1. Montgomery County, Maryland Moderately Priced Dwelling Unit (MPDU) Program

2. The MPDU Program In Brief:
Montgomery County, Maryland Moderately Priced Dwelling Unit (MPDU) Program
The MPDU Program In Brief:
a portion of the housing units built in subdivisions/rental complexes with 20 units or more must be priced at a level that is affordable to moderate income individuals and families
Enacted in 1974, it has produced approximately 11,700 housing units
An “inclusionary zoning” technique - in exchange for setting aside “affordable” units, the developer may increase the density allowable under the base zone
MPDU sales prices controlled for 30 years; MPDU rents controlled for 99 years
After the control period expires, the County and the owner/seller split the “windfall” profit on the market rate sale
Believed to be the first inclusionary zoning program in the country
Montgomery County, Maryland

3. Montgomery County, Maryland Moderately Priced Dwelling Unit (MPDU) Program
Background - Geography:
The most populated jurisdiction in Maryland
Within one hour drive of Washington, D.C. and Baltimore
During the 1970s and 80s, changed from a “bedroom” community for the Nation’s Capital to an urban county where over 60% of the County’s residents find work in the County.
Chesapeake Bay
Montgomery County, Maryland

4. Montgomery County, Maryland Moderately Priced Dwelling Unit (MPDU) Program
Background – Demographics (2000 Census):
People
Total Population
873,341
Estimate (7/1/2004)
921,690
Under age 18
25.4 %
Over age 65
11.2 %
White
73.6 %
Black
15.1 %
Asian
11.3 %
Hispanic (all races)
11.5 %
Median Income (2005)
$89,300
A relatively diverse, higher income population with children
Housing
Total households
324,565
Single-family detached
51.2 %
Single-family attached
17.9 %
Multi-family
30.7 %
Owner Occupied
68.7 %
Renter Occupied
31.3 %
A county of predominantly single family homes and home owners
Montgomery County, Maryland

5. Montgomery County, Maryland Moderately Priced Dwelling Unit (MPDU) Program
Background – Development Factors in the 1970s and 1980s:
Interstate highway system and the METRO resulted in exploding growth
Adequate Public Facilities Ordinance - Limited development in various portions of the County depending on existing transportation network and school capacity
New growth, plus limited developable land, increased concern about housing for families with moderate incomes that could not afford the market rate units that were being built
Major Transportation Improvements
I-270 built in 60’s and 70’s
I-495
(Beltway)
METRO, built
in 70’s and 80’s
Montgomery County, Maryland

6. 2004 Median Housing Sales Price
Montgomery County, Maryland Moderately Priced Dwelling Unit (MPDU) Program
Background - Current housing situation:
2004 Median Housing Sales Price
New Resale
SF Detached $666, $450,000
SF Attached $427, $283,500
All Single Family $395,000
Average Rent (2004) HUD/FMR (2004)
Efficiency $ $ 913
1-BR $1, $1,039
2-BR $1, $1,218
3-BR $1, $1,660
HUD limit for family of four (2005)
@ 50% of median…………$44,650
Montgomery County, Maryland

7. Montgomery County, Maryland Moderately Priced Dwelling Unit (MPDU) Program
The legislative environment in the early 1970s:
Period of rapid growth
Large increase of young families wanting to move into the County
Increasing shortage of housing affordable to low-to-moderate income households
High demand for building lots increased the price of land which raised the cost of housing
Sewer and water moratorium restricted the number of new water and sewer connections, adding to the supply/demand problems faced by housing developers and further increasing the costs
Developers began building the largest, most expensive and most profitable houses to compensate for the limited supply of lots
Even with the lifting of the development moratorium, the problem with affordability still remained
Montgomery County, Maryland

8. The pressure for affordable housing legislation:
Montgomery County, Maryland Moderately Priced Dwelling Unit (MPDU) Program
The pressure for affordable housing legislation:
Civic pressure came from such groups as Suburban Maryland Fair Housing and the League of Women Voters
A concept was forwarded to have builders supply a percentage of houses in each development that would be “affordable”
Several members of the County Council introduced a local legislative bill that
was countywide
introduced “inclusionary” zoning
provided density bonuses
Main legislative concerns:
Taking property without just compensation
Successful economic integration of neighborhoods
“Marketing” developments with mixed incomes
The economic impact of affordable units on housing values
Density bonuses undermining pristine zoning practices
Montgomery County, Maryland

9. Montgomery County, Maryland Moderately Priced Dwelling Unit (MPDU) Program
Legislative History:
County Council worked on first bill for over one year
After a number of substantive amendments, the bill was passed unanimously on October 23, 1973
The County Executive vetoed the bill - he believed it to be unconstitutional, invasive public policy, and too difficult to administer
The Council overrode the veto and the Moderately Priced Housing law became effective on January 21, 1974
The law has never been challenged in court
Montgomery County, Maryland

