What Are Linkage Fees?
Linkage Fees are a type of fee cities charge real estate developers on new developments to raise funds for the needs of the community that are linked to the increased growth and demand that result from their development project.
How Do Linkage Fees Work?
Cities may charge market rate real estate developers a linkage fee on real estate developments over a certain threshold. For example, a city may charge developments of a certain property type over 50,000 square feet a linkage fee of $5 per square foot. The money raised will go into a fund that the city will used to increase the supply of affordable housing.
Linkage Fees And Affordable Housing
Linkage fees are most commonly associated with affordable housing initiatives as cities try and find ways to raise funds to subsidize and increase the supply of affordable housing.
The link between real estate development projects and increased needs of the community for affordable housing demands is thought to stem from the fact that increased economic development will increase the need for low wage workers who will in turn need affordable housing that is in short supply.