BEYOND THE MPDU
INTRODUCTION
In 1977, the League of Women Voters of Montgomery County
sponsored a conference entitled: “Housing in Montgomery
County – Who Can Afford to Live
Here?” The title brings to mind the old
adage that the more things change, the more they stay the same. The shortage of affordable housing for
low-and moderate-income residents has become a crisis for much of county’s
workforce earning just above moderate-income levels. Over the years the League
has consistently supported affordable housing throughout the county and tools
such as inclusionary housing, enforcement of housing codes, housing for the
homeless, for people entering the work force, for people in the workforce and
for the elderly living on limited incomes.
In this fact sheet we will assess the current status of both rental and
owned housing in the County; look at programs designed to increase the supply
of affordable housing including Montgomery County’s Moderately Priced Dwelling
Units (MPDU) inclusionary housing law and accessory apartments; proposals to
increase the supply of workforce housing; the implications of increased
assessments and taxes on senior citizens; and discuss housing for residents
with special needs, such as homelessness or disabilities. We hope to achieve consensus on accessory
apartments, workforce housing, special needs housing, and visitabilty housing
issues.
The Washington area’s precipitous
rise in residential property values, led by Montgomery
County, is due to the interplay of
several national and regional factors.
Washington Post reporter Miranda S. Spivack writes that there were
concerns after the Sept 11, 2001
terrorist attacks that housing values in the region would plummet. Instead, investors who traditionally looked
to Wall Street have entered the real estate market. Growth of jobs in the Washington
region made the area attractive. In
2004, Montgomery County
added 30 new and expanded companies and 3,000 new jobs. Ironically the Sept 11 attack precipitated job
growth as a burgeoning new homeland security industry poured millions into
local companies. Regional biotechnology
and bio-defense industries and other white-collar professions have been
nurtured by their proximity to the federal government. The result is a local
economy with strong job growth in relatively high paying jobs as well as
population growth and a heightened demand for housing.
CURRENT HOUSING
MARKETS AND SUPPLY
The Montgomery County Park and Planning Commission’s “Annual
Report on Economic Forces that Shape Montgomery County” reports that most
people earning the median county income of $84,446 a year are being priced out
of the housing market. Half of all new
detached single family homes sold in Montgomery County last year cost more than
$660,000 (the median price), and are expected
to reach $1,000,000. The monthly
cost of buying a median priced home was more than 28% of the median income of
residents late last year. The following
chart, based upon an article in the Montgomery Gazette of March 30, 2005,
depicts the financial aspects of current single-family home prices. The required income are probably too low to
qualify in most cases.
BEFORE REPRODUCING, PLEASE
CALL THE LEAGUE OFFICE AT 301-984-9585 FOR CORRECTIONS OR UPDATED INFORMATION. ORGANIZATIONS AND INDIVIDUALS ARE INVITED TO
DUPLICATE THIS FACT SHEET WITH ATTRIBUTION GIVEN TO LWVMC.
The Maryland-National
Capital Park
and Planning Commission (M-NCPPC) reports a total population of 917,400 and
338,445 total households in 2002.
Currently the total number of occupied housing units is around 350,000,
including private and public housing.
The 2004 affordable assisted housing supply of 29,089 units,
reported by M-NCPPC, includes 13,481 units owned and managed by the Housing
Opportunities Commission (HOC), 3,278 revenue bond financed units (HOC
assisted) and 12,330 MPDUs which includes HOC’s 1,544 permanent MPDUs. The number of non-government sponsored
(private) affordable units is being assessed by M-NCPPC.
Multi-Family Housing
The 2004 apartment market was not as tight as in 2001, 2002
and 2003 and was typified by vacancy rates of 5.1%, about the break even point
for owners. Over 5,900 units have been
added since 2001 to substantially increase the multifamily rental housing stock
in the county. Subsidized units for
families and the elderly amounted to a significant 28.0% (1,657) while the
majority of the new units, 4,267, are market rate units. The average rent for a two bedroom apartment
countywide, was $1,211 in 2004. The fair
market rent, established by the U.S. Department of Housing and Urban
Development (HUD), for a two-bedroom, non-subsidized apartment in the county is
$1,187 including utilities. The HUD rent
requires a household to have a gross income of $47,480. In spite of the rise in the vacancy rate, the
number of applicants on waiting lists has increased, especially for subsidized
housing. The HOC reports a waiting list
of 6,952 for public housing, and of 10,025 for housing choice vouchers. The HOC has announced that it will not open
either list for 2005 since new applicants have no chance for housing. The 2003 Census Update stated that 49% of
renter households spend more than 25% of their incomes on housing.
