1 Montgomery County, Maryland Moderately Priced Dwelling Unit (MPDU) Program Montgomery County,...

1

Montgomery County, MarylandModerately Priced Dwelling Unit (MPDU) Program

Montgomery County, Maryland

2


The MPDU Program In Brief: a portion of the housing units built in subdivisions/rental complexes with 20

units or more must be priced at a level that is affordable to moderate income individuals and families

Enacted in 1974, it has produced approximately 11,700 housing units

An “inclusionary zoning” technique - in exchange for setting aside “affordable” units, the developer may increase the density allowable under the base zone

MPDU sales prices controlled for 30 years; MPDU rents controlled for 99 years

After the control period expires, the County and the owner/seller split the “windfall” profit on the market rate sale

Believed to be the first inclusionary zoning program in the country


3


Background - Geography:

The most populated jurisdiction in Maryland

Within one hour drive of Washington, D.C. and Baltimore

During the 1970s and 80s, changed from a “bedroom” community for the Nation’s Capital to an urban county where over 60% of the County’s residents find work in the County.


Chesapeake Bay

4


Background – Demographics (2000 Census):


People

Total Population 873,341

Estimate (7/1/2004) 921,690

Under age 18 25.4 %

Over age 65 11.2 %

White 73.6 %

Black 15.1 %

Asian 11.3 %

Hispanic (all races) 11.5 %

Median Income (2005) $89,300

Housing

Total households 324,565

Single-family detached 51.2 %

Single-family attached 17.9 %

Multi-family 30.7 %

Owner Occupied 68.7 %

Renter Occupied 31.3 %

A relatively diverse, higher income population with children

A county of predominantly single family homes and home owners

5


Background – Development Factors in the 1970s and 1980s:

Interstate highway system and the METRO resulted in exploding growth

Adequate Public Facilities Ordinance - Limited development in various portions of the County depending on existing transportation network and school capacity

New growth, plus limited developable

land, increased concern about housing for families with moderate incomes that could not afford the market rate units that were being built

Major Transportation Improvements


I-270 built in 60’s and 70’s

I-495(Beltway)METRO, built

in 70’s and 80’s

6


Background - Current housing situation:2004 Median Housing Sales Price

New

Resale

SF Detached $666,540 $450,000

SF Attached $427,501 $283,500

All Single Family $395,000

Average Rent (2004) HUD/FMR (2004)

Efficiency $ 887 $ 913

1-BR $1,027 $1,039

2-BR $1,211 $1,218

3-BR $1,526 $1,660

HUD limit for family of four (2005)

@ 50% of median…………$44,650


7


The legislative environment in the early 1970s:

Period of rapid growth Large increase of young families wanting to move into the County Increasing shortage of housing affordable to low-to-moderate income

households High demand for building lots increased the price of land which raised the cost

of housing Sewer and water moratorium restricted the number of new water and sewer

connections, adding to the supply/demand problems faced by housing developers and further increasing the costs

Developers began building the largest, most expensive and most profitable houses to compensate for the limited supply of lots

Even with the lifting of the development moratorium, the problem with affordability still remained


8


The pressure for affordable housing legislation: Civic pressure came from such groups as Suburban Maryland Fair Housing and the League

of Women Voters A concept was forwarded to have builders supply a percentage of houses in each

development that would be “affordable” Several members of the County Council introduced a local legislative bill that

was countywide introduced “inclusionary” zoning provided density bonuses

Main legislative concerns: Taking property without just compensation Successful economic integration of neighborhoods “Marketing” developments with mixed incomes The economic impact of affordable units on housing values Density bonuses undermining pristine zoning practices


9


Legislative History: County Council worked on first bill for over one year After a number of substantive amendments, the bill was

passed unanimously on October 23, 1973 The County Executive vetoed the bill - he believed it to be

unconstitutional, invasive public policy, and too difficult to administer

The Council overrode the veto and the Moderately Priced Housing law became effective on January 21, 1974

The law has never been challenged in court


10


The Legislative Findings section declares that: The number of persons and families needing affordable housing is growing

Persons with lower paying jobs or on fixed incomes cannot afford to reside in the County

Making workers commute into the county is not sound policy

Ignoring the high cost of housing is discriminatory

The market conditions that foster high priced housing (and higher profits) discourages development of a broader range of housing types and prices

A profitable market exists for lower cost housing if land costs can be reduced and a more modest product is built

Private developers will become an active partner in providing MPDUs if an incentive is provided and a density bonus holds the best hope for being that incentive


11


The public policies underpinning the law include: Providing a full range of housing choices in a suitable living

environment Provide affordable housing to meet existing and future employment

needs Disperse affordable housing throughout the county Allow increased densities to off-set the additional costs to developers provide flexibility for developers to meet the MPDU requirement


12


Public Policy Goals of the MPDU Program:

GOAL: Produce moderately priced housing so that County residents and persons working in the County can afford to purchase or rent decent housing

IMPLEMENTATION: Form a partnership with developers through the zoning ordinance to add moderately priced housing to subdivisions by allowing more market rate development to off-set costs.

