Author: Municipal Finance Law Bureau
This month's Ask DLS features frequently asked questions concerning special act linkage fees. Please let us know if you have other areas of interest or send a question to cityandtown@dor.state.ma.us. We would like to hear from you.
What is a linkage fee?
A linkage fee is generally a fee, often permitted through special legislation, charged by a local government on certain developments to raise funds to offset the impacts of the development. Many communities have sought special legislation to reserve the fees in a special revenue fund to be expended for affordable housing related purposes. Some communities have also allowed expenditures for job training and readiness, and for the support of social services, education, youth recreational activities and public space enhancements like traffic and transportation improvements and capital construction projects. Sometimes, prior to pursing special legislation, a community will conduct a nexus study to demonstrate the relationship between the impact of the development and the spending purpose of the fee.
What are some examples of communities that have sought linkage fees through special legislation?
Examples of such communities are: Chelsea, Boston, Cambridge, Somerville, Everett, Watertown, Gloucester and Concord.
How does a municipality implement linkage fees?
Generally, once a community’s special legislation is approved, the community will implement an ordinance or by-law to carry out its purposes.
What size and type of development is this fee usually imposed on?
Each community has approached this differently. Chelsea has imposed the fee on commercial development, as well as industrial and residential. Boston has a 100,000 square foot exemption, which was recently lowered to 50,000 with a delayed two-year start. Watertown has implemented linkage fees only on commercial development of 30,000 square feet or more. These distinctions are made by each community.
Do municipalities have the authority to impose these fees?
As DLS has noted whenever similar legislation has been proposed, cities and towns already have broad authority under their home rule powers to impose fees not otherwise inconsistent with state law. See Silva v. Attleboro, 354 Mass. 165 (2009); Emerson College v. Boston, 391 Mass. 415 (1984). However, those fees must meet the three-prong test established under Emerson College to determine whether it is an allowable fee or an unauthorized tax: (1) Is the charge for a particularized service? (2) Is the charge designed to compensate the government for its costs in providing the service and not to raise revenue generally? and (3) Is receipt of the service and payment of the charge voluntary? See also Greater Franklin Developers' Association, Inc. v. Town of Franklin, 49 Mass. App. Ct. 500 (2000), where the appeals court expressly rejected a "rational nexus" justification for the imposition of the development impact fees for the capital cost of additional school facilities. The court's holding was based not merely on the absence of statutory authorization for Franklin's fee, but on constitutional considerations, relying upon the Court's decision in Emerson. It remains to be seen whether the Supreme Judicial Court would uphold linkage fees authorized by the legislature under a “rational nexus” analysis or under other constitutional considerations.
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| Date published: | May 4, 2023 |
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