During the previous eight years, no rental units in the
county were converted to condominiums, however one property has converted this
year, and at least seven other properties are expected to convert during the
next two years. In all 1,500 rental
units will be converted including 80 to 90 units currently renting below market
rate. However, the Housing Initiative Fund supports around 3,000 affordable
units a year via rehabilitation or new construction.
Housing in Rockville
Rockville represents about 6% of the
population of Montgomery County
with a population growth of only 4% from 1980 to 2000, compared to a growth
rate of 15.4% for the county between 1990 and 2000. From 1970 to 2000, only about 900 housing
units were built. Since 2000, housing
construction has exploded. It has been
fueled by low mortgage rates, adequate incomes and available land. The first project was King Farm with 3500
units followed by Fallsgrove with 1300 units. With the addition of a number of smaller
projects, close to 9000 homes have been built or are currently under
construction. It is estimated that the
city has added more than 10,000 people (a 20% increase) in the last five years.
More are coming! There are 4200 units now approved or in the
pipeline and hundreds of others in the planning stage. In nearby areas an additional 7000 units are
to be built.
The price of housing is a growing concern. The average assessed value of a house in Rockville
is now over $400,000 and new home prices can be double that. However, the status of affordable housing is
relatively good. Rockville
adopted an MPDU ordinance with a 30 year control period several years ago and
has adopted a policy of no buy-outs. The
new construction in the city will result in the production of about 1500 MPDU
units. At this time the city has 343
rental MPDUs and 311 MPDUs have been sold.
In addition the city has 747 affordable units as public housing,
retirement communities, etc. Because of
the rapidly escalating cost of conventional housing, most of the city residents
could not afford to buy the homes they live in.
The need for housing for the median income person is not being met by
the current market. To respond to this
need the “workforce” housing concept has been developed and there are now plans
for some construction in this price category.
MODERATELY PRICED
DWELLING UNITS
The Moderately Priced Dwelling Unit (MPDU) program was
created 30 years ago to provide moderately priced housing without public
funding and without economic hardship to the private sector. In exchange for a density bonus, the law requires
developers of multiple units to offer up to 15% of them as MPDUs. The program has provided about 12,000 units
for houeholds making no more than 65% of the county’s median household
income. Only about 3,000 units remain in
the program, however many of the older units whose control period has expired
still remain moderately priced.
The MPDU program was designed when County land development
was predominantly suburban in nature. In
2004, the County Council undertook a major revision of the MPDU ordinance to
deal with the economic and land use challenges uniquely identified with more
urban or rural environments. Achieving
geographic dispersion of affordable housing remains an overriding objective of
the program. The law has been modified
to require developers of 20 units or more to offer MPDUs. The sales control period has been increased
from 10 to 30 years for homes and
from 20 to 99 years for rental units. The revision requires the County
Executive to set different income
eligibility standards for buyers and renters.
The buyout provision, a useful tool in some situations, was modified to
require fees of 10% of the actual price of a high-rise unit, and up to 30% of
the sale price for a non-high rise unit.
The money goes to the Housing Initiative Fund. New zoning regulations will allow developers
to build taller buildings and to occupy more of the site if required to include
MPDUs. MPDUs will also be permitted in
large lot zones but not as multifamily units.
Further, the law states that the Director may allow fewer or no MPDUs to
be built in a development of 20 to 49 units if building the required number
would not allow compliance with applicable environment standards and other
regulatory standards or would significantly reduce neighborhood compatibility. The newly revised MPDU law is unlikely to
generate the large numbers of affordable units typical of the early years of
the program.
ACCESSORY APARTMENTS
Accessory apartments are a small but significant source of
much needed affordable housing in Montgomery
County. Many homeowners benefit
from the program, receiving necessary additional income. Beginning teachers, our newest citizens,
retail clerks, service workers and students gain access to affordable housing. An accessory apartment is a second dwelling
unit that is part of a one-family detached dwelling, or is located in a
separate existing accessory structure on the same lot as the main dwelling,
with provision within the accessory apartment for cooking, eating, sanitation
and sleeping. A large accessory
apartment is one that has more than 800, but less than 1,200 square feet of
habitable area if part of a dwelling, or that is located in a separate
accessory structure having a footprint of over 800 square feet, but less than
2,500 square feet, of habitable area.
