Montgomery County Executive Marc Elrich (D) vetoed on Monday legislation approved this month by the County Council that would offer tax breaks for some developers that create workforce housing units.
“We should not be subsidizing market-rate housing under any circumstances whatsoever,” Elrich said at a press conference Monday afternoon in Rockville to announce his veto. “That makes no sense at all.”
Elrich’s veto does not mean the legislation is dead. 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.
The tax break legislation was passed after the council unanimously passed a zoning text amendment (ZTA) on April 8 that would expedite the process for commercial-to-residential building conversions. The amendment and tax program were proposed as part of the More Housing N.O.W. (New Options for Workers) legislative package sponsored by several councilmembers, introduced in January led by councilmembers Andrew Friedson (D-Dist.1) and Natali Fani-González (D-Dist. 6) and supported 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 already passed that expedites the process for conversions, and another that would increase the permitted density in certain zones along transit corridors.
Elrich cannot veto ZTAs, but he can veto the part of the package that would establish a property tax break program for any residential development approved under the 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). The AMI 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 the bill sponsors.
Elrich bluntly stated Monday why he vetoed the legislation.
“Let me be clear: I support converting underutilized commercial space to help provide affordable housing. However, this mechanism is flawed,” Elrich wrote in his letter to the council announcing his veto. “Projects should not automatically receive a 20-year, 100% tax abatement.”
His letter called the exemption “fiscally irresponsible and unnecessary.”
Elrich’s press conference included several community members who spoke in opposition to the legislation.
“There’s many underutilized buildings in the counties, and this bill chooses winners and losers, but these winners will decide, in their own interest, what the outcome is,” said Lloyd Gertie of the Citizens Coordinating Committee on Friendship Heights, which advocates in response to land-use issues.
Lisa Blackwell-Brown of the Montgomery County Government Employees Organization (MCGEO) union, said she was concerned about whether the housing built with a tax exemption would be as affordable as intended.
“Too many of our members are pushed out of the county into other areas due to the lack of affordable housing but this bill is not about affordability,” Blackwell-Brown said. The bill provides a “tax exemption to the developers, many of whom are hungry and well-resourced. … That’s not a good deal for working people, and it’s not a good deal for taxpayers.”
Legislation may survive
Elrich has vetoed six previous council decisions, all of which were then overridden by the council. Only one councilmember, council Vice President Will Jawando (D-At-large), initially voted against the More Housing N.O.W. legislative package. He has been critical of several aspects of the package, voicing concerns that it would not actually result in more affordable housing.
Elrich concluded his remarks Monday with a “call to action,” urging community members to contact their councilmembers to reconsider their votes when they vote to override his veto.
“I’m looking forward to this triggering a citizens’ revolt,” Elrich said.
In an email to Bethesda Today on Monday afternoon, Fani-González said she was “disappointed — though not surprised” by Elrich’s veto.
“Converting under-utilized and obsolete office buildings to housing presents a great, cost-effective opportunity to increase the supply … these vacant office buildings are currently paying very little in property tax,” Fani-González wrote. “With redevelopment into multi-family housing, the County will be receiving new impact taxes for schools and transportation, additional income taxes from the new residents, and revenue from fees.”
Fani-González also argued the property tax receipts from redeveloped buildings will be “significantly higher due to a ten-fold increase in value relative to the vacant office building.”
Friedson expressed similar sentiments in a text to Bethesda Today Monday afternoon.
“I remain disappointed by the continued peddling of misinformation. The Council remains focused on addressing the scourge of office vacancies on our economy and community,” Friedson wrote. “We know that vacant buildings reduce resources for the county and repurposing them into residential opportunities will generate more revenue, not less. I am confident that we will overturn the veto.”
According to its 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 has also been 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 vocal in his vehement opposition to the legislative package throughout the process, arguing that market-rate housing is already being built in the county without the legislation.
“It’s kind of embarrassing that someone would suggest we have to do this,” Elrich said Monday. “What bothers me most is when you know that other people have done this without a tax break, why are you insisting that everybody get a tax break?”
In addition to its council sponsors, the More Housing N.O.W. legislative package has received support from organizations that advocate for housing, which have praised its aim to increase the county’s housing supply for teachers, nurses, first responders and other middle-income county residents.
“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, regional policy director for the land use and transportation advocacy group Greater Greater Washington, told Bethesda Today on April 11. “These bills will put these sites back to use while creating something we also need — more homes for more budgets.”
A vote to override Elrich’s veto has not yet been scheduled.
