4/19/2004 1:39 PM

4/12/2004 3:56 PM

4/7/2004 1:49 PM DRAFT

MPDUs - The Next Generation

Today I am proposing a package of adjustments to the Moderately Priced Ddwelling Unit program in order to strengthen the lifeline of affordable housing. We are facing a growing crisis in moderately-priced housing. Our young people children, teachers, firefighters and police officers can no longer afford to live in Montgomery County. Individuals earning the County average income of $46,000 confront median home prices of $315410,,000 f000 for all single family detached homes (detached and townhouses, new and existing). Median prices range from a high of $563,000 for a new detached home to $223,000 for an existing townhouse. These prices are beyond the reach of many. and $231,000 for town houses. As a result, they see no option but to leave the County in search of more reasonably-priced housing choices, only adding to a long, stressful commute and our growing traffic nightmare.

This interrelated set of pragmatic and achievable measures will address some of tthe major problems with the production and retention of affordable housing that stakeholders have identified. It balances our rigorous land use control system with additional flexibility necessary to foster the production of less expensive housing. Our objective ought to be to build make a structure that will work, not simply one that sounds good.

The time for study is over. It is now time to act.

Legislation:

1. Control Period – In order to preserve the stock of MPDUs for future use, extend the control period period for rental and sale MPDUs to 30 years, a nationally recognized period for housing maintenance before major rehabilitation is required. An income qualified homeowner must maintain a personal financial stake in building equity in the home; otherwise, the units will not be maintained and will not sustain their value over time.

2. Buyouts – Ensure that production of MPDUs is possible by allowing greater flexibility in zoning standards (see ZTA section). Therefore, prohibit buyouts except in the case of certain senior housing or if condominium/homeowners’ association fees are determined, by recognized standards, to be too costly as a percentage of income.

a. Clarify the proper measure of the buyout policy.

i. Buyout prices will be calculated under a new method. Even though if the County may can leverage buyout payments with other funds, such as those provided by other government (federal and/or state) programs, the developer’s buyout price will not be reduced by factoring such other sources into the buyout calculations.

ii. The buyout price should not be the full cost of providing the unit, however, because the units are not given away. The income-qualified person provides funds when purchasing the unit. Therefore, the buyout price should not include the unit’s purchase price, as set by County regulation.

b. The new buyout pricing policy will be based upon the cost to provide the unit minus the County-established price of the unit with the caveat that to participate in a buyout arrangement, the developer must pay for 25% more units than the number otherwise required.

c. Clarify that buyout dollars are in addition to, not in place of, County contributions to the Housing Initiative Fund. This will ensure that buyouts yield a net gain to funding available for affordable housing.

3. Alternative Sites – When provision of MPDUs on alternative sites is deemed appropriate by the Department of Housing and Community Development because of high fees or by the Planning Board because site restrictions do not permit the development to include the density bonus and the full MPDU complement, require that developers build or otherwise provide the substitute housing within the same or adjacent planning areas.

a. Give builders the option to purchase, rehabilitate, convert from commercial, or otherwise provide and return to the MPDU stock existing, deteriorating housing units or for-sale MPDUs no longer in the control period, or to add ones never before subject to the program, to meet requirements for the alternative agreements. This would simultaneously add to the affordable housing stock and help to preserve neighborhoods.

4. Bedroom Count – The MPDU bedroom count should reflect substantially the same mix as provided in the market rate units in the project.

5. Income Eligibility – The current program sets different income-eligibility limits for garden and high-rise apartments. Expand this by requiring having a differentiation of of maximum income-eligibility limits for rental units and sale units.

Raise the income eligibility level up to 80% of annual median income in Transit Station and large lot zones for rental and sale units.

6. First Refusal – Require that MPDU deeds and purchase contracts include conspicuous notice language precluding the owner from selling an MPDU without 1)providing proof that due notice was given to the County of its right to exercise its right of first refusal and 2)the County’s written decision not to exercise its right.

Zoning Text Amendments

1. To ensure production of MPDUs, require increased flexibility in site requirements as necessary to support densities created by the addition of MPDUs, the legislatively authorized bonus market-rate units, and the absence of buyout options. The Planning Board should Ppermit variations with respect to unit types, height limits, amenities, open space, setbacks, forest conservation, on-site afforestation, private roadways, imperviousness, and lot size requirements. As in Kentlands, zero lot-line projects should be permitted in appropriate locations.

a. As noted in Sec. 25A-2 of the County Code, ensure that private developers constructing moderately priced dwelling units under this chapter incur no loss or penalty as a result thereof, and have reasonable prospects of realizing a profit on such units by virtue of the MPDU density bonus provision of Chapter 59 and, in certain zones, the optional development standards.

2. To encourage more rental units close to transit, allow a n increased density bonus of up to 30% for constructing a rental building within walking distance1/2 mile of Metro and providing an additional 20 percent increase in the number of additional MPDUs units.

3. Require MPDU construction in large lot zones only where sewer is permittedrecommended by the Master Plan, to ensure that residency is open to those of moderate income in all areas of the County is open to those of moderate income.

4. Provision of additional MPDUs on site or off-site may be substituted for some or all of the amenity space requirements, such as public open space requirements in optional method development projects. This provision can also be used in by a commercial developmentments.

Administration

1. Create a housing advocate at Park & Planning Commission, to ensure that affordable housing ramifications are considered in Commission decisions.

2. Commit an annual allocation from the Housing Initiative Fund of $250,000 for low-interest loans to fix up older MPDUs for owners earning up to 65% of median annual incometo fix up older MPDUs.

3. Establish a County low-interest closing Closing cost Cost assistance Assistance program with anand earmark ainitial start up contribution of $501,000,000 from Housing Initiative Funds to replace the loss of the Federal Fannie Mae program.