1. MAJOR HOUSING PROGRAMS IN MONTGOMERY COUNTY MD
Presented by
Elizabeth B Davison
Department of Housing and Community Affairs

2. Montgomery County Known for Innovative Housing Programs
Moderately Priced Dwelling Unit Ordinance
Condominium Conversion laws
Right of First Refusal on Sale of Multifamily Housing
Housing Initiative Fund

3. Moderate Priced Dwelling Unit Program

4. The Moderate Priced Dwelling Unit Program In Brief
Priced to be affordable to moderate income households
Required in subdivisions of 20 units or more
Enacted in 1974,
produced 11,700 housing units
An “inclusionary zoning” technique –
Allow density bonuses above the base zone
MPDU sales prices controlled for 30 years;
MPDU rents controlled for 99 years
County and the owner split the “windfall” profit after control period
The first inclusionary zoning program in the country
Montgomery County, Maryland

5. Montgomery County, Maryland Moderately Priced Dwelling Unit (MPDU) Program
Background – Demographics (2000 Census):
A relatively diverse, higher income population with children
People
Total Population
873,341
Estimate (7/1/2004)
921,690
Under age 18
25.4 %
Over age 65
11.2 %
White
73.6 %
Black
15.1 %
Asian
11.3 %
Hispanic (all races)
11.5 %
Median Income (2005)
$89,300
Housing
Total households
324,565
Single-family detached
51.2 %
Single-family attached
17.9 %
Multi-family
30.7 %
Owner Occupied
68.7 %
Renter Occupied
31.3 %
Montgomery County, Maryland

6. Montgomery County, Maryland
Background - Current housing situation:
2004 Median Housing Sales Price
New Resale
SF Detached $666, $450,000
SF Attached $427, $283,500
All Single Family $395,000
Average Rent (2004) HUD/FMR (2004)
Efficiency $ $ 913
1-BR $1, $1,039
2-BR $1, $1,218
3-BR $1, $1,660
HUD limit for family of four (2005)
@ 50% of median…………$44,650
Montgomery County, Maryland

7. Legislative History of MPDU Program in Early 1970’s
Civic pressure from Fair Housing advocates and the League of Women Voters
A concept to have builders supply a percentage of houses in each development that would be “affordable”
Issues:
“Taking” of property
Successful economic integration of neighborhoods
“Marketing” developments with mixed incomes
The economic impact of affordable units on housing values
Density bonuses undermining “pristine” zoning practices
Montgomery County, Maryland

8. Goals of the MPDU Program:
The Moderately Priced Dwelling Unit Ordinance : Goals and Implementation
Goals of the MPDU Program:
Distribute low and moderate income households throughout the County
Expand inventory of low and moderate -income housing for the County
Housing authority and nonprofits to retain long term ownership of affordable units
Funds future affordable housing by sharing windfall appreciation.
Implementing the MPDU Goals:
Partnership with developers:Density bonus (22%) to off-set land and other costs.
Apply MPDU requirement county-wide to achieve distribution of MPDUs in every community.
Off-set expiration of MPDU inventory by purchase of portion of units by Housing Authority or non profits.
Dedicating shared profits from sales after price controls to the County’s housing trust fund.
Montgomery County, Maryland

9. The public policies underpinning the law include:
Montgomery County, Maryland Moderately Priced Dwelling Unit (MPDU) Program
The public policies underpinning the law include:
Providing a full range of housing choices
Provide affordable housing to meet employment needs
Disperse affordable housing throughout the county
Allow increased densities to off-set the additional costs to developers
provide flexibility for developers to meet the MPDU requirement
Montgomery County, Maryland

10. Montgomery County, Maryland Moderately Priced Dwelling Unit (MPDU)
Three County Agencies with Responsibility:
The Planning Board
The Department of Housing and Community Affairs (DHCA)
The Department of Permitting Services (DPS)
Montgomery County Government must:
administer the zoning and plan approval
assure that the project’s MPDU requirements are documented
certify consumer eligibility
establish agreements with developers on staging
establish MPDU pricing
oversee the selection of potential buyers through the lottery
enforce resale and shared profit restrictions

