The Montgomery County Planning Board has decided it would be "unfair" to require the developer of a luxury subdivision in Potomac to take a financial loss in order to comply with an ordnance requiring the inclusion of moderate-priced houses in new large developments.
This marks the first waiver of the 1974 Moderate Priced Dwelling Unit law, but county officials stressed that the case was unique and should not be regarded as a percedent.
Under the ordnance, the developer of a subdivision with more than 50 dwellings is required to build 15 per cent of them for sale at medium prices. (The highest allowable price for a designated "moderate-price" house in the county is $47,300.) In exchange, the developer is granted the right to build at higher density and thus compensate for the moderate-price units.
The recently-decided case involved F.M. and D.P. Bell Builders Co. of Bethesda, which plans to construct 70 luxury-price houses in Potomac on a 45-acre site in the McAuley Park subdivision a mile outside the Beltway. Bell has already built 80 houses in another section of the same property, which was acquired in 1960 from the Sisters of Mercy, a Roman Catholic order.
The order sold the land with written guarantees that spacious, detached homes would be built on lots of at least a half-acre each. Development of the tract was postponed by the 1970 sewer moratorium, and in the interium, the moderate-price unit requirement went into effect.
Bell's attorney argued before the planning board that the nuns' restrictive covenants prevent the developer from taking advantage of a higher density bonus and that any violation of the agreement could lead to lawsuits against the builder by the Sisters of Mercy and nearby homeowners.
If Bell had been required to sell 10 units at official moderate prices - between $40,000 and $45,000 - the developer would have probably taken a loss on the lots in that area sell for $30,000 to $50,000, according to John J. Broda, chief of the planning agency's development review division. And absolute minimum construction cost perhouse would be $60,000, Bell maintained.
Earlier this year it was revealed that some developers were getting around the MPDU law by limiting construction in her subsidivisions to 48 or 49 units. Others were found to be renting the moderate-priced dwellings for five years and then selling them at market value.
Broda said he did know of other developers owning property with similar restrictive covenants made before 1974 who could be expected to request waivers.
He added that there is no evidence either to support or refuse realtors' contentions that including moderate-income housing in luxury complexes decreases the value of the expensive homes.