Los Angeles Mayor Eric Garcetti has proposed a linkage fee — a levy on new construction — in hopes to raise funds to build affordable housing. However, city officials are now debating whether to enact a "one-size-fits-all" citywide construction fee or charge different fees based on neighborhoods, market conditions or geographical areas.
A “geographic-based fee could unintentionally lead to unanticipated changes throughout the development timeline,” creating uncertainty for developers, according to a city report. However, a citywide fee could lead to “lost revenue potential in stronger market areas or negative impacts to development in cooler market areas.”
The new construction fee would apply to new homes, office buildings, apartment towers and other construction. The current proposed fee is $5 per square foot for commercial development and $12 per square foot for residential developments. Several types of developments would be exempt from the fee.