The cost of creating affordable housing has fallen more to local governments since state and federal governments refuse to do their share. The St. Petersburg City Council this week will discuss an innovative proposal to help meet that challenge: a linkage fee on new development. As development downtown and elsewhere continues to skyrocket, this would be one way to harness those expensive projects for the greater good.
The linkage fee would impose a fee of $1 per square foot of gross floor area on any building permit for residential, industrial or commercial new structures or an addition that increases the gross floor area of an existing building. For any building used as an office, that fee would be reduced to 10 cents per square foot. The fee would come with some exceptions: It would not apply to affordable housing, accessory dwelling units, single-family residences that are 1,400 square feet or less and an addition to a single-family home or duplex that totals 1,000 square feet or less, to name a few. Developers who do not want to pay the fee could build affordable housing or include affordable units in their property instead. The linkage fee could collect as much as $2 million a year, totaling about $20 million in the next 10 years.
Where would that money go? It could go toward the direct construction of affordable housing units, meaning units appealing to those making up to 120 percent of the area median income, or $56,280 for a single person to $80,280 for a family of four. This could include the city giving a subsidy or loan to developers to create affordable housing and encourage developers to use the 4 percent tax credit incentives that already exist. The money could also fund acquiring land for affordable housing, helping first-time home buyers with an income up to 140 percent of the area’s median or preserving existing affordable housing options.
City Council member Robert Blackmon has another idea: Use money the city already has in its back pocket to fund affordable housing. State law that was changed in 2019 limits the total amount local governments can carry forward from collected building permit fees. The fees may not exceed an average of the department’s operating budget to carry out the permitting process for the previous four years. In St. Petersburg, the city has collected more than $15 million on building permit fees and only needs roughly $6 million to cover the department’s operations. So Blackmon is pushing a change to the law that would allow local governments to use the money for affordable housing. On top of the proposed linkage fee and the possible building permit fee revenue, the city already has roughly $15 million that it will receive over the next 10 years for affordable housing from the Penny for Pinellas sales tax.
City Council members will discuss the proposed linkage fee Thursday. From there, city staff hope to go back to the council with a firmer version of the ordinance in May or June. The linkage fee would be a step in the right direction. If developers don’t want to build affordable housing, they should contribute money toward that effort. It’s unlikely a reasonable fee would curtail development. This is a fee that will cost someone building a 2,000 square foot home $2,000. It would be a reasonable fee for one, but it could mean a lot more for many who struggle to find affordable housing in St. Petersburg.
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