Subject
title
Affordable Housing Presentation, Discussion and Possible Approval
end
Department
Housing and Community Development
Recommendation
Staff recommends that the Mayor and Council receive the presentation, discuss, and possibly approve their priorities for specific short-term affordable housing initiatives to be completed within 0-2 years. Staff recommended priorities are shown at the end of the discussion section.
Discussion
For definitions of commonly used terms used in housing policy, please see Attachment A.
Background
The United States is in a housing crisis. According to Freddie Mac, the mortgage finance giant, the nation is short by approximately four million units. The deficit is particularly true with low-cost rentals and the entry-level starter homes favored by first-time buyers. The Great Recession of 2008 led to a severe drop in housing production through the nation, including in Rockville. Inflation, high interest rates, and zoning restrictions continue to contribute to the shortage. The lack of supply has caused home prices and rents to significantly rise, and the gap in affordability is worst for the lowest-income households.
While rising housing values are beneficial to those who already own property, high housing costs are a challenge to many individuals and families, especially newcomers to Rockville and those with lower incomes. Finding a place to rent or buy is more expensive than in decades past. Much less undeveloped land is available in the city or county while the overall regional population has increased markedly, resulting in a rapid increase in the cost of land. Other pressure points to the city’s housing challenge are Rockville’s desirability as a place to live and work within the Washington, D.C. region and a growing senior population. Although Rockville has seen several new single-family townhouse developments in recent years, most future housing will be multi-family buildings in mixed-use centers served by public transportation. With limited construction of new for-sale homes, the price of existing homes has continued to rise beyond the reach of most Rockville residents and people who would like to be Rockville residents.
The housing crisis has led to a significant economic development issue. The lack of affordable housing has lasting impacts on the local workforce and can hinder businesses from attracting and retaining the talent they need, thereby hindering growth and deterring new businesses from moving in. A continuum of housing types is needed, especially a housing product that is affordable, in an urban setting, and close to transportation alternatives. When workforces cannot find housing or maintain housing expenses, they explore new options, sometimes driving them away from the community, region, or even state. As more people who work in Rockville are forced to live farther away due to high housing costs, traffic within the city worsens.
Furthermore, housing impacts a person’s health, educational and employment opportunities, social network, and overall quality of life. The barriers brought about by high housing prices are disproportionately felt by Black, Hispanic, and other historically excluded groups. Without action, the crisis is expected to worsen due to continuously growing demand to live in the city and the surrounding region.
According to housing needs projections by the Metropolitan Washington Council of Governments (MWCOG), the Washington Metro area will need to add approximately 430,000 new housing units between 2020 and 2040 to meet projected demand (Attachment C). The City of Rockville’s share of this expected new demand is approximately 8,600 housing units by 2040 (Figure 1), an increase to the 28,800 housing units in Rockville in 2020 to a projected demand of 37,400 housing units in 2040.
Based on these needs, MWCOG established regional housing targets in 2019. On October 21, 2019, Mayor and Council voted to support a resolution by the Montgomery County Council endorsing the targets. This established a target of 1,000 additional housing units between 2020 and 2030 beyond the 2,800 units already forecast for this period with a goal of 75% of new housing units to be affordable to low- and middle-income households and located within activity centers like Town Center. Most of the growth in new housing is expected to be in multi-family units.
Figure 1. Projected Rockville Housing Growth, 2015-2040
Source: Rockville 2040 Comprehensive Plan; City of Rockville demographic forecasts, 2018
Additionally, in 2021, the Rockville Mayor and Council adopted the Rockville 2040 Comprehensive Plan (Comp Plan), which includes a chapter on housing (see Attachment B). This chapter’s vision statement is to: “Ensure that current and future Rockville residents have a diverse array of quality housing choices that are affordable and livable, at all socio-economic levels.” The three supporting goals to this vision are as follows:
1. Foster sufficient market-rate housing development to provide housing affordable for the wide range of those who live, and wish to live, in Rockville.
