Why Use It?

Community Benefits

Increasingly, community coalitions are demanding community benefits from large developments using exactions that mandate production of affordable housing, local hiring, and living-wage jobs.

Exactions benefit communities in that they provide income without raising local property or other taxes. Exactions benefit existing residents of a community who are not required to subsidize the servicing of new development. The exactions can create benefit for low-income residents, when a developer pays into an affordable housing fund, builds affordable housing, or agrees to living-wage and local hiring agreements.

A key advantage of exactions is that the beneficiaries of new developments (developers, property owners, business tenants) pay more of the costs associated with those developments. In other words, exactions can help reduce the infrastructure subsidies to new developments.

In addition, exactions can serve to discourage new development on undeveloped "greenfield" (open space) sites by charging higher rates for extending public infrastructure to those areas. In this usage, exactions can create incentives for infill development because development costs are lower where infrastructure and services already exist.

TYPES OF EXACTIONS AND POTENTIAL BENEFITS

Exaction Category Examples Potential Benefits
Infrastructure Exaction Dedication of land for park.
Construction of roads to serve new housing development.
School construction.		 Recreational amentiy for residents.

New development pays own way; city funds freed up to maintain existing roadways.

Exands capacity to serve new residents, reducing potential overcrowding at existing schools.
Impact Fees Funding for affordable housing, childcare, schools, and other needs. Resources obtained to offset social and economic impacts of new development.

(Boston's housing linkage program has allocated approximately $45 million from developer impact fees to fund nearly 5,000 affordable housing units. (May 2000)
Community Benefits Development agreement. Developer commits to local hiring and living-wage jobs.
Developer constructs affordable housing off site.
Developer pays for traffic mitigation/traffic calming measures.
Developer funds job training programs.

(The Bayer Developer Agreement in Berkeley, CA included the developer paying $1,200,000 - $1,400,000 for a biotechnology education program for local youth.)