‘Linkage’ fees for big developers leap upward, while smaller projects are given an exemption
Construction “linkage” fees that pay for affordable housing in Cambridge were raised Monday to $33.34 per square foot from the current $20.10, a change that comes with a detail opposed by the city’s Law Department: exempting the first 30,000 square feet of smaller projects.
The dollars demanded to go into the Affordable Housing Trust are justified by regular “nexus” studies. City solicitor Nancy Glowa expressed worry in recent reports to the council that the change wasn’t supported by the most recent version, which hadn’t been shaped to address such exemptions.
The council has been working on the 66 percent increase for more than a year, with increasingly intense debate as the current “incentive zoning” rate petition neared its expiration date next week.
Councillors entered discussions in 2021 united behind the dramatic increase and confident it wouldn’t scare off developers. “When we raised this the last time it was a pretty significant increase and there was some concern about not going too far because we were unsure as to what that would do – you know, where that breaking point was,” councillor Marc McGovern said last year. “I think it’s clear that we can go much higher than where we are, and that we need to.”
In the past months, though, councillors learned that the fees did have an effect: Developers of commercial space were building just short of the size of construction that would trigger the fees, similar to how builders of apartments in Cambridge have often stopped just short of the number of units that would require one to be set aside as affordable. On Monday, Patty Nolan reminded fellow councillors of a project that she believed “was specifically designed to be 200 square feet under 30,000, because of the linkage fee.”
Amendments were discussed in recent weeks to cancel linkage fees on the first 30,000 square feet of any project; and exempt square footage that was torn down and rebuilt.
Those evolved to what was voted Monday: an exemption for the first 30,000 square feet of projects that are 60,000 square feet or smaller; and for existing space that gets a permit within three years to be rebuilt, so long as there is no change in use. It avoided a Community Development concern that builders would feel “incentivized [toward] demolition and reconstruction compared to rehab,” in the words of Jeff Roberts, the department’s zoning and development director.
Where once much of the city’s development took place on empty parcels or where there were “very small existing buildings,” Roberts said, “a lot of the development we’re seeing now is larger buildings being replaced with even larger buildings.”
Leaving money on the table
Some councillors were concerned about leaving money on the table that could go to build affordable housing – considering that the point of linkage is to make up for the displacement of residents by people drawn to Cambridge for higher-paid jobs in the offices and labs of new construction.
Given concerns about money lost from the 30,000-square-feet exemptions and Law Department nervousness about the lack of a foundation for a change, “it would be prudent for us to remove that,” vice mayor Alanna Mallon said. “We’ve heard it from the Affordable Housing Trust, we’ve heard it from CDD – we’ve heard from all of these experts saying that this is not prudent to do at this point. If we do want to study it, it can be in the next nexus study.”
The fears of lost money were overblown, Nolan said, and councillor Burhan Azeem noted charts showing an increase of about $20 million over current linkage income with the amendments, as opposed to around $30 million without. “It’s still a very, very significant increase,” Azeem said.
Reliance on linkage
Councillors Dennis Carlone and Marc McGovern highlighted the various ways affordable housing was funded beyond linkage. Carlone returned to a common theme of urging the city to buy more land to build on, and McGovern hinted at a potential new approach to ensuring a consistent flow of funding. “I am working on something now that I hope to bring in soon,” McGovern said.
“Linkage is unpredictable,” McGovern said. “A lot of the folks who don’t want to exclude demolished buildings or who want us to raise the linkage fees are also people who speak out against development. Well, if you don’t get development, you don’t get a linkage fee.”
Even with the exemption, the leap in fees was huge, he said. “We’re losing sight of the fact,” McGovern said. “No other community is doing anything close.”
Taking votes
Language around the exemptions were crafted by councillors Paul Toner, Azeem and Nolan and passed in split votes: Toner’s amendment on demolition exclusions with no change of use was first and went 5-4, drawing “no” votes from Mallon, McGovern, Zondervan and Mayor Sumbul Siddiqui; the three-year limit, with language shaped by Azeem and Nolan, went 6-3 with “no” votes from Mallon, Siddiqui and Zondervan. When Zondervan tried to remove the entire new combined sentence of amendments, it failed 4-5.
The linkage increase as a whole passed 9-0.
To McGovern’s understanding, the new rate of $33.34 per square foot of commercial construction over 60,000 square foot went into effect immediately, the councillor said after Monday’s five-hour meeting, and was retroactive to the date the incentive-zoning rate petition was filed.
Coming soon to a development near you, fractionalized projects to squeeze under the project cap.
We have x number of people who live in Cambridge and who need good affordable housing. Let’s focus on them.
We do not need to add affordable housing for those who don’t currently live here. Not everyone who wants to live in Cambridge should be allowed to if they can’t afford it. Look after the people who are already here. And the council should stop spending money on needless nonsense things, so that we have more money for affordable housing.
Let’s just build housing and make it affordable for those who can afford it. Let the market decide that. Not everyone has to be accommodated in Cambridge.
There are literally thousands of housing options just a few miles out. I would like to live on Marlborough street – but I afford what I can afford.
These fees offset the cost of adding jobs without adding homes — as if it is entirely the developers fault.
Meanwhile large swaths of Cambridge is capped at 1-3 families, with a very large chunk single family zoned.
Pretty amazing that the city can demand so much from developers while still intentionally and purposefully hindering home construction.
If I were a developer I would be pretty pissed at the double standard.
Greatful for the small carveouts but in no way is $33.43/sqft justifiable.
These “small” carveouts could cost affordable housing $10,000,000 a year. Developers who intend to take advantage of the carveouts should be upfront about how they will economically benefit from these amendments to the linkage bill. What comes immediately to mind is the proposed Middle East hotel development in Central Square. Cambridge residents should know which developers lobbied for the carveouts and how much they stand to gain. Follow the money when looking at Council votes.
Gerald Bergman (area4),
It’s a very time honored cambridge tradition to spend money you don’t have. It’s hard enough to explain this to people who are willing to learn it’s even worse when people intentionally spout nonsense.
Peace Be unto you.
Our city municipal policy makers and administrators are only making affordable housing, unaffordable to the homeless.
Yours In Peace
Hasson Rashid
Deeply Concerned Citizen
Cambridge, MA