2. Create and improve incentives, programs, and policies for production and preservation of quality affordable housing.
3. Expand and improve Rockville’s public and assisted housing programs for low- and very low-income residents.
Rockville Data Profile
Demographics
Population
Rockville grew at a rate of 9.7% between 2010 and 2020 to reach 67,117 residents. This is about the same rate of growth as Montgomery County as a whole, but slower than the City of Gaithersburg’s 16.2% growth rate. Population growth has been slower than the previous decade when Rockville’s population increased by 29.2% from 2000-2010.
Income
The median household income in Rockville is $106,338, as of 2022. This is 43% higher than the national average, 12% higher than Maryland, and similar to that of Montgomery County. In Rockville, 12.9% of residents live in poverty (compared to 7.9% in Montgomery County, 9.6% in Maryland, and 12.5% in the Unites States), although the housing affordability crisis affects many more residents of both low and moderate incomes. Figure 2 shows the rent that is affordable for each major income group, which is frequently out of step with the rental options available in the city. Part of the solution lies not only in providing more affordable housing opportunities, but in improving residents’ incomes and economic circumstances so that they may be able to afford existing housing options.
Figure 2. Area Median Income (2021)
|
Income Group |
Income |
Affordable Rent or 30% of Income |
|
0-30% AMI |
$0 - $38,700 family of four $0 - $27,090 single person |
$0 - $968 family of four $0 - $677 single person |
|
30-60% AMI |
$38,700 - $77,400 family of four $27.090 - $54,190 single person |
$968 - $1,935 family of four $677 - $1,355 single person |
|
60-80% AMI |
$77,400 - $103,200 family of four $54,190 - $72,240 single person |
$1,935 - $2,580 family of four $1,355 - $1,806 single person |
|
80-100% AMI |
$103,200 - $129,000 family of four $72,240 - $90,300 single person |
$2,580 - $3,225 family of four $1,806 - $2,258 single person |
|
100-150% AMI |
$129,000 - $193,500 family of four $90,300 - $135,950 single person |
$3,225 - $4,838 family of four $2,258 - $3,399 single person |
Source: U.S. Department of Housing and Urban Development; City of Rockville, 2021
Housing
According to the 2020 Census, 55% of Rockville residents were homeowners and 45% were renters. Nearly 30% of owner-occupied homes are owned “free and clear,” with about 70% owned through a mortgage or loan. Due to high housing prices, homeownership rates have dropped since the 2000s when the city was 68% homeowners and 32% renters (see Figure 3). Another trend in Rockville has been a decline in average household size from 2.7 persons per household in 2000 to 2.55 in 2020. This parallels regional and national trends. 35% of total households identify themselves as non-family households.
Figure 3. Rockville Homeownership Rates (1990-2020)
Source: Rockville 2020 Census Report; US Census Bureau. 1990, 2000, 2010 and 2020 Decennial Census
Housing costs are high and continue to increase. The median renter pays $2,101 per month and needs an income of $84,040 to afford such a rent. This has increased 34% from $1,568 in 2010 and is on par with rents in North Bethesda, Silver Spring, and Wheaton (Figure 6). Bethesda has a much higher average rent at $2,659, whereas Takoma Park has a much lower average rent at $1,285, due to its longstanding rent stabilization policy and lack of new multi-family housing construction. Figures 4 and 5 show how multi-family rental rates have changed since 2000.
