Commercial linkage fees are collected on new commercial construction to help increase the supply of homes that are affordable to local workers. Linkage fees are very dependent on a healthy economy, because they rely on new commercial development. As a result, these fees, while often a viable source of funding, will fluctuate with market conditions.
In 1986, the city of Boston created the Neighborhood Housing Trust with a dedicated funding source from a linkage fee on commercial developments. The fee applies to all new or expanding office, retail, hotel and institutional developments exceeding 100,000 square feet that are requesting zoning relief. As of 2015, the fee was $8.34 per square foot.
Annual revenue from the linkage fee has averaged $6,500,000 a year and has been very stable over time. Through 2014, the Neighborhood Housing Trust has invested nearly $150 million, helping to create or preserve 10,725 affordable units in 206 developments.
Developers in the downtown area are granted a seven-year pay schedule, while developers in neighborhood districts are given 12 years to pay the linkage fees. Developers may also fulfill their linkage obligation by creating or directly assisting in the creation of affordable housing units. Under municipal law, revenue from these fees can only be used to create or preserve housing that is affordable to low- and moderate-income households in the city.
For More Info:
Theresa Gallagher, Boston Neighborhood Housing Trust
Email: [email protected]