Washington, D.C., is considering a new weapon in the never-ending battle to fund much-needed affordable housing in the nation's capital. The city commissioned a study to explore the use of commercial linkage fees—per-square-foot fees on new development that are used to finance below-market-rate housing. The study recommends that, over two years, D.C. implements a fee no higher than $10 per square foot.
The city has not yet taken a position on the linkage fee, but the idea is to build housing to match newly created jobs. Such fees are used in a number of areas, including Boston, San Francisco, and Northern Virginia. “D.C. is weighing its options. The District is facing an affordable housing crisis,” says Sean Madigan, communications director for D.C.'s Office of the Deputy Mayor for Planning and Economic Development. “But at the same time, we have benefited immensely from a remarkable streak of real estate investment and development during the past eight years, and we want to keep that momentum going.”
Opponents of the fee are speaking out. The D.C. Building Industry Association, a nonprofit representing commercial and residential real estate in the city, is concerned that the extra expense will impede new commercial development. “We want the district to remain competitive with the surrounding jurisdictions, and the more you slap on to commercial development, the higher the lease rates go. It just makes us less competitive than with [nearby] Crystal City and Rosslyn,” says Gail Edwards, the association's executive vice president.