Overview

The City is continuously facing a critical time with the threat of severe federal funding cuts and limited to non-existing local resources for affordable housing. The Affordable Housing Linkage Fee (AHLF) provides the City of Los Angeles a permanent and self-sustaining local resource that will create long-term and innovative housing funding programs. Based on projected development activity, over the next decade the Affordable Housing Linkage Fee is anticipated to bring in tens of millions of dollars to the city’s affordable rental and homeownership housing programs.

The City Council adopted the Affordable Housing Linkage Fee Ordinance (No. 185342) on December 13, 2017. The Ordinance places a fee on certain new market-rate residential and commercial developments to generate local funding for affordable housing production and preservation. The fee was phased in beginning on June 18, 2018 and the amount of the fee varies by the type of use and by geography across the city. The AHLF also includes various exemptions and deductions based on certain characteristics.

For more information about the AHLF fee structure and exemptions and deductions, click here.

Affordable Housing Linkage Fee Oversight Committee

In concurrence with the adoption of the Affordable Housing Linkage Fee Ordinance, the Housing Impact Trust Fund (HITF) Ordinance (No. 185341) outlines provisions for the creation of the new Trust Fund as well as a mandate that funds generated by the Affordable Housing Linkage Fee (AHLF) be easily tracked and monitored to ensure maximum accountability and transparency as required under the California Mitigation Fee Act. As such, the Mayor and City Council established the Affordable Housing Linkage Fee Oversight Committee (AHLF OC) comprised of designees from the following departments/offices: LAHD, Office of the Mayor, the Office of the Chief Legislative Analyst (CLA), the Office of the City Administrative Officer (CAO), and the Department of City Planning (DCP).

The AHLF OC provides an opportunity for public input in the development of LAHD’s annual report to the City Council, as well as any proposed recommendations for AHLF expenditures and new programs on a regular basis.

The first public meeting for the Affordable Housing Linkage Fee Oversight Committee was held on Wednesday, July 24, 2019.  The subsequent Affordable Housing Linkage Fee Oversight Committee took place on May 28, 2020, staff provided a presentation on the status of the FY 2019-20 linkage fee expenditures, provided updates on AHLF revenue estimates, and an analysis of revenue activity.

Affordable Housing Linkage Fee Oversight Committee meeting agenda and materials:

FY 2019-20 Adopted Expenditure Plan

After receiving approval from the Affordable Housing Linkage Fee Oversight Committee (AHLF OC), the City Council and Mayor approved the Fiscal Year 2019-20 AHLF Expenditure Plan in October 2019. The Expenditure Plan outlines how funds are allocated across a variety of populations and housing programs to address the City’s critical housing needs, which include rental new construction, preservation, and the Moderate-Income Purchase Assistance Program (homeownership).

Timeline

December 13, 2017 – AHLF adopted by City Council
February 17, 2018 – AHLF becomes effective (no fees apply)
March 15, 2018 – Stakeholder Meeting #1
March 23, 2018 – Stakeholder Breakout Groups (1st Session)
March 29, 2018 – Stakeholder Breakout Groups (2nd Session)
April 13, 2018 – Stakeholder Meeting #2
May 2018 – LAHD prepares AHLF Expenditure Plan
June 2018 – Report issued to Mayor and City Council for review/approval
June 2018 – Mayor and City Council adoption of AHLF Expenditure Plan
June 18, 2018 – One-third of full fee amount in effect
December 20, 2018 – Two-thirds of full fee amount in effect
June 17, 2019 – Full fee amount in effect
July 24, 2019 – First Affordable Housing Linkage Fee Oversight Committee meeting – FY 2019-20 Expenditure Plan Proposal
May 28, 2020 – Second Affordable Housing Linkage Fee Oversight Committee meeting – Updates on FY 2019-20 Expenditures

August 2020 – Stakeholder Meetings – Preparation for FY 2020-21 Expenditure Plan Proposal

September 2020 – Third Affordable Housing Linkage Fee Oversight Committee meeting – FY 2020-21 Expenditure Plan Proposal

Frequently Asked Questions

What is the purpose of the Affordable Housing Linkage Fee ordinance?
The AHLF Ordinance creates a permanent source of local funding for the development of affordable housing. The ordinance establishes a fee on identified types of market rate development, which would be used to fund the creation of affordable housing across the City. This would help address the impacts of new development on the demand for affordable housing.