10. Montgomery County, Maryland Moderately Priced Dwelling Unit (MPDU) Program
The Legislative Findings section declares that:
The number of persons and families needing affordable housing is growing
Persons with lower paying jobs or on fixed incomes cannot afford to reside in the County
Making workers commute into the county is not sound policy
Ignoring the high cost of housing is discriminatory
The market conditions that foster high priced housing (and higher profits) discourages development of a broader range of housing types and prices
A profitable market exists for lower cost housing if land costs can be reduced and a more modest product is built
Private developers will become an active partner in providing MPDUs if an incentive is provided and a density bonus holds the best hope for being that incentive
Montgomery County, Maryland

11. The public policies underpinning the law include:
Montgomery County, Maryland Moderately Priced Dwelling Unit (MPDU) Program
The public policies underpinning the law include:
Providing a full range of housing choices in a suitable living environment
Provide affordable housing to meet existing and future employment needs
Disperse affordable housing throughout the county
Allow increased densities to off-set the additional costs to developers
provide flexibility for developers to meet the MPDU requirement
Montgomery County, Maryland

12. Public Policy Goals of the MPDU Program:
Montgomery County, Maryland Moderately Priced Dwelling Unit (MPDU) Program
Public Policy Goals of the MPDU Program:
GOAL: Produce moderately priced housing so that County residents and persons working in the County can afford to purchase or rent decent housing
IMPLEMENTATION: Form a partnership with developers through the zoning ordinance to add moderately priced housing to subdivisions by allowing more market rate development to off-set costs.
GOAL: Distribute low and moderate income households throughout the growth areas of the County
IMPLEMENTATION: Apply the MPDU requirement countywide in order to achieve distribution of MPDUs in every community.
Montgomery County, Maryland

13. Montgomery County, Maryland Moderately Priced Dwelling Unit (MPDU) Program
Goals of the MPDU Program (continued):
GOAL: Expand and retain inventory of affordable housing by allowing the County’s housing authority (the Housing Opportunities Commission or HOC) and nonprofit housing sponsors to purchase up to 40% of the MPDUs
IMPLEMENTATION: Off-set losses from the MPDU inventory due to expiration of the price controls by allowing a portion of the new units to be purchased by the HOC or other nonprofits to be retained as a permanent resource that is rented to qualified participants
GOAL: Provide funds for future affordable housing by sharing the windfall appreciation when MPDUs are first sold at market price after the price controls expire
IMPLEMENTATION: Supplement County financial support for affordable housing by sharing the profit when an MPDU is sold at market rate after the price control expires and dedicating those profits to the County’s housing program.
Montgomery County, Maryland

14. Montgomery County, Maryland Moderately Priced Dwelling Unit (MPDU) Program
Legal Framework: The MPDU program is primarily implemented through two sections of the Montgomery County Code:
Chapter 25A – known as the Moderately Priced Housing (MPH) law, this section of the Code lays the foundation for the MPDU Program
Chapter 59 – The Montgomery County Zoning Ordinance specifies the applicable zones, sets the applicable zoning bonus densities, and sets the site plan requirements
Montgomery County, Maryland

15. Montgomery County, Maryland Moderately Priced Dwelling Unit (MPDU) Program
Chapter 25A - Among other things, this law requires the County Executive to:
Set income and eligibility standards for consumers of MPDUs, including:
Set maximum incomes by size of household
Enforce first-time homebuyer requirement
Establish maximum sales prices and rents of MPDUs, based on such factors as:
general market and economic conditions
interest group input
necessary and reasonable costs to build and market the MPDU units
price adjustments tied to relevant cost elements of changes in CPI
“architectural compatibility” - adjustment to upgrade exterior appearance of unit to “fit in”
Establish the procedures for the sale and rental of units
Establish procedures for establishing resale prices and any shared profit required
Montgomery County, Maryland

16. Montgomery County, Maryland Moderately Priced Dwelling Unit (MPDU) Program
Chapter 59 - The zoning connection
The zoning ordinance contains provisions for residential development that provides both flexibility and restrictive controls over the construction of moderate cost housing in new subdivisions.
The MPDU requirement operates as an “overlay” zone applicable to all residential projects of 20 units or more regardless of zoning density. In single family detached, residential zones the ordinance allows a portion of the units (40-60%) to be attached in the form of “one-family attached or semidetached dwelling units, townhouses, or a combination thereof…”
Lot sizes can be smaller than the base zone in order to achieve the density bonus and accommodate the variation in building types.
Density comparison of base zones to permitted adjustments for MPDUs
Dwelling Units Per Acre
Base MPDU R R R R R
R-T
R-T
R-T
R-T
R-T R R R
The overall density increase can not exceed 22%
Montgomery County, Maryland

