Affordable housing bill requires developers to receive full offset of linkage fee costs

FORT LAUDERDALE, Fla. (August 17, 2020) – Florida commercial real estate developers who faced costly linkage fees imposed by local governments to help fund affordable housing initiatives will receive legislative relief with the enactment of Florida House Bill 1339 (HB 1339).

The Florida chapter of NAIOP, the Commercial Real Estate Development Association, worked in partnership with other industry organizations to deliver the new legislation, which now requires local governments that levy linkage fees on new development projects to fund affordable housing within their jurisdictions to fully offset those costs.

The new law went into effect on July 1 and provides clear guidance and standards for using development incentives to render linkage fees as net neutral cost factor on development. Incentives may include:

• allowing the developer density or intensity bonus incentives or more floor space than allowed under the current or proposed future land use designations; and
• reducing or waiving fees, such as impact fees or water and sewer charges.

HB 1339 is an adjunct bill to Florida House Bill 7103 (HB 7103), which passed last year and also requires full offsets for inclusionary zoning mandates, which generally require a developer to provide a specific number of affordable housing units or to contribute to a housing fund.

HB 1339 goes a step further by specifying that linkage fees for affordable housing are also subject to the same cost offsets.

“This new law clarifies any potential ambiguity the earlier legislation’s silence on linkage fees may have created. The latest bill unequivocally declares cost burdens borne by developers through linkage fees be mitigated,” said NAIOP Florida President Darcie Lunsford, executive vice president at Butters Realty & Management. “With more local governments looking to shift costs for affordable housing initiatives onto commercial projects, this became a priority for NAIOP chapters across the state, and a bonafide deal-killing threat for development.”

Such linkage fees in the state can range from $0.37 per square foot up to $2.42 per square foot for new developments, according to a Florida House staff analysis of the legislation.

“Considering that commercial real estate is nearly a $26 billion industry in Florida, supporting 227,512 jobs, it was imperative that we protect its viability, particularly in this fragile economic climate,” Lunsford said. “Despite the challenges of COVID-19, the commercial real estate industry has continued to push forward with new projects and impactful legislative wins.”

The 1,000-member NAIOP Florida is a coalition between the state’s five regional chapters in South Florida, Central Florida, Tampa Bay, Northeast Florida and Northwest Florida, and works to advance responsible commercial real estate development in the state and advocates for effective public policy.

“One of the distinct advantages of membership in NAIOP South Florida is that it provides our members with an opportunity to have a seat at the table when it comes to policy making and policy changes at the state level,” added NAIOP South Florida Chapter President Stephanie Rodriguez. “This is critical to our work as developers in the market. This legislation is an example of how the power of our organization can impact how we do business across the state.”