Figure 4. Multi-family Rent Growth Table (2000-2023)
|
Year |
Effective Rent Per Unit |
Effective Rent per SF |
Effective Rent % Growth |
|
2000 |
$1,318 |
$1.42 |
- |
|
2001 |
$1,400 |
$1.51 |
6.3% |
|
2002 |
$1,411 |
$1.52 |
0.7% |
|
2003 |
$1,367 |
$1.47 |
-3.1% |
|
2004 |
$1,357 |
$1.46 |
-0.7% |
|
2005 |
$1,373 |
$1.48 |
1.2% |
|
2006 |
$1,432 |
$1.54 |
4.2% |
|
2007 |
$1,516 |
$1.63 |
5.8% |
|
2008 |
$1,551 |
$1.67 |
2.5% |
|
2009 |
$1,578 |
$1.70 |
1.5% |
|
2010 |
$1,631 |
$1.76 |
3.5% |
|
2011 |
$1,664 |
$1.79 |
2.0% |
|
2012 |
$1,691 |
$1.82 |
1.7% |
|
2013 |
$1,704 |
$1.84 |
0.8% |
|
2014 |
$1,735 |
$1.87 |
1.6% |
|
2015 |
$1,740 |
$1.87 |
0.3% |
|
2016 |
$1,761 |
$1.90 |
1.3% |
|
2017 |
$1,789 |
$1.93 |
1.4% |
|
2018 |
$1,824 |
$1.96 |
1.9% |
|
2019 |
$1,891 |
$2.04 |
3.7% |
|
2020 |
$1,903 |
$2.05 |
0.7% |
|
2021 |
$2,012 |
$2.17 |
5.6% |
|
2022 |
$2,159 |
$2.32 |
7.3% |
|
2023 |
$2,237 |
$2.41 |
3.8% |
Source: CoStar
Figure 5. Multi-family Rent Growth Graph (2000-2023)
Source: CoStar
Figure 6. Average Asking Monthly Rents in Montgomery County (2nd Quarter, 2022)
|
Submarkets as Defined by CoStar |
Average Asking Monthly Rents |
|
Bethesda |
$2,659 |
|
North Bethesda |
$2,283 |
|
Germantown-Gaithersburg |
$1,889 |
|
Rockville |
$2,090 |
|
Silver Spring |
$1,960 |
|
Takoma Park |
$1,285 |
|
Wheaton |
$1,906 |
|
Northern Unincorporated Montgomery County |
$1,925 |
|
Montgomery County |
$1,980 |
Source: Rockville 2020 Census Report; Costar Q2 2022; Montgomery Planning
For buyers, the median home value is $662,400. This has increased 34% from 2010 when the median home value was $494,600. During the same period, the median income increased by only 16%. To afford the current median home value, a household would need $132,480 for a 20% down payment and an income of $184,440 to afford the estimated $4,611 monthly payment.
As a result of these high housing costs, 40% of homeowners and 23% of renters pay 50% or more of their income in housing costs, meaning they are considered severely housing cost burdened. Over 40% of renters pay more than 30% of their income for rent, making them housing cost burdened (see Figure 7).
Figure 7. Percent of Cost-Burdened Renter-Occupied Households in Rockville and Nearby Jurisdictions
|
Jurisdiction |
Percent of gross household income paid by renter-occupied households |
|
|
More than 50% |
More than 40% |
More than 30% |
|
United States |
22.70% |
31.00% |
45.70% |
|
State of Maryland |
23.10% |
31.70% |
46.60% |
|
District of Columbia |
20.90% |
27.40% |
43.00% |
|
Frederick County |
22.20% |
29.30% |
46.30% |
|
City of Frederick |
21.70% |
29.10% |
51.00% |
|
Montgomery County |
23.60% |
32.40% |
48.30% |
|
City of Gaithersburg |
24.70% |
35.10% |
47.90% |
|
City of Rockville |
19.10% |
26.40% |
43.30% |
|
Prince George’s County |
23.30% |
32.70% |
48.90% |
|
City of Bowie |
28.40% |
34.80% |
47.30% |
|
Arlington County |
16.70% |
23.60% |
37.10% |
|
Fairfax County |
20.70% |
28.70% |
44.10% |
|
Loudoun County |
19.60% |
28.00% |
42.00% |
|
Prince William County |
21.50% |
29.60% |
47.30% |
|
City of Alexandria |
18.80% |
27.20% |
42.10% |
|
City of Fairfax |
27.50% |
36.00% |
41.70% |
|
Source: US Census Bureau. American Community Survey 5-year Estimate, 2020, Table B25070 |
Source: Rockville 2020 Census Report
Existing Housing Stock and Future Pipeline
Since 2015, Rockville has produced approximately 4,000 housing units (630 single-family homes and 3,400 multi-family homes), with approximately 840 units being senior housing.
