Jobs Housing Linkage Fee

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What is the problem?

This Jobs-Housing Fit problem -- the imbalance between housing affordability and the jobs and wage levels being created by the city’s current economic boom -- is seen across San Francisco. Expansion of commercial space brings new jobs to the city, which creates a need to house those workers. Historically, the need for housing has been up to 60% of workers earning wages that put them under 120% of the median income, far below what market-rate housing can provide. Even tech office spaces have large numbers of administrative/clerical, marketing, recruiting, and other positions who cannot afford market rate housing, not counting the accessory cafeteria, janitorial, and other necessary uses that keep tech offices going. The Jobs-Housing Linkage (JHL) fee provides much needed funding to provide housing for these workers since their wages do not allow them to afford market-rate housing, essentially partially mitigating the impact of increased housing needs that new commercial development projects create.

History

When the City embarked on its first phase of high-rise office expansion, from 1970 to 1990, there was recognition of the need to link office development to fees to offset the impacts of the development. In the late 1980s, along with Prop M and the Downtown Plan, the city enacted a transportation impact fee, a childcare impact fee, and a jobs-housing impact fee. A completed nexus study is required under the State’s Mitigation Fee Act in order to justify impact fees, and sets the ceiling / maximum fee amount. The Jobs-Housing Linkage Fee became effective in March 1996, but is predated by the Office Housing Production Program and the Office Affordable Housing Production Program which went into effect in 1988.

Jobs Housing Linkage Fee!

The Jobs-Housing Linkage Fee applies to any development project, with some exceptions, that increases the total amount of any combination of commercial uses by 25,000 or more gross square feet, including entertainment, hotel, office, research and development, and retail. It is important to note that the actual Jobs-Housing-Linkage fee is not set at the maximum/ceiling level that the nexus study shows is analytically and legally allowed.

Jobs Housing Nexus Analysis Study

The Jobs Housing Nexus Analysis Study that the JHL fee is based off of is set by a formula that finds the nexus of impact between new large-scale developments and the increased demand that is created for housing in the City. The last Jobs-Housing Nexus analysis study was done in June 1997, prepared by Keyser Marston Associates, Inc. There was no requirement in the original legislation for updating the nexus study. However, the City has new updated nexus studies for other impact fees, including inclusionary housing, transportation, and other specific impact fees. The newer nexus fees update the fee methodology based on the changes in worker densities. Recent nexus studies take into account the much greater worker densities of technology offices, which can be up to one worker per 200 gross square feet of commercial space. The 1997 nexus study by Keyser Marston Associates assumed 160 square feet per worker, which reflected more traditional older “finance and real estate” office uses compared to today’s tech focus of office development and marketing.

How does JHL work?

Prior to issuance of a building or site permit, the commercial developer must pay the JHL fee, or may elect contribute a sum of land of value at least equivalent to the fee or use the funds or land to construct housing units. Fees are deposited into the Citywide Affordable Housing Fund. Planning Code Section 413.10 specifies that this fee revenue is to solely be used to increase the supply of housing affordable, and typically the funds are bundled with other local sources and then “leveraged” for additional funding through state tax credits and other state or federal public subsidy sources. The Citywide Affordable Housing Fund is administered by the Mayor’s Office of Housing (MOH). No funds may be used to pay any administrative, general overhead, or similar expenses.

Maya Chupkov