Currently around 340 such apartments are legally occupied in the
county. A lengthy and expensive special
exception process appears to have discouraged many from providing accessory
apartments
and resulted in many illegal apartments that may not meet
safety standards such as having smoke alarms.
In an attempt to increase the supply and safety of accessory
apartments, a revised zoning text amendment was introduced in 2004. The amendments revised the approval process
for accessory apartments to an administrative review by the Department of
Housing and Community Affairs (DHCA), similar to a licensing procedure. An accessory apartment is not allowed if more
than 15% of the dwelling units in the neighborhood have an accessory apartment,
are single-family rental units, or contain a similar use. Time restrictions as to the age of the house
or length of ownership have been deleted. The appearance of a single-family dwelling
must be preserved and a minimum of two off-street parking spaces must be
provided. The owner of the lot must
occupy one of the dwelling units except for a temporary absence not exceeding
three months.
WORKFORCE HOUSING
A late April Washington Post headline reads “Firefighters
Moving Out of County” and goes on to report that fewer than a quarter of the
county’s firefighters live in Montgomery
County. Only 207 out of 867 firefighters live in Montgomery
and most live as much as a two hour drive from their fire stations. The county suffers if its emergency workers
live too far away to get to work quickly during a catastrophic event. In the Washington
area, according to a Washington Post article by Sandra Fleishman, a police
officer, teacher or nurse, three of the important community infrastructure
jobs, making a median salary for that profession can afford a median-priced
home in only 37% of the census tracks.
Retail workers can afford to buy in less than 1% of census tracts. Most existing programs provide affordable
housing for workers earning less than $60,000 but workers earning from $60,000
to $85,000, such as professional engineers, are largely priced out of the
market for all but resale townhouses.
The Sage Policy Group defines workforce housing as housing that is affordable
to public service or quality-of-life occupations such as administrative
assistants, postal workers, mechanics, teachers, social workers, police
officers, firefighters, child care workers, nurses and other hospital
employees. At the Affordable Housing
Conference held on May 2, 2005, two plans were proposed: the first to require
10% of the new units in all developments to be workforce housing, in addition
to any MPDUs and the second to construct special communities of workforce
housing. A third proposal is to build
workforce housing on county-owned land.
Multi-family housing has traditionally been a source of workforce
housing.
Employer Assisted Housing (EHA) programs have been developed
in many parts of the United States
to provide workforce housing. Fannie Mae
has helped 700 employers to develop EAH programs, 37% of whom are private
sector employers. Benefits provided
typically include a low rate forgivable loan for down payment of a house,
mortgage assistance and a day off for closing. The benefits of an EAH program include better morale,
less turnover of employees, more productivity and shorter commutes. In this area Freddie Mac and Fannie Mae both
have EAH programs offering closing cost aid.
M-NCPPC provides all employees with a financial education program and
provides lower paid employees with access to rent houses located in parks.
ASSESSMENTS AND TAXES
With higher house prices come higher property assessments
which in turn usually means higher property taxes for the homeowner. All homes are reassessed every three years by
the state. Many homeowners have seen
their property assessments rise by 70% in their latest assessment. Since home prices are rising at the rate of
25% a year, rising assessments seem assured for some time. By law the value of the assessment used to calculate
taxes can rise only 10% a year so if the new assessed value is 70% higher than
the earlier value, it will take seven years to work out that increase. If during that seven years the value of the
house continues
to rise, it will just add to the backlog and take that much
longer to use up all the increased value. Thus it now appears that county residents are
assured of a 10% increase in their taxable assessment as far as the eye can
see. Even if the housing bubble bursts,
house values in Montgomery County
rarely decline. Because of the strong
housing market, they just stay constant for a while, as they did from 1990
until 1997.
At an increase of 10% a year, it takes seven years for the
assessed value of a house to double. Does
this mean that property taxes will double for the homeowner in seven years? Not unless the Constant Yield Tax Rate is
completely ignored. State law says that
a jurisdiction must advertise before adopting a budget that does not readjust
the tax rate so that it that yields no higher taxes on a property than the
previous year’s tax rate plus the rate of inflation. To achieve a constant yield, the county tax
rate would have to be reduced
7.6%, a reduction of 5.7 cents per $100 assessed
valuation. The county charter stipulates
that any tax rate that exceeds the constant yield rate must be adopted by a
“super majority” of 7 out of 9 votes. This
has been a barrier in the past.
