The Montgomery County Council approved changes yesterday in the county's affordable housing program designed to create more moderately priced homes in a region where a hot real estate market has shut out many renters and buyers.
The changes, the first major overhaul of the program in 30 years, could affect development particularly in downtown areas of Bethesda, Silver Spring, Wheaton and Rockville. To make it easier for developers to get financing for high-rises with below-market units, the council voted to allow more units on available land by relaxing height restrictions and green space requirements.
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The council also voted to increase the amount of time that below-market housing is required to remain in the program, so that the county can retain as many affordable units as possible as developable land dwindles. Rental units will have to remain in the program for 99 years, up from 20 years, and for-sale units will have to remain 30 years, up from 10 years.
Council President Steven A. Silverman (D-At Large) said downtown high-rises with moderately priced units might be one or two stories higher under the new rules.
"I think people will accept a couple more floors on a building if that means more affordable housing in Montgomery County," Silverman said. "The people who work in Montgomery County ought to have a fair shot at living in Montgomery County."
The program was created 30 years ago to provide moderately priced housing without public funding. It requires developers to set aside about 12 percent of new units to sell or rent at below-market prices. Since its inception, the program has provided about 12,000 units for people making no more than 65 percent of the region's median household income.
But the effort has been overtaken by the county's hot real estate market.
The median price of a home in Montgomery now exceeds $320,000, according to county figures.
That puts ownership effectively out of reach for the 30 percent of households in the county with incomes of less than $50,000, the county says. Rents in the county have increased so sharply that workers need to make more than $19 an hour to afford the average rent for a two-bedroom apartment.
The program's 12,000 units have dwindled to about 3,000. Older housing has been permitted to leave the program, and construction of affordable units -- like residential construction in general -- has declined as open land has become more scarce.
Adding to the shortage is the ability of developers, particularly those building high-rises, to avoid including below-market units by paying "buyout" fees. Developers have argued that they cannot project enough profit to get financing if they include below-market units in expensive high rises.
The council stopped short of abolishing buyout fees but limited them to such cases as when hefty condominium dues would make monthly costs too great for the moderate-income people eligible for the program.
Some council members argued, however, that the buyout fees violate the county's professed goal of creating economically diverse neighborhoods.
Without some moderately priced units in luxury high-rises, downtown Bethesda "is going to look like Beverly Hills in just a few years," council member George L. Leventhal (D-At Large) said.
To discourage developers from seeking buyouts, the council voted to set the fees at 12.5 percent of the market price of a high-rise unit and 37.5 percent of the price for a non-high-rise unit. Previously, the fees varied and usually were much lower.
The council also voted to extend the program requirements to housing developments with 20 or more units.The current rules apply to developments with 35 or more units.