17. The concept of a density bonus – simplified:
Montgomery County, Maryland Moderately Priced Dwelling Unit (MPDU) Program
The concept of a density bonus – simplified:
Under zoning law, the percentage of MPDUs required ranges between 12.5 percent and 15 percent, while the allowed density bonus ranges from 0 percent to 22 percent.
Example: If the underlying zoning would permit 100 units, in exchange for providing 15 percent MPDUs, the developer could receive the maximum bonus of 22 percent (assuming the site would allow such an increase)
Therefore, the total number of units would be 122; 15 of the bonus units are MPDUs, while 7 additional market rate units are provided.

18. The developer’s requirements:
Montgomery County, Maryland Moderately Priced Dwelling Unit (MPDU) Program
The developer’s requirements:
Must identify MPDU units on signed site plan that is legally binding and enforced through a site plan enforcement agreement
Must execute “Agreement to Build MPDUs” before building permits can be issued
Must sign “Offering Agreement” to market the units to MPDU consumers when they are ready for occupancy
Must record covenants in land records that commit the units, require the MPDUs to be owner occupied, and place controls on re-sale prices
Montgomery County, Maryland

19. Site Plan Review and Approval:
Montgomery County, Maryland Moderately Priced Dwelling Unit (MPDU) Program
Site Plan Review and Approval:
The MPDU requirement for a development is determined by the Planning Board through the site plan review and approval process
MPDU site planning guidelines for developers to help with achieving “compatibility”:
Encourage a variety of MPDU unit types including duplexes, piggybacks, quadriplexes, triplexes, small-lot detached units, apartments, and townhouses
Prohibit back-to-back units unless absolutely necessary
Discourage clustering MPDUs in a location in a subdivision through innovative site planning and building configuration
Permit enough clustering of single-family detached and duplex MPDUs to take advantage of production and marketing efficiencies
Ensure that open space and recreational facilities that are required for site plan approval are equally available to all residents
Encourage distribution of MPDU apartment units among market rate units
Montgomery County, Maryland

20. The Agreement to Build MPDUs includes:
Montgomery County, Maryland Moderately Priced Dwelling Unit (MPDU) Program
The Agreement to Build MPDUs includes:
The total number of units, including MPDUs
The entire land holding related to the subject project
A requirement that the MPDUs be constructed at the same time or before other dwelling units
A requirement that the MPDUs be completed before the the final market rate units are completed
Disclosure, at time of sale, that the unit is price controlled
Montgomery County, Maryland

21. The Offering Agreement includes:
Montgomery County, Maryland Moderately Priced Dwelling Unit (MPDU) Program
The Offering Agreement includes:
The total number of MPDUs being offered
The final sales prices or rents as calculated using the pricing standards and formula
MPDU floor plans and types
The final site plan and recorded plats for each unit
A copy of the covenants in recordable form
A general information sheet on the units
Montgomery County, Maryland

22. Alternative Compliance measures:
Montgomery County, Maryland Moderately Priced Dwelling Unit (MPDU) Program
Alternative Compliance measures:
In cases of “economic infeasibility”, environmental constraints, or high condo fees that would make the unit unaffordable to consumers, the developer may request an alternative arrangement
Requests for alternatives are reviewed by the Director of Housing and Community Affairs (DHCA), and in some cases, a panel composed of the DHCA, Director of Planning, and the HOC Executive Director
Alternatives include: paying a fee in lieu of MPDUs, building the MPDUs elsewhere, or donating land to be used to build MPDUs
Historically, alternatives have been requested in high-rise, high cost developments in central business districts

23. Montgomery County, Maryland Moderately Priced Dwelling Unit (MPDU) Program
The Consumer Side:
Consumers must be certified by the Department of Housing and Community Affairs (DHCS) as eligible by submitting income verification and assurance that no other property is owned
For Sale MPDUs are offered through a Lottery, with a point system
One point for living in Montgomery County
One point for working in Montgomery County
Up to three points for participating in the program for three or more years
Eligibility to participate in individual lotteries is determined by unit size (number of bedrooms) and family size
Rental MPDUs are offered on a first come, first served basis
Montgomery County, Maryland