11. Profile of Consumers Moderately Priced Dwelling Unit (MPDU) Program
Maximum Income Range: For Sale $44,000 (individual) to $68,000 (family of 5)
Rental $40,000 (individual) to $62,000 (family of 5)
Maximum income limits are set at about 65% to 70% of median
Average income of purchasers - $32,000
Number of certificate holders ,300
MPDU purchasers are:
Employed
Hold jobs in the retail and service sectors, often multiple jobs at one time
Entry level teachers, firemen and police officers
Montgomery County, Maryland

12. The Moderately Priced Dwelling Unit Ordinance: What do they look like?
Achieving Compatibility: judge the results by identifying the MPDUs
Montgomery County, Maryland

13. The Moderately Priced Dwelling Unit Ordinance: Design Compatibility is a Must.
MPDUs
Achieving Compatibility: judge the results by identifying the MPDUs
Market Rate
MPDUs
MPDUs
Market Rate
MPDU duplexes in a single family
detached community.
Montgomery County, Maryland

14. The Moderately Priced Dwelling Unit Ordinance: Dispersal Throughout the Community
Montgomery County, Maryland

15. Housing for needed workers. Homeownership opportunities
The Moderately Priced Dwelling Unit Ordinance Does it Work? Yes. Is it Perfect? No.
Benefits
Housing for needed workers.
Homeownership opportunities
Access to schools and services
Prevents ghettos and mainstreams low income
Issues
Dependent on market rate new construction
Cost in High Rise
Large Waiting list
Credit issues for applicants
Enforcement of Covenants
Montgomery County, Maryland

16. Questions and More Info
montgomerycountymd.gov
More Background informatination, forms and regulations:

17. Condominium Conversions and Right of First Refusal

18. Condominium Conversions: Back to the Future
Similar to condo craze of late ’70’s early 1980’s
New construction of condominiums began a few years ago as high end rentals became saturated
Conversion of high end properties well underway
Laws from 1980’s apply but need update
Page 2

19. Status of Conversions In Montgomery County
19 complexes are in early stages of conversion
Represents 3,850 Units
Only 3 buildings has gone through conversion process
Half the buildings converting by owner
1 building a tenant sponsored conversion
5 properties created as condominium, but initially rented, now being sold
Page 3

20. Several Laws Regulate Conversions
Ch 53 A: Montgomery County Right of First Refusal
Title 11: State of Maryland Condominium Conversion
Ch11A: Montgomery County Condominium Conversion
Ch29: Montgomery County Landlord Tenant Law
Page 5

21. Right Of First Refusal: 53 A
Gives Right to Certified tenant organization, County, Housing Authority
Must match price and terms
Page 6

22. Title 11 State of Maryland Condominium Conversion Law
Requires extended tenancies for protected classes up to 20% of units
Allows Local government to extend protections
Defines protected classes as those:
- over 62 years of age,
“Handicapped”/ mobility impaired,
Under 80% of median income
Page 7

23. Ch 11A Montgomery County Condominium Conversion
Extends protections in state law to Lifetime Tenancies:
Over 62 or “handicapped” and
under 80% of median income, and
Tenant for at least 12 months
Includes 3 year tenancies for persons with disabilities, seniors, or any person under 80% median income
Page 8

24. Other Provisions Tenants have right of first refusal on their unit
HOC and County have Right of first refusal on entire building, also of up to 20% of the individual units
Relocation payments to tenants on a reimbursement basis up to $750
Priority for extended tenancies by length of residence in property
Page 9

25. The Housing Initiative Fund
A Housing Trust Fund of Local Money Dedicated to Promote Affordable Housing

26. The Housing Initiative Fund
Adopted As part of the County Code in 1988.
Purpose Establishes a trust fund to promote a broad range of housing opportunities in Montgomery County.

27. Goals of the Housing Initiative Fund
Renovating distressed properties.
Preserving housing that could be lost from the affordable housing stock.
Special needs housing.
Helping create mixed-income communities.
Making sure that housing programs build neighborhood and not just housing units.
6. Working toward an equitable distribution of affordable housing units.

