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Nexus study: Dollar linkage fee could put Kriseman’s ‘For All, From All’ housing plan target in reach

Megan Holmes

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The relationship between incoming market rate development and demand for affordable housing, including factors like cost of living, housing burden and income of St. Petersburg residents is at the root of a new funding mechanism the City of St. Petersburg is considering to boost the city’s affordable housing stock, and address the gravity of the city’s housing crisis. 

The newly-released results of a Nexus Study Draft commissioned by the Kriseman administration show that instating a linkage fee between $1-5 per square foot could potentially generate between $2.1 million and $10.4 million respectively in annual revenues for the city’s Affordable Housing Trust Fund.

Linkage fees, also known as impact fees, are a mechanism for funding affordable housing that would impose a fee per square foot of new market rate developments, on both residential and nonresidential developments. Such fees have been used effectively in cities like Denver, Los Angeles, Seattle and Boston to fund affordable housing projects. They’ve also been used in Florida cities like Winter Haven, Coconut Creek, and Jupiter.

Over 10 years, the fees could generate $20.8 to $104 million in funding, providing the city with funding that can be utilized for a number of housing programs, including down payment assistance programs, rehab assistance programs, or helping to subsidize privately-developed affordable housing units like the recently-completed Burlington Post, City Place Senior Apartments and Wyngate Apartments. 

The City of St. Petersburg accepted a proposal for the nexus study last spring, the first step in evaluating the appropriateness of imposing a linkage fee throughout the city. The nexus study establishes guidelines for the linkage fees, based on current development costs and housing needs, and examines the gap between what low, moderate, and median income residents can afford and the cost of building affordable units. 

St. Petersburg Mayor Rick Kriseman and his staff have long been looking at the possibility of imposing a linkage fee to spur affordable/workforce housing development. In fact, linkage fees were included in the “For All, From All” Affordable Housing Plan announced by Kriseman in July. But the City has been tight-lipped about how much those linkage fees might cost developers above normal building costs. According to that plan, $20 million in affordable housing funds would come from linkage fees over the plan’s 10 year span, pending the results of the nexus study. 

In many cities, developers have the option, in lieu of paying the linkage fee, to mix a certain number of affordable units into their market rate development or to build them within a certain distance of the development. 

Linkage fees have risen in popularity as St. Petersburg and cities across the nation experience the effects of an housing affordability crisis. Thirty-four percent of St. Petersburg homeowners and 52 percent of renters in the city are considered housing burdened, paying more than 30 percent (the standard established by the Department of Housing and Urban Development) of their income towards their housing.

In St. Petersburg, the median household income is $57,700, which means an a median income household could afford a maximum $1,269 for rent or a maximum of $229,400 for a single family home. Yet, the median single family sale price was $235,515 in 2019 and $280,000 for a townhome/condominium, according to the MLS. The asking rent for a two bedroom apartment was $1,987. 

Even households making 120 percent of the area median income, or $69,240, could reasonably afford to buy a median single family home, but could not afford a two-bedroom apartment.

There are currently no proposed ordinances surrounding linkage fees and no exact number proposed by the city. The nexus study will be presented to City Council on Oct. 24 at the Council of the Whole (COW) meeting and will be further presented to the public for comment in November.

This is a developing story, check back with the St. Pete Catalyst for updates. 

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