Skip to main content

Capital Improvement Projects as an Affordable Housing Opportunity

In Practice
HUD USER Home > PD&R Edge Home > In Practice

Capital Improvement Projects as an Affordable Housing Opportunity

Conceptual rendering showing, at street level, two facades of an approved 11-story building, with commercial uses on the first floor and residential units above; in the background to the right of the building is the Silver Spring library, shown as it will look when construction is complete.
Approved prior to the adoption of Montgomery County’s legislation, the 155-unit building next to the new library in Silver Spring shows the possibilities of combining affording housing development in capital improvement projects. Conceptual rendering courtesy of VOA Associates, Inc.
With more than 971,000 residents, Montgomery County, located just northwest of Washington DC, is Maryland’s most populous county. The county has a history of supporting affordable housing development, having instituted the nation’s first inclusionary zoning program with its Moderately Priced Dwelling Unit (MPDU) ordinance in 1974. Still in effect today, the MPDU ordinance requires any new development in the county with 20 or more units to reserve 12.5 to 15 percent of its units as affordable housing for low-income owners and renters, depending on the density bonus received. In addition, the county mandates workforce housing units, affordable to households earning between 70 and 120 percent of the area median income, in certain residential developments in Metro station areas.

Despite these requirements, Montgomery County residents still experience challenges to housing affordability. According to the 2007–2011 American Community Survey, more than 51 percent of renters and 37 percent of homeowners with a mortgage paid 30 percent or more of their monthly household income for housing. The county’s population grew 11.3 percent between 2000 and 2010, and only 4 percent of land zoned for development remains undeveloped. In response to these challenges, in February 2013 the Montgomery County Council enacted Bill 37-12 (website content has changed and this document is no longer available), which requires the county to assess whether affordable housing could be included in proposed capital improvement projects. This bill is yet another creative attempt by Montgomery County to provide residents with needed affordable housing.

Assessment of Affordable Housing in Capital Projects

Montgomery County’s Capital Improvements Program is a six-year plan, adopted every other year, for major investments in transportation, public safety, culture, recreation, and other facilities. For each capital project proposed by the county’s Department of General Services and the Parking Management Division of the Department of Transportation, Bill 37-12 requires the Montgomery County Office of Management and Budget (OMB) to submit an affordable housing assessment. The Department of Housing and Community Affairs (DHCA), the Housing Opportunities Commission, and the Planning Board will take part in each assessment, which will be included in a capital project’s preliminary design and cost estimate.

The affordable housing assessment must include information on the proposed project’s site, estimated housing construction and operating costs, and estimated revenue. In addition, the assessment must evaluate the demographics and supply of affordable housing in the area. Funding for the housing component will come from the general fund or the Housing Initiative Fund, a locally funded housing trust fund for constructing, preserving, and rehabilitating affordable multi- and single-family housing. The bill also suggests that zoning, land use plans, and proximity to transit and other community amenities be considered. An assessment should also discuss how compatible affordable housing would be with the capital improvement project; DHCA is currently collaborating with OMB to establish criteria for evaluating such compatibility.

Strategic Combination of Housing and Community Amenities

According to the lead sponsor of Bill 37-12, council member Roger Berliner, the County Council expects that DCHA will seek out affordable housing providers interested in working with the county on the program. Berliner believes that certain capital projects and affordable housing fit together naturally — housing for seniors in conjunction with recreation centers and libraries, for example. Berliner also recognizes a strategic opportunity to use scarce county-owned land near transit stations because of “our focus on transit-oriented development [TOD] — accommodating growth and adding density in smart ways around our Metro stations. . . . My hope is that this legislation brings about additional affordable housing units targeted to our TOD areas.” According to the Affordable Housing Conference of Montgomery County, incorporating affordable housing into infill development makes sense because old county facilities tend to have larger lot sizes and greater building separation than are needed today.

Although not a result of this legislation, the development of a new library in Silver Spring in combination with affordable housing, which may include units for seniors, is a prime example of the type of project that Montgomery County could include in future versions of its capital improvement program. Construction is in progress for the 63,000-square-foot library in Silver Spring’s central business district, located within walking distance of several bus stops and a half mile from stations for Washington DC’s Metro and Maryland’s regional train system. In April, the Maryland-National Capital Park and Planning Commission approved the development plan for a residential building on county-owned land adjacent to the library. Montgomery Housing Partnership and the Donohoe Development Company will provide 155 studios and one- and two-bedroom units, including 20 MDPUs and 32 Workforce Housing Units.

Montgomery County’s legislation offers a creative approach to using county properties to support affordable housing. The capital improvements program offers the public several opportunities to comment on proposed projects, and Berliner expects that these opportunities will help alleviate concerns community members may have about the appropriateness of affordable housing included with a specific capital project. He states, “Montgomery County has been and is a national leader on affordable housing, but we can and must do more.” This legislation paves the way for future transit-accessible, affordable housing near the nation’s capital.

Published Date: July 15, 2013

The contents of this article are the views of the author(s) and do not necessarily reflect the views or policies of the U.S. Department of Housing and Urban Development or the U.S. Government.