Boston City Hall

Commercial real estate trade group NAIOP-MA is urging Boston officials to be cautious as they weigh a proposal to nearly double development fees.

Boston Mayor Marty Walsh is asking the Boston Planning & Development Agency board to vote Thursday on a proposal to increase the “linkage” fees large projects pay by 42 percent, from $10.81 per square foot on developments over 100,000 square feet to $15.39 per square foot.

Walsh, who is expected to be confirmed soon as President Joe Biden’s secretary of Labor, unveiled the proposal Thursday morning, saying the increase was needed to make sure the city’s development boom was benefitting all residents. Linkage fees generate millions of dollars a year – including $43 million in 2020 – for affordable housing and workforce training programs.

NAIOP-MA CEO Tamara Small called the increase “dramatic” and officials must “carefully monitor” its impact, but noted that the COVID-19 pandemic “underscored the critical need for affordable housing and workforce training across the Commonwealth and in Greater Boston.”

“Conversations about changes to linkage took place over the course of the year and while we believe that there was some room to increase linkage, an increase of this size should not be taken lightly – especially given that previous increases have not come close to this proposal,” Small wrote in an email to Banker & Tradesman.

Boston last raised its linkage fees by a mere 8 percent in 2018. The state legislature recently granted the city more flexibility to raise or lower linkage fees in response to changing markets.

The city’s real estate market is also facing headwinds, with large amounts of office space having hit the sublease market in recent months and high-end condominium sales and multifamily rents slowing.

Affordable housing groups praised Walsh’s move.

“The COVID-19 pandemic has deepened long-standing housing and income inequities and the Mayor’s action will give us additional resources to ensure that the City’s recovery from this crisis is more equitable and inclusive,” Emilio Dorcely, CEO of Roxbury/Dorchester affordable housing developer Urban Edge, said in a statement released by Walsh’s office. “We thank Mayor Walsh for taking decisive action to increase the linkage fee to provide more funding for affordable housing and job training, now that the Legislature has authorized the City of Boston to shape its own development policy.”

Joe Kriesberg, president of the Mass. Association of Community Development Corporations, tweeted that the proposal was “great news – an important and immediate step forward to advance housing and economic opportunity!”