Keeping Track of Incentive Zoning "Linkage Fees" for the Affordable Housing Trust

Screen_shot_2014-09-13_at_6.13.51_PM.pngEarlier this year, I introduced a policy order calling for action on an update to the Incentive Zoning Ordinance "Linkage Fees" that help support the city's affordable housing programs.

"Linkage" refers to the connection between new commercial real estate development and the local housing market. In 1988, the Incentive Zoning Ordinance was established to require non-residential developers who are seeking a special permit for an increase in density to mitigate the housing-market impact of their commercial development through a Housing Contribution (i.e. "Linkage Fee") to the Affordable Housing Trust.

According to Section 11.203.1 of the Zoning Ordinance, "the amount of the Housing Contribution shall be subject to review and recalculation...every three (3) the Cambridge City Council based on a consideration of current economic trends including but not limited to development activity, commercial rents per square foot, employment growth, and housing trends measured in terms of, but not limited to, vacancy rates, production statistics, and prices for dwelling units."

Despite this mandate for periodic updates, the council hasn't recalculated the linkage fee for many years. In 2002, the city commissioned a "nexus study" to determine an updated linkage rate — but subsequent recommendations by noted economist Barry Bluestone were never implemented.

Ultimately, the council voted to refer my order to committee — but not without agreeing to have the city perform an audit of "how much money for affordable housing would have been obtained had the City Council implemented the 2002 recommendations."

As a result, the Community Development Department published an accounting of the lost funds in a memo dated July 8.

We looked at the July 8 memo and concluded a $3.85 million loss for the Affordable Housing Trust since the time of the 2002 nexus study. Granted, $3.85 million will only go so far in the City of Cambridge, but the failure to update the linkage fee is really just the tip of the iceberg — the bigger issue is the fact that our linkage program is relatively weak. The City of Boston, for example, has a much higher fee, and the scope of their program is also broader. Somerville recently moved to implement a higher fee as well.

We all know that strong commercial sector growth brings upward pressure on local housing. I hope we take a much closer look at the incentive zoning ordinance in the very near future. Our next opportunity to discuss this issue will likely be the Housing Committee meeting on Tuesday, September 30. The meeting will be held from 3:00 to 5:00 p.m. in the Basement Community Room, 831 Massachusetts Avenue.

There's an in-depth report on this issue in Cambridge Day, "Linkage of $3.9M for affordable housing was left on table by city since 2002 advice."

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