit of prior nonresidential uses when converted to residential uses through a change of use.
  • Floor area of Restricted Affordable Units (per LAMC 12.22 A. 25) in a market rate development.
  • Floor area from the residential portion of a mixed-use building if the development is subject to certain other affordable housing requirements.
  • First 15,000 square feet of nonresidential floor area in a mixed-use building.
  • Any floor area that accrued as a result of a Public Benefit Payment as part of a Transfer Floor Area Right approval (per LAMC 14.5.9).
  • Value of any land dedication for the purpose of affordable housing, as approved by HCIDLA.

For a complete list of exemptions and deductions/credits, please review the AHLF Ordinance

More Information

Click here for more information on the AHLF Ordinance and FAQs