December 18, 2018

San Jose: Council to Study Commercial Linkage Fees


Last Tuesday night, the San Jose City Council voted to conduct the studies necessary to adopt City-wide Commercial Linkage Fees (CLF) as a funding solution for affordable housing.  The studies, including a standard Nexus and an in-depth Feasibility study, will provide a foundation for Council deliberation about a potential fee and appropriate fee levels.

Commercial Linkage Fees are a standard tool used by cities throughout the Bay Area to help generate much needed resources for affordable housing development.  The justification for charging affordable housing fees for non-residential development is established by a Nexus study, which looks at the ways that new jobs create a demand for housing, but don’t always pay enough to for employees to afford housing in our super expensive market.  The Nexus calculates the amount non-residential developers would need to pay to fully mitigate the impact of their development on the demand for new housing.

The Feasibility study, which will accompany the nexus analysis, will look at the potential impact of new fees on future commercial development.  This study, as approved by the Council, will explore fee levels for different types of commercial development – what would work for warehouse versus high-tech office space – and different parts of the City – what would work in more residential areas versus downtown.  The goal will be to find fee levels that generate as much money as possible for affordable housing without deterring commercial development.

Moving forward on the CLF in San Jose has been a major goal of the affordable housing community.  Staff will return to Council in February with a detailed implementation plan including a scope of work, a budget, and a timeline for the proposed studies.  While the Council action assures that the fee studies will move forward, it will be important to understand and engage about the details of the studies, what they will cover, and how they will be conducted. And, of course, once the studies are completed, the Council will need to vote to approve a CLF ordinance.

Stay tuned for further opportunities to weigh in and help ensure that we gather all of the appropriate data to inform a substantive policy discussion when the studies are completed.