Linkage fees are back. But will they do any good — or any harm? A "linkage fee" is a fee imposed on one kind of development to help fund a different kind of development that otherwise might not get built. Most commonly, this means slapping a fee on commercial development (which presumably brings more jobs to a community) in order to fund affordable housing development (which presumably will house the workers who take the jobs). Linkage was all the rage back in the late '80s — when office development was so hot that every town seemed to be planning for a 5-million-square-foot office park. Having lost faith in the private market's ability to provide worker housing, "lefty" cities such as Santa Monica, Berkeley, and San Francisco began charging office developers a per-square-foot fee to fund affordable housing projects. The fee idea soon spread to a few high-end employment rich cities, such as Cupertino. But it pretty much stopped there. The boom of the '80s ended, developers complained that the fee was bad for business, and the housing market tanked anyway. The City of Los Angeles, for example, started the process of adopting a fee but never completed the task. Now, the economy is hot again. Housing production is off but non-residential construction is strong, and there is a growing jobs-housing imbalance in many parts of the state. So it's not surprising to see a resurgence in the linkage concept. Some cities that have had fees for a long time are considering increasing them. And several places that have not had fees before are talking about imposing them. A housing task force appointed by the Los Angeles City Council has proposed the linkage fee as part of an overall strategy to create a $50-million-a-year affordable housing trust fund. Calabasas, an affluent city adjacent to the San Fernando Valley, has imposed linkage fees for the first time, and has created a different fee schedule for retail and office development (90 cents per square foot for retail versus $1.50 for office). The charming small city of Sonoma — not exactly a center of commercial development — is currently doing a study to determine what level its fees should be. The resurgence of linkage fees raises two related questions about whether they are good public policy. First, are they really justified? And second, do they really make any difference? The whole concept of the "development impact fee," of course, is based on the assumption that new development makes certain demands on a community and therefore the developer must take responsibility for mitigating the impact. This process, in turn, assumes that it's possible to measure the impact. This quantification is probably far easier in examining whether a flower or bird gets wiped out than determining whether a new office building or store is driving up the price of housing. In order to justify the fees, a municipality must make a series of assumptions about how much money employees will make, what kind of housing they're likely to seek, and what percentage of those employees are likely to look for housing in the same political jurisdiction where they work. But, of course, commute sheds and housing markets are regional in nature. Very often, companies will seek to locate in a particular jurisdiction because it's within commuting distance of a good labor pool, which may or may not be located in the same jurisdiction. And vice versa. In some geographical areas, this argument sticks nicely. For example, the connection in the Silicon Valley could scarcely be more obvious. Since the beginning of the Internet boom five years ago, something like seven jobs have been created for every home constructed in Santa Clara County, and the average home price in the county now exceeds a half-million dollars. The Internet companies employ vast numbers of in-commuters, yet they are highly resistant to moving their operations closer to their employees' homes. So it's not surprising that the Silicon Valley cities of Palo Alto, Menlo Park, Sunnyvale, and Cupertino all have linkage fees. But one of the biggest linkage fee programs in the state is run by the Sacramento Housing and Redevelopment Agency, the joint agency that serves the city and county of Sacramento. Back in the '80s, homebuilders sued Sacramento. They argued that — far from driving housing costs up -— employers were locating in Sacramento because housing prices were low, at least in comparison to the Bay Area. The homebuilders lost the case — the judges were reluctant to overturn Sacramento's impact analysis — but their argument has a certain logic. Why impose housing fees on businesses that are chasing low housing prices to begin with? Then there's the question of whether all these linkage fees actually make any difference in providing housing affordable to the employees who work in the new facilities being built by the commercial developers who pay the fees. A recent statewide survey by The Wall Street Journal estimated that all the commercial linkage fees in the state had raised less than $100 million for housing over a 15-year period. That's not chicken-feed, but it's not much in the context of a multibillion-dollar housing need statewide. The money usually gets thrown together with other local housing money, such as block-grant funds or redevelopment funds, to help provide a pool of subsidies for affordable housing projects. In other words, like so many other fees, it's difficult to trace a direct connection between the employment center creating the problem and the employees who are supposed to benefit. This is a little like Mello-Roos taxes for school construction, which often create more "school construction capacity" for the school district but rarely provide new schools for the children who actually live in the Mello-Roos project. The basic question, of course, is whether housing is either (1) a profit-making activity or (2) a piece of "community infrastructure" that is likely to lose money if it is pursued in a manner appropriate to the community's needs. Over the past half-century, American public policy has assumed that the answer is #1. But in a high-cost location like California, the answer, increasingly, appears to be #2. The question is not WHETHER somebody other than actual home buyers ought to pay for housing, but WHOM. A century ago, the most common answer to the question was the employers themselves, many of whom built magnificent "company towns" such as Scotia, the hamlet built by Pacific Lumber. Today, the most common answer is that the government ought to serve as some sort of "middle man" extracting money from profitable community ventures to subsidize unprofitable ones. But given the low esteem in which most people hold their government, it remains to be seen whether linkage fees are the right technique.