28. Sources of Revenue for the Fund
Current sources:
General fund: 2.5% of property Tax
Sale of moderate priced housing
Sale of publicly owned land
Investment income
Loan repayments
Developer payments
Past sources:
Condominium conversion tax
Impact tax
Property rental
State contributions

29. The Problem of Uneven Funding:
Solved by 2.5% of Property Tax

30. Administration of the Fund

31. Process for Approval
1. Developer submits application to the Department of Housing and Community Affairs.
2.Housing Loan Committee reviews proposal in monthly meeting
3. Presentation to Director for final decision
4. Dispersal of funds to developer if approved

32. Factors Considered During the Review Process
Purpose:
Complies with HIF mission
Public purpose
Neighborhood need
Need for physical improvement
Feasibility/cost:
Financial feasibility and need
Leveraging
Cost reasonableness
Market feasibility
Readiness to go forward
Availability of support services
Development team capacity
Compatibility:
Project design
Land use and zoning
Community support

33. Important Note: For every dollar of local funding spent,
the Housing Initiative Fund was able to leverage
seven dollars in resources
from private, federal, and state sources.

34. Case Studies

35. Preservation: Stewartown Homes Apartments
Property: 94 unit complex, one third uninhabitable when acquired by the housing authority. Expiring “236” property.
HIF role: year loan at 1%, with no payments for 17 years and no interest accruing. Rehab costs of $120K/unit. Leverage ratio of County funds: to 1.

36. Goals met by this project:
Community Preservation and Development Corp. runs a computer learning center and after school job training at Stewartown Homes Apartments.
Goals met by this project:
Renovating distressed properties.
Preserving housing that could be lost from the affordable housing stock.
Making sure that housing programs build neighborhood and not just housing units.

37. Rehabilitation: Montgomery Arms Apartments
Property: Historic 130 unit complex located in downtown Silver Spring built in the 1940s. Owned by the housing authority.
HIF role: $2 million, 30 year loan at 3%, no payments for 6 years, no interest accruing. In 7th year, payment to be based on available cash flow.

38. Goals met by the project:
Conditions: 84 units reserved for families and individuals in affordable housing programs. Of these, 10 are “McKinney Act” units for chronically mental ill persons. 46 units leased at market rate.
Goals met by the project:
Renovating distressed properties.
Special needs housing.
Helping create mixed-income communities.
Working toward an equitable distribution of affordable housing units.
Rehabilitation and upgrading underway at Montgomery Arms.

39. New Construction: Victory Terrace
Property: Former 16-acre school site (surplus), purchased by nonprofit housing developer Victory Housing. Located in Wealthy Potomac
HIF role: Two loans: a land purchase loan to defer payments, with no interest accrual, for 20 years. Predevelopment and development loan will have 1% interest only payments for 5 years, then fully amortized for remaining 35 years. Both loans to be cash flow loans.
Conditions: 72 units with 14 affordable to persons at or below 40% of the area median income, 44 units to persons at or below 60%. Remaining 14 units unrestricted.

40. Goals met by the project:
Special needs housing.
Helping create mixed-income communities.
Working toward an equitable distribution of affordable housing units.

41. Transitional Family Housing and Single Room Occupancy:
Econolodge makeover
Property: 99 room motel in two buildings.
HIF role: $287,246 towards purchase of the motel by the County. Housing authority to serve as development manager during construction.

42. Econolodge makeover:
Conditions: 40 living units will be created for single adults needing permanent supportive housing and 17 2-bedroom apartments will be created for families needing 3-6 month transitional housing, operated by the Montgomery County Coalition for the Homeless, Inc. under partnership with DHCA and HHS.
Goals Met by the project
Renovating distressed properties.
Special needs housing.
Making sure that housing programs
build neighborhood and not just
housing units.

43. For more information, please contact Stephanie Killian, Multifamily Housing Manager
content/hca/Housing/
mutifamily-intro.htm