Between now and 2050, Rockville there are over 6,000 housing units in the pipeline, with a total of 12,160 units either approved, projected, pending, or completed (see Figure 8). This puts Rockville on track to meet its housing targets of 3,800 units by 2030 and 8,600 housing units by 2040. However, not all approved, projected, or pending units will necessarily turn into completed projects due to a range of economic factors, including many outside of the city’s control. The city may be able to activate projects to develop sooner, such as by streamlining the process for more by-right approvals.
Figure 8. Housing Units Forecast (as of March 2024)
|
|
2020-2030 |
2031-2040 |
2041-2050 |
Total |
|
Approved |
4,699 |
460 |
- |
5,159 |
|
Projected |
- |
3,440 |
1,843 |
5,283 |
|
Pending |
295 |
226 |
- |
521 |
|
Completed |
1,197 |
- |
- |
1,197 |
|
Total |
6,191 |
4,126 |
1,843 |
12,160 |
Source: City of Rockville, Department of Community Planning and Development Services
Existing Affordable Housing Stock and Future Pipeline
Approximately 90% of housing in Rockville was produced through market-rate production and transactions between buyers and sellers, or landlords and tenants. The remaining 10% of housing units are supported by city or other programs to produce affordable housing or are public and assisted housing units directly subsidized by public investment.
The MPDU program is Rockville’s main source of new affordable housing. The program requires rental and for-sale development with 50 or more units to set aside at least 15% of the homes for households earning a certain income. MPDUs are not owned or managed by the city. Since 2015, there have been 644 rental MPDUs constructed (408 at 60% AMI and 236 at 80% AMI) and 68 for-sale MPDUs (17 at 50% AMI, 34 at 60% AMI, and 17 at 80% AMI). Looking forward, there are 164 MPDUs under construction, with 777 approved in the pipeline (see Figure 9). This falls dramatically short of MWCOG’s goal to have 75% of new housing units to be affordable to low- and middle-income households, since MPDUs represent 15% of total new multi-family housing construction in projects with 50 units or more. Due to high construction costs, new market-rate housing does not tend to be affordable to low- or middle-income households without additional subsidy or intervention.
Figure 9. MPDU Pipeline (as of March 2024)
|
|
Total Units |
MPDUs |
|
Under construction |
1,260 |
164 |
|
Approved |
4,381 |
777 |
|
Proposed or Under Review |
678 |
89 |
|
Total |
6,319 |
1,030 |
Source: City of Rockville, Department of Community Planning and Development Services
Additional affordable housing opportunities are offered by Rockville Housing Enterprises and non-profit or mission-driven housing providers. RHE owns and manages 60 rental units in King Farm and Fallsgrove, 177 units of affordable housing at Parkside Landing, 121 units at Scarborough Square, and 80 public housing units. RHE also administers 450 units in its Housing Choice Voucher program.
To meet the city’s housing production and affordability goals, Rockville will need substantially more market-rate and subsidized, income-restricted housing, alongside other policy interventions and partnerships to help households improve their economic outlooks and to ensure housing stability and quality. The housing crisis is multi-faceted and as such there is no one strategy that alone will fully address the challenges Rockville faces. The next section recommends an approach to crafting a housing strategy appropriate to the complexity of the situation.
Crafting a Housing Strategy
The emerging best practice for housing policy is to think of it as a three-legged stool: supply, stability, and subsidy. A strong housing affordability strategy will pursue policies and programs that cover all three areas. There are others version of this, such as produce, protect, and preserve. These three-pronged models reflect the complexity and diversity of public policies needed to improve housing affordability, stability, and safety.
The following section will further define each of these three areas, give a short overview of existing initiatives related to that area of housing policy, and then provide a menu of potential new policies to pursue. Note that the examples provided are non-exhaustive and are intended to reflect current national and regional best practices in addition to recommended actions from the Comp Plan.
