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Build It or Buy It?

Affordable Housing in Montgomery County: Special Report

Last year, County Council member Tom Perez (D-5th) introduced a bill that would eliminate what has become among the most controversial aspects of the county’s affordable housing program — the practice of allowing builders to pay money into a fund instead of building the affordable units required by their project.

"We’re going to continue to push to end them," Perez said.

Under a provision of the county’s affordable housing law, builders are permitted to make a payment to the county’s Housing Initiative Fund in lieu of building the affordable unit. The payment must be enough to create "substantially more" affordable units in a different site in that or an adjoining planning area.

From the time the first buyouts were allowed in 1989, until the end of 2003, builders have paid into the fund instead of building 446 units. Two of those units were in Potomac. Now the developers of condominiums at Stoneyhurst Quarry propose to pay into the fund instead of building 17 affordable units required by the project coming to River Road near Seven Locks Road.

"THE BUYOUTS have become a lightning rod of criticism for the whole program," said Derick Berlage, chair of the Park and Planning Commission. Berlage explained that when zoning proposals come before the planning board, residents complain that affordable housing requirements in them are meaningless because developers will buy out of their obligations, and that these sorts of complaints are coming before the Commission with greater frequency.

"It’s affecting the credibility of the program," Berlage said.

In the proposals being made by Council member Nancy Floreen (D-At large), many but not all buyouts will be ended. "If we eliminate this, we’re going to have to make some changes to the other side of the equation," Floreen said. "If you’re going to change one part of it, you have to see how it’s going to affect the other parts."

Floreen is calling for a trade-off, more flexibility in the zoning standards and less in buyouts. Floreen proposes to "permit variations with respect to unit types, height limits, amenities, open space, setbacks, forest conservation, on-site forestation, private roadways, imperviousness, and lot size requirements," according to a press release describing her initiatives.

Essentially, the Planning Board will have the authority to balance what is more important to a particular project — current restrictions on things like building height and environmental concerns or the creation of more affordable housing units.

"There’s a real tension between numbers and policy and location," Floreen said.

MOST BUYOUTS happen in high-rise buildings. The reason given for this is that high-rises have fixed costs for each unit.

The other facet of this is the "density bonus." When developers include affordable housing in their projects, they are permitted to construct some additional market-rate units to offset the costs and allow them to continue to make a profit on the project.

However, since the height of buildings is limited by zoning requirements, they cannot often get a density bonus in high-rises. "I don’t think people really understood that limiting the height density would have an impact on affordable housing," said Elizabeth Davidson, director of the Department of Housing and Community Affairs.

Davidson and her department negotiate buyout prices with developers and approve buyouts. "I find that developers can include [affordable housing] if they get the density bonus," she said.

Floreen’s proposal would allow the Planning Board to relax some height restrictions, which would allow taller buildings and therefore more density. Building height is often a contentious issue when new projects are proposed, with existing neighbors frequently objecting to buildings towering over existing structures.

Davidson has also approved buyouts in cases of buildings with high homeowners or condo fees, such as Stoneyhurst. In these places, the condo fees could be at levels that a person who is eligible for affordable housing could not afford.

Floreen proposes to continue to allow buyouts in this situation.

In some places, such as Avenel, the fees have been "unbundled." Residents pay a fee for maintenance and can pay a separate, optional fee for the use of other amenities, such as the community pool.

Floreen, however, does not advocate unbundling. "Do you create second-class citizens in a community?" she said.

Perez thinks that the county needs to think more creatively and work to end them in all cases.

"Their arguments were raised," he said, but he rejects them. "I’m dubious as to whether the elimination of buyouts is going to be the end of affordable housing."

He points out that the City of Rockville does not allow buyouts, and it still has a viable affordable housing program. He thinks the county needs to take a stronger stand and use its desirability to force an end to the process. "People want to live in Montgomery County," he said. "We have a lot of leverage by virtue of where we are."