Councilmembers Riemer and Friedson introduce bill to address the affordable housing crisis in Montgomery County

From the Office of PHED Chair Councilmember Riemer and Councilmember Friedson

Councilmembers Riemer and Friedson introduce bill to address the affordable housing crisis in
Montgomery County

ROCKVILLE, Md., June 29, 2021— Today Councilmembers Hans Riemer and Andrew Friedson introduced Bill 26-21, Taxation – Payments in Lieu of Taxes – Affordable Housing – Amendments, to help address the affordable housing crisis in Montgomery County.

"This legislation is designed to help affordable housing providers successfully compete against private developers in a fast-moving market," said Councilmember Hans Riemer. "With the legislation, mission-driven housing providers looking to buy a building will know that a share of their financing will be secure. The Purple Line corridor is a great example of a location where this could be especially helpful."

"We must act aggressively to address the housing affordability crisis in our County and in our region," Councilmember Andrew Friedson said. “Government alone cannot provide enough affordable housing to serve our residents’ needs. This measure builds on our partnerships with nonprofit affordable housing providers to add certainty and lower the costs of building new, quality affordable housing so more people can live in and be part of our community."

State law authorizes counties to negotiate agreements with real property owners for a payment in lieu of taxes (PILOT) when the development or property rehabilitation will provide low- or moderate-income housing. In 2002, the Council enacted Bill 19-02 which authorized the director of finance to agree to accept a PILOT. The aggregate amount of all PILOTs (other than for HOC) must not exceed an amount set annually by Council resolution for the following 10-year period. Currently, the Montgomery County Code authorizes the Director of Finance to accept a negotiated payment in lieu of real property taxes for a qualifying housing development in which the owner is eligible for a PILOT.

PILOTs for HOC properties are excluded from the aggregate maximum established by the Council. In addition, both the decision to offer a PILOT for a qualifying housing development and the amount of the PILOT is discretionary. In practice, the Department of Housing and Community Development negotiates the PILOTs.

Bill 26-21 would amend this law by mandating a PILOT for HOC projects and establishing the following minimum PILOT for other affordable housing developments. If at least 50 percent of the dwelling units limit the rent charged for at least 15 years to an amount affordable to households earning less than 65 percent of the area median income, the PILOT must be 100 percent of the property tax for at least 15 years.

The director would be required to offer a partial PILOT for a qualifying housing development with at least 25 percent but less than 50 percent of the units rent restricted:

• for each dwelling unit affordable for residents at 51 percent to 65 percent of area median income, the project must receive a payment in lieu of taxes for one unit;
  
• for each dwelling unit affordable for residents at 31 percent to 50 percent of area median income, the project must receive a payment in lieu of taxes for 2 units; and
  
• for each dwelling unit affordable for residents at 30 percent or less of area median income, the project must receive a payment in lieu of taxes for 3 units.

Finally, Bill 26-21 would eliminate the annual maximum aggregate amount for all payments in lieu of taxes approved under this law.

This legislation continues the the Council’s focused efforts to increase housing choices for all Montgomery County residents, including the enactment of the More Housing at Metro Stations Act, which will facilitate new opportunities for housing on WMATA property, the creation of a new $50 million Housing Production Fund for the County’s Housing Opportunities Commission and record funding for the County’s Housing Initiative Fund.

The Council staff report for Bill 26-1 can be viewed here.