The Montgomery County Council voted 9-2 Tuesday to override County Executive Marc Elrich’s veto of legislation allowing tax breaks for some developers that create workforce housing units.
On April 8, the council voted 10-1 to approve the tax break legislation after unanimously passing a zoning text amendment (ZTA) that would expedite the process for converting office and other commercial buildings to residential housing. The legislation establishes a property tax break program for any residential development approved under the conversion ZTA that fulfills 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.
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.
Council Vice President Will Jawando (D-At-large) was the only councilmember to vote April 8 against the property tax break legislation. His opposition continued Tuesday when he voted against overriding Elrich’s veto after more than 40 minutes of debate among councilmembers. Jawando criticized a “lack of fiscal guardrails” in the legislation and argued the bill could incentivize developers to increase vacancies in office buildings so they’d be ripe for conversion.
“It makes sense to incentivize the conversion or disposition of chronically vacant buildings that serve no possible office purpose,” Jawando said. “But this is not that bill. This is significantly broader than that … this will actually incentivize making all office buildings vacant at a time when all major corporations and governments are making their employees come back to the office.”
Councilmember Kristin Mink (D-Dist. 5) joined him in voting to sustain Elrich’s veto, reversing her previous approval of the legislation.
“Perfect should also not be the enemy of the good, and … that is why I voted in favor of the bill [on April 8],” Mink said. “I had major concerns about the structure of this incentive, and since that vote, my concerns have increased rather than decreased, as a result of my own research and as constituents have reached out.”
The zoning text amendment and tax program were proposed as part of the More Housing N.O.W. (New Options for Workers) legislative package that is sponsored by several councilmembers. The package was introduced in January by councilmembers Andrew Friedson (D-Dist.1) and Natali Fani-González (D-Dist. 6).
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 a project’s proposed housing serve the local workforce. The goal of the legislative package is to increase access to more affordable workforce housing through two zoning text amendments: the one approved by the council that expedites the process for conversions, and another that would increase the permitted residential density in certain zones along transit corridors.
The tax break program received a mixed reaction from the community, with opponents criticizing subsidies for developers, while supporters said it would help increase the county’s housing supply for middle-income residents like teachers and first responders.
Elrich cannot veto zoning text amendments but was allowed by law to veto the bill that would establish a property tax break program. He held a press conference April 21 to announce his veto of the legislation, which would waive property taxes for 20 years on new developments of housing with 17.5% of units qualifying as workforce housing under county income guidelines.
“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.”
Prior to Tuesday’s council vote, Fani-González defended the tax break legislation she had sponsored, telling her fellow councilmembers that converting office buildings to new housing will lead to different tax sources, rather than the lack of revenue generated by buildings sitting empty.
“When you have a conversion or a tear-down, you know what happens? More people move in,” she said. “When that happens, we have people paying income taxes. We have more people paying the recordation taxes. We have more people paying all those fees that you have to pay when these buildings are being redeveloped. So it’s not just the property tax, it’s more than that.”
Friedson expressed a similar sentiment prior to the vote.
“In addition to the detrimental effects upon communities and on adjacent businesses, the vacant buildings result in reduced resources for the county,” Friedson said. “Repurposing these buildings into residential opportunities will generate more revenue, not less, and it’s a win-win for the county. It brings in housing that we need. It addresses the office vacancy that we have.”
Council President Kate Stewart (D-Dist. 4), who supported the legislation and voted to override Elrich’s veto, pushed back on claims that the council rushed the legislative approval process. She noted the council held two public hearings on the proposed legislation — more than the one required by law — in addition to multiple committee sessions, which led to amendments of the proposal.
Stewart referred to her previous experience overseeing similar tax programs as mayor of Takoma Park, a position she held before she was elected to the council in 2022.
“The financing on these very complex projects can make or break a project, and that I know for a fact because I have seen it firsthand and worked with developers on this,” Stewart said. “I feel incredibly confident in overriding this veto today.”
