Montgomery County, Maryland Moderately Priced Dwelling Unit MPDU Program

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Montgomery County, MarylandModerately Priced
Dwelling Unit (MPDU) Program
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Montgomery County, MarylandModerately Priced
Dwelling Unit (MPDU) Program

• Part I History and Overview of Montgomery
  Countys MPDU Program

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Montgomery County, MarylandModerately Priced
Dwelling Unit (MPDU) Program

• The MPDU Program In Brief
• A percentage of units built in developments with
  20 units or more must be priced at a level that
  is affordable to moderate income individuals and
  families
• It is the oldest inclusionary zoning program in
  the country
• Enacted in 1974, it has produced approximately
  12,500 housing units
• An inclusionary zoning technique bonus
  density
• Long-term Resale Price Controls and Shared Profit
  requirement

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Montgomery County, MarylandModerately Priced
Dwelling Unit (MPDU) Program

• Location Washington, DC MSA
• Within one hour drive of
• Washington, D.C.
• and Baltimore

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Montgomery County, MarylandModerately Priced
Dwelling Unit (MPDU) Program

• Demographics
• The most populated
• jurisdiction in
• Maryland
• Increasing diversity
• High Median Income

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Montgomery County, MarylandModerately Priced
Dwelling Unit (MPDU) Program

• Housing
• Characteristics

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Montgomery County, MarylandModerately Priced
Dwelling Unit (MPDU) Program

• Current Housing Cost
• High Cost
• High Rent

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Montgomery County, MarylandModerately Priced
Dwelling Unit (MPDU) Program

• Housing Cost Burden

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Montgomery County, MarylandModerately Priced
Dwelling Unit (MPDU) Program

• Program History
• During the 1970s and 80s, Montgomery County
  changed from a bedroom community for the
  Nations Capital to an urban county where over
  60 of the Countys residents find work in the
  County

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Montgomery County, MarylandModerately Priced
Dwelling Unit (MPDU) Program

• Legislative Environment in Early 1970s
• Period of rapid growth
• Large increase in young families wanting to move
  into the County
• Sewer and water moratorium restricted the number
  of new connections
• High demand for limited building lots increased
  the price of land
• Developers began building the largest, most
  expensive and most profitable houses to
  compensate for the limited supply of lots
• Increasing shortage of housing affordable to
  low-to-moderate income households
• Does this sound familiar to anyone?

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Montgomery County, MarylandModerately Priced
Dwelling Unit (MPDU) Program

• Civic and Political Pressure for Affordable
  Housing Legislation
• Civic pressure - Suburban Maryland Fair Housing
  and the League of Women Voters decried
  exclusionary zoning practices
• A concept was forwarded to the County Council to
  have builders supply a percentage of houses in
  each development that would be affordable

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Montgomery County, MarylandModerately Priced
Dwelling Unit (MPDU) Program

• Major legislative concerns
• Taking property without just compensation
• Successful economic integration of neighborhoods
• Marketing developments with mixed incomes
• Negative impact on housing values
• Density bonuses undermine pristine planning
  practices
• ...Once again, sound familiar?

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Montgomery County, MarylandModerately Priced
Dwelling Unit (MPDU) Program

• Addressing these Legislative Concerns
• Taking? Provide a density bonus extra market
  rate units
• Economic Integration? Providing home ownership
  to moderate-income families
• Marketing Developments and Home Values? Apply
  law countywide to all new developments
• Pristine planning practices? Required to
  balancing competing public policies

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Montgomery County, MarylandModerately Priced
Dwelling Unit (MPDU) Program

• Legislative History
• County Council worked on the bill for more than 1
  year
• The County Executive vetoed the bill as
  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

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Montgomery County, MarylandModerately Priced
Dwelling Unit (MPDU) Program

• Public policy goals of the MPDU Law
• Goal Provide a full range of housing choices in
  a suitable living environment so persons of
  moderate incomes can live and work in the County
• Policy Form a partnership with developers
  through the zoning ordinance to add moderately
  priced housing to subdivisions, and allow more
  market rate development to off-set costs

