Linkage Fee Opponents Want to Take Down San Diego’s – and Everyone Else’s

There’s a good chance the San Diego City Council this month will approve a measure that’s been a white whale for local progressives for years.

If it does, there’s also a good chance the measure’s opponents will take the fight to a courtroom.

On Oct. 15 the Council is tentatively expected to consider a measure that would increase by 500 percent the fee charged on construction projects to help subsidize housing for low-income workers. It’s called a linkage fee.

But a spokesperson for organized opposition to the increase calling itself the “Jobs Coalition” — made up of groups like the Chamber of Commerce and building industry associations — has retained legal counsel. Those lawyers say recent court cases have rendered such fees illegal.

Many cities across the state charge a similar fee—and most of those fees are bigger than San Diego’s, even bigger than San Diego’s would be if the increase passes. A successful challenge to San Diego’s fee could have big statewide implications, making it difficult for cities to implement or raise all kinds of fees.

“We’ll take whatever action we need to protect job creation in San Diego,” said Jobs Coalition spokesman Craig Benedetto.

The fee increase is being proposed by the San Diego Housing Commission, which runs subsidized housing programs in the city.

Its proposal would increase the fee by up to 500 percent from its current level.

But the City Council cut the fee in half in 1996 to spur development, after it was first implemented in 1990 at 1.5 percent of construction costs. The new proposal would return the fee to 1.5 percent of current construction costs.

The Council voted down a proposal to double the fee two years ago.

Benedetto says his clients would rather see affordable housing funded with a big municipal bond for citywide infrastructure improvements, and accompanied by a tax increase. He said his clients are hoping to put the bond to voters in 2016.

“We’re hoping that cooler heads will prevail, that they’ll look at the top concern of their constituents — and every poll shows jobs and economy are the No. 1 issue — and they’ll work with us to put something on the 2016 ballot to provide a far more significant form of affordable housing,” he said.

That would take the Council voting down the proposed increase in order to work toward the 2016 bond.

Otherwise, opponents will pursue legal recourse.

“We’re not trying to threaten anything,” Benedetto said. “If they’re challenged legally, and you lose that challenge, not only does San Diego’s [linkage fee] go down, they all go down.”

Colin Parent, director of policy at the Housing Commission, said San Diego is facing an affordable housing crisis, and the linkage fee increase would provide immediate relief.

“This talk of folding housing into an infrastructure bond is something San Diego is going to be talk about for a number of years, but no one is suggesting doing that today,” he said. “We’re comfortable talking about that when it’s more timely.”

Lawyers for the Jobs Coalition weren’t available for comment.

The challenge would likely come down to a recent Supreme Court ruling.

According to Supreme Court rulings in 1987 and a 1994, cities need to show linkage fees — like other charges to property owners for new development — are related and proportional to the effect they’ll have on an area. It’s called the Nollan-Dolan test.

For instance, a developer can be required to make traffic improvements within an area that’ll be affected by the new project.

But the new ruling, Koontz v. St. Johns River Water Management District, makes it harder for cities to prove that relationship.

“It raised the bar for what municipalities have to do to justify a fee,” said Felix Tinkov, a San Diego-based land use attorney.

Before, cities could show there was a foundational rationale between a fee a project, and the court essentially presumed it was justified.

Now, judges are expected to have a stricter standard. Just drawing a rational connection isn’t enough.

“The court’s essentially saying, ‘show us the beef,’” Tinkov said.

And since the ruling was just released this summer, it hasn’t really been applied yet. But court-watchers predicted right away the ruling would open the door to more lawsuits against cities trying to implement fees.

If the challenge is successful, though, Tinkov said it wouldn’t necessarily spell doom for fees already in place.

Instead, it would just make it harder for cities to implement all kinds of new fees.