Montgomery County this week announced plans for construction of three low-income rental projects with a total of 554 units, the first building of this kind to be financed through the county's condominium conversion tax and the first rental property in the county in the past four years to be developed without federal subsidies.
The first three developments using this local initiative, to be built next year, are:
* Montgomery Paint Branch Section II, a 118-unit garden apartment complex in White Oak, to be built by Ralph J. Duffie Inc.
* Oak Mill Apartments, a 208-unit garden apartment development in Germantown, to be built by Artery Organization.
* The Place, a 228-unit garden apartment development in White Oak, to be built by Linpro Co.
The local program works for funding these projects works much like the federal "Section 8" rental construction program that the Reagan administration plans to end. It involves supplementing the rents of lower-income families in 20 percent of the units at the new projects. The funds for the rent supplements come from the 4 percent condo conversion tax that Montgomery County has assessed developers who convert rental apartments into condominiums.
In addition, the 20 percent set-aside for low-income persons makes each project eligible for construction financing through county-issued tax-exempt mortgage revenue bonds, and the county can provide financing at about 12 percent for these developments.
Because of the below-market financing, rents at the projects will be about $450 a month for a one-bedroom apartment, compared with a rent level of about $600 if the developers had to use regular commercial financing.
The 20 percent set-aside will mean that 112 low-income families will have their rents subsidized at the three projects. To be eligible for the subsidies, tenants can earn between $12,000 and $24,300, depending on household size, and will pay 30 percent of their income in rent. The county will make up the difference between what each low-income family has to pay and the established rent level at the apartment.
Developers submitting proposals to build under this program either had to promise that the property would remain as rental apartments for 30 years or could retain an option to convert to ownership after 10 years. If the developer retains to option to convert, the rental supplements are to be treated as a loan to be paid off when the property is sold or converted.
The county put out a request for proposals in June and by the July deadline had received five applications representing $50 million worth of proposed development in the county. The three selected projects will be valued at $20 million.
"I am gratified with the response to this program," County Executive Charles W. Gilchrist said in announcing the selections. "In this period of economic uncertainly, it can be difficult to launch a new program such as this."
"This response in providing much-needed rental housing in this county is an excellent example of our efforts in private-public partnership to provide needed services to our citizens."