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Montgomery County, MarylandModerately Priced
Dwelling Unit (MPDU) Program

• Public policy goals of the MPDU Law (continued)
• Goal Distribute low and moderate income
  households throughout the growth areas of the
  County
• Policy Apply the MPDU requirement countywide in
  order to achieve distribution of MPDUs in every
  community to avoid over-concentration of
  affordable housing

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Montgomery County, MarylandModerately Priced
Dwelling Unit (MPDU) Program

• Public policy goals of the MPDU Law (continued)
• Goal Expand and retain inventory of affordable
  housing
• Policy Off-set losses from the MPDU inventory
  by
• Establishing resale price controls, and
• Allowing 40 of units to be purchased by the
  Countys public housing authority and non-profits

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Montgomery County, MarylandModerately Priced
Dwelling Unit (MPDU) Program

• Public policy goals of the MPDU Law (continued)
• Goal Provide funds for future affordable housing
  
• Policy Share the profit when an MPDU is sold
  after resale controls expire and dedicate those
  profits to the Countys housing programs

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Montgomery County, MarylandModerately Priced
Dwelling Unit (MPDU) Program

• Zoning Flexibility
• MPDU requirement alternative method of
  development applicable to all residential
  projects of 20 units or more allows increase in
  density
• In SF residential zones a portion of the MPDUs
  can be one-family attached or semidetached
  dwelling units, townhouses, or a combination
  thereof
• Lot sizes can be smaller

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Montgomery County, MarylandModerately Priced
Dwelling Unit (MPDU) Program

• The density bonus - simplified
• 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)
• 100 x .22 22 bonus units 100 22 122 total
  units
• 122 units x .15 19 MPDUs
• 122 units - 19 MPDUs 103 market rate units

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Montgomery County, MarylandModerately Priced
Dwelling Unit (MPDU) Program

• Has it been successful? Yes.
• Over 33 years, the program has produced 12,500
  affordable housing units
• It has provided thousands of first-time
  homebuyers an opportunity to live and work in
  Montgomery County
• Shared profit payments have provided millions to
  the Countys affordable housing fund

Montgomery County, Maryland
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Montgomery County, MarylandModerately Priced
Dwelling Unit (MPDU) Program
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Montgomery County, MarylandModerately Priced
Dwelling Unit (MPDU) Program

• But
• Units are lost forever as controls expire - of
  the 12,500 units produced, only 3,000 are still
  under resale price controls
• Not as many units produced annually as County
  approaches build-out

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Montgomery County, MarylandModerately Priced
Dwelling Unit (MPDU) Program
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Montgomery County, MarylandModerately Priced
Dwelling Unit (MPDU) Program

• Nothing is set in Stone
• Program Changes over the Years
• Minimum subdivision size reduced (from 50 units
  to 35 to 20)
• Control period extended
• From 5 to 10 to 30 years for sale units
• From 20 to 99 years for rental units
• Shared profit requirement added in 1989

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Montgomery County, MarylandModerately Priced
Dwelling Unit (MPDU) Program

• Part II Administration and Frequently Asked
  Questions

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Montgomery County, MarylandModerately Priced
Dwelling Unit (MPDU) Program

• Program Administration and Staffing
• Working with Builders
• Enforcement
• Alternative Compliance Measures
• Current Issues

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Montgomery County, MarylandModerately Priced
Dwelling Unit (MPDU) Program

• What is the appropriate staffing level?
• 1) Inclusionary housing programs are complex
  programs with many moving parts
• 2) In Montgomery County, the program workload is
  demand-driven, not supply-driven
• 3) Customer education is critical to long-term
  success
• 4) An accurate and thorough database with
  tracking and reporting capabilities is essential
• 5) Enforcement with teeth takes a lot of time
  and effort

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Montgomery County, MarylandModerately Priced
Dwelling Unit (MPDU) Program

• Program Administration and Staffing
• Three County Agencies
• The Planning Department/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 projects MPDU requirements are
  documented
• certify buyer eligibility
• execute agreements with developers on
  construction staging
• establish MPDU pricing and rents
• select buyers through random selection drawings
• enforce resale and shared profit restrictions