Supply
Building more market-rate housing is important for slowing or reducing price increases and addressing the underlying issue of low housing supply in a high demand market like Rockville. This strategy is most immediately beneficial to moderate- and high-income households but recent research has found an overall positive effect on housing prices for low-income households as well. The chain of residential moves brought about by new housing relieves competition for existing homes, which can drive up the price of previously naturally occurring affordable housing. This concept is commonly referred to as filtering. The Federal Reserve Bank of Minneapolis found that for every 100 new market-rate apartments, there are an estimated 70 new openings for renters in lower-income neighborhoods.
Existing initiatives:
• Zoning Ordinance Rewrite
• Town Center Master Plan
• Detached Accessory Dwelling Units (ADUs)
• Rockville Metro Station Study
Possible new policies:
• Streamline the development review process.
o Longer and/or more unreliable development review processes can be more costly for developers and adds to the overall cost of housing. It can also deter developers from choosing to build in certain jurisdictions. To counter this, many localities have begun to reexamine their development review process with a focus on speed and reliability. One tool to streamline the development process is to make more projects eligible for by-right approval, where the approval comes from staff as long as the project meets certain conditions. For example, in Montgomery County, almost all residential and mixed-use development in urban hubs are by-right approvals. By-right approvals may attract more multi-family housing to address the lack of affordable and market-rate housing supply and improve the city’s competitive edge with other jurisdictions.
o Examples: Montgomery County, Maryland; Fort Collins, Colorado
o Comp Plan Connection:
§ Action ED.5.7: Review the city’s regulatory standards and practices for impact on business needs and city development goals.
§ Action ED.5.8: Achieve an efficient, rapid, and transparent development review and permitting process.
• Allow smaller multi-family housing types in certain single-family zones.
o Many localities and states across the country have recently adjusted the zoning in neighborhoods that currently only allow for single-family detached homes to allow for more diverse housing types, such as townhomes, duplexes, and cottage clusters. These types of homes typically use less land or can split land and construction costs between more households, making home prices comparatively less expensive than a new single-family detached home.
o Examples: Portland Residential Infill Project, Minneapolis 2040 Plan, Arlington Expanded Housing Option Development, Montgomery County Attainable Housing Strategies Initiative (ongoing)
o Comp Plan Connection: The Comp Plan’s future land use map identifies certain areas, primarily along major roadways, to allow smaller multi-family housing types (Attachment D). However, the prominence of single-family detached zoning is not expected to substantially change. The vast majority of Rockville’s residentially zoned land is currently envisioned to continue to be zoned to exclusively allow for single-family detached homes.
§ Action H.2.1: Explore revising zoning regulations that may present obstacles to new housing types.
§ Action H.2.3: Work with neighborhoods to promote small-scale infill and redevelopment projects that will diversify the housing stock and lower per unit land costs for new housing, including townhouses, rowhouses, duplexes, triplexes, fourplexes, and small multiple-unit properties.
§ Action H.2.5: Continue to accommodate development of mixed-use communities with varied housing types in transit-proximate areas.
§ In the future, this would enable the city to more ably pursue Action H.2.6: Explore options for co-housing, co-ops, or other shared ownership structures with construction types to suit.
• Allow places of worship to build housing on their property.
o There are many places of worship who may be interested in using their land for a mission-driven purpose, such as affordable housing. However, they face barriers to constructing housing due to current zoning and development standards.
o Examples: Montgomery County FAITH Zoning Text Amendment 24-01; California State Bill 4, Yes in God’s Backyard
• Support accessory dwelling unit construction.
o In alignment with the Comp Plan, last fall, the Rockville Mayor and Council passed a zoning amendment to allow attached ADUs. This spring, the body will consider a similar zoning amendment to allow detached ADUs. Many cities who have legalized ADUs have found that further support for homeowners is still needed to help them with the process of constructing and renting an ADU.
o Examples: Los Angeles’ ADU Accelerator Program, Portland’s ADU Financing Guide, Vancouver's Laneway Housing How-To Guide, Boston’s Additional Dwelling Unit Loan Program
• Establish requirements for housing to be considered on public land.
o When either constructing a new public facility or disposing of public land, some jurisdictions have a requirement that the development of housing, especially affordable housing, be considered. Land acquisition is one of the costliest components of housing development, so if these costs can be minimized due to its public ownership, that can act as a subsidy for the creation of affordable housing.
o Examples: Both Montgomery County and Washington, D.C. have a requirement for housing to be considered as a part of the public land disposition process and for the construction of new public facilities.
o Comp Plan Connection:
§ Action H.9.4: “Consider including the development of housing in conjunction with the construction or redevelopment of community facilities.”
