City of Los Angeles Affordable Housing Linkage Fee Nexus Study

City of Los Angeles, CA

BAE completed the City of Los Angeles Affordable Housing Linkage Fee Nexus Study in Fall 2016.

This landmark work was prepared as three key components: a detailed nexus study for both commercial and residential linkage fees resulting in calculations of maximum legal fee levels by land use, a real estate market analysis used to categorize 144 neighborhoods into low, medium, or high market condition, and a financial feasibility analysis of seven commercial prototypes and four residential prototypes across the market condition categories to test for a maximum feasible fee.

The Study also estimated potential annual linkage fee revenues under four proposed Fee Options. In addition, BAE’s work for the linkage fee study provided recommendations for applying the fee to residential Density Bonus projects, based on an analysis of the housing need addressed by affordable units in Density Bonus Projects in comparison to the need addressed by a potential fee.

Background work included over 20 case studies of cities in California and elsewhere with linkage fee programs. The case studies provided detailed information on program implementation, including point of collection, exemptions for specific projects, and the relationship between the fee program and other City ordinances such as density bonuses. Findings from the case studies informed recommendations for implementation of the City of Los Angeles Fee.

The process for the study also included BAE organizing and co-facilitating three workshops which invited more than 50 developers, housing advocates, and academics to engage in the study process. Additional direct interviews with leading Los Angeles commercial and market-rate residential developers were also conducted to firm up assumptions and obtain feedback.

The Linkage Fee Ordinance was adopted in December 2017, creating a major permanent funding source for affordable housing.