Because of losses in revenues from the state and federal
governments and increased costs of education it is very hard to pare the budget
to achieve a constant yield rate. Thus
one must expect that in seven years the actual taxes will be substantially
higher but hopefully not double. No
matter what the actual increases, many homeowners are finding their property
taxes an increasing hardship. Especially
hard hit are retired people and those with low incomes.
There is in place now a “circuit breaker” tax credit program
originated by the state that has been adopted by the county and the city of Rockville.
This program began some time ago before
the current increase in house prices. It
is helpful only to a small number of people. There is a cutoff of $150,000 for home
assessments. Three proposals have been advanced by County Council members to
make the program more in keeping with present prices. The Council may act on them after completing
work on the budget.
Other jurisdictions have used different methods to reduce
the hardship of higher property taxes. These ideas may be useful here. One is a homestead exemption that forgives
the taxes on a portion of the assessed value. This is a move to make property
taxes more “progressive” by effectively reducing the tax rate for lower priced
houses. A second method is a tax
deferral program that allows a homeowner to defer a portion of their taxes in
return for a lien on the property. The
lien would then be repaid when the property is sold. Both of these programs are preferred over
inverse mortgages that can lead to predatory abuse and the loss of a home.
SPECIAL NEEDS HOUSING
Current LWVMC housing positions support Montgomery
County policies and programs to
provide shelter and services to meet the needs of the homeless. The fact sheet proposes expanding this
position to include all individuals with special needs such as individuals with
special needs due to disability, the elderly and individuals with special needs
due to mental illness.
Fifty-four million people or one in five meet the standard
for disability established by the Americans with Disabilities Act (ADA):
The Act states that people with a disability must:
- Have a
physical or mental impairment that substantially limits one or more major
life activity;
- Have a
record of such impairment; or
- Be
regarded as having such an impairment.
A current issue in providing service to individuals with
special needs is compliance with the Olmstead Decision. This 1999 decision states that it is a
violation of the ADA to
discriminate against individuals with a disability by keeping them in
institutions rather than providing appropriate services in the community. Also in 1999, the Supreme Court ruled in the
Olmstead Decision that states should administer programs for people with
disabilities “in the most integrated setting appropriate to the needs of qualified
individuals with disabilities.” The court held that the goals of service and
housing programs for people with disabilities should be to provide the least
restrictive housing environments possible.
In order to comply with the Olmstead decision the county
should expand its services program so that people in need of services can
obtain them while living in independent settings. The states are required to have a working
plan for compliance to establish responsibility for developing the plan,
measure and enforce the plan and determine liability in the absence of
compliance. The Montgomery County
Department of Health and Human Services says there are numerous programs in the
county working in the spirit of the Olmstead Decision of community integration,
but according to the County Council staff, there is no basis for determining
how the programs meet the need. The
relationship of waiting lists to the total population in need, a current
assessment of target population in restrictive community settings, and how the
State or County makes a mandated review of residential options for those living
in institutions are not known.
Housing options in Montgomery
County are still limited although
the 2001 Policy on Special Housing Needs called for an action plan that would
develop a comprehensive inventory of special needs housing, develop a forecast
of special needs populations, identify and implement programs to meet any
shortfall and increase the supply of adaptable housing with basic accessibility
design elements. In 2002 the County
Council hosted a roundtable on how the County might promote the development,
restoration, and retention of affordable and special needs housing. The highest priorities were identified as
initiatives and appear in the Affordable and Special Needs Housing Action Plan,
reiterated in a December, 2004 memorandum.
A major initiative is to establish numeric goals for production of new
special needs housing and set a timetable for meeting those goals. Another
initiative is to identify undeveloped and underdeveloped publicly-owned
properties that may be suitable for development of affordable or special needs
housing, now being implemented by DHCA and M-NCPPC.
Funding for housing and services must be available to
applicants without preference or discrimination. Mainstream resources are not
thought be sufficient to meet the needs of the target populations. Mainstream resources include public housing,
choice vouchers, tax credits, and the Community Block Grant /Home Program which
has been proposed for elimination in the Federal budget.
