Council approves $50 million construction fund for public-private housing model

Council approves $50 million construction fund for
public-private housing model
County’s Housing Opportunities Commission estimates 900 new units per year, one-third for lower income residents

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For Immediate Release

ROCKVILLE, Md., March 24, 2021—On Tuesday, the Montgomery County Council approved a special appropriation of $500,000 to the fiscal year 2021 (FY21) operating budget for the Housing Initiative Fund, to fund the creation of a new Housing Production Fund for the Housing Opportunities Commission (HOC). The appropriation was sponsored by the full County Council and was developed by Councilmember Hans Riemer, chair of the Council’s Planning, Housing and Economic Development (PHED) Committee, together with HOC and private sector partners, in collaboration with members of both the PHED and Government Operations and Fiscal Policy (GO) Committees including GO Chair Nancy Navarro and Councilmembers Andrew Friedson, Will Jawando and Sidney Katz. The fund was previously reviewed and unanimously approved last spring at a joint meeting between the two Committees.

This appropriation will allow HOC to issue $50 million in bonds. The County will provide approximately $3.4 million in funding annually for the life of the bonds, which HOC will use for construction financing to accelerate projects in its development pipeline. HOC will make payments back to the Housing Initiative Fund from interest paid from developments, which will reduce the net cost to the County. HOC estimates it can create nearly 8,800 units of housing with the assistance of this fund. Projects funded by the Housing Production Fund will be self-sustaining, with about 30 percent of the new units being income-restricted and affordable, with the remaining units available at market rate.

This mixed-income approach draws inspiration from the Social Housing model used in Vienna, Austria and elsewhere in Europe, which has been employed by HOC in Montgomery County for decades. Repayments will go back into the fund, allowing HOC to draw on them again for new projects. HOC will also make interest payments which will offset a large portion of the County’s annual appropriation for principal and interest on the bond issuance. This fund will also reduce HOC’s need to draw on other sources of County subsidy, freeing those resources for other projects. HOC will leverage its access to publicly owned land to implement the projects through a public-private partnership model.

“I am thrilled to get the Housing Production Fund across the finish line,” said Councilmember Hans Riemer. “This revolving fund will allow HOC, the County’s affordable housing agency, to build new, high-quality, self-sustaining, mixed income housing and create new opportunities for thousands of families to thrive here in Montgomery County. As the Washington region mobilizes to meet our future housing targets, this plan will be a strong contribution from Montgomery County. I am confident this remarkable public private partnership will become a national model.”

“Housing is fundamental to economic development and to building a thriving, inclusive community,” said Councilmember Andrew Friedson. “We cannot meet our ambitious housing targets without big, bold ideas to deliver on the commitments we have made. This creative partnership with our local housing authority, the Housing Opportunities Commission, will accelerate projects in their development pipeline and long-term, this will make a meaningful difference in our residents' lives.”

“The special appropriation for the Housing Production Fund is one more tool to produce affordable housing in Montgomery County,” said Councilmember Will Jawando. “It will provide important bridge funding to HOC to support the development of a pipeline of continuous projects that will increase the affordable housing stock in the County ensuring that all Montgomery County residents have access to safe, affordable housing.”

“This type of proposal is exactly what I envisioned when I authored the Economic Development Platform, and it is a perfect fit to the stated goal of the housing pillar of the platform – placing an emphasis on housing that is affordable in the County’s activity centers,” said Councilmember Nancy Navarro. “It is imperative that we boost our housing production, and we must continue to put forth innovative strategies like the Housing Production Fund to rise to that challenge. We have a lot of ground to cover to meet the Council of Governments’ Regional Housing Targets, and this is a bold step in the right direction. Establishing this fund to leverage our resources in this way will help the County boost its economic development efforts and puts us in position to make a strong recovery from the effects of this pandemic.”

“Right-sizing the amount of residential housing in Montgomery County includes developing a broad range of housing types for households of varying sizes and income levels,” said Councilmember Sidney Katz. “The Housing Opportunities Commission Housing Production Fund is an important strategy as we work to meet the Metropolitan Washington Council of Governments housing targets, as adopted by the County Council. I am pleased that District 3 will benefit from accelerated production of Westside at Shady Grove Metro, and this is a win for all of Montgomery County.”

“We thank the Council, and the leadership of PHED Chair Hans Riemer, for ushering through important appropriations and establishing the Housing Production Fund, which will provide bridge funding for HOC's extensive affordable housing development pipeline,” said Stacy L. Spann, executive director of the Housing Opportunities Commission of Montgomery County. “We appreciate the Council's support and commitment to affordable housing. In these economically uncertain times, thoughtful partnership to achieve affordable housing goals is more critical than ever. We are proud to be part of a solution that gets more Montgomery County residents stably housed in communities that provide opportunity.”

“As a Council, we have always been committed to creating affordable and quality housing,” said Council President Tom Hucker. “I'm proud to join my colleagues in supporting the HOC Housing Production Fund. This will serve as an important tool in creating affordable and quality housing for low and moderate-income families and individuals.”

“Creating the Housing Production Fund will provide accessible opportunities for many residents to secure affordable housing in Montgomery County,” said Council Vice President Gabe Albornoz. “This public-private partnership will not only spur economic development, but it will begin to dismantle intergenerational poverty, one home at a time. I would like to especially thank Councilmember Riemer and my Council colleagues who sit on the Planning, Housing and Economic Development and the Government Operations and Fiscal Policy Committees for spearheading this innovative effort.”

“Housing is a basic right and everyone should be guaranteed a safe place to live,” said Councilmember Evan Glass. “The Housing Production Fund is an innovative way for us to build more affordable housing so that residents from all walks of life can continue to call Montgomery County home. I applaud Councilmember Riemer for leading this important effort.”

“The Housing Production Fund is innovative in bringing together the public and private sectors to finance affordable housing in our County,” said Councilmember Craig Rice. “This strategy will pay dividends in meeting our regional housing targets and increasing mixed-income housing opportunities for our residents. I am proud of the unanimous support for this initiative that invests in the future and in our economic recovery.”

The Council staff report can be viewed here.

 

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