A Tale of Two Counties
By Mark Fogarty
7 min read
Strategies to keep the workforce in town
Workforce housing is on the minds of the elected officials of Montgomery County, MD even more than it normally is. That’s because the county, just north of Washington, DC, is one of 20 finalists to be the site of the second North American headquarters of giant Internet retailer Amazon.com. And workforce housing is definitely on the minds of Amazon executives as they deliberate where to locate their “HQ2.”
Montgomery County councilmember Roger Berliner told a session at the recent Affordable Housing Summit of the National Council of Housing Market Analysts that the county is paying plenty of attention to what Amazon is saying.
“The Amazon bid is something that really focuses the mind like nothing else,” he told the Philadelphia meeting of the group, an affiliate of the National Housing & Rehabilitation Association.
“One of their criteria is, what’s your affordable housing stock? Do you have workers that are going to be able to live in the community in which we are going to locate? Having affordable housing that can house your workforce is incredibly important for any community that wants to bring about more economic development.”
The retailer, which expects to make its decision this year, says the project will bring with it $5 billion in construction spending and up to 50,000 jobs, with multiplier effects that could bring in tens of billions of dollars of new investment.
The county is facing stiff competition for the giant corporate move, including from Toronto, New York, Boston, Philadelphia, Washington, DC, Atlanta, Miami, Chicago, Denver, Los Angeles and Dallas. But it has already beaten out another 218 locations whose bids didn’t make the final cut.
Workforce program in place
Montgomery County, home to one million people, also has going for it the fact that it has a workforce housing program already in place. It has thought about affordable housing for a long time. The county was one of the first in the country to implement a Moderately Priced Dwelling Unit (MPDU) program, for instance, in 1974.
The workforce housing program includes both rental and ownership units, Berliner said, and features a county down payment assistance program along with a state mortgage program. The county also provides single-family rehab and weatherization programs.
The county says its workforce housing program has a number of goals, including:
- Promoting the construction of housing affordable to households with incomes at or below 120 percent of the area median income (which is a hefty $110,000 for a family of four.)
- Increasing the availability of housing for county public employees and other workers who cannot afford the high cost of living close to their workplaces.
- Helping county employers reduce labor shortages of skilled and semi-skilled workers by providing housing accessible to their workplaces.
- Reducing traffic congestion by shortening commuting distances for employees who work in the county but who otherwise would live elsewhere.
In addition to new construction projects, the workforce housing program also includes existing homes, according to Stephanie Killian, acting division chief for the county Division of Housing.
Successful applicants can qualify for Federal Housing Administration mortgages through the state and down payment assistance of up to $25,000 from the county, Killian said.
The idea is to help first-time home buyers get into starter homes, she said. The county is also re-starting a single-family home rehabilitation effort next year.
According to a list Killian provided, the county has eight new construction projects with a total of more than 200 units of workforce housing. The highest number is at a Rockville, MD development called Westside Shady Grove. Nine workforce housing units have been built there and subsequent rental and for-sale phases scheduled to be finished in 2019 feature 16 for-sale units and 64 rentals.
“Income disparity is a serious issue,” said Berliner, who would like to be the next county executive. He told the housing market analysts, “We are a community of great wealth. Montgomery County is one of the top ten richest in the country. We are a magnet for immigrant communities. We have a great disparity in our county. I call us a tale of two counties.”
A family of four can have an income as high as $132,500 to qualify for the workforce program, and a family of six can have a maximum income of $153,500 to fit in the county’s 70-120 area median income (AMI) bucket.
How much house can a family at 100 percent of Washington, DC Metropolitan Statistical Area AMI get? At one new construction development called The Darcy at 7171 Woodmont Ave. in Bethesda, the deal comes to $343,675 for a two-bedroom, two-bathroom condominium of between 820 and 855 square feet.
That compares to a recent listing of market-rate condos for sale at The Darcy for prices between $715,000 and $1,885,000. The more expensive one has two bedrooms, two-and-a-half baths and 2,140 square feet of space.
Another project with workforce housing is The Flats at Bethesda, adjacent to The Darcy. The rental project has 24 one- and two-bedroom highrise workforce housing apartments in downtown Bethesda. The eight one-bedroom units rent for $1,710 per month and the 16 two-bedroom units rent for $2,055 per month.
There are a good many restrictions workforce housing occupants must follow at these projects. They include a 20-year control period in which owners must occupy the unit as their primary residence. If the owner can’t remain in the unit they must sell it to another workforce housing applicant.
Refinancings are allowed, but not at market rates, rather at prices set by the Department of Housing and Community Affairs. Owner equity cannot dip below $10,000. And, when the unit is sold after the 20-year control period, owners must contribute half of a DHCA-defined “excess” to the county’s Housing Initiative Fund.
The Housing Initiative Fund is currently budgeted at about $67 million ($8 million of that is debt), Berliner told the meeting. If he is elected executive, he’d like to double that.
It’s a key concept, he feels. It comes down to, “Where are the workers living in your community? Because they can’t afford to live in Montgomery County. They live in Frederick (an adjacent city in Maryland). And then they end up commuting through our communities and causing sprawl and traffic jams.”
Looking for solutions
Finding solutions isn’t always easy, he said. “With workforce housing we have a struggle. At above 100 percent people say ‘gosh, you are going to spend our scarce resources on people above 100 percent AMI? And you say, well, that depends if you want them to live in Montgomery County or not.’”
The county has other projects with mixed uses that include some workforce housing, Berliner told the NCHMA meeting. One is The Lindley rental housing project at 8406 Chevy Chase Lake Terrace in Chevy Chase Lake. It is developed and owned by the Housing Opportunities Commission which has a development partner called EPA. Forty of its 200 units are affordable to those at 100 percent AMI.
The project used land already owned by HOC and the new construction cost $68 million, raised through mortgage revenue bonds and developer equity. The county has a lot of vacant land, said Berliner, who built a law firm that gained national recognition in the field of energy and consumer protection before he was elected to the council in 2006.
“We have a lot of county property,” he said. “Basically with land at no cost you can make a lot of good things happen.”
Story Contacts:
Roger Berliner
Montgomery County (MD) county councilmember
240-777-7828 (voice)
(MD Relay) Dial 711 or 800-201-7165 (TTY)
[email protected]
Stephanie Killian
Montgomery County Division of Housing acting division chief
240-777-3692
[email protected]
