Category Archives: Development

Development, Economy, purple line

Housing Initiative Partnership Responds

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Last week, I published a blog post on the conundrums facing the Purple Line Compact effort to preserving affordable housing and commercial rents in areas around new Purple Line stations. At the end of the piece, I wrote that I’d welcome hearing more from Compact proponents about “creative ideas to ease the collision of fundamental economic forces with real social needs.” I appreciate that Maryann Dillon, Executive Director of the Housing Initiative Partnership, took up this public invitation. Here are her thoughts:

In his article on October 2, “Fair Development Compact Pipe Dream”, David Lublin rightly argues that a “central goal of the Purple Line is to improve transportation connections” and that, as a result, “the land around the stations should become more desirable and valuable”.

He cites Bethesda, Silver Spring, Ballston and Clarendon as successful examples of places that have become more desirable given their access to transportation including Metro. These places boast stronger tax bases that help local governments provide better services. I think we all can agree that these are four of the most desirable and attractive destinations in the DC metro area, and that, as a result, they naturally have increased in value.

What David fails to note, however, is that all four of these locations are beneficiaries of progressive housing policies by the Montgomery and Arlington County governments put in place well before revitalization occurred.

Forty years ago, Montgomery County pioneered the concept of “inclusionary zoning”. Called Moderately Priced Dwelling Units (MPDUs), Montgomery County’s program requires developers of over 20 residential units to include 12.5% of the units as affordable to working families earning less than 80% area median income ($85,600 for a family of four). The MPDU program has created thousands of homes affordable to moderate income renters and homebuyers scattered in every neighborhood of the County. In this way, a broader range of residents can live near transportation and jobs, reducing the burdens on our roads from long-distance commutes. A mix of housing types makes it easier for employers to find workers for their restaurants, hotels, offices and local services that make these communities special, let alone the teachers, fire and police personnel necessary to maintain their high quality of life. Montgomery County commits around $50 million annually from its own general revenue to support affordable housing development in its most desirable communities.

Likewise, the Arlington County Affordable Housing Ordinance offers developers seeking additional density in the site plan process the choice of providing affordable units or contributing to the Affordable Housing Investment Fund. The Special Affordable Housing Protection District (SAHPD) as outlined in the General Land Use Plan identifies existing affordable housing sites within the County’s two Metro Corridors that are planned for site plan projects of 3.24 FAR or higher. Existing affordable housing units are to be replaced on a one-for-one basis, again with the goal of protecting and preserving the mix of housing types and prices that can help keep these corridors dynamic and diverse. Arlington has committed $13 million in the current fiscal year to support its Affordable Housing Investment Fund.

Last year, the Prince George’s County Council passed inclusionary zoning legislation and charged the County Executive with recommending areas of the County in which this zoning would apply. While the recommendations have been made, County Council has not yet taken any action on them. Unlike its neighbors, Prince George’s County does not dedicate any of its own resources to develop or renovate affordable housing.

On August 30, 2014, the Washington Post published a story, “Affordable rents fading away in DC’s housing picture” which described the imbalance between the overbuilt “luxury” rental market and the continued loss of more affordable and moderately prices apartments. Montgomery and Prince George’s Counties share the distinction of having 50% of their renters “cost burdened”, where they spend more than 50% of their gross income on rent. Another surprise… both the District and Montgomery County have a higher number of households earning less than 50% of the area median income than does Prince George’s County, despite perceptions to the contrary.

Surely we all understand that the Purple Line will be an economic boost for the neighborhoods along its way. But, as higher density is introduced into some of these redevelopment corridors, our State and Counties should take measures to protect the residents and small businesses that have kept many of these areas thriving, despite the lack of investment in properties for so many years. These residents kept the faith in the bad years. They should share in the rewards once the good years finally come.

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Development, Economy, purple line

Fair Development Compact Pipe Dream?

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The rally for a compact to promote fair development in relation to the Purple Line will occur on October 6th. What is the compact according to its promoters?

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In essence, the key purposes of the compact are to prevent the displacement of affordable housing and small businesses currently located near Purple Line stops.

I look forward to seeing how they plan to square this circle.

Obviously, a central goal of the Purple Line is to improve transportation connections. And if people can more easily get from one place to another, the land around the stations should become more desirable and valuable, which will make it harder to afford to live and more expensive to operate a business near the stations as rents for housing and commercial space rise.

Indeed, proponents claim that the Purple Line will propel economic development around the stations. If successful, the spike in land prices will be far stronger than caused by faster transportation alone. It should also cycle in a positive way.

Think about places like Bethesda, Silver Spring, Ballston and Clarendon. As more businesses open and more people travel to the area, it becomes more desirable to locate businesses there. Similarly, more people will want to live near jobs and the commercial establishments in the area.

Just as improvements to the educational system or reductions in crimes make a place more attractive to open a business or establish a residence, ease of access both in terms of transportation and customers has the same effect.

Land prices will rise, as will rents for housing and businesses. Of course, the State and the County want this to happen. It’s not just a side effect but the point of spending $2.5 billion to build the Purple Line.

And hardly for nefarious reasons. As Montgomery County Councilmember George Leventhal has often explained correctly, economic growth generates jobs–not to mention the taxes that pay for services.

Local and state governments are always looking for ways to increase the tax base because the demand for services naturally exceeds the monies available. Moreover, if growth doesn’t occur, the demand for services rises even as funds dry up.

[And let’s avoid for now the political dynamite surrounding the benefits to the County’s budget balance–if not moral deficit–of attracting wealthy residents or displacing poorer ones to other jurisdictions. For our purposes, we’ll just assume that they stay in the County even if they have to move.]

In short, the proposed compact is likely to have success only to the extent that it tilts against the economic goals of the Purple Line. Some stations may attract much less growth than others–just compare the Metro stops in Prince George’s to those in Montgomery. In these areas, prices will rise comparatively less and they will remain more affordable.

Squaring the circle of displacement and growth seems all but impossible. If the County somehow prohibits or slows rents from rising on housing or businesses, it inhibits the growth of its tax base and undermines a central rationale for building the Purple Line.

To an extent, the inevitable concentration of growth around some stations but not others may provide some relief. But probably not in some areas that deeply concern Casa de Maryland like Langley Park, which is a natural prime target for redevelopment as middle-class residents get displaced from other more expensive areas.

It will not all be bad. Economically rising residents who have managed to acquire properties will benefit if they end up making a tidy profit if and when they decide to sell their land. Small businesses who have longer terms leases will see their customer base rise. And many will relocate successfully, though others will not.

And perhaps the proponents of the Compact have creative ideas to ease the collision of fundamental economic forces with real social needs that development around the Purple Line will not address.

If so, I look forward to hearing more about them. Engagement of an interested public and government on the problem may provide real benefits. But it’s not going to be easy.

 

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