Montgomery County Executive Marc Elrich (D) said this week that he is developing a “detailed response” and plans to push back against zoning changes made by the County Council this week that aim to increase the county’s supply of workforce housing and incentivize developers to build this kind of housing by offering certain tax breaks.
“This is a sad day for the county,” Elrich said during a virtual media briefing Wednesday. “The idea that developers are sitting there laughing off this deal with no taxes on their lap … is just a shame.”
The County Council unanimously passed a zoning text amendment (ZTA) Tuesday that will expedite the process for commercial-to-residential building conversions, which was proposed as part of the More Housing N.O.W. (New Options for Workers) legislative package sponsored by several councilmembers.
The legislative package aims to allow more residential building types – including duplexes, triplexes, townhomes and apartments – along the county’s transit corridors, with a requirement that 15% of the housing serve the local workforce. The goal of the legislative package is to increase access to more affordable workforce housing through two ZTAs: the one passed Tuesday that expedites the process for conversions, and another that would increase the allowed density in certain zones along transit corridors.
The council also voted Tuesday to approve legislation that would establish a “payment in lieu of taxes” program for any residential development approved under the proposed conversion ZTA that fulfilled the requirement of providing 17.5% or more moderately priced units at 60% of the county’s area median income (AMI), which is defined as the midpoint of a specific area’s income distribution. This means that qualifying developments would be exempt from 100% of the real property tax that would otherwise be levied for a period of 20 years. The intent is to encourage developers to convert office and commercial buildings to affordable units, according to bill sponsors.
During the media briefing, Elrich said he has a plan to respond to the council’s recent votes, but did not elaborate and said more information would be made public in the coming days. Elrich does not have the authority to veto zoning changes, but he can veto other types of legislation. He said during the media briefing that he intends to veto the pilot program.
“This council moved forward with what will be hundreds of millions of dollars in property taxes over the next 20 years that would have normally been used to address many, many of the county’s needs. That money will not be there,” Elrich said. “It would have been there if these housing units had been built by the normal process, by other developers who own vacant land and have the right to develop their foregoing property, we would have generated all the tax revenue that’s being forgone by this legislation.”
However, Elrich’s prospective veto of the pilot program could still be overturned. Elrich has vetoed six previous council decisions, all of which were then overridden by the council. Under the council’s Rules of Procedure, a supermajority of at least seven of the 11 councilmembers must vote in favor of overriding a county executive’s veto.
Elrich said he’s “totally in favor” of the ZTA making it easier to convert commercial properties to housing but disagrees with the incentives.
“I don’t think this is a net increase in housing. It’s just a housing unit or group of units that will be built in different places,” Elrich said. “The only difference between this and what otherwise will happen is everybody else’s property will pay taxes, and these people will not pay taxes, and their exemption from taxes is not anywhere close to the economic needs of that project, not even close.”
According to the council sponsors, the More Housing N.O.W. legislative package was inspired by public conversations concerning the highly controversial Attainable Housing Strategies Initiative proposed by the county Planning Board in 2024 — but not based on that proposal. The Attainable Housing Strategies Initiative outlines recommendations to the council for zoning changes to allow more housing options in some single-family home zones in targeted areas of the county.
The More Housing N.O.W. legislative package was formally introduced by councilmembers Andrew Friedson (D-Dist.1) and Natali Fani-González (D-Dist. 6) in early February. It is co-sponsored by council President Kate Stewart (D-Dist. 4) and councilmembers Laurie-Anne Sayles (D-At-large), Marilyn Balcombe (D-Dist. 2) and Dawn Luedtke (D-Dist. 7).
The package has proved controversial among community members, with supporters praising its aim to increase the county’s housing supply and critics voicing concerns that more development would encroach on existing neighborhoods. Elrich has been critical of the proposal since its inception.
The Montgomery County Communities Coalition, a group of neighborhood associations and community members that has organized in opposition to legislative package, did not provide a specific position as an organization, but shared statements from group members who are disappointed by Tuesday’s vote.
“We were led to believe the [tax exemption program] was designed to support the difficult and costly conversion of existing office space into residential units. This was the rationale for offering incentives,” Kimblyn Persaud, founder and executive director of EPIC of MoCo, a community organizing group, said. “But in reality, a developer can demolish the building and start fresh — undermining the original intent of the program entirely.”
Rohit Khanna, a member of the Somerset Town Council, was also critical.
“The bottom line is that 10 councilmembers were fiscally irresponsible,” Khanna said. “They were unconcerned that the tax abatement would be offered to any and all conversion developments whether they had a financial need or not.”
Some housing advocacy organizations praised the council’s decision. Greater Greater Washington, an organization that advocates for housing, transportation and land use policy in the Washington, D.C., region, has lobbied the county to pass zoning changes that would increase the housing supply.
“Montgomery County has a glut of vacant commercial space, which are a blight on our neighborhoods and a drag on our tax base,” Dan Reed, Greater Greater Washington’s regional policy director, told Bethesda Today in a text Friday. “These bills will put these sites back to use while creating something we also need — more homes for more budgets.”
A vote has not been scheduled on the remaining portion of the legislative package, a ZTA that would allow duplexes, triplexes, townhouses and apartment buildings in certain residential zones if they are located along boulevards, downtown boulevards, downtown streets, town center boulevards or controlled major highways.
Fifteen percent of the units in such developments must qualify as “workforce housing.” According to the legislative staff report, that would mean income-restricted units for residents making between 70% and 120% of area median income. County officials said that would be equivalent to an annual salary of approximately $148,000, or two working people making around $75,000 each.
The Coalition for Smarter Growth, a nonprofit whose website notes that it advocates for “walkable, bikeable, inclusive, and transit-oriented communities” in the Washington, D.C., area, also praised the move and urged passage of the full legislative package.
“Every new home helps, but the Council must also adopt the other tools in the package to meet our county’s great housing need. Most important is the approach reflected by [the ZTA] —making it much easier to build duplexes, triplexes, and small apartments near transit and jobs,” Carrie Kisicki, Montgomery advocacy manager for the Coalition for Smarter Growth, wrote in an email statement to Bethesda Today.
“This approach complements the county’s commitment to medium and higher density transit-oriented development at Metro, Purple Line, and [bus-rapid transit] stations, as outlined in the Thrive 2050 general plan,” she wrote. “It will provide much needed, more affordable housing options in locations with good transportation options and lower transportation costs.”
