All posts by David Lublin

Riemer Issues Conflicting Statements on Development and ADUs

During the past month, Councilmember Hans Riemer (D-At Large) has sent out communications touting the real success of his legislation in promoting affordable housing and others decrying both the affordability crisis and lack of significant development. From a February 19th email blast:

Housing affordability is one of our County’s greatest challenges. We have a housing shortage, which drives up sale and rental prices and creates affordability problems particularly for those with moderate or low incomes.

With this in mind, last year I authored legislation that raises the requirement for affordable units in the County’s most expensive areas. The Council supported my plan and now we are already getting results in Bethesda, White Flint, and Rock Spring. Read the Council staff report and news coverage of the legislation.

From a February 4th email blast:

The projected slowdown of housing growth results in a massive reduction of tax revenues, even with our developer impact tax rates that are among the highest anywhere. With a much lower baseline of anticipated housing growth, not only will the housing crunch worsen (a huge issue in and of itself) but immediate infrastructure needs cannot be met.

Hans similarly lamented the lack of affordable housing and development at a public forum on January 19th:

We heard some very bad news this week. In all of 2018, there were only 800 housing units added to the tax rolls of Montgomery County. . . . That is how you get a housing crunch, my friends. That is how you get an affordability crisis.

These conflicting claims parallel diametrically opposed arguments regarding his proposal to make it easier to build accessory dwelling units (ADUs). While Hans has repeatedly touted his proposal as part of the “tiny house” movement and designed to allow grandma units over the garage, his proposal removes the 1200 foot cap on the size of such units. If we want small and affordable, the cap promotes this goal and Hans’s legislation should be amended to maintain it.

Even more problematically, Hans has downplayed the number of units that would be constructed but proposal supporters also claim that this will be a major step in adding affordable units and that the increased supply should help depress housing prices more broadly. Of course, if the units aren’t small, they may not be very affordable.

The proposal similarly cuts parking requirements because many owners may take transit but doesn’t tie the reduced parking requirements to location near a Metro line or even frequent bus service let alone actual limits on the number of cars. If we’re trying to promote smart growth, tying the proposal to transit and transit use would seem, well, smart.

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Riemer’s Zoning Proposal Breaks Trust and Will Be Abused (Part III)

Councilmember Hans Riemer has proposed making much easier to build additional accessory dwelling units (ADUs) with the best of intentions. Yesterday’s post looked at why it will likely raise housing costs, even though it is intended to do the opposite, and burden county infrastructure. Today, I look at why the proposal breaks trust with residents and remains open to serious abuses.

Breaking Trust with Residents

The county literally just finished revising its entire zoning code in a pro-development direction. We also just revised the rules on ADUs only a few years ago. Yet here we are once again revising the code in a major way. And the changes are all uni-directional to allow more. Always.

In a single stroke, Hans’s legislation undermines all of the county master plans by drastically increasing the number of potential units in any area. In Bethesda, we just finished the process and already upped the existing density considerably. Is it any wonder so many county residents are mistrustful of planning processes and county government?

Homeowners value stability in neighborhoods. After all, buying a home is the single largest and more personally important investment most people will ever make. While some will welcome the changes, others will feel that they’ve just been cheated. As one resident articulated at the forum, not everyone wants to live on a congested street next to an AirBnB.

Why We Can’t Have Nice Things

“Never assume a good motive when a bad motive will do” is not the most positive outlook on life but a very good approach when thinking about how some people will do their best to stretch and to misuse new rules.

While ADUs may help some achieve the positive goals emphasized by Hans, one can easily imagine how these rules will be abused despite Hans’s commendable attempt to build in protections. The law requires that ADUs can only be built by people on their principal home’s property. In theory, this should prevent a developer from buying a home, tearing it down and building either a duplex (in apartment or attached townhouse form) or two detached houses with one twice the size of the other.

