The ability to obtain developer concessions derives from a local government's power to regulate through its general planning responsibilities, zoning ordinances, and governance of subdivisions.
Infrastructure Costs. Localities can establish the legal basis for exactions by passing an "Adequate Public Facilities Ordinance" (or similar law). Such laws require necessary infrastructure and services before any new development can be approved. Infrastructure requirements include utilities, roads, parks, schools, or other services.
Affordable Housing. Jurisdictions can use exactions as part of a broader "linkage" program to support affordable housing. Linkage programs generally require exactions from the developer in the form of construction of affordable housing or payment into a housing fund in return for permits or other concessions.
Community Benefits. Local governments can negotiate exactions with developers on a project-by-project basis. In Los Angeles, a community coalition of labor, housing advocates, and community groups concluded a far-reaching agreement with the city and the developer of a billion dollar hotel and entertainment center. The Staples Center developers agreed to hire neighborhood residents, provide living-wage jobs, build affordable housing, and create new parks in the area adjacent to the project.
To avoid legal challenges, governments must ensure the exaction is linked in content and cost to the impact of the proposed development.
Localities impose exactions in the context of particular development scenarios. To mitigate the effect of increased motor traffic to a new shopping center, a developer may be required to pay for construction of a left turn lane and traffic lights. In some instances, local governments may require exactions from developers of commercial and office space to offset rising housing prices caused by economic growth. These exactions are generally based on square footage formulas, generating greater revenue from larger developments with larger impacts. Cambridge, Massachusetts requires commercial, hotel, retail, and institutional development to pay a linkage fee of $3.00/square foot. These exactions create a jobs-housing balance and help to maintain housing affordability. In this context, exactions represent an important linkage between land use regulations and a city's economic and social equity concerns.
Level of Use: Exactions are generally required by local governments to regulate development within their jurisdictions. Exactions are based on local "Adequate Public Facilities Ordinances," [sample ordinance of Washington County, Maryland at http://www.wc-link.org/washco/adqpub.pdf], provisions in the zoning regulations [San Francisco linkage ordinance at http://www.amlegal.com/sanfranplanning/lpext.dll?f=templates&fn=main-j.htm&2.0], and/or negotiated on a project-by-project basis. In addition, states may enact legislation to both enable and regulate local use of impact fees and exactions.
