Prince George's County Executive Lawrence Hogan is seeking to prevent the construction of new homes costing less than $85,000 because he believes the county can no longer afford to provide services for moderate-income housing.
Although Prince George's has long been the suburban area that moderate-income families have looked to for affordable apartments and homes, county officials say that Hogan has been forced to adopt his new policy because of Prince George's tax-freezing TRIM charter amendment.
A new analysis by county officials has shown that a new home in Prince George's will have to cost about $100,000 under the property-tax freeze to yield as much in other tax revenues as it costs to provide such essential services as police protection and schools.
As a result, Hogan will not recommended any new development for advancement in the critical county sewer authorization process that costs less than $85,000, and will recommend to the county council that it adopt a "cost-benefit" ratio formula as a criterion in studying all new developments.
Prince George's political leaders have long sought to raise the percentage of high-cost homes in the county. Currently, 70 percent of the county's houses are valued between $30,000 and $60,000, while only 2.2 percent are valued over $90,000.
Nevertheless, Hogan's new policy will almost certainly renew his long-standing development conflict with the county council, which generally has opposed Hogan's limited growth proposals and favored more economically mixed development. The Executive also will face strong opposition from county homebuilders, who argue that a cost-benefit policy will strangle the county's building industry.
"Hogan's plan is immensely logical, and from a fiscal standpoint the benefits are obvious," said council member Gerard T. McDonough. "But the fact of the matter is that it is blatantly economically discriminatory."
Hogan's aides insist that unless Prince George's focuses on high-income housing in the future, residents already in the county will be unduly penalized.
"Because of TRIM, growth is going to result in a decrease of services," said Kenneth V. Duncan, the county's chief administrative officer. "The problem is that we have to try and minimize the impact of TRIM on people who are already here."
Duncan said that 25,000 new housing units, have already been approved for construction in Prince George's, and nearly 25,000 more are in the final stages of approval. If these homes are built, he said, they will not add to the county's property tax collections, which are frozen at last year's level, but will require new road, police and school services.
Duncan said that budget officials estimate that if all the already approved homes were built at an average price of $65,000, the county would effectively lose $20 million a year because of the discrepancy between service costs and tax revenues.
Currently, more than 90 development plans for close to 14,000 homes are pending in the county's complicated sewer hookup allocation process, and most of the builders are planning homes that would cost less than $100,000.
Duncan said Hogan's staff will be contacting the developers during the coming week to inform them of the new policy. "We're hoping we will encourage developers to re-look at the projects and revise the kind of housing they are planning to build."
Duncan said Hogan will also submit revisions to his water and sewer plan now pending before the county council reflecting the new cost-benefit evaluations worked out by his staff.
The council, however, has the final authority for approving housing projects as they advance through the development process, and could ignore Hogan's recommendations.