MAJOR HOUSING PROGRAMS IN MONTGOMERY COUNTY MD

MAJOR HOUSING PROGRAMS IN MONTGOMERY COUNTY MD

Presented byElizabeth B DavisonDepartment of Housing and Community Affairs

Montgomery County Known for Innovative Housing Programs

Moderately Priced Dwelling Unit Ordinance Condominium Conversion laws Right of First Refusal on Sale of Multifamily

Housing Housing Initiative Fund

Moderate Priced Dwelling Unit Program

The Moderate Priced Dwelling Unit Program In Brief

Priced to be affordable to moderate income households Required in subdivisions of 20 units or more Enacted in 1974, produced 11,700 housing units An “inclusionary zoning” technique – Allow density bonuses above the base zone MPDU sales prices controlled for 30 years; MPDU rents controlled for 99 years County and the owner split the “windfall” profit after control period The first inclusionary zoning program in the country

Montgomery County, Maryland

Montgomery County, MarylandModerately Priced Dwelling Unit (MPDU) ProgramBackground – 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


Background - Current housing situation:2004 Median Housing Sales Price

New

ResaleSF Detached $666,540 $450,000SF Attached $427,501 $283,500 All Single Family $395,000

Average Rent (2004) HUD/FMR (2004)Efficiency $ 887 $ 9131-BR $1,027 $1,0392-BR $1,211 $1,2183-BR $1,526 $1,660

HUD limit for family of four (2005) @ 50% of median…………$44,650


Legislative History of MPDU Program in Early 1970’s

Civic pressure from Fair Housing advocates and the League of Women Voters

A concept to have builders supply a percentage of houses in each development that would be “affordable”

Issues: “Taking” of property 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


The Moderately Priced Dwelling Unit Ordinance : Goals and Implementation

Goals of the MPDU Program:

Distribute low and moderate income households throughout the County

Expand inventory of low and moderate -income housing for the County

Housing authority and nonprofits to retain long term ownership of affordable units

Funds future affordable housing by sharing windfall appreciation.

Implementing the MPDU Goals:

Partnership with developers:Density bonus (22%) to off-set land and other costs.

Apply MPDU requirement county-wide to achieve distribution of MPDUs in every community.

Off-set expiration of MPDU inventory by purchase of portion of units by Housing Authority or non profits.

Dedicating shared profits from sales after price controls to the County’s housing trust fund.


Montgomery County, MarylandModerately Priced Dwelling Unit (MPDU) Program

The public policies underpinning the law include: Providing a full range of housing choices Provide affordable housing to meet 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


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

Profile of ConsumersModerately Priced Dwelling Unit (MPDU) Program

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


The Moderately Priced Dwelling Unit Ordinance: What do they look like?

Achieving Compatibility: judge the results by identifying the MPDUs


The Moderately Priced Dwelling Unit Ordinance: Design Compatibility is a Must.

Achieving Compatibility: judge the results by identifying the MPDUs


Market Rate

Market Rate

MPDUs

MPDUs

MPDUs

MPDU duplexes in a single familydetached community.

The Moderately Priced Dwelling Unit Ordinance: Dispersal Throughout the Community


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

Key:>1010 - 99100 – 249250 – 499500 – 9991,000 – 1,4991,500 – 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

Rockville

Silver Spring

Rockville is not part of the County MPDU Program.

Mont. Village

The Moderately Priced Dwelling Unit Ordinance Does it Work? Yes. Is it Perfect? No.

Benefits Housing for needed

workers. Homeownership

opportunities Access to schools and

services Prevents ghettos and

mainstreams low income

Issues Dependent on market rate

new construction Cost in High Rise Large Waiting list Credit issues for

applicants Enforcement of Covenants


Questions and More Info

[email protected]

More Background informatination, forms and regulations:

www.montgomerycountymd.gov/mpdu

Condominium Conversions and Right of First Refusal

Condominium Conversions: Back to the Future

Similar to condo craze of late ’70’s early 1980’s New construction of condominiums began a few

years ago as high end rentals became saturated Conversion of high end properties well underway Laws from 1980’s apply but need update

Status of Conversions In Montgomery County

19 complexes are in early stages of conversion Represents 3,850 Units Only 3 buildings has gone through conversion

process Half the buildings converting by owner 1 building a tenant sponsored conversion 5 properties created as condominium, but initially

rented, now being sold

Several Laws Regulate Conversions

Ch 53 A: Montgomery County Right of First Refusal

Title 11: State of Maryland Condominium Conversion

Ch11A: Montgomery County Condominium Conversion

Ch29: Montgomery County Landlord Tenant Law

Right Of First Refusal: 53 A

Gives Right to Certified tenant organization, County, Housing Authority

Must match price and terms

Title 11 State of Maryland Condominium Conversion Law

Requires extended tenancies for protected classes up to 20% of units

Allows Local government to extend protections

Defines protected classes as those: - over 62 years of age,– “Handicapped”/ mobility impaired,– Under 80% of median income

Ch 11A Montgomery County Condominium Conversion

Extends protections in state law to Lifetime Tenancies:– Over 62 or “handicapped” and– under 80% of median income, and– Tenant for at least 12 months Includes 3 year tenancies for persons with

disabilities, seniors, or any person under 80% median income

Other Provisions

Tenants have right of first refusal on their unit HOC and County have Right of first refusal on entire

building, also of up to 20% of the individual units Relocation payments to tenants on a reimbursement

basis up to $750 Priority for extended tenancies by length of

residence in property

The Housing Initiative Fund

A Housing Trust Fund of Local Money Dedicated to Promote Affordable Housing

The Housing Initiative Fund

Adopted As part of the County Code in 1988.

