The Impact on Housing of the Montgomery County 2024 Growth and Infrastructure Policy

June 24, 2024

 

How Montgomery County Can Reinforce the Goals and Strategies of Thrive Montgomery 2050 to Solve Housing Affordability Crisis

By Matthew M. Gordon and C. Robert Dalrymple

The Montgomery County planning board is in the early stages of reviewing the quadrennial growth policy for Montgomery County, titled the “Working Draft of the 2024 Growth and Infrastructure Policy” (the “working draft” or “GIP”). The working draft includes a number of innovative policies tailored toward advancing important housing goals established by the county’s general plan (Thrive Montgomery 2050 – “Thrive”).

Given there is not a one-size solution for addressing the housing supply and affordability crisis in the county, the working draft introduces a number of new strategies that have the potential to result in a diverse mix of housing types, including both market-rate units and a broad spectrum of affordable units. There are other positive and balanced policy recommendations in the working draft that will advance the various housing goals established by Thrive.

The 2024 Growth and Infrastructure Policy

The GIP is updated every four years and aims to ensure the most effective tools are in place so that public facilities (schools, transportation, water and sewer services) are adequate and timely available to support any new development in the county.

Additionally, a primary objective of the GIP is to ensure the county’s growth policies are consistent with, and in furtherance of, other county priorities relating to growth, including, in the broadest manner, the county’s general plan (Thrive) adopted in 2022.

The planning board will transmit its recommended working draft to the county council in late July, and it is expected that the county council will adopt a new GIP in November following public hearings and other input and feedback from the public and other relevant governmental agencies.

Thrive Montgomery 2050

By way of background, Thrive recognizes that “Montgomery County needs housing at a wide range of prices,” and “the current crisis of housing affordability affects households at all income levels, not just low-income households.” (Thrive, p. 131).

Further to this point, Thrive provides that “the term affordable housing, generally used for subsidized housing, does not encompass the housing needs of middle-income households, which constitute the largest segment of the county’s population hurt by rising housing costs and limited supply.” (Thrive, p. 131).

Significantly, Thrive notes that “increasing the supply of housing near transit, jobs, and amenities will improve the quality of life for everyone in the county while helping to attract and retain the broadly skilled workforce that employers need, helping to make the county more economically competitive.” (Thrive, p. 135).
Proposed Strategies for Increased Housing

Consistent with Thrive’s prioritization of “housing for all,” the working draft proposes several policies aimed at reducing barriers to producing housing needed to keep pace with the county’s population growth and demands.

More specifically, the working draft proposes:

  1. An exemption from the county’s development impact tax for three-bedroom and larger units in multi-family buildings.
  2. A 50% discount on the development impact tax for single-family attached and detached dwellings that are 1,500 square feet or smaller (i.e., smaller homes, sometimes referred to as attainable housing).

In this respect, the working draft acknowledges the reality that the market will not naturally produce a mix of housing typologies and price-points that are necessary and more attainable for a growing segment of the county’s population (families and middle-income households), thus driving the need for a regulatory growth policy that will yield more opportunity for the delivery of rental and for-sale housing consistent with the housing goals and objectives set out in Thrive.

In addition to providing more opportunity for undersupplied housing types at varying price points, the working draft is also intended to address Thrive’s recommendation to “increase regulatory flexibility to incentivize residential infill, redevelopment, and repositioning of office parks ….” (Thrive, p. 132).

The working draft acknowledges two important economic realities:

  1. The office vacancy rate in Montgomery County increased about 40% from 2018 to late 2023.
  2. It is complex and expensive to convert an office building to residential use.

In light of the county’s housing shortage, the working draft recommends exempting office-to-residential conversion projects from development impact taxes as an incentive to increase housing inventory.

As a further and additional incentive, we at Selzer Gurvitch plan to push the planning board and county council for the GIP to go further by providing discounts to the development impact tax, where the only viable path forward is repositioning an obsolete office building through demolition and infill redevelopment of multi-family and/or attached single-family housing.

Conclusion

Unlike the county council’s adoption of rent stabilization in the summer of 2023 — thought by many (including us) as unnecessary governmental regulation and interference with the market that discourages and constrains the production of housing — the GIP presents the county with an opportunity to embrace and adopt growth policies that support the production of housing consistent with the goals and objectives of Thrive.

If you have concerns, questions, or needs relating to the working draft or the GIP, please contact Bob Dalrymple at bdalrymple@sgrwlaw.com or Matt Gordon at mgordon@sgrwlaw.com.

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