Except that it won’t. Someone who flips houses can just buy it, say he plans to move into it, tear it down, build a duplex or two detached houses, sell, and repeat. Alternatively, I imagine developers could construct contracts with existing homeowners that pre-arrange the sale to maintain the fiction that the new duplex or second house is the idea of the existing homeowner. As often occurs in such situations, county planners will determine that it complies with the letter of the law and have no choice but to approve the plans.

I bet someone with more knowledge of housing law could come up with even more ways to accomplish the same goal without breaking a sweat. Heck, by the time that lawyers for developers are done, we’ll be thanking them for only building two units.

Making it possible to build more will make the land more valuable, and thus less affordable. Existing residents who can’t afford the higher property taxes will have to sell. Others will leave because they thought they were living in a neighborhood but found themselves in a construction zone. Either way, the hiked prices render the Montgomery dream out of reach for many more more families–all in the name of affordable housing.

It could well result in tearing down entire neighborhoods to build pricey duplexes. Why not make a killing doing something its supporters have labelled building affordable housing? Some would undoubtedly cheer and call it “smart growth” but that’s not how it’s being sold. Moreover, there is no guarantee that the new homes won’t be placed far from transit.

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The Opposite of Intended: How Riemer’s Zoning Proposal Will Increase Housing Costs (Part II)

Yesterday, I introduced Councilmember Hans Riemer’s proposal to make it much easier to build accessory dwelling units (ADUs) in single-family home neighborhoods around the county. Today, I being to explore why the current proposal may well exacerbate the problem it is designed to solve while further burdening county infrastructure.

Affordable or More Expensive Housing?

While sold as a means of advancing affordable housing, Hans’s proposal to make it much easier to build ADUs could have precisely the opposite effect. As Hans pointed out at his forum on the idea, over 30% of Montgomeryites already are house poor and devote a disproportionate share of their incomes to housing. Will banks be willing to lend to people who already have trouble making ends meet to construct new units?

Even worse, housing values on properties amenable to additional units will rise. After all, property becomes more expensive the more income you can generate. This is why developers always press for more density. Instead of making MoCo affordable, Hans’s legislation will contribute to the problem it aims to solve by making existing homes more expensive.

Property taxes will go up with rising land values. While incomes have been stagnating, taxes continue to rise—not least because the county hiked them by 9% before the last election. Increasing values further will result in higher taxes that many residents, even those not house poor, will not find it easy fit into their budgets. Again, banks are unlikely to lend even more money for the construction of ADUs to the already financially stretched.

Poor Housing Code Enforcement

As several forum attendees highlighted, county housing law enforcement is a joke. One woman explained how she has tried fruitlessly to get rules enforced on her block for over 15 years, including by contacting Councilmembers Hans Riemer and Nancy Navarro.

Hans didn’t disagree but touted that the county wanted to address the issue, citing repeatedly an additional $1 million allocated to housing code enforcement and the keenness of the new county executive to fix this problem.

But enforcement is often not systematic let alone muscular. Riemer’s bill limits ADU occupancy to two adults. If the county isn’t even enforcing rules people support regarding overcrowding and parking that protect both tenants and neighbors, does anyone think that the county is going to kick out a kid when she turns 18 or needs to come home at an older age? What about other relatives or friends who needs a place to stay for more than just a few days?

No Idea of Infrastructure Cost

Speaking of those kids, how many additional entrants will the public schools need to accommodate and how much will it cost? Hans opened his forum by lamenting that young families can’t afford MoCo. Presumably, if his proposal works, MCPS will get more students.

I asked Hans if he had any idea of the impact on the county budget due to the need for not just schools but more police and so forth, and he doesn’t know but “doesn’t think it will have a big impact.” I can’t say I will have much faith in any belated estimates generated by people already squarely behind the idea. My head is still spinning from the idea that lack of knowledge of the cost or the impact was apparently no barrier to county planners expressing so much support at the forum.

Hans suggested, however, that the impact would be minimal. He imagines that the number built here will fall between the 40-50 per year built now and the over 500 per year built in Portland, Oregon. Except that is almost surely an under-guesstimate. The City of Portland has only two-thirds the population of MoCo and more live in apartment buildings, so it has a lot fewer homes where you could construct an ADU.

Moreover, Portland is a terrific city, but it’s not exactly a model for affordable housing. Prices have risen rapidly in recent years and there is no sign that ADUs have altered that trend. Ironically, Montgomery and Portland share a major driver of high housing costs: green belts off limits to new construction that export sprawl and raise prices inside the belt.

Next Up: Breaking Trust with Residents

Tomorrow’s post looks at why Hans’s proposed zoning change breaks trust with residents and how it is open to abuses that the county won’t be able to stop despite Hans’s laudable efforts to prevent them.

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Riemer’s Proposed Zoning Changes Will Have Major Impact & Need Serious Work (Part I)

Montgomery County Councilmember Hans Riemer, now in his third council term, thinks that not enough residential units are being built in the county and has been peppering his email list recipients with arguments about how we need to build more.

Interestingly, Hans has reached these conclusions not long after the previous council completely revised and simplified the zoning code in a sharply pro-development direction that gives developers increased flexibility to pursue their plans. Master Plan revisions have also added millions of developable square feet in areas such as Bethesda and White Flint.

Hans’s New Dream: Accessory Dwelling Units

Even after all of these changes, Hans now has offered a zoning text amendment (ZTA) that would increase development possibilities in single-family home neighborhoods around the county. He wants to make it easier to build separate apartments or buildings, known as accessory dwelling units (ADUs) on the same single-family home property. The core idea is that they are autonomous living units with their own entrances.

Hans sees this as a way of creating more affordable housing in Montgomery. New smaller units would be more affordable. Building a rental unit might allow people to buy into Montgomery and help make the mortgage payment. Under Riemer’s proposal, the units could be up to 50% of the size of the main home and he would reduce or eliminate requirements for additional off-street parking. Only two people No more than two adults but an unlimited number of children could live in them.

It would facilitate multigenerational living and aging in place by allowing parents and adult children to live on separate residences on the same property. (Alternatively, that possibility may discourage many parents and children.) Older residents could also supplement fixed incomes by renting out the unit or the original home.

Planning Board Chair Casey Anderson and Planner Lisa Govoni attended and provided supportive information and commentary at a forum organized by Hans that presented only positive information. Several attendees of the public also shared anecdotes about how the proposal might meaningfully help them. I should also mention that Hans was unfailingly polite to the few dissenting voices, though I disagree with his belief that county residents widely hold negative views about renters.

Serious Problems

But Hans’s proposal is not nearly ready for prime time. The proposal itself has serious problems in terms of its workability in terms of its own goals and lack of an iota of information on how it will impact the county budget or infrastructure. Tomorrow, I begin to explore why.

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Senator Smith Deploying to Afghanistan

Towards the end of the current legislative session, Sen. Will Smith (D-20) will deploy to Afghanistan. I am sure many join me in thanking him for his service to our country and wishing him a safe and speedy return to his loved ones and to the General Assembly.

The following is the press release from Smith’s office:

Senator Smith, an Officer in the Naval Reserve, will deploy to Afghanistan in March

Silver Spring, MD, February 6, 2019 – State Senator William “Will” C. Smith, Jr., an Officer in the United States Navy Reserve, has received orders from the Pentagon to deploy to Afghanistan in support of Operation Resolute Support. Smith, who serves as the Vice Chair of the Senate Judicial Proceedings Committee and is Chair of the Senate Veterans Caucus, will report for duty on March 29, 2019. The Senator’s deployment comes toward the end of Maryland’s 439th legislative session.

Senator Smith, who is an attorney in private practice with a focus on national security law and employment discrimination, commissioned to be an Intelligence Officer through the Navy Reserve’s Direct Commission Officer Program and has received the National Defense Service Medal; the Global War on Terrorism Service Medal; two Joint Meritorious Unit Awards; and a Joint Service Achievement Medal.

Senator Smith’s office will remain operational in his absence and his staff will be actively engaged in handling constituent matters for the residents of District 20.

Senator William C. Smith, Jr.

District 20, Silver Spring/Takoma Park

410-841-3634/301-858-3634

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Corruption at MTA

Maryland Reporter has the story:

In response to a call to its waste, fraud and abuse hotline, the Office of Legislative Audits investigated complaints about contracting at the Maryland Transit Administration, which runs the buses, subway and light rail line in the Baltimore region.

“Our review disclosed that MTA included language in certain contracts that allowed its employees to circumvent State procurement regulations by directing the contractors to use specific vendors as subcontractors,” chief legislative auditor Gregory Hook said in a letter to lawmakers. “The MTA management employee used this capability to direct work to specific vendors as subcontractors including one vendor with which the management employee had less than an arm’s-length relationship (related vendor). The related vendor was paid $3 million for the subcontracted work. Due to the questionable nature of certain of this activity, we referred this matter to the Office of the Attorney General – Criminal Division. We also identified possible violations of State ethics law that may require referral to the State Ethics Commission.”

“Our review also identified questionable procurement and contract monitoring practices, which may have limited competition and precluded effective monitoring of contracts and related payments,” Hook said. Contracts were issued without proper approval, and payments were made without invoices to back up the work.

Four contracts for snow and ice removal totaling $6.2 were issued to a contractor that the project manager had a relationship with.

While Secretary Rahn says that his office takes the “findings of the audit seriously,” he has yet to apologize or take responsibility for this occurring in his office on his watch on his pet project. When Gov. Hogan promised to make Maryland more business friendly, presumably he wasn’t talking about featherbedding of the form so appreciated by President Trump.

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Anemic business growth is the problem. So why does Empower MoCo think residential growth is the solution?

Empower Montgomery (EM) released a report today, displayed at the bottom of this post, arguing that Montgomery County faces strong economic headwinds. In particular, it highlights “a disproportionate, unhealthy reliance on residential tax base” for new revenues and a corresponding lack of growth in commercial business.

And this is where they lost the plot.

Despite having identified the lack of growth in commercial business, and “unimpressive” commercial real estate valuations, as critical challenges for the county, EM’s number one solution is bizarrely geared towards promoting more residential growth.

Specifically, EM’s report expresses alarm that several areas in the county could soon face building moratoria because of the lack of sufficient spaces in public schools to educate more kids. Empower Montgomery regards moratoria as a major business challenge and calls for building more schools to prevent them.

Leaving aside the question of the best places for needed capital investment in the public school system, often in existing schools, the problem facing Montgomery County is not residential development but commercial business. Put another way, we need more businesses that produce goods and services other than more housing.

Though this is the central point of the entire report, EM’s number one solution (literally, it’s numbered “1”) is obliviously to promote more residential housing growth. EM links school construction, rather than improving what’s inside the schools, to better outcomes. Perhaps it’s not accidental that the former but not the latter enables more housing construction.

In a similar vein, EM comes up with concrete ways to fund school construction. But their report is silent on the question of funding operations, which is far more critical to long-term student success and a heavy ongoing cost. Again, one might almost think schools are more about housing development than child development.

Beyond failing to make the connection between school construction and student performance, EM’s report completely neglects to explain why building more residential housing attracts new commercial business. That may be because the report itself inadvertently shows that it doesn’t. After all, EM’s report reveals that Montgomery’s housing stock and population have grown without attracting needed new business.

The truth about residential development is that it is often unprofitable from the county’s perspective. Once the builders are gone, they leave a new group of residents demanding additional infrastructure and services. While commercial business brings both employment and tax revenues, new residential development is much closer to a break-even proposition.

Even new residents who don’t need special government services—and many will—still require more police and fire protection. More residents mean we need more people at the 911 call center to take just one mundane example.

One set of new residents is especially expensive: children. Education is by far the most expensive service that local government provides. It takes up roughly one-half of the current county budget. Very few families are net contributors to the county budget while they have kids in the public schools. Unless we’re willing to increase classroom sizes, it’s also not easy to achieve economies of scale.

Depending upon who moves into new homes and infrastructure required, and the county school system remains a core asset, residential development can even exacerbate county balance sheet problems. I’m not saying education is not a worthwhile expense. As an educator, I have a decidedly vested interest in promoting it. But it’s not cheap.

In short, focusing on residential development as the solution ignores the critical problem. Even more myopically, it utterly ignores election results not just in Montgomery but also in other parts of the state, such as Anne Arundel, expressing frustration with the lack of infrastructure to support current residents.

Let’s be blunt. For too long, the county has often conflated building and business. We need to spend a lot more time thinking about how to attract and to grow commercial businesses into commercial spaces than building more residential housing. Attracting more business would sure help us afford the new residents for whom there is already ample zoning.

EM is right that expanding the commercial tax base has to be a key part of addressing that problem. As the previous county council under the leadership of Councilmember Nancy Floreen revised the zoning code in a pro-business manner, it would be welcome if the new council would turn its attention to promoting new commercial business.

In contrast, pursuing EM’s approach on development would be a perfect example of trying the same solution again and expecting a different result. Why on earth shoring up residential development is touted as essential when the central problem is a badly anemic commercial business sector remains a mystery.

Empower Montgomery is a business group—it supported David Blair for county executive—and it unsurprisingly contains pro-business recommendations. In terms of residential development, their approach represents more of the same, and it’s not going to cut it.

We are not going to solve our problems in attracting new commercial businesses by building more residential homes. At the same time, EM is right that expanding the commercial tax base has to be a key part of addressing that problem. Other ideas in the report may be well worth considering. I’m certainly a fan of privatizing the liquor monopoly.

The previous county council just revised the zoning code in a pro-business manner. It would be welcome if the new council would shift its attention to promoting new commercial business. We have a bunch of new councilmembers who hopefully can bring new perspectives on how to bring new business vitality to the county.

It would also be terrific if the business community would partner with the new executive and council in figuring out ways to both make Montgomery County government more innovative and efficient, and also work far better to attract business. Reforming county government has been a central plank of Marc Elrich’s platform. If business doesn’t take him up on it and keeps making him out to be the boogeyman, they’re missing a real opportunity.

Business needs to play a bigger role in helping move Montgomery County forward. But this report’s focus on residential development as a solution to commercial business problems suggests that the political representation of business may be just as skewed towards the residential developers as the county’s tax base is to residential development.

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Elrich Sends Pro-Business Signals – Anyone Listening?

Immediately after taking office as county executive, Marc Elrich confronted a budget dilemma. The way he handled it deserves far more notice that it has received.

Outgoing Montgomery County Executive Ike Leggett promised bond rating agencies that he’d move towards a reserve fund of 10% of the country budget. Increasing the county’s reserves provides evidence of fiscal prudence that bond-rating agencies like, so adherence to Leggett’s target helps preserve the county’s AAA bond rating.

But revenues for the current fiscal year so far have fallen short of projections. I don’t view this as due to wildly unrealistic projections by the outgoing executive or council. Projections are called projections and not certainties for a reason. Sometimes, we end up with more money than expected too.

The shortfall presented newly minted County Executive Elrich with tough choices. Elrich could have declared that the 10% reserves target was unnecessarily high and that he would not be bound by Leggett’s commitment. Alternatively, Elrich could have taken a wait-and-see attitude in expectation that the final revenues for the fiscal year will prove higher.

Elrich chose neither of these more expedient options. Instead, he made the tough choice and pledged to cut spending. By asking county agencies for a variety of options, Elrich also used it as an opportunity to do in a smart, policy-oriented way rather than a uniform across-the-board cut. In short, it’s a first small step towards reshaping country government.

In his first major decision, Elrich also acted in an inclusive way by bringing in Council President Nancy Navarro to discuss it in advance of the decision, though the Council will, of course, need to scrutinize Elrich’s independently developed proposal for cuts.

Business, taxpayers and the bond-rating agencies could hardly have asked for a more fiscally responsible