Linkage Fee Approved by City Council, Developers Have Longer to Make Payment

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Charlie Breitrose Watertown City Hall

The City Council approved a linkage fee on large developments that would be used to create affordable housing in Watertown. The ordinance also spreads the fees into two payments and the City can consider offers of housing units or land in lieu of the fee.

Before they deliberated and voted, the Council heard from people advocating for changes to the proposed ordinance.

Charles River Regional Chamber President Greg Reibman, who represented multiple developers who do business in Watertown, asked to delay the start of the fees until 2024, and phase in the amount starting with $5.56 per sq. ft. starting in July 2024 and begin $11.12 per sq. ft. in July 2025. He added that costs of construction have increased and the economy has softened since the study recommending the fee was done, last year.

Several affordable housing advocates asked for the fee to be higher, and many said they want the funds to come in all at once. They asked for $15 per sq. ft., as had been suggested by Councilor Tony Palomba, which is lower than the maximum $18 allowed by the linkage fee home rule charter approved by the State Legislature. They argued that the price of housing construction, and of housing, have also increased and made affordable housing even more of a priority.

The fee is in the right place, said Assistant City Manager and Director of Community Development and Planning Steve Magoon, who added that it is “defensible” because it came out of the Nexus study into the impact of development on affordable housing.

“I think that we landed in the right place for our recommendation,” Magoon said. “The recommendations for fees and the process balances the issues in a way that I think, unfortunately, most people are unhappy with. In my business, if everyone is unhappy we probably struck the right place in the debate.”

The Nexus study recommended that 360 units of housing be created over the next 10 years to make up for the impact of the new developments. The study had a recommended range for the linkage fees from $9.44 to $11.12 per sq. ft. on commercial developments over 30,000 sq. ft., said Senior Planner Larry Field. The fee would increase annually based on inflation, and will be reviewed every five years by the Council.

Council Vice President Vincent Piccirilli approved of the proposal brought to the Council.

“A compromise has been proposed by the consultant and the economist that did the Nexus study, by the staff with comments from the Planning Board,” he said. “It is balanced, it is reasonable and is responsible. I will fully support this.”

Palomba said the idea for a linkage fee first came up at the City level at the Committee on Human Services four years ago. He thanked current and former Councilors, including former Councilor Susan Falkoff and current Councilor Caroline Bays for supporting the effort.

Palomba pushed to increase the linkage fee to $15, saying that the region is in a housing crisis. He added that he does not believe that the biotech industry has totally dried up, noting that multiple projects have been approved in Watertown and Boston over the past several months, with more proposed.

He also asked what the rules would be for offers of land or housing in lieu of the payment. Fields said that the City would have the option to refuse the offer and require payment.

Councilor Gardner wondered if it would be difficult to collect payments if they are made in two phases. Magoon said he would be comfortable that the City could keep track of the payments if there are only two, made a year apart. He would also be confident that the company would still be in business and able to pay. If it were spread over seven years, like in Boston, he would not be comfortable.

Councilor Emily Izzo noted that in other cities, such as Chelsea, the linkage fees are used in multiple areas besides affordable housing, including education, job training, and traffic and transportation impacts. She asked whether the ordinance could be amended to use the money for other needs.

City Manager George Proakis said he has seen other communities come back years later to change what the fees would be spent on. Magoon said that he expected in five years that affordable housing will still be a concern. Also, he said Watertown currently gets mitigation funds from projects to deal with traffic impacts directly associated with a particular development.

Council President Mark Siders backed the proposal and said that it has been a long time in coming.

Before the vote he said: “It’s pretty obvious we are going to have a linkage fee. It’s pretty obvious we are pretty late in the game, doing this very late in the game,” Sideris said. “We should have been considering doing this 6 or 8 years ago.” 

He also acknowledged that the fees — along with changing economic — may change the math for developers, who may even decide not to go ahead with projects that have been permitted.

Palomba made a motion to raise the linkage fee to $15 per sq. ft., but no one seconded it. He then proposed Making the fee $12.50 per sq. ft., which required six votes to pass but got only four.

The Council unanimously approved the proposal from the City staff with the $11.12 per sq. ft. linkage fee that will be paid in two phases (half when they get a certificate of occupancy and half a year after the building has been occupied). The fee will increase annually on Jan. 1 based on the Consumer Price Index inflation. Also, the city can accept land or housing units in lieu of payment.

6 thoughts on “Linkage Fee Approved by City Council, Developers Have Longer to Make Payment

  1. It is definitely a sad thing that the linkage fees couldn’t even be raised at least a dollar per square foot. Usually in negotiations you start high and then come to the middle or close to that. The owners of these big buildings of 30,000 sq. ft. or larger are going to make a lot of money over the years they are going to be here and they are going to be using our infrastructure during their construction and going forward.

    For some reason our ‘leaders’ seem to side with developers more than we, the people. If Watertown is such a wonderful and desirable place to be, I would think that these developers could well afford to absorb some extra expenses, especially nominal ones. These are big developers who have done projects in big cities like NY, Chicago and more; they are not really local people even though they claim to have local roots through their families over many years.

