New Linkage Fee Update: What You Need to Know

In a significant development for the real estate, city planning, and affordable housing sectors, the Department of City Planning has unveiled the updated Affordable Housing Linkage Fee (AHLF) schedule, set to take effect on July 1, 2023. This article aims to provide a concise overview of these changes, ensuring that professionals and stakeholders are well-informed.

Background

The AHLF Ordinance (No. 185,342) was initially endorsed by the City Council on December 13, 2017. This ordinance introduced a fee for specific new market-rate residential and commercial developments. Its primary objective was to generate local funding to support affordable housing initiatives. Subsequently, the fee schedule was approved on June 29, 2018, with the provision that it would be annually adjusted for inflation, utilizing the Consumer Price Index for all urban consumers (CPI-U) specific to the Los Angeles-Riverside-Orange County area, starting from July 1, 2018.

Adjustments

In January 2018, the Bureau of Labor Statistics introduced a new geographic sample for the CPI. As a result, the AHLF's annual inflation adjustment now references the CPI-U for the Los Angeles-Long Beach-Anaheim Area. For 2023, the inflation adjustment has been determined at 3.8%, derived from the average CPI-U over the 12 months ending April 2023.

Updated Fee Schedule (Effective July 1, 2023)

To simplify matters, here's a breakdown of the updated AHLF fee schedule:

• Low Market Area:

  • Nonresidential (Including Hotels): $3.61/sqft

  • Residential (6+ units): $9.64/sqft

  • Residential (2-5 units): $1.20/sqft

  • Single-family detached home: $9.64/sqft

  • Net Loss of Housing Units: $3.61/sqft

• Medium Market Area:

  • Fee per square foot: $4.82 for non-residential uses, $12.05 for residential uses with 6 or more units, $1.20 for 2-5 units in a development project, and $12.05 for single-family detached homes.

• Medium-High Market Area:

  • Fee per square foot: $14.46 for residential uses (6 or more units), $1.20 for residential uses (2-5 units), and $14.46 for single-family detached homes.

• High Market Area:

  • Fee for all types of uses: $21.68/sqft

It's crucial to note that all projects subject to AHLF must pay the applicable fee amount in place at the time of their building permit issuance.

Stay informed and navigate the evolving landscape of affordable housing with this AHLF update. It's a pivotal step towards promoting accessibility and sustainability in the city's housing sector.