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Watertown Pursuing New Fees On Commercial Development

Arsenal Mall in Watertown was transformed into an open-air lifestyle development branded Arsenal Yards.

Watertown has joined a growing list of Massachusetts cities that are pursuing linkage fees on new commercial real estate projects to boost funds for affordable housing production.

After the city sought the state's permission to impose the fees, the state legislature approved a bill this month that would allow Watertown to adopt an $18 per SF fee for new commercial projects, the Boston Business Journal reported.

For now, $18 is the maximum, but the city will be able to adjust it over time. 

Gov. Charlie Baker signed the bill for the authorization late last week, opening the door for the city to begin creating a fee.

Any linkage fee the city proposes will need to be finalized by Watertown's planning board and city council. When finalized, the fee will be required for all nonresidential, nongovernmental development of at least 30K SF that is in need of zoning relief.

Watertown isn't the only city that has introduced new linkage fees this year. In October, Cambridge voted to increase its linkage fees by 66%, bringing it to $33.34 per SF for all new development.

Last week, Boston Mayor Michelle Wu proposed raising linkage fees from $15.39 to $30.78 for lab space and to $23.09 for all other commercial developments. The proposed raise needs to be approved by the Boston Planning & Development Agency and the Zoning Commission.

Watertown has caught the eye of big time developers in recent years, including Alexandria Real Estate Equities, which has invested millions into the city with new lab developments.

This year, Alexandria broke ground on two lab buildings totaling 248K SF at its Arsenal on the Charles campus. In May, the life sciences developer paid $130M to acquire the Watertown Mall, which sits down the street from its other campus and is also eyed for a life sciences redevelopment.