San Diego City Council’s proposal to increase linkage fees – a method for commercial building developers to balance the effect of their new facilities to bring more low-wage employees in San Diego real estate – passed on Monday according to KPBS.org. These funds are to go into affordable housing.
The San Diego City Council passed the proposal with a 5-4 party line vote according to the foresaid source.
The linkage fee or levy created in 1990, charged 1.5 percent of the entire building cost, but the percentage was cut in half in 1996. To reestablish the cost that it originally was in 1990, the proposal does just that and it goes into effect by the end of the fiscal year on June 30, 2014 according to KPBS.org.
According to the San Diego Union-Times, the hike in price could mean these commercial developers will pay hundreds of thousands of dollars instead of thousands of dollars to the city of San Diego. These fees will make low-cost housing increase.
Called ‘excessive,’ by the Independent Budget Analyst Report, the cost of building could mean impending loss of developing projects to San Diego real estate and surrounding cities according to that report.
Now that the restoration of the 1.5 percent is implemented to 2013 costs, an office building developer must compensate $1.06 per square to San Diego. By July 2016, the price per square foot will sky rocket to $5.32 according to the San Diego Union-Times.
San Diego’s City Council had 100 speakers (from community groups and nonprofits) voicing their pleasure for the rise in cost, while businesses call it the proposal that kills jobs according to the San Diego Union-Times.
In a study released earlier this month, it indicated that San Diego is the United States’ second least affordable housing market according to KPBS.org.
“Currently this city is the only jurisdiction in the entire county charging this fee,” said President of the San Diego Regional Chamber of Commerce Board of Director Mike Niggli to KPBS.org, who is against the proposal. “Likewise our competitor regions across the United States that are trying to attract businesses from California don’t charge this fee.”
Niggli also feels this will force out a lot of local companies to other cities that are more lucrative for their business.
“We have an economy today where a third of our families can’t pay their basic bills, can’t make ends meet, where half of our families can’t afford to live in their homes,” said head of the San Diego and Imperial Counties Labor Council Richard Barrera to Kpbs.org, who is in support of the proposal.
“What you are doing today is you’re taking a critical, necessary step to grow an economy that works for all of us.”
Since San Diego City Council changed some of the verbiage of the proposal, they will have to reconvene for two more votes in the upcoming months according to KPBS.org.