2022 | Government

Montgomery County officials tout county’s historic investment in affordable housing funding

Spending plans include buying and preserving housing and providing rental assistance, but officials say more investment will be needed

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Editor’s Note: Bethesda Beat reporter Steve Bohnel and freelance writer Bethany Rodgers, who formerly covered development for Bethesda Beat, take a look at the affordable housing issue in Montgomery County. In his story, Bohnel focuses on county funding and policy while Rodgers tells the story from the perspective of a few local renters.

Local candidates on the campaign trail this spring have talked about many issues, but perhaps none has been more dominant than the need to increase the amount of affordable housing in Montgomery County.

On Thursday, the County Council approved a $6.3 billion budget and a six-year capital improvement plan for the coming fiscal year that allocates roughly $200 million in the upcoming fiscal year toward multiple aspects of affordable housing.

Local leaders and housing advocates agree the amount of the investment — made possible by higher revenues and state and federal funding — is historic. But they also caution that the county will need to keep investing and even increase its financial commitment in order to address the housing affordability crisis. 

[‘I wanted to stay here’ — Renters lament high cost of living in Montgomery County]

How will the funding dedicated to affordable housing be spent? 

The money will be used in a variety of ways, but officials will primarily focus on preserving naturally occurring affordable housing (older units that are currently affordable), allocating funding for new affordable housing projects, and helping to keep lower-income residents and their families in their homes through rental assistance funds or other efforts.

The capital improvement plan for fiscal years 2023 to 2028 allocates $157 million for the Affordable Housing Acquisition and Preservation Project. That allows county officials to work with nonprofit developers and other affordable housing partners to pay for renovation of naturally occurring affordable housing, along with purchasing properties in order to add to the county’s affordable housing supply.

County officials also allocated $40 million to fund the creation of the Preservation of Naturally Occurring Affordable Housing (NOAH) Fund for fiscal 2023, which begins July 1. The fund will be used to help preserve affordable units countywide, either through purchasing them or helping pay for renovations and maintenance work at older buildings. The county executive and County Council say they want to explore increasing this fund in the coming years.

Another $50 million in county-backed debt financing is earmarked for the Housing Opportunities Commission’s (HOC) Housing Production Fund. The HOC is an organization that works with county government and other housing partners on affordable housing issues countywide, and the fund helps purchase older apartment units and condos in developments throughout the county in order to create and preserve affordability.

Also, nearly $20 million has been set aside for rental assistance, which is meant to help with rent payments for residents who have been financially impacted by the coronavirus pandemic. 

Other programs have also been funded, but those are some of the largest programs and funds in the budgets.

What do elected officials think about the investment?

Elrich, who proposed the funding in his operating and capital budgets, has said this investment is needed in order to address housing affordability in the county. County Council Member Hans Riemer, who is facing Elrich alongside businessman David Blair and tech CEO Peter James in the Democratic primary for county executive July 19, has said that the approved funding is a good start, but that more investment is needed.

The two have sparred on affordable housing issues — Elrich says the county’s past investments and zoning practices haven’t led to the results that the council had envisioned. Riemer and others disagree with this characterization. Riemer says that Elrich has not invested enough or implemented strong policies to encourage more affordable housing throughout the county.

Council President Gabe Albornoz said after Thursday’s final vote on the county budgets that the investment is a good start, but that more will be needed in the coming years. No single program or funding allocated in one budget year is going to solve the housing crisis, he said.

County officials and partners need to work with neighboring jurisdictions in Washington, D.C., Northern Virginia, and other Maryland counties to address the crisis, Albornoz said.

“We’ve all set benchmarks through the [Metropolitan Washington] Council of Governments that we’re trying to achieve,” Albornoz said. “And we are stronger united as a region than we are divided. And while of course, there’s an element of competition … I think there’s an opportunity for us to, at a broad level, strategically try and address those benchmarks.”

Council member Craig Rice, who will leave office at end of the year because of term limits, participated in his final round of budget deliberations. He said the funding provided in the operating and capital budgets does a good job in stabilizing current affordable housing, but that more needs to be done in the coming years, especially regarding policies encouraging new housing projects. 

If there are more units, then it becomes easier to have lower rents and home prices across the county, Rice said. 

He added that county officials also will have to make difficult decisions in the coming years such as deciding whether to pay down rents for people who need assistance or provide assistance so apartment owners can keep rents at affordable rates. That’s not always a politically easy thing to do, but those decisions must be made in order to address the crisis, he said. 

More broadly, the county also needs to revisit the moderately priced dwelling unit (MPDU) program, Rice said. That program was first approved back in the 1970s, and “presently requires that between 12.5 and 15 percent of the total number of units in every subdivision or high-rise building of 20 or more units be moderately priced,” according to the county.

“The whole program needs to be revisited,” Rice said. “We’re in a different age now … we really need to be more strategic [about what we’re trying to do], similar to what we’re doing now in terms of around Metro and around transit.”

Takoma Park Mayor Kate Stewart has worked on several affordable housing issues in her city. She said the budgeted funding is a great start and noted that it focuses on three important aspects — preservation of housing, production of housing, and helping people stay in their homes.

Stewart, who is running for County Council District 4 (Silver Spring, Takoma Park, Kensington, North Bethesda), said it’s important that providing rental and homeowner assistance is not forgotten because eviction can cause major disruption in people’s lives.

“This is not a ‘this year’ budget,” Stewart said. “We are at such a place in our housing crisis that this is going to take multiple years [to solve].” 

What do housing partners think about the efforts?

Chris Gillis is director of policy and neighborhood development at the Montgomery Housing Partnership — a nonprofit that works with regional governments in affordable housing issues and other related areas.

Gillis advises county officials to use the funds to buy properties to preserve as affordable housing sooner rather than later because the properties will only get more expensive. But it’s also important to fund affordable housing projects already in the pipeline as labor and supply costs continue to rise, he added.

Like others, Gillis said the county needs to continue investing in affordable housing in the coming years, referencing the 1989 baseball movie Field of Dreams.

“If you fund it, the projects will come,” Gillis said. “Once the county is serious and funds affordable housing at this level … more and more projects will then be proposed.” 

Jane Lyons, Maryland advocacy manager for the Coalition for Smarter Growth — an organization that focuses on transportation and housing policies in the Washington, D.C., region — also agrees that the county should use the funding to preserve housing, build more developments, and help with rental assistance and other programs. But more is needed, she said.

“I think it comes down to political will,” Lyons said. “The county needs to work with the nonprofit entities and other partners. It’s great the county executive is prioritizing this now … it’s something I wish had happened earlier in [Elrich’s] administration, and in the county’s history of working with affordable housing projects.”

With about 50 years of experience in dealing with housing financing issues, HOC board chair Roy Priest said that the financing of affordable housing projects — especially new construction — is inherently complex and requires many funding sources. It’s important that the allocated funds are being used in a variety of ways, Priest said.

Priest said both preservation and new construction are needed, but added that the “per unit cost” of preserving older apartment units is typically cheaper than new construction. Still, he echoed the sentiment expressed by others about the need to keep investing in affordable housing.

“This money will not solve the affordable housing problem in Montgomery County,” Priest said. “It’s a significant down payment, but it will take significant funding going forward.”

Steve Bohnel can be reached at steve.bohnel@bethesdamagazine.com