Commercial Real Estate Dictionary

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Linkage Fee

Definitions of Linkage Fee
  • A linkage fee is a fee charged by a local government on real estate developments to raise funds to help pay for the additional needs of the community that result from the additional development.

    Linkage fees are a tool that cities have turned to in order to raise funds to help meet the increasing demands for affordable housing that market rate developers cannot respond to.

    The link between market rate developments and affordable housing is the resulting development and economic growth draws low-income employees and families who will need affordable housing that the market will not provide for.



Linkage Fee

What Are Linkage Fees?

Linkage Fees are a type of fee cities charge real estate developers on new developments to raise funds for the needs of the community that are linked to the increased growth and demand that result from their development project.

Linkage fees are most commonly associated with affordable housing initiatives as cities try and find ways to raise funds to subsidize and increase the supply of affordable housing.

The link between real estate development projects and increased needs of the community for affordable housing demands is thought to stem from the fact that increased economic development will increase the need for low wage workers who will in turn need affordable housing that is in short supply.

Cities may charge market rate real estate developers a linkage fee on real estate developments over a certain threshold. For example, a city may charge developments of a certain property type over 50,000 square feet a linkage fee of $5 per square foot. The money raised will go into a fund that the city will used to increase the supply of affordable housing.


        

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