Commercial Linkage Fee
Proposed Amendments
Jacky Morales-Ferrand
Director
Rachel VanderVeen
Deputy Director
March 29, 2022
Item 8.2
Chris Burton
Director
Nanci Klein
Director
Jerad Ferguson
Housing Catalyst
Darius Brown
Senior Development Officer
BUILDING GREAT PLACES INVESTING IN PEOPLE PROVIDING HOUSING FOR ALL Background
3/29/2022 2
In 2014, City Council
directed staff to
research a non-
residential linkage fee
consistent with the
Mitigation Fee Act
In 2018, City Council
directed staff to return
with a nexus study and
feasibility study for a
Commercial Linkage Fee
In 2020, City Council
approved an ordinance
and adopted a
resolution establishing
the Commercial Linkage
Fee program
BUILDING GREAT PLACES INVESTING IN PEOPLE PROVIDING HOUSING FOR ALL Proposed Amendments
3/29/2022 3
Credit against fees for construction of new affordable housing Increase the threshold for exemption for office developments under 100,000 sq. ft to exempt the first 50,000 sq. ft.
Adopt a deferred secured payment option for office and
industrial research & development projects of 100,000 sq. ft. or more
Reduce Fee for all commercial developments when fees are paid prior to issuance of building permits
BUILDING GREAT PLACES INVESTING IN PEOPLE PROVIDING HOUSING FOR ALL Credit for New Affordable Housing
3/29/2022 4
For each new unit of affordable housing provided, CLF is satisfied for a specified amount of commercial floor area. The amount of credit depends on the income level of the affordable unit.
Area Median Income for
Affordable Units
Office Space >100,000 sq. ft. in
Downtown
All Other CLF Projects
Extremely Low Income 20,323 sq. ft. 60,971 sq. ft.
Very Low Income 15,605 46,817
Low Income 12,097 36,292
Moderate Income 2,903 8,710
BUILDING GREAT PLACES INVESTING IN PEOPLE PROVIDING HOUSING FOR ALL 203,230
Example of Affordable Housing Credit
53/29/2022
10 New Residential Units for
Extremely Low-Income tenants
20,323 SF
For each Residential Unit Square feet credit
203,2301,000,000
796,770
Remaining Square Feet for CLFSquare Feet of Credit
$11,951,550$15
796,770
Downtown Office Rate Fee payment
Office Square feet
Square Feet
BUILDING GREAT PLACES INVESTING IN PEOPLE PROVIDING HOUSING FOR ALL Support for Small Office Developments
3/29/2022 6
$0 CLF
(previous threshold was 40,000 sq. ft.)
For the first 50,000
sq. ft.
BUILDING GREAT PLACES INVESTING IN PEOPLE PROVIDING HOUSING FOR ALL Modified Payment Options
3/29/2022 7
Option 1: Pay 80% of CLF at issuance of building permit Option 2: Pay 100% of CLF by building final inspection
Option 3: Deferred Secured payment option
• Developments have the option to pay at Building
permit issuance or Scheduling of building final
inspection
• Office and Industrial Research & Development
projects of 100,000 sq. ft. or more have all three
options
Deferred Secured Payment Option
3/8/2022 8
ENTITLEMENT CONSTRUCTION
DESIGN PERMITTING CONSTRUCTION BUILDING
SHELL
TENANT
IMPROVEMENTS
Issuance of
Building Permit
Scheduling of
Building Final
Inspection
Payment 2
Security: The deferred payments must be secured by a bond or letter of credit Payment 1 On-going Payments
BUILDING GREAT PLACES INVESTING IN PEOPLE PROVIDING HOUSING FOR ALL Feasibility Study Timeline
3/29/2022 9
May 2022
• Execute amended contract with consultant
• Define scope of work for study
June – August 2022 • Consultant and staff work on study Early September Release Draft Feasibility Study
September - October 2022
60-day public review
• Conduct public outreach
• Collate and summarize feedback
• Prepare staff report
November 2022 Housing & Community Development Commission and City Council
10 Citywide Leasing Activity Office Space
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 3M
2.5M
2M
1.5M
1M
500K
BUILDING GREAT PLACES INVESTING IN PEOPLE PROVIDING HOUSING FOR ALL Expected Outcomes
3/29/2022 11
Create a more sustainable CLF program that doesn’t inhibit commercial development
Produce more affordable housing
Improve efficiency of CLF program administration
Commercial Linkage Fee
Proposed Amendments
Jacky Morales-Ferrand
Director
Rachel VanderVeen
Deputy Director
March 29, 2022
Item 8.2
Chris Burton
Director
Nanci Klein
Director
Jerad Ferguson
Housing Catalyst
Darius Brown
Senior Development Officer