GOAL: Distribute low and moderate income households throughout the growth areas of the County

IMPLEMENTATION: Apply the MPDU requirement countywide in order to achieve distribution of MPDUs in every community.


13


Goals of the MPDU Program (continued):

GOAL: Expand and retain inventory of affordable housing by allowing the County’s housing authority (the Housing Opportunities Commission or HOC) and nonprofit housing sponsors to purchase up to 40% of the MPDUs

IMPLEMENTATION: Off-set losses from the MPDU inventory due to expiration of the price controls by allowing a portion of the new units to be purchased by the HOC or other nonprofits to be retained as a permanent resource that is rented to qualified participants

GOAL: Provide funds for future affordable housing by sharing the windfall appreciation when MPDUs are first sold at market price after the price controls expire

IMPLEMENTATION: Supplement County financial support for affordable housing by sharing the profit when an MPDU is sold at market rate after the price control expires and dedicating those profits to the County’s housing program.


14


Legal Framework: The MPDU program is primarily implemented through two sections of the Montgomery County Code:

Chapter 25A – known as the Moderately Priced Housing (MPH) law, this section of the Code lays the foundation for the MPDU Program

Chapter 59 – The Montgomery County Zoning Ordinance specifies the applicable zones, sets the applicable zoning bonus densities, and sets the site plan requirements


15


Chapter 25A - Among other things, this law requires the County Executive to:

Set income and eligibility standards for consumers of MPDUs, including: Set maximum incomes by size of household Enforce first-time homebuyer requirement

Establish maximum sales prices and rents of MPDUs, based on such factors as: general market and economic conditions interest group input necessary and reasonable costs to build and market the MPDU units price adjustments tied to relevant cost elements of changes in CPI “architectural compatibility” - adjustment to upgrade exterior appearance of unit to “fit in”

Establish the procedures for the sale and rental of units

Establish procedures for establishing resale prices and any shared profit required


16


Chapter 59 - The zoning connection The zoning ordinance contains provisions for residential development that provides both flexibility and restrictive controls over the construction of moderate cost housing in new subdivisions.

The MPDU requirement operates as an “overlay” zone applicable to all residential projects of 20 units or more regardless of zoning density. In single family detached, residential zones the ordinance allows a portion of the units (40-60%) to be attached in the form of “one-family attached or semidetached dwelling units, townhouses, or a combination thereof…”

Lot sizes can be smaller than the base zone in order to achieve the density bonus and accommodate the variation in building types.

Density comparison of base zones to permitted adjustments for MPDUs

Dwelling Units Per Acre

Base MPDU

R200 2.0 2.44

R150 2.6 3.17

R90 3.6 4.39

R60 5.0 6.1

R40 7.0 10.12

R-T6 6.0 7.32

R-T8 8 9.76

R-T10 10 12.2

R-T12.5 12.5 15.25

R-T15 15 18.35

R30 14.5 17.69

R20 21.7 26.47

R10 43.5 53.07

The overall density increase can not exceed 22%


17


The concept of a density bonus – simplified: Under zoning law, the percentage of MPDUs required ranges between

12.5 percent and 15 percent, while the allowed density bonus ranges from 0 percent to 22 percent.

Example: If the underlying zoning would permit 100 units, in exchange for providing 15 percent MPDUs, the developer could receive the maximum bonus of 22 percent (assuming the site would allow such an increase)

Therefore, the total number of units would be 122; 15 of the bonus units are MPDUs, while 7 additional market rate units are provided.

18


The developer’s requirements: Must identify MPDU units on signed site plan that is legally binding

and enforced through a site plan enforcement agreement

Must execute “Agreement to Build MPDUs” before building permits can be issued

Must sign “Offering Agreement” to market the units to MPDU consumers when they are ready for occupancy

Must record covenants in land records that commit the units, require the MPDUs to be owner occupied, and place controls on re-sale prices


19


Site Plan Review and Approval: The MPDU requirement for a development is determined by the Planning Board

through the site plan review and approval process

MPDU site planning guidelines for developers to help with achieving “compatibility”:

Encourage a variety of MPDU unit types including duplexes, piggybacks, quadriplexes, triplexes, small-lot detached units, apartments, and townhouses

Prohibit back-to-back units unless absolutely necessary Discourage clustering MPDUs in a location in a subdivision through innovative site

planning and building configuration Permit enough clustering of single-family detached and duplex MPDUs to take

advantage of production and marketing efficiencies Ensure that open space and recreational facilities that are required for site plan

approval are equally available to all residents Encourage distribution of MPDU apartment units among market rate units


20


The Agreement to Build MPDUs includes: The total number of units, including MPDUs

The entire land holding related to the subject project

A requirement that the MPDUs be constructed at the same time or before other dwelling units

A requirement that the MPDUs be completed before the the final market rate units are completed

Disclosure, at time of sale, that the unit is price controlled


21


The Offering Agreement includes: The total number of MPDUs being offered The final sales prices or rents as calculated using the pricing standards

and formula MPDU floor plans and types The final site plan and recorded plats for each unit A copy of the covenants in recordable form A general information sheet on the units


