Construction at a Cambridgeside mixed-use project in East Cambridge in December. New commercial construction helps pay for affordable housing in Cambridge. (Photo: Marc Levy)

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.