Special needs funding programs in Montgomery
County include:
- A
subsidy diversion program which serves 25 clients who find, train and pay
caretakers and are then reimbursed by the County;
- A
consumer directed care program serving five clients who find, train and
pay self-employed individuals and are reimbursed by the County; 100
individuals are on the waiting list; and
- 1,043
clients with developmental disabilities receive resource coordination and
79 clients receive individual support services through the Aging
Disabilities Services under the developmental disabilities Medicaid waiver
for adults; 1900 are on the waiting list.
Housing options for consumers leaving state psychiatric
hospitals are based on their individual clinical and support service needs. Individuals are often assigned to housing
based on a diagnosis. This practice
results in a tendency to group (congregate) and segregate people that appears
regimental and often meets community opposition. Group housing has been limited to a maximum of
16 mental health consumers in any single facility. The majority of consumers reside in scattered
site units that provide needed financial subsidies and/or support services.
Housing for individuals with special needs due to mental
illness includes:
Transitional
shelter for men and women 23
beds
Transitional
– age youth residential services 22
beds
Residential
Rehab Programs 317
beds
McKinney
House Programs 35
beds
Assisted
Living services 16
beds
Shelter plus
care Program 45
beds
Landlord/tenant
housing 89
beds
Visitability
Universal Design Housing
The senior population in Montgomery
County is projected to increase
throughout the next decades as the baby boomer generation ages. Many younger people with disabilities,
temporary or permanent, cannot get out of their homes without assistance to
seek medical care and attend to daily living needs. Visitability housing includes architectural
design features which allow basic access and use of a residential dwelling by
people with significant mobility impairments, and which minimize the cost of
full accessibility modification,
if necessary, at a later time. Installing universal design or visitability
features in newly constructed, substantially renovated and adapted reuses of
housing is far more cost effective than making necessary accessibility
modifications at a later time. Aging in
place is facilitated by visitablity housing design.
The Montgomery County Commission for the People with
Disabilities and the Maryland National Capital Building Industry Association
began to explore what is involved in developing a voluntary program to promote
the use of visitability features in both new and existing residential
homes. Their effort has evolved into a
Visitability/Accessibility Roundtable which includes civic associations,
builders, the Commission on Aging, the Department of Health and Human Services,
the Commission for People with Disabilities, an architect and an independent
living strategist. The Commission for
People with Disabilities has proposed legislation to require visitability
housing. The Fair Housing Act (FHA) and
the Americans with Disability Act (ADA) apply to multifamily housing but do not
apply to the construction of single-family homes, duplexes, triplexes,
townhouses and row houses, or for buildings that were not originally intended
as housing.
The characteristics of a visitable home are: one no step entry, 32 inches clearance space
around doorways on the entry level, 36 inches wide circulation paths throughout
the entry level, and a minimum of a powder room (two fixtures) with wheelchair
access or a bathroom located on level at grade entrance. The front door does not need to be the no step
entry. A two level voluntary program has
been proposed with Level 1 being the characteristics described above, and Level
2 adding access to a bedroom, full bath and kitchen on the entry level. Certification would be given to builder of
homes including Level 1 or Level 2 and used as a marketing tool.
Atlanta, Ga.
has created a model certification program which awards complying builders with
an “Easy Living Home” certification for homes which include universal design. The “Easy Living Home” marketing material
includes the advantages of wider doors for parents struggling with toddlers or
groceries or for large football players who need extra room in which to
move. The Building Industry feels that
the added value of visitability housing will be an effective marketing tool.
Written by the Housing committee: Melpi Jeffries (Chair), Ellen Menis
Sally Roman, Roald Schrack
Consensus Questions For June Meeting:
“Beyond the MPDU”
Consensus Questions:
- Do we
support measures that will increase the supply of accessory apartments
including:
- eliminating
the requirement for a special exception
- adopting
a streamlined regulatory process
- allowing
a “large accessory apartment category” to be established
- adding
a maximum neighborhood percentage
- deleting
time restrictions on age of home or length of ownership
- allowing
accessory apartment in a townhouse.
- Do we
support measures that will increase the supply of workforce housing?
- Should
the measures involve an incentive based approach or a mandatory
requirement like the MPDU ordinance?
- Do
we support measures that increase density, often required by the concept
of smart growth?
- Do we
support expanding our position on housing to include individuals
with special needs:
- support
residential supportive services for individuals with special needs due to
mental illness
- support
residential supportive services for individuals with other special
needs
- Should
the production of “Easy Living” barrier free housing continue to be a
voluntary effort on the part of the home-building industry? If not, what incentives or mandatory
requirements would be appropriate?