Purpose Establishes a trust fund to promote a broad range of housing opportunities in Montgomery County.

1. Renovating distressed properties.

2. Preserving housing that could be lost from the affordable housing stock.

3. Special needs housing.

4. Helping create mixed-income communities.

5. Making sure that housing programs build neighborhood and not just housing units.

6. Working toward an equitable distribution of affordable housing units.

Goals of the Housing Initiative Fund

Sources of Revenue for the Fund

•Condominium conversion tax•Impact tax

•Property rental•State contributions

General fund: 2.5% of property Tax

Current sources:

•Sale of moderate priced housing•Sale of publicly owned land•Investment income•Loan repayments•Developer payments

Past sources:

The Problem of Uneven Funding:Solved by 2.5% of Property Tax

Housing Initiative FundAnnual Revenue Totals

02,000,0004,000,0006,000,0008,000,000

10,000,00012,000,00014,000,00016,000,00018,000,000

Year

Rev

enue

s in

$

Nominal $Constant $'89

Administration of the Fund

1. Developer submits application to the Department of Housing and Community Affairs.

2.Housing Loan Committee reviews proposal in monthly meeting

3. Presentation to Director for final decision

4. Dispersal of funds to developer if approved

Process for Approval

Factors Considered During the Review Process

Purpose:

Complies with HIF mission Public purpose Neighborhood needNeed for physical improvement

Compatibility:

Project design Land use and zoning Community support

Feasibility/cost:

Financial feasibility and need Leveraging Cost reasonableness Market feasibility Readiness to go forward Availability of support services Development team capacity

For every dollar of local funding spent, the Housing Initiative Fund was able to leverage

seven dollars in resources from private, federal, and state sources.

Important Note:

Case Studies

Preservation: Stewartown Homes ApartmentsProperty: 94 unit complex, one third uninhabitable when acquired by the housing authority. Expiring “236” property.

HIF role: 30 year loan at 1%, with no payments for 17 years and no interest accruing. Rehab costs of $120K/unit. Leverage ratio of County funds: 5.24 to 1.

Goals met by this project:

1. Renovating distressed properties.

2. Preserving housing that could be lost from the affordable housing stock.

3. Making sure that housing programs build neighborhood and not just housing units.

Community Preservation and Development Corp. runs a computer learning center and after school job training at Stewartown Homes Apartments.

Rehabilitation: Montgomery Arms Apartments

Property: Historic 130 unit complex located in downtown Silver Spring built in the 1940s. Owned by the housing authority.

HIF role: $2 million, 30 year loan at 3%, no payments for 6 years, no interest accruing. In 7th year, payment to be based on available cash flow.

Rehabilitation and upgrading underway at Montgomery Arms.

Conditions: 84 units reserved for families and individuals in affordable housing programs. Of these, 10 are “McKinney Act” units for chronically mental ill persons. 46 units leased at market rate.

Goals met by the project:

1. Renovating distressed properties.2. Special needs housing.3. Helping create mixed-income

communities.4. Working toward an equitable

distribution of affordable housing units.

New Construction: Victory TerraceProperty: Former 16-acre school site (surplus), purchased by nonprofit housing developer Victory Housing. Located in Wealthy Potomac

HIF role: Two loans: a land purchase loan to defer payments, with no interest accrual, for 20 years. Predevelopment and development loan will have 1% interest only payments for 5 years, then fully amortized for remaining 35 years. Both loans to be cash flow loans.

Conditions: 72 units with 14 affordable to persons at or below 40% of the area median income, 44 units to persons at or below 60%. Remaining 14 units unrestricted.

Goals met by the project:

1. Special needs housing.

2. Helping create mixed-income communities.

3. Working toward an equitable distribution of affordable housing units.

Transitional Family Housing and Single Room Occupancy: Econolodge makeover

Property: 99 room motel in two buildings.

HIF role: $287,246 towards purchase of the motel by the County. Housing authority to serve as development manager during construction.

Goals Met by the project

• Renovating distressed properties.

• Special needs housing.

• Making sure that housing programs build neighborhood and not just housing units.

Conditions: 40 living units will be created for single adults needing permanent supportive housing and 17 2-bedroom apartments will be created for families needing 3-6 month transitional housing, operated by the Montgomery County Coalition for the Homeless, Inc. under partnership with DHCA and HHS.

Econolodge makeover:

http://www.montgomerycountymd.gov/

For more information, please contact Stephanie Killian, Multifamily Housing Manager

content/hca/Housing/mutifamily-intro.htm

MAJOR HOUSING PROGRAMS IN MONTGOMERY COUNTY MD

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