• Examine development fees.
o Development fees can add onto the cost of housing and discourage housing construction. These charges can also be used to encourage or discourage certain kinds of development. This initiative would need to be done in partnership with Montgomery County, the entity who levies impact fees.
o Example: Montgomery County Development Impact Tax Exemption for State-Designated Enterprise Zones
o Comp Plan Connection:
§ Action H.1.3: Monitor and evaluate impact fees imposed on new residential development to determine their cumulative impact on the production and cost of market-rate housing units.
• Eliminate or minimize parking requirements in certain areas.
o Parking requirements can significantly add onto the cost of new housing. One parking space in an underground garage is estimated to cost anywhere between approximately $25,000 to $50,000 per space. This can especially pose a barrier when trying to finance affordable housing projects, even though fewer residents are expected to own a personal vehicle.
o Example: Elimination of parking requirements in Buffalo, NY, Eugene, OR, Minneapolis and St. Paul, MN, Lexington, KY, Hartford, CT, etc.; Montgomery County Zoning Text Amendment 23-10
o Comp Plan Connection:
§ Action H.4.5: Where appropriate, consider reducing minimum parking requirements for senior housing in exchange for more affordable housing or other city priorities.
§ Action H.10.5: In areas near transit, consider reducing parking requirements to build parking spaces for MPDU units in exchange for more affordable units; while requiring that occupants of MPDUs have equal access to parking spaces built in the overall project.
§ Action T.14.7: Reduce off-street parking requirements to disincentivize driving, especially in mixed-use, high-density, and transit-served areas.
§ Action L.17.1: Review and revise regulations, specifically parking minimums, that limit the use of existing commercial space.
Subsidy
Affordable housing cannot be built or bought without some sort of subsidy to make up the difference between the market-rate costs and the lower, “affordable” price. Policies in this category focus on the subsidizing of new income-restricted housing and tend to be most beneficial to low- and moderate-income households.
Existing initiatives:
• Moderately Priced Dwelling Unit Program
• Rockville Housing Opportunity Fund
• REACH Homeownership Assistance Program
• Employee Homeownership Program
• Rockville Housing Enterprises’ Housing Voucher Programs
Possible new policies:
• Update City Code Chapter 13.5 (Moderately Priced Housing).
o The long-standing MPDU program is the city’s primary way of adding new, affordable housing units. There are many components of the current MPDU ordinance that have been identified in the Comp Plan and by staff as outdated, unclear, or not in the best interest of the program’s objectives.
o Comp Plan Connection:
§ Action H.10.1: Continue to monitor and adjust income requirements and other aspects of the MPDU program to encourage the production of affordable units.
§ Action H.10.2: Adjust the structure of the MPDU program to encourage the production of more MDPUs. Examples include:
• Action H.10.2.a: Explore and study requiring MPDUs for residential developments of 10 units or more.
• Action H.10.2.b: Explore and study requiring a fee-in-lieu payment into the city’s Housing Opportunities Fund for developments with less than 10 units.
• Action H.10.2.c: Explore imposing 15 percent MPDU set-aside for developments throughout the city with 20 or more units of total unit count regardless of zoning district.
§ Action H.10.3: Impose restrictions on refinancing of homeownership MPDUs by owners to avoid over-leveraging and potential subsequent foreclosure.
§ Action H.10.4: Offer incentives to developers of properties near Metrorail stations to provide a higher percentage of MPDUs or units that serve low- or very low-income households.
§ Action H.10.7: Explore strategies that seek to restructure the MPDU in-lieu fee payment option to allow for more feasible and wider application when such options better meet the city’s housing objectives.
• Offer a by-right Payment in Lieu of Taxes (PILOT) for affordable housing.
o A PILOT is a property tax abatement. Montgomery County offers two types of PILOTs: 1) the Standard PILOT in exchange for providing affordable housing units to low-income residents, which is negotiated on a case-by-case basis and 2) the by-right PILOT, which abates all county property taxes for at least 15 years for a rental property owned or controlled by a non-profit if at least 50% of the units are leased to households with incomes no greater than 60% of the AMI. Historically, properties in Rockville can qualify for a county PILOT, but the application of a city PILOT is not guaranteed. A guaranteed city PILOT for certain types of affordable housing development would make affordable housing development more attractive within the city.
• Establish stable sources of funding for Rockville’s local Housing Opportunities Fund (HOF).
o Most mid- and large-sized cities use an affordable housing trust fund as their main mechanism for supporting the construction of affordable housing. Rockville’s HOF has been used to support RHE’s acquisition of Scarborough Square, but it does not currently have a substantial amount of funding to pursue new projects. Stable sources of funding could come from taxes that align with other land use and/or housing affordability goals, such as by taxing “flipped” homes (homes that are torn down and rebuilt) at a higher rate or by placing higher taxes on vacant or underutilized property.
o Comp Plan Connection:
§ Action H.8.2: Establish stable sources of funding for Rockville’s local Housing Opportunities Fund that can be used for affordable housing rehabilitation or development projects.
§ Action H.10.8: Explore ways to grow the City’s Housing Opportunities Fund, such as through a dedicated budget line item and/or expanded MPDU fee-in-lieu requirement.
§ Action H.11.1: Continue to support Rockville’s and Montgomery County government’s public housing agencies and non-profit organizations in site acquisition and construction, and in preservation of existing assisted housing.
• Strengthen Rockville Housing Enterprises.
o RHE is Rockville’s best partner for building affordable housing within the city. RHE has recommended changes to its Articles of Organization to allow them to work more efficiently with the city by improving their ability to act expeditiously when opportunities arise. They have also begun exploring an expansion of their bonding capacity. HOC’s bonding capacity allowed the county to establish the highly successful Housing Production Fund (HPF), which is now a national model. The HPF is a $100 million revolving construction fund that uses a public equity model to produce mixed-income developments without traditional subsidy sources such as local housing trust funds, project-based vouchers, or the Low-Income Housing Tax Credit. If RHE can do something similar, they may be able to produce housing with minimal financial contributions from the city.
o Example: Montgomery County Housing Production Fund
o Comp Plan Connection:
§ Action H.8.3: Explore strategies and seek opportunities to preserve existing market-rate affordable rental dwelling units through actions by the City of Rockville and Rockville Housing Enterprises.
§ Action H.11.2: Work with Rockville Housing Enterprises to develop and maintain a long-term comprehensive strategic plan that seeks to preserve and maintain its existing portfolio of affordable housing and produce new units.
§ Action H.11.3: Work with Rockville Housing Enterprises to improve the living environment in the vicinity of David Scull Courts and ensure that new public housing is located so that residents are not isolated.
§ Action H.11.4: Support RHE in its outreach to property owners and landlords about the opportunities and social benefits of participating in the Housing Choice Vouchers Program.
Stability
Housing stability policies focus on keeping people housed in affordable, healthy conditions. Policies and programs in this category tend to focus on renter’s rights and affordable housing preservation, which especially benefits low- and moderate-income households.
Existing initiatives:
• Code Enforcement
• Community Development Block Grant Program
• Landlord-Tenant Program
• Voluntary Rent Guidelines
• Rockville Emergency Assistance (REAP) and Bridge Financial Assistance Programs
• Home Energy Assistance Program (HEAP)
• Self-sufficiency, financial literacy, and vocational counseling programming
• Rockville Housing Enterprises’ Preservation Sites: David Scull, Parkside Landing, Scarborough Square
Possible new policies:
• Update City Code Chapter 18 (Rental Facilities and Landlord-Tenant Relations)
o Staff has identified a list of areas in Chapter 18 that would benefit from additional clarity as well as from being brought into better alignment with the county’s practices, which would create less confusion from both landlords and tenants and provide tenants with stronger protections. Reviewing this chapter would also provide an opportunity for the Mayor and Council to consider including certain landlord-tenant policies that were discussed at the body’s retreat, such as strengthening the Landlord-Tenant Commission and fee transparency.
