Amidst affordable housing concerns, city discusses housing linkage solutions

At a public meeting Tuesday, the City’s Housing and Community Development Department (HCDD) introduced the idea of linkage fees as local funding sources to reduce the impact of the current affordable housing crisis.

A linkage fee is assessed on new commercial and residential developments to help communities meet the need for workforce housing. The costs are calculated on a square foot basis or a per unit basis. 

Despite the scheduled agenda to discuss development programs, the Penny for Pinellas Funding and CRA Housing Programs, citizens raised questions about the proposed idea.

Has it been done before?

According to Rob Gerdes, the Neighborhood Affairs administrator, in 2007 Florida conducted a nexus study recommending the fee, which included Pinellas County and St. Petersburg. 

The study collected data about housing needs and market conditions, and showed recommended commercial development linkage fees at a time of “market interest and emphasis on inclusionary zoning policies,” he explained.

The HCDD used the study as a detailed example of potential costs for future commercial and residential developments.

According to the analysis, a retail development would have a recommended fee of $2.90 per square foot upon its construction, while an industrial land use would be designated 2 percent less of the cost.

Under Florida law, there must be a rational relationship between the fee imposed and the impact of new construction on the need for affordable housing. The link used in the nexus study was based on employment and wage statistics together with development data. 

“Retail jobs are more likely to pay in a wage that is going to create the necessity for affordable housing versus industrial,” Gerdes said. “So the demand created for affordable housing with industrial is not as significant.”

The recommended fee for office and a full-service hotel land use is $2.50 per square foot.

If a linkage fee were to be established, commercial and residential developers would have to pay a fee at the time of issuing a new building permit. Yet it is too early for the HCDD to decide how the money will be used.

Proposed services using linkage funds include a direct subsidy for construction of affordable housing, down payment assistance above 80 percent of the average median income (AMI), and rental assistance.

A non-profit such as Habitat for Humanity, for example, could be awarded linkage funds.

The nexus study shows that Habitat received linkage funds in the ’90s to develop homes in Winter Park, before the City Commission suspended the fee in 2013. The town of Jupiter adopted the incentives program in 2015 and required developers of commercial and industrial buildings of more than 10,000 square feet to pay a linkage fee.

The Housing and Community Development Department will present the proposal to the Budget Finance and Taxation Committee meeting  Sept. 13.

If the Budget Finance and Taxation Committee show interest in the affordable housing linkage fee proposal, the HCDD will have to conduct a new nexus study as recommended by the City Attorney’s Office. 

With prices for homes and apartments getting more expensive in the city, the HCDD is determined to receive public input if the city can fund a 2018 study. The first – and last – study was completed 11 years ago.

A completed nexus study will show the number of workforce housing units needed for new development, and determine the amount of assistance that would be required to create a defined level of housing affordable.

“A study like this will always show that the true impact is way higher than any political reality,” said Gerdes. “It gets down on working with developers, and playing with numbers people can work with.”