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Montgomery County, MarylandModerately Priced
Dwelling Unit (MPDU) Program

• Program Administration and Staffing
• 5.5 Full-time staff
• Senior Program Manager (1) planning review
  process, developer agreements, establish sales
  prices and rents, write regulations, information
  and reports
• Program Managers (2.5) monitor construction,
  resale price requests, shared profit payments,
  ongoing enforcement, customer service
• Administrative Staff (2) applications, files,
  administrative support
• Other departmental staff, as needed
• Consultants and contractors

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Montgomery County, MarylandModerately Priced
Dwelling Unit (MPDU) Program

• Working with Builders
• Builders just want to know what they have to do
• Rules and timelines
• Agreements
• Pricing
• Required forms
• Builders want informed, financially qualified
  customers
• Meet with sales staff up front

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Montgomery County, MarylandModerately Priced
Dwelling Unit (MPDU) Program

• Enforcement
• The key to avoiding future enforcement is
  thorough, upfront customer education
• Explain the rules as many times as possible
• Trustbut verify and certify

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Montgomery County, MarylandModerately Priced
Dwelling Unit (MPDU) Program

• Enforcement Issues
• Non-occupancy
• Illegal rentals
• Selling during the control period
• Failure to share profit

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Montgomery County, MarylandModerately Priced
Dwelling Unit (MPDU) Program

• Enforcement tools and resources
• Land records
• Check the MLS weekly
• Conduct field inspections
• Settlement agreements
• Lawsuits

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Montgomery County, MarylandModerately Priced
Dwelling Unit (MPDU) Program

• Alternative Compliance measures
• Allowed in cases of economic infeasibility due
  to environmental constraints or high condo fees
• Not by right requests for alternatives are
  reviewed by the DHCA Director and in some cases,
  a committee
• Alternatives include
• Fee-in-lieu
• Providing on alternative sites
• Donating land
• Historically, alternatives have been requested in
  high-rise, high cost buildings in central
  business districts

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Montgomery County, MarylandModerately Priced
Dwelling Unit (MPDU) Program

• Current challenges
• Refinancings during and after controls
• Sales prices vs. incomes
• High condo fees

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Montgomery County, MarylandModerately Priced
Dwelling Unit (MPDU) Program

• Achieving Compatibility - Judge the results by
  identifying the MPDUs

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Montgomery County, MarylandModerately Priced
Dwelling Unit (MPDU) Program

• Achieving Compatibility - Judge the results by
  identifying the MPDUs

MPDUs
Market Rate
MPDUs
MPDUs
Market Rate
MPDU duplexes in a single family detached
community.
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Montgomery County, MarylandModerately Priced
Dwelling Unit (MPDU) Program

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

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Montgomery County, MarylandModerately Priced
Dwelling Unit (MPDU) Program

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

All MPDUs
All MPDUs
All Market Rate
All Market Rate
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Montgomery County, MarylandModerately Priced
Dwelling Unit (MPDU) Program

• More choices
• Which are the MPDUs?

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Montgomery County, MarylandModerately Priced
Dwelling Unit (MPDU) Program

• More choices
• Which are the MPDUs?

Market Rate
MPDUs
MPDUs
MPDUs
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Montgomery County, MarylandModerately Priced
Dwelling Unit (MPDU) Program

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

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Montgomery County, MarylandModerately Priced
Dwelling Unit (MPDU) Program

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

Market Rate
Market Rate
MPDUs
Piggy Back MPDUs
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Montgomery County, MarylandModerately Priced
Dwelling Unit (MPDU) Program

• Examples of single-family detached MPDUs at
  Avenel, a golf course community of multi-million
  dollar houses

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Montgomery County, MarylandModerately Priced
Dwelling Unit (MPDU) Program

• More background, forms and regulations can be
  found at
• www.montgomerycountymd.gov/mpdu
• MPDU Law and Regulations Online
• www.amlegal.com
• Questions?
• christopher.anderson_at_montgomerycountymd.gov