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HIGH-RISE CHALLENGE

County Program Loses Ground as Unit Prices Soar

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Thursday, February 7, 2008

Rising housing and construction costs in recent years have become a particularly thorny problem for Montgomery County's affordable-housing program.

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More and more, county officials have found that prospective participants have been priced out of the program. As the price of units rises, would-be buyers meet the county's income guidelines but not those of the lenders who must provide the mortgages.

Under county rules, that has opened the way for builders and developers to sell the units to higher-income residents who are not the program's intended recipients.

The county housing agency does not know how many potential sales have been made to residents who earn too much to participate in the program, but housing official Joseph T. Giloley said it is "very few."

A 2007 study by Office of Legislative Oversight analysts Leslie Rubin and Aron Trombka gave some sense of the problem. In 2006 and early 2007, they found that home prices in Montgomery rose so much that less than half of the 500 moderately priced new homes offered for sale -- about 44 percent -- were in the price range of a family of four qualifying for the program.

With eligible incomes of $58,500 to $63,000, the highest allowed in 2006, residents at the low end of the scale could afford fewer than a third of the units.

Builders and developers point to an additional challenge caused by the market. High-rise buildings, which planners say are the wave of the future in Montgomery, are likely to charge condo fees that are higher than program participants can afford.

The county has responded by allowing many high-rise developers to opt out of the program and make payments instead of building units. The units are still required in lower-rise buildings.

County Executive Isiah Leggett (D), who campaigned on a promise to expand affordable housing in Montgomery, recently proposed changes in the county law to require the affordable units to be priced according to the buyer's ability to pay rather than the developer's need to recover expenses.

That isn't sitting well with the building industry. Raquel Montenegro, a prominent lobbyist in Montgomery, called Leggett's plan "a fundamental change," that the industry cannot afford.

Nanci Porten, a prominent builder in Montgomery County, told the County Council this week that Leggett's proposed changes would "eliminate the final economic protection" the building industry has. She asked that the county further lift restrictions on building height and density to allow builders to produce more market-rate units if they continue to be required by the county to build affordable units.

"The building industry is in a position to be a part of the solution, but it has not caused the problem," she said.

-- Miranda S. Spivack


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