24. Profile of Current Consumers:
Montgomery County, Maryland Moderately Priced Dwelling Unit (MPDU) Program
Profile of Current Consumers:
Maximum Income Range: For Sale $44,000 (individual) to $68,000 (family of 5)
Rental $40,000 (individual) to $62,000 (family of 5)
Maximum income limits are set at about 65% to 70% of median
Average income of purchasers - $32,000
Number of certificate holders ,300
MPDU purchasers are:
Employed
Hold jobs in the retail and service sectors, often multiple jobs at one time
Entry level teachers, firemen and police officers
Montgomery County, Maryland

25. Montgomery County, Maryland Moderately Priced Dwelling Unit (MPDU) Program
Achieving Compatibility - Judge the results by identifying the MPDUs
Montgomery County, Maryland

26. Montgomery County, Maryland Moderately Priced Dwelling Unit (MPDU) Program
Achieving Compatibility - Judge the results by identifying the MPDUs
MPDUs
Market Rate
MPDUs
MPDUs
Market Rate
MPDU duplexes in a single family
detached community.
Montgomery County, Maryland

27. Montgomery County, Maryland Moderately Priced Dwelling Unit (MPDU) Program
Another housing type - Identify which are market rate and which are MPDUs
Montgomery County, Maryland

28. Montgomery County, Maryland Moderately Priced Dwelling Unit (MPDU) Program
Another housing type - Identify which are market rate and which are MPDUs
All MPDUs
All MPDUs
All Market Rate
All Market Rate
Montgomery County, Maryland

29. Montgomery County, Maryland Moderately Priced Dwelling Unit (MPDU) Program
More choices:
Which are the MPDUs?
Montgomery County, Maryland

30. Montgomery County, Maryland Moderately Priced Dwelling Unit (MPDU) Program
More choices:
Which are the MPDUs?
Market Rate
MPDUs
MPDUs
MPDUs
Montgomery County, Maryland

31. Montgomery County, Maryland Moderately Priced Dwelling Unit (MPDU) Program
Another way to mix MPDUs with Market Rate Units. Which is which?
Montgomery County, Maryland

32. Montgomery County, Maryland Moderately Priced Dwelling Unit (MPDU) Program
Another way to mix MPDUs with Market Rate Units. Which is which?
Market Rate
Market Rate
MPDUs
Piggy Back MPDUs
Montgomery County, Maryland

33. Montgomery County, Maryland Moderately Priced Dwelling Unit (MPDU) Program
The market rate houses in this community are large and expensive. In this instance, there is absolutely no way to achieve compatibility.
Examples of single-family detached MPDUs at Avenel, a community of multimillion dollar houses.
Montgomery County, Maryland

34. Montgomery County, Maryland Moderately Priced Dwelling Unit (MPDU) Program

35. 2004 Median Housing Sales Price
Montgomery County, Maryland Moderately Priced Dwelling Unit (MPDU) Program
Current housing situation with MPDUs:
2004 Median Housing Sales Price
New Resale MPDU
SF Detached $666, $450,000
SF Attached $427, $283, $140,000*
All Single Family $395,000
* calculated for late 1999 on a three bedroom townhouse including: land, construction, financing, legal and closing, marketing and sales commission, builders overhead allowance, and architectural compatibility
Average Rent (2004) MPDU
Efficiency $ $ 854
1-BR $1, $ 906
2-BR $1, $1,083
3-BR $1, $1,260
Total MPDU’s Produced through = 11,647
MPDUs still in inventory = approximately 3,500
Montgomery County, Maryland

36. Program Implementation:
Montgomery County, Maryland Moderately Priced Dwelling Unit (MPDU Program
Program Implementation:
The local government carries out regulatory and administrative functions and the building industry produces the housing
Builders must:
subdivide the land and obtain Planning Board approvals
obtain building permits
construct the units
work with DHCA to price and offer the units
work with consumers selected to purchase units
Montgomery County, Maryland

37. Montgomery County, Maryland Moderately Priced Dwelling Unit (MPDU
Three County Agencies with Responsibility:
The Planning Board
The Department of Housing and Community Affairs (DHCA)
The Department of Permitting Services (DPS)
Montgomery County Government must:
administer the zoning and plan approval
assure that the project’s MPDU requirements are documented
certify consumer eligibility
establish agreements with developers on staging
establish MPDU pricing
oversee the selection of potential buyers through the lottery
enforce resale and shared profit restrictions

38. Public cost to administer the program:
Montgomery County, Maryland Moderately Priced Dwelling Unit (MPDU Program
Public cost to administer the program:
The cost to administer the zoning requirements is absorbed in the normal zoning administration program.
The cost to carry out the non-zoning part of the program is in the County’s Department of Housing and Community Affairs budget.

39. More background, forms and regulations can be found at:
Montgomery County, Maryland Moderately Priced Dwelling Unit (MPDU Program
More background, forms and regulations can be found at:
Questions?: