Subject
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Authorization for the Acting City Manager to Execute the First Amendment to the Moderately Priced Dwelling Unit Program Agreement between the Mayor and Council and Pulte Home Company, LLC
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Department
Housing and Community Development
Recommendation
Staff recommends that the Mayor and Council authorize the Acting City Manager to execute the First Amendment to the Moderately Priced Dwelling Unit Program Agreement for the Farmstead Residential District Development between the Mayor and Council and Pulte Home Company, LLC, subject to approval as to legal form by the City Attorney.
Discussion
Pulte Home Company, LLC (“Pulte”) and KBSG Associates LLC are developing a single residential community consisting of, among other things, townhome units and multifamily condominium units (the “Farmstead Residential District Development”). On November 8, 2021, the Mayor and Council adopted Resolution No. 17-21 (the “Project Plan Resolution”) approving Project Plan Application PJT2021-00013, allowing for, among other things, the development of 370 residential dwelling units in the Farmstead Residential District Development, including 94 townhome units and 118 multifamily condominium units that will be developed, constructed, and sold by Pulte. Pursuant to the Project Plan Resolution, a minimum of 40 townhome units and 18 multifamily condominium units in the Farmstead Residential District Development are required to be designated as Moderately Priced Dwelling Units that are reserved for sale to eligible households.
Prior to obtaining a building permit to construct its section of the Farmstead Residential District Development, Pulte was required to submit to the Department of Community Planning and Development Services a Moderately Priced Dwelling Unit Program Agreement, approved by the Mayor and Council and the City Attorney, which, among other things, provided for the required number of moderately priced dwelling units in Pulte’s section of the Farmstead Residential District Development. On November 9, 2023 and April 8, 2024, the Mayor and Council approved and authorized the Acting City Manager to execute the MPDU Program Agreement between the Mayor and Council and Pulte for the Pulte section of the Farmstead Residential District Development (the “Pulte MPDU Program Agreement”), pursuant to which Pulte is required to designate, administer, and sell 20 of its townhome units and 18 of its multifamily condominium units in the Farmstead Residential District Development as Moderately Priced Dwelling Units. In accordance with Section 13.5-5(l) of the Rockville City Code, Pulte is also required to execute and record certain covenants that impose upon each of its Farmstead Residential District Development MPDUs restrictive covenants, conditions, and requirements that, among other things, maintains the long-term affordability of the MPDUs for the duration of the compliance control period.
The restrictive covenants for Pulte’s 18 MPDU multifamily condominium units cannot be recorded until the State of Maryland issues Tax Identification Numbers for each of the units, which cannot be issued until after Pulte’s multifamily condominium units have been constructed. Because it is critical for the restrictive covenants to be recorded as soon as the Tax Identification Numbers are issued by the State of Maryland, Section 2.05(a)ii of the Pulte MPDU Program Agreement currently provides that Pulte is not permitted to offer any of its 18 multifamily condominium units in the Farmstead Residential District Development for sale, unless and until Pulte has first executed and recorded the restrictive covenants for those 18 MPDU condominium units.
Pulte has requested that it be permitted to begin selling the 18 MPDU condominium units before the restrictive covenants are recorded. In an effort to accommodate Pulte’s request, yet still protect the City’s interest, the staff has proposed an amendment to the Pulte MPDU Program Agreement to provide that Pulte will execute and record the restrictive covenants “prior to obtaining a certificate of occupancy” for Pulte’s 18 MPDU condominium units.
Mayor and Council History
On October 4, 2021, the Mayor and Council adopted Resolution No. 14-21 enlarging the corporate boundaries of the City of Rockville to include the Subject Property, and on November 3, 2021, the Mayor and Council, Victor, Inc., the original owner of the Subject Property, and the KBSG Owner, the subsequent owner of the property, entered into and executed that certain Annexation Agreement.
On November 8, 2021, the Mayor and Council adopted Resolution No. 17-21 approving Project Plan Application, permitting the development of 370 residential dwelling units in the Farmstead Residential District Development, including 252 townhouses with front and rear-loaded garages and 118 two-over-two stacked condominium multifamily units, including 58 MPDUs.
On November 9, 2023, the Mayor and Council approved the MPDU Program Agreement with Pulte Home Company, LLC. With this approval Pulte Home Company, LLC was able to obtain a building permit for King Farm Farmstead development.
On April 8, 2024, the Mayor and Council authorized the Acting City Manager to execute the Moderately Priced Dwelling Unit Program Agreement and approved and authorized the Acting City Manager to execute the Declaration of Restrictive Covenant for the King Farm Farmstead Development Site between the Mayor and Council of Rockville and Pulte Home Company, LLC.
Next Steps
This First Amendment to the Moderately Priced Dwelling Unit Program Agreement between the Mayor and Council of Rockville and Pulte Home Company, LLC will be finalized for execution by all parties.