    If we have some stiffer linkage fees, maybe that would discourage these buildings from getting bigger from the initial notice phase to the presentations of their plans at the committee meetings. Even if development slowed due to the fees, maybe that wouldn’t be a bad thing. We could see the results of the rapid expansion of biolabs before more come on board and consider needed changes. Of course, that doesn’t seem to be the plan for our DCDP. In their minds the bigger, the better plan is best!

    The Cannistraro project grew in height and size and the 104 Main St. project grew from 5 stories to 6 because of concessions by the city due to the developer throwing in some token gifts to the city. The Main St. site is a residential site that wouldn’t be subject to the linkage fees, but it is just another sign of the bigger, the better leanings that we are seeing.

    This might bring in more tax dollars, but is anyone considering the quality of life for people who live here and want to stay here? Where is all the proposed affordable housing going to go with the dollars that are obtained through the linkage fees if we don’t change zoning to allow more housing in place of all these huge biolabs that are allowed by right. Do these decision makers live near any of these potential huge commercial projects? I think not.

    People need to call their Councilors and the City Manager and attend the various meetings to express their views before all is lost.

  2. When Boston enacted its linkage fee program in 1983, it was one of the first cities in the country to levy a fee on all commercial and institutional developments larger than 100,00 square feet. In 2021, then-Mayor Marty Walsh, signed a 42 percent increase ($15.39 from $13.00) into law. The fee schedule allocates $13.00 to affordable housing and $2.39 to workforce training. Watertown’s newly-enacted linkage fee does not allocate any money to workforce training. The city would have to make a home rule petition request to the Legislature to change the linkage law.

    Mayor Wu has proposed increasing the current fees by lowering the threshold and exemption from 100,000 feet to 50,000 feet and increasing the linkage fee to $30.78 per square foot for lab space, and to $23.09 for other commercial uses. That’s up from the $15.39. Mayor Wu is proposing to phase in the increases over two years. Please feel free to edit my comment accordingly.

    Business people take into account a range of economic factors when projecting the costs of development projects. If their projections are wrong, well, that is the risk they take. When Walsh approved a linkage increase, he said that the Boston was confident that the economics of real estate development in Boston, even in the time of Covid, could bear the increase. Similarly, Councilor Palomba cited news stories showing that despite increases in development costs, developers are still coming forward with new project proposals in the metro area, indicating to him that his compromise $12.50 fee would not be an industry dealbreaker. That the representative of the regional chamber engaged in poor-mouthing was insulting to Watertown residents who don’t get a break on the price of a pound of butter or their mortgage or rent payment.

  3. Charlie,

    Wasn’t the “compromise” the other night that we’d give the companies a break and spread the linkage fee over two payments? That’s how the City compromised. And then we didn’t demand a compromise for our City as well by bringing the fee up a mere dollar per square foot?

    We’ve got developers whose families have owned private islands and professional sports teams.
    The response to the very detailed analysis by some of our astute citizens was met with the Planning Department replying, “Sure times are tough for us, but they’re tough for these developers, as well.” HUH?? In what world is this comparable?

    It looks like the price of caviar has gone up, but c’mon, as Carolyn has mentioned, so has the price of butter! And as Joan questioned, “Who’s looking out for the quality of life of Watertown’s residents and their ability to continue to live in the city that they love?

  4. ‘Palomba…saying that the region is in a housing crisis…proposed Making the fee $12.50 per sq. ft…The Council unanimously approved…$11.12 per sq. ft. linkage fee…paid in two phases…’. The region is certainly in a serious affordable housing crisis and without being bold and forward thinking, little progress will be made to address the growing issue. Raising the linkage fee $1.38 would not deter development in Watertown, especially given that linkage fees are greater elsewhere, but it would help make a small dent in the affordable housing crisis. And given the fact that the fee is spread out over two payments, this would not create a significant immediate cost increase to developers. I cannot understand why this small increase was not supported by the council. ‘Magoon said…“…if everyone is unhappy we probably struck the right place in the debate.”’ This is a pretty low bar to meet, making a decision where no one is happy. You should be striving to make someone happy, preferably the residents.

  5. “In my business, if everyone is unhappy we probably struck the right place in the debate.” –Steve Magoon

    I was going to let this pass, but since Michelle brought it up, I must comment: The arrogance of this statement is beyond stunning, to the point that it beggars belief that Magoon would actually make such an utterance publicly.

    The point that Mr. Magoon seems to miss–and the point that he always misses–is that a one portion of the unhappy people pay his salary and thus he is responsible for protecting their interests.

    The unhappiness among those who pay Mr. Magoon’s salary is so widespread as to be almost universal. Folks on the right are unhappy. Folks on the left are unhappy. Folks in the center are unhappy and they are all unhappy about the process and the scale and quality of development in our town. Thanks to Mr. Magoon for uniting us in these divided times.

    Indeed Michelle is correct, a slightly higher linkage rate would have made little difference to development, but would have had an impact on affordable housing.

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