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Montgomery's lesson in affordable housing

July 11, 2004|by BOB MAGINNIS

Most builders and developers in Montgomery County, Md., hated the idea. The county executive vetoed the bill. But thanks to pressure from the League of Women Voters, the county council overrode that veto and created the Moderately Priced Dwelling Unit program in 1974.

MPDU works on a simple idea. In exchange for being allowed to build more homes than zoning would otherwise allow, the developer agrees that a certain percentage of those units will be affordable housing, as opposed to homes priced as high as the market will bear.

To prevent buyers of those homes from "flipping" them to make a quick profit, there's a requirement that half the profit from a quick sale go back to the county, which also retains the first option to repurchase the property.

Sound like socialism? Then-County Executive James Gleason worried that requiring developers to do moderately-priced home was an unconstitutional taking of property. But after the council overrode his veto, the program proceeded with few problems, although it has been modified over the years, according to Eric Larsen, its director.

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Why is affordable housing a good thing? The obvious answer: Everyone should have a shot at the American dream of home ownership. But having a supply of affordable housing for purchase makes sense, for several other reasons.

As the number of people who commute to jobs increases, so does the demand for additional roads. Bigger roads and more cars create more air pollution.

Then there's the waste of time and its effect on family life. A parent who spends an hour driving to work can't spend that time with his or her children, and probably can't coach a youth sports team if practice starts at 6 p.m. Does it make sense to put a whole army of potential volunteers on the road, doing nothing productive, because they can't afford to live here?

From a public-safety standpoint, does it make sense to have police and fire/rescue personnel living far from the areas they serve? According to the Montgomery County League of Women Voters' Web site, 68 percent of the firefighters there live in other counties.

MPDU addresses these issues by requiring that every subdivision of 35 units of more have between 12.5 and 15 percent of the units be moderately priced. In exchange, the developer gets a density of 22 percent greater than what's normally allowed.

But just because these things are required doesn't mean everyone who wants a moderately priced home or rental units gets one, said MPDU's Larsen.

"This is not a quick program. You're going to be in it for a couple of years before you're selected," he said.

There are income limits, which Larsen said are designed to ensure that new teachers and police officers can afford to live where they work. The guidelines award extra points for those who already live in the county and for those who work for county government.

"We take applications in January and July. I guess we get 700 to 800 each time, for both rentals and sales. About half of those are turned down for poor credit," Larsen said.

Then names are chosen in a lottery drawing from the available pool, Larsen said, adding that those who've been waiting for several years get extra consideration.

If you're lucky enough to win the right to buy an MPDU home, Larsen said the purchaser can sell it at any time. But only after 10 years' occupancy can the seller get the maximum return.

Larsen explained that at that point, the seller can get full market value for the home, with allowances for inflation, closing costs, real estate commissions and the fair value market of all improvements. But any profit over and above all that has to be split with the county, Larsen said.

The county has the first option to purchase any of the homes, but doesn't usually do it, because the prices are too high, Larsen said. About one-third of the homes that come up for resale are purchased by the county's housing authority, Larsen said.

"It helps to disperse the public housing units throughout the community," he said.

Asked for advice to other counties that may be thinking about such a program, Larsen said delay won't help.

"It's better to approve them sooner rather than later because the land gets taken up and then you don't have as many units," he said.

The LWV Web site notes that from 1976 to 2001, 10,993 MPDUs were produced. For a long while they were done at the rate of 200 units per year, "but in the last 18 months only 151 were built."

Every time there's a proposal to add a new tax or fee on the construction industry, the cry is that it will make it impossible for some people to ever purchase their own homes. Montgomery County has an affordable-housing program with a 30-year track record that it would be very easy to borrow from. Whether that happens will depend on whether those who talk about affordable housing are sincere about making it happen.

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