Montgomery County officials announced yesterday that they are ready to build moderately priced housing on a highly coveted parcel of land in the heart of downtown Bethesda.

The land, currently a county-owned parking lot, will include at least 65 below-market-rate townhouses and condominium units in an area where they routinely sell for upward of $500,000. The project is part of a larger commercial and residential development that could transform the already thriving Bethesda Row.

"Working families struggling to make ends meet will have the opportunity to find an affordable place to live here in downtown Bethesda," said County Executive Douglas M. Duncan (D), who is campaigning for the 2006 Democratic gubernatorial nomination. Last year, he promised to build an additional 1,000 affordable units over the next four years.

With the median price of a single-family home in Montgomery $392,000 -- and $415,000 for a new townhouse -- middle-income families are being squeezed out of the county's housing market. Officials reported last month, for example, that fewer than a quarter of Montgomery's firefighters reside in the county. Duncan and the County Council have been looking at ways to compel developers to provide more moderately priced units as part of their designs.

The units, to be built across from the Barnes and Noble bookstore at Woodmont and Bethesda avenues, will be set aside for sale to families with incomes between roughly $35,000 and $100,000 a year.

"We are standing at one of the most sought-after pieces of real estate in the Washington region," Duncan said during a news conference on what is known Lot 31. The site also will include 40,000 square feet of retail space, 150 market-rate townhouses and apartments and a 1,300-space underground public parking garage.

The development, to be built by Hoffman Construction and Development Inc. and Stonebridge Associates Inc., will feature two structures, one of which will rise nine stories.

Developers said the below-market-rate units will have the same amenities as the market-rate condominium units, even though they could sell for less than half the price. They hope to break ground in 2007.

Duncan also announced the selection of a developer for a housing development on Fleet Street in Rockville. Eakin/Youngentob Associates has agreed to build 30 below-market rate units for rent or sale on the site.

Combined with the Bethesda development, Duncan said, the two initiatives are a "down payment" on efforts to identify county-owned land that can be used for housing.

"We are going to continue to meet this affordable-housing challenge one parcel at a time," said council President Tom Perez (D-Silver Spring).

Action in Montgomery, a coalition of churches and religious organizations, has been championing use of public land for affordable housing. Converting county property, such as parking lots or under-used school yards, into housing can generate community opposition, but coalition officials say it's worth it.

"What's more controversial: building on a parking lot or the fact families cannot afford to live in Montgomery County?" asked Mark Fraley, Action in Montgomery's lead organizer.

Duncan also signed an executive order yesterday that cleared the way for four other county-owned properties to be used for housing.

The question of how to get more affordable housing built is expected to be a major issue in next year's county executive race.

Council member and Democratic candidate for county executive Steven A. Silverman is a chief proponent of offering county-owned land to developers who promise to include substantial amounts of affordable units. His opponent for the Democratic nomination, former council member Isiah Leggett, said he wants to construct entire neighborhoods of below-market-rate houses.

Developers said the only financially practical way to construct below-market units is to intersperse them with market-rate housing.

"I think it's the future of development in the Washington area," said Robert D. Youngentob, president of Eakin/Youngentob. "And it works."