22


Alternative Compliance measures: In cases of “economic infeasibility”, environmental constraints, or high condo

fees that would make the unit unaffordable to consumers, the developer may request an alternative arrangement

Requests for alternatives are reviewed by the Director of Housing and Community Affairs (DHCA), and in some cases, a panel composed of the DHCA, Director of Planning, and the HOC Executive Director

Alternatives include: paying a fee in lieu of MPDUs, building the MPDUs elsewhere, or donating land to be used to build MPDUs

Historically, alternatives have been requested in high-rise, high cost developments in central business districts

23



The Consumer Side: Consumers must be certified by the Department of Housing and

Community Affairs (DHCS) as eligible by submitting income verification and assurance that no other property is owned

For Sale MPDUs are offered through a Lottery, with a point system One point for living in Montgomery County One point for working in Montgomery County Up to three points for participating in the program for three or more years

Eligibility to participate in individual lotteries is determined by unit size (number of bedrooms) and family size

Rental MPDUs are offered on a first come, first served basis

24


Profile of Current Consumers: Maximum Income Range: For Sale $44,000 (individual) to $68,000 (family of 5)

Rental $40,000 (individual) to $62,000 (family of 5) Maximum income limits are set at about 65% to 70% of median Average income of purchasers - $32,000 Number of certificate holders - 1,300 MPDU purchasers are:

Employed Hold jobs in the retail and service sectors, often multiple jobs at one time Entry level teachers, firemen and police officers


25


Achieving Compatibility - Judge the results by identifying the MPDUs


26


Achieving Compatibility - Judge the results by identifying the MPDUs

Market Rate

Market Rate

MPDUs

MPDUs

MPDUs

MPDU duplexes in a single familydetached community.


27


Another housing type - Identify which are market rate and which are MPDUs


28


Another housing type - Identify which are market rate and which are MPDUs

All MPDUs

All MPDUs

All Market Rate

All Market Rate


29


More choices:

Which are the MPDUs?


30


More choices:

Which are the MPDUs?

MPDUs

Market Rate

MPDUs MPDUs


31


Another way to mix MPDUs with Market Rate Units. Which is which?


32


Another way to mix MPDUs with Market Rate Units. Which is which?

Market Rate

Market Rate

MPDUs

Piggy Back MPDUs


33


Examples of single-family detached MPDUs at Avenel, a community of multimillion dollar houses.

The market rate houses in this community are large and expensive. In this instance, there is absolutely no way to achieve compatibility.


34


Research & Technolog y C enterM-NCPPC, Mo ntgomery C ty.

Key:

>10

10 - 99

100 – 249250 – 499

500 – 999

1,000 – 1,499

1,500 – 1,999>2,000

MPDUs Are Well Dispersed by Policy AreaMPDUs Are Well Dispersed by Policy Areain the Countyin the County

Rural Areas And Clarksburg

BCC

Potomac

FairlandK-W

Olney

Aspen Hill

GaithersburgVicinity

Damascus

Rockvil le

Silver Spring

Rockville is not part of the County MPDU Program.

Mont. Village


35



Current housing situation with MPDUs:

2004 Median Housing Sales Price

New Resale MPDU

SF Detached $666,540 $450,000

SF Attached $427,501 $283,500 $140,000*

All Single Family $395,000

* calculated for late 1999 on a three bedroom townhouse including: land, construction, financing, legal and closing, marketing and sales commission, builders overhead allowance, and architectural compatibility

Average Rent (2004) MPDU

Efficiency $ 887 $ 854

1-BR $1,027 $ 906

2-BR $1,211 $1,083

3-BR $1,526 $1,260

Total MPDU’s Produced through 2004 = 11,647

MPDUs still in inventory = approximately 3,500

36

Montgomery County, MarylandModerately Priced Dwelling Unit (MPDU Program

Program Implementation: The local government carries out regulatory and administrative functions and the building industry produces the housing

Builders must: subdivide the land and obtain Planning Board approvals obtain building permits construct the units work with DHCA to price and offer the units work with consumers selected to purchase units


37

Montgomery County, MarylandModerately Priced Dwelling Unit (MPDU

Three County Agencies with Responsibility: The Planning Board The Department of Housing and Community Affairs (DHCA) The Department of Permitting Services (DPS)

Montgomery County Government must: administer the zoning and plan approval assure that the project’s MPDU requirements are documented certify consumer eligibility establish agreements with developers on staging establish MPDU pricing oversee the selection of potential buyers through the lottery enforce resale and shared profit restrictions

38


Public cost to administer the program:

The cost to administer the zoning requirements is absorbed in the normal zoning administration program.

The cost to carry out the non-zoning part of the program is in the County’s Department of Housing and Community Affairs budget.

39


More background, forms and regulations can be found at:

www.montgomerycountymd.gov/mpdu

Questions?:[email protected]

1 Montgomery County, Maryland Moderately Priced Dwelling Unit (MPDU) Program Montgomery County,...

Documents

Transcript of 1 Montgomery County, Maryland Moderately Priced Dwelling Unit (MPDU) Program Montgomery County,...