What is the need for the Affordable Housing Linkage Fee ordinance?
Due to strong demand for housing leading to substantial price and rent increases, a growing number of middle and lower income households have been priced out of the City. Many workers cannot afford to live near their jobs, which contributes to worsening traffic and air quality. In 2016, almost 56% of renters pay more than 30% of their income on rent. In 2014, a household earning the median income ($54,440) could afford to purchase a home for $179,000, well below the median home sale price of $560,000. Due to the dissolution of redevelopment (CRA/LA), as well as significant cuts in federal housing funds, much of the City’s affordable housing funding has been lost, shrinking from $100 million in 2010 to $26 million in 2014.

How did the Affordable Housing Linkage Fee ordinance develop?
In October 2015, Mayor Eric Garcetti announced that the City would develop a Linkage Fee program to help raise funds to subsidize the production of affordable housing. Under the direction of LAHD and the Department of City Planning, economic consultants BAE Urban Economics conducted a Nexus Study to evaluate the impact of new development on the demand for affordable housing in the City. The purpose of the Nexus Study is to conduct a legally defensible analysis of the relationships between commercial and market-rate housing development projects, the new employment generated, the new demand for workers and worker households, their income distributions, and an estimate of those new households that will need affordable housing

What are the potential revenues the Affordable Housing Linkage Fee will generate for affordable housing in the City?
The AHLF ordinance has the potential to generate an estimated revenue range between $90 and $130 million per year to fund the development of affordable housing at the proposed fee levels. This estimate accounts for some fluctuation in development trends and the exemptions and credits offered in the ordinance.

What are the fees being used for?
Fees generated through the AHLF will be directed to the Housing Impact Trust Fund, and the distribution will be managed by LAHD. The allocation and distribution of revenue will be determined through a stakeholder input process.

How were the Linkage Fee levels selected?
The City sought to strike a careful balance between maximizing potential revenue that can be generated for affordable housing while remaining sensitive to individual submarkets. The Nexus Study established a framework for understanding the maximum feasible level of fees that are considered supportable by ten different development types across three geographic sub-markets in the City.

How will the City make adjustments to the Affordable Housing Linkage Fee amount?
An annual adjustment for inflation will be made beginning on July 1, 2019, according to the change in the Consumer Price Index (CPI-U). Every five years, market areas and geographies will be adjusted, where necessary, to reflect the most up to date market trends. This includes adjustments to geographic maps as necessary.

How do I calculate the fee amount that will apply to my project?
The fee amount is calculated as the amount of new or added floor area in a development project devoted to the uses described in the fee schedule, multiplied by the amount of the applicable fee at the time the project was deemed complete. Any deductions, credits or surcharges would be subtracted or added to the total AHLF amount.

How do I submit payment for the Affordable Housing Linkage Fee?
The Linkage Fee is due and payable prior to the issuance of a building permit. The process of submitting payment will soon be determined. Check back here for updates.

What if I already submitted my project for plan check or zoning entitlements?
Projects are exempt from the fee if a building permit application has been submitted to the Los Angeles Department of Building and Safety or a complete entitlement application has been submitted to the Department of City Planning City of Los Angeles (whichever is first) prior to June 18, 2018.

Who do I contact with additional questions?
Please send your questions or comments on the implementation of the AHLF to hcidla.ahlf@lacity.org. Project specific questions are best answered in person at one of the Department of Building and Safety offices.

Additional Resources

• Affordable Housing Linkage Fee Nexus Study
• DCP & LAHD Joint Report
• City of Los Angeles Council File
• Affordable Housing Linkage Fee Ordinance
• Housing Impact Trust Fund Ordinance
• Resolution
• DCP Implementation Memo