• Create a right of return for redevelopment projects and/or displacement compensation requirements.
o This policy would allow residents who have been displaced or who are at-risk of displacement to return or stay in their neighborhood by giving them priority for new affordable housing units or through other assistance. If they are unable to return, the household could receive a displacement compensation payment.
o Examples: California State Bill 330, Portland’s Right to Return Resolution, Austin’s Right to Stay and Right to Return Program, San Francisco Displaced Tenant Housing Preference Program
• Provide additional emergency assistance to renters.
o Rockville provides emergency rental, utility, and other financial assistance to renters through the REAP and Bridge programs. REAP prevents eviction or utility shut-offs and the Bridge program provides assistance for someone who is suffering from a short-term financial crisis. The current limit on assistance the city provides to renters facing eviction via the REAP program is $2,000, which covers only one month’s rent for the median renter. For REAP, city residents are to access assistance from the county first as the county is able to provide more financial support than the city. City residents are then referred by the county to the city for additional assistance. Staff would like to bring REAP to the Mayor and Council to increase the limit to at least $4,000. Additionally, more funding for both the REAP and Bridge programs would allow the city to help more residents when the county is unable to provide assistance.
• Update the city’s homeownership assistance program.
o The Real Estate Effort for Affordable Community Housing (REACH) program is designed to assist first-time homebuyers at 100% AMI who live or work in Rockville with down payment and closing cost assistance with a soft loan in the amount of up to $12,000. The program is currently administered by a third party, and staff is in the process of bringing an agenda item to the Mayor and Council to move the program’s administration to RHE and update the terms of the program to bring it into alignment with the current housing markets, such as by increasing the down payment assistance to $25,000 and increasing income eligibility to 120% AMI.
o Comp Plan Connection:
§ Action H.9.1: Restructure the Real Estate Effort for Affordable Community Housing (REACH) program to provide down payment and closing cost assistance to low- and moderate-income first-time home buyers in Rockville.
• Explore rent stabilization or anti-rent gouging requirements.
o This will be discussed in-depth at the Mayor and Council’s July 8, 2024 meeting.
o Rent stabilization regulates the amount a landlord may increase rents. It can be used to improve housing stability for existing residents by preventing large rent increases that could result in a tenant needing to move. There are many components to rent stabilization and policies can vary greatly in their strictness and the circumstances under which the restrictions apply.
o Examples: Montgomery County Bill 15-23; Takoma Park Rent Stabilization; Washington, D.C. Control
Short-Term Affordable Housing Initiatives
Staff recommends the following short-term (0-2 years) priorities as actions that will improve existing programs, services, and operations, in addition to any other priorities selected by the Mayor and Council:
• Through the Zoning Ordinance Rewrite, support housing production by:
o Streamlining the development review process
o Allowing smaller multi-family housing types in certain single-family zones
o Eliminating or minimizing parking requirements in certain areas
• Update City Code Chapter 13.5 (Moderately Priced Housing)
• Update City Code Chapter 18 (Rental Facilities and Landlord-Tenant Relations)
• Establish stable sources of funding for Rockville’s local Housing Opportunities Fund
Mayor and Council History
This is the first briefing on the general topic of affordable housing for the current Mayor and Council. At recent strategic planning meetings, the body selected housing as one of its top three initiatives.
Next Steps
After approval of the short-term affordable housing initiatives, staff will provide the Mayor and Council with an implementation timeline for those initiatives.
A presentation and discussion on rent stabilization is scheduled for July 8, 2024. This briefing will dive deeper into the topic and provide an opportunity for the Mayor and Council to give staff direction on whether to pursue further action on this policy.