Last month, the Los Angeles City Council approved a new fee on development to raise money for affordable housing. Mayor Eric Garcetti has long pushed for the linkage fee because he believes it would provide a permanent revenue stream to build housing for low-income residents. The fee takes into account both the type of project being built and its location, which officials estimate will raise about $100 million annually when it goes into effect in 2019. After the fee was approved, Eric Garcetti stated,

Today we see hope in the promise that Los Angeles can continue to grow and indeed must grow. That when we see luxury condominiums going up, that we can make sure that there is money paid in to build housing for the rest of us.

When the fee goes into effect, builders will pay $1 to $15 a square foot, depending on the type of project and area, with higher fees in “high-market” neighborhoods and lower fees in some neighborhoods. For example, the linkage fee to build a 3,000-square-foot home on a vacant lot in Bel-Air would be $45,000, while in San Pedro the fee would be $24,000 for the same size home. The term “linkage fee” refers to a city’s efforts to offset the strain on the housing market for lower-income people caused by market-rate development. Several categories are exempt from the fee, including hospitals, schools, public museums, and residential additions smaller than 1,500 square feet. Developers could be exempt from the fee if they include a certain amount of affordable, low-income or moderate-income housing in their buildings as well. We will have to wait and see what the affects of the fee are next year.

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