Builders in Montgomery Country will keep constructing the $150,000 to $300,000 houses that high-income families continue to demand unless the county creates economic incentives to spur construction of apartments for residents with moderate incomes, a special committee on moderate-income rentals has warned.
"While [WORD ILLEGIBLE] attention and assistance through various governmental programs have been given to the housing in the low-income brackets, it has become increasingly apparent that some governmental assistance is also needed to help those at the moderate-income levels," the committee reported to the Montgomery County Council.
The task force, which was formed to study the impact of the end of rent controls last December, said rents are rising more rapidly than the moderate incomes of these tenants, and available housing for the tenants is declining because of condominium conversions and the lack of sufficient apartment construction by private builders.
"It's a matter of social policy," said Norman Christeller, a former County Council member who served on the task force. "Do we say that the people in high-income ranges can live there, but the people who wait on them in the supermarkets and shopping malls cannot?"
The moderate-income rental reports, coupled with a new draft housing policy, has placed before the council the concrete shape of one of its thorniest dilemmas: how to provide a range of housing types, prices and locations foran economically diverse population.
As the draft housing policy states. "It is clear that demand far exceeds the supply of housing at almost all price levels and that prices for both new and existing housing are rising so rapidly that low-and moderate-income families find it difficult to move into the country.
"Distrust by landlords and developers of the county government, lack of developable ground in marketable locations and rapidly rising operating and construction costs are a few of the impedients currently responsible for the absence of new construction of conventionally financed rental housing in the country."
Low-density development, governmental health and safety regulations, sewer moratoriums and the impact of inflation on interest rates and construction costs have compounded the problem, according to the report.
THe consequences of this claim of events are greatest on low-and moderate-income families, including young families and elderly persons with fixed incomes.
Although the federally financed Section 8 rent subsidies program is the most substantial remedy available for these residents, there is not enough Section 8 money for the Montgomery County residents who qualify, particularly those on the upper-income fringes of Section 8 qualifications, according to county housing director Gene Sieminski.
In fact, the group of 14,000 persons who qualified for Section 8 aid two years ago has grown to 17,000, he said.
And other forms of relief, such as an ordinance that requires some developments to contain a percentage of moderate-income dwelling units "certainly is a help but hardly addresses the magnitude of the problem," he added.
A housing needs analysis of 1977 put the matter another way. Between now and 1985, an estimated 19 percent of the renters will not be able to afford the housing prices and rents required of them, it said.
About a quarter of the county households fall under the low - or moderat-income category, which covers family incomes of up to $22,500. The median family income th the county is $26,700, according to latest census figures.
The draft housing policy also asserted that the dearth of housing opportunities for low - and moderate-income households is hampering economic development. New employers approaching the county consider availability of housing an essential element in their site selection criteria. The county is also encountering increasing problems in its efforts to retain existing employers in a metropolitan market where local jurisdictions are competing to attract new economic development.
"A portion of these difficulties is directly attributable to a lack of availablity of affordable housing," the statement said.
But how to resolve these problems and whose interests should be placed first are dispute matters that the council will thrash out within the next few months. Undoubtedly the housing themes will be debate by voters this election year as well.
Making such housing decisions involves complicated political considerations on a broad sweep from sewer allocations and land use to rent supplements and energy conservation standards in new construction.
Although the task force report on moderate-income rentals was a new set of proposals, the draft housing statements adopted in the past decade. "We were able to agree on the problems," said Sieminski. "Now the problem is to agree on the solutions."
Despite a profusion of policies that address many of the problems, "nothing seems to get done," Sieminski said.
Currently, about 2.5 percent of county housing is subsidized in some form, but projections indicate that ten times that, or two out of five county residents, will need some housing assistance by 1985.
"We've been working away at these problems and will begin soon to move on all fronts," said Council President Elizabeth Scull.
A particular advantage of the moderate-income rental task force report was that it "showed us the most cost-effective way to do it," she added.
The task force of builders, property owners, tenants and citizens associations urged the council to "rapidly" increase available sewage capacity to permit new construction and to use its power to abate real estate taxes as an incentive for new apartment construction or rehabilitation of old units.
Other ways to increase the apartment supply, the committee said, would be to permit some single-family residences to convert to multifamily units and to turn surplus school property into residential developments. County acquisition of rental properties, expansion of the Section 8 program and conversion of apartments into cooperatives would be ways of maintaining the existing apartment supply, it added.
"Many developers we visited did not want to convert their buildings to condomuniums," builder Norman Dreyfuss told the County Council. "But they had no incentive to keep apartments with rent control and escalating utility costs. There's a lot of risk in condominium conversion, but it can be seen as the lesser of two evils."
The best way to reduce costs for new projects is through government-backed, long-term financing assistance, the task force concluded.
Various combinations of Maryland Community Development Administration construction loans, county Housing Opportunities Commission revenue bonds and tax-free mortgages and other county-guaranteed bonds could reduce rents for new apartments by as much as a third, the committee calculated. Such assistance would require little or no county government expenditures.
The report also encouraged the council to make available moderately priced land in the areas of greatest moderate-housing needs by permitting denser zoning in some existing surplus school sites into moderate-income communities.