A plan designed to increase housing in Montgomery County by offering incentives to developers was revived by council members who voted 9-2 to override County Executive Marc Elrich’s veto.
Expedited Bill 2-25, the “Payment in Lieu of Taxes-Affordable Housing” bill, would make 100% of the real property tax that developers would pay for a period of 20 years exempt if they converted office buildings with a 50% or greater vacancy rate into housing. They would also have to make 17.5% of the housing units affordable.
On Tuesday, the 11-member council explained the rationale behind their votes.
“It’s a win-win for the county. It brings in housing that we need. It addresses the office vacancy that we have,” Council President Andrew Friedson said of the bill. “Disinvestment is a race to the bottom, and if we don’t do anything to address our office vacancies, then we are participating in that race to the bottom.”
Council member Natali Fani-Gonzalez said overriding the veto and reviving the bill would create a climate where more housing could be built and more people move in.
“When that happens, you have people paying income taxes. We have more people paying the recordation taxes. We have more people paying the all the fees that you have to pay when these buildings are being redeveloped,” she said.
“It’s not just the property tax, it’s more than that. I find this a very responsible way to move forward, especially looking at the challenging times that we’re facing in our county, in our region, in our nation. Doing nothing is not an option,” she added.
Council member Laurie Anne Sayles told her colleagues, “I believe the urgency of our housing crisis demands action now.”
“This bill demonstrates real progress in balancing community needs and the realities of housing development,” she added.
A number of council members mentioned the pressures facing the national and local economies, and Council member Evan Glass, in voting to override the veto said, “Our kids and our grandkids cannot afford to live in Montgomery County, and it’s getting increasingly harder for seniors, working families and our own county employees.”
The only council members who voted against the override were Council members Will Jawando and Kristin Mink.
“After weeks of study, the math of this proposition simply isn’t math-ing. In my view, it is fiscally irresponsible for the county to override this veto, because this extremely broad bill does not have the appropriate fiscal guardrails to protect the county,” Jawando said.
“I agree with the premise, as I’ve stated before, that it makes sense to incentivize the conversion or disposition of chronically vacant buildings that serve no possible office purpose and are weighing down our community. But this is not that bill,” he added.
“I support the goals of this bill. My fervent hope is that it generates new projects without cutting into property tax-producing projects that would have otherwise occurred,” Council member Kristin Mink said.
Mink added that the bill could prompt developers to make decisions that would cost the county: “If the math that they do, in light of this bill, causes them to instead do an office conversion in order to take advantage of the tax abatement, then that is a huge loss for every project.”
County Executive Elrich vetoed the bill, and in his letter explaining his veto to Council President Kate Stewart, he wrote that the bill could “significantly impact County revenues, adversely affect racial equity, and provide excessive tax benefits to developers with no meaningful public benefit.”
According to analysis by the county’s Office of Legislative Oversight, “it is unclear whether the Bill would incentivize conversions that would not otherwise occur.”
But, the analysis continued, “certain residents could benefit from increased access to affordable housing, potentially lowering nondiscretionary household expenses.”
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