MAJOR HOUSING PROGRAMS IN MONTGOMERY COUNTY MD

Presented by Elizabeth B Davison Department 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, Maryland Moderately Priced Dwelling Unit (MPDU) Program

Background – Demographics (2000 Census): People

Total Population Estimate (7/1/2004) Under age 18 Over age 65 White Black Asian Hispanic (all races) Median Income (2005) 873,341 921,690 25.4 % 11.2 % 73.6 % 15.1 % 11.3 % 11.5 % $89,300

A relatively diverse, higher income population with children Housing

Total households Single-family detached Single-family attached Multi-family Owner Occupied Renter Occupied 324,565 51.2 % 17.9 % 30.7 % 68.7 % 31.3 % Montgomery County, Maryland

Montgomery County, Maryland Background - Current housing situation: 2004 Median Housing Sales Price New Resale SF Detached SF Attached $666,540 $450,000 $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 Montgomery County, Maryland

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 Montgomery County, Maryland

The Moderately Priced Dwelling Unit Ordinance : Goals and Implementation

Goals of the MPDU Program: Implementing the MPDU Goals:

    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.

    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, Maryland

Montgomery County, Maryland Moderately 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, Maryland

Montgomery County, Maryland Moderately 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 Consumers Moderately 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 MPDU purchasers are: 1,300    Employed Hold jobs in the retail and service sectors, often multiple jobs at one time Entry level teachers, firemen and police officers Montgomery County, Maryland

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



Achieving Compatibility: judge the results by identifying the MPDUs

Montgomery County, Maryland

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

Achieving Compatibility: judge the

MPDUs MPDUs MPDU duplexes in a single family detached community.

Montgomery County, Maryland MPDUs Market Rate

The Moderately Priced Dwelling Unit Ordinance: Dispersal Throughout the Community

Damascus Rural Areas And Clarksburg

Rockville is not part of the County MPDU Program.

Res earch & Tech nolog y C enter M -N CPPC, M o ntgomer y C ty.

Mont. Village Gaithersburg Vicinity Olney Rockvil le Aspen Hill K-W Potomac BCC Fairl and Sil ver Spring Key: >10 10 - 99 100 – 249 250 – 499 500 – 999 1,000 – 1,499 1,500 – 1,999 >2,000

Montgomery County, Maryland

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 Montgomery County, Maryland

Questions and More Info

 Christopher.anderson@ montgomerycountymd.gov

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 Page 2

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 Page 3

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 Page 5

Right Of First Refusal: 53 A

 Gives Right to Certified tenant organization, County, Housing Authority  Must match price and terms Page 6

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 Page 7

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 Page 8

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 Page 9

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.

Goals of the Housing Initiative Fund

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.

Sources of Revenue for the Fund

Current sources:

General fund: 2.5% of property Tax •Sale of moderate priced housing •Sale of publicly owned land •Investment income •Loan repayments •Developer payments

Past sources:

•Condominium conversion tax •Impact tax •Property rental •State contributions

The Problem of Uneven Funding: Solved by 2.5% of Property Tax Housing Initiative Fund Annual Revenue Totals 18,000,000 16,000,000 14,000,000 12,000,000 10,000,000 8,000,000 6,000,000 4,000,000 2,000,000 0

19 89 19 90 19 91 19 92 19 93 19 94 19 95 19 96 19 97 19 98 19 99 20 00 20 01 20 02 20 03 Year

Nominal $ Constant $'89

Administration of the Fund

Process for Approval

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

Factors Considered During the Review Process

Purpose:

 Complies with HIF mission   Public purpose Neighborhood need  Need 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

Important Note:

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.

Case Studies

Preservation: Stewartown Homes Apartments Property:

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 7 th year, payment to be based on available cash flow.

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.

Rehabilitation and upgrading underway at Montgomery Arms.

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 Terrace Property:

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.

Econolodge makeover: 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.

Goals Met by the project

• Renovating distressed properties.

• Special needs housing.

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

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

http://www.montgomerycountymd.gov/ content/hca/Housing/mutifamily-intro.htm