Linkage: Civic Aid or ‘Extortion’? : Parley Discusses Merits of Fees on Downtowm Projects

All over the country, in prosperous downtowns and struggling neighborhoods, planners and developers are talking about “linkage.”

Not everybody agrees on whether it’s good or bad, but there’s no doubt that it has become the latest buzzword in urban development--at least if discussion at a recent conference on urban design here is any indication.

For cities, linkage means tapping developers of prosperous downtown projects, usually office buildings, for funds to help improve poor neighborhoods in other parts of a city. Advocates say it is necessary as a means of replacing lost federal funds for struggling neighborhoods; developers call it “extortion” and worse.

Some form of linkage programs has been instituted in San Francisco, Boston and Santa Monica, and many other cities are considering similar ordinances.

Topic at Conference

One of those cities is Chicago, which may be why linkage was the leading topic of conversation at the national conference here sponsored by the Institute for Urban Design. This city, like so many others around the country, is debating the question of how to “balance” growth between a downtown that is prospering and neighborhoods struggling to survive.

Many city and neighborhood officials find linkage an attractive concept, but there is some question--more so here in the Rust Belt than in San Francisco or Boston--about how much the city can demand from developers before they move to the suburbs or to other cities.

“Cities that heavily tax the wealthy to aid the poor can’t do so in the long run,” economist Anthony Downs, a Chicago native and founder of Real Estate Research Corp. here, said during a luncheon speech at the Art Institute of Chicago. “Some cities with unique amenities or attractions, like San Francisco, can engage in redistributive policies. But most can’t.”

Yet for neighborhood advocates here, linkage may be more a battle cry than a useful policy.

“Can it replace federal subsidies? Absolutely not,” said Robert Brehm, who works for the Bickerdike neighborhood development corporation in Chicago and serves on a commission that is putting together a linkage proposal. “Is it more important than employment issues? Absolutely not. But what we see in linked development is a chance to publicly debate the issue of balanced growth.”

The linkage concept originated in California about five years ago. San Francisco, seeking to mitigate environmental damage, began requiring developers of office buildings to provide money for housing, and later, for transit improvements. Santa Monica picked up on the idea, and in 1983, Boston passed the first ordinance specifically linking downtown development projects to improvements in other neighborhoods.

Many other cities with hot downtown office markets have looked into linkage, including New York and Minneapolis. According to one researcher, at least two cities--Seattle and Cambridge, Mass., just outside Boston--have considered linkage policies and rejected them.

Low-Income Housing

Los Angeles engages in a linkage of sorts through the Community Redevelopment Agency. Under state law, CRA uses some tax revenue from redevelopment districts--most notably downtown Los Angeles, home of many office towers--to encourage construction and renovation of low-income housing in many parts of the city.

Real-estate developers are singled out to bear the linkage burden for two reasons. First, as Downs said in his speech here, “developers have become symbols of private-sector arrogance, whether or not this is true.” And second, cities are becoming increasingly aware of the crucial role new development plays in creating new wealth within a city--wealth that some city officials believe should be spread around the entire city, not just concentrated downtown.

The San Francisco policy, as explained by George Williams, assistant planning director, is not strictly linkage.

“We’ve never conceived of our programs as linked development,” Williams said. Instead, he said, it’s “dealing with quantifiable environmental impacts and infrastructure.”

San Francisco’s strategy began as an informal policy based on the city’s power under the California Environmental Quality Act, but a few months ago it was passed into ordinance by the Board of Supervisors. Exactions on downtown office buildings in San Francisco now total $13.34 per square foot--$5.34 for housing, $5 for transit, $2 for downtown parking and $1 for child care. (These fees come on top of the stringent aesthetic review requirements featured in the city’s new downtown plan. San Francisco architect Jeffrey Heller said these requirements can increase the cost of a downtown office building 20% in addition to the exactions.)

“The analogy to suburban development is clear,” Williams said. “But instead of school sites and roads rights-of-way, we’re dealing with transit and housing.”

Critics of the San Francisco policy, including Downs, suggest that the cost of development is driven so high that jobs for low- and moderate-income people--ironically, those the city is trying to help through linkage--are driven out of downtown and into suburban areas such as Walnut Creek.

Unlike San Francisco, in Boston, the policy of linkage is clearly stated.

“The need was perceived to link a prosperous downtown with the neighborhoods,” said Susan Allen, assistant director of the Boston Redevelopment Authority, which has broad planning powers in the city. “One to two miles from downtown we have tremendous problems with blighted neighborhoods.”

According to Allen, development projects larger than 100,000 square feet must pay $5 per square foot for all area in excess of the 100,000. However, the developers can pay the fee over a 12-year period. Since passage of the policy in 1983, developers in 13 projects have committed to contributing $34 million in linkage payments--though, because of the deferral option, no payments are due until next year.

Allen acknowledged that the linkage policy has brought problems--not the least of which is the possibility that the city will value linkage payments over good urban design.

Boston will soon take the linkage concept one step further. The agency is about to start a “parcel-to-parcel” program, under which prime pieces of publicly owned downtown real estate will be offered for development--but only if the developer is also willing to develop another piece of publicly owned property in the neighborhoods as well. The first parcel-to-parcel linkage combines a site in the downtown financial district with a piece of land near a new transit stop in an outlying district.

However successful linkage-type programs have been in San Francisco and Boston, the underlying question remains: Can the idea be transported to cities with less robust economies?

Many developers think not. “What we are talking about is fairly explosive growth in some of our more dynamic cities,” said Michigan developer William Caldwell, president of the Urban Land Institute. “It’s good for a few very significant markets like Boston and San Francisco. But most Rust Belt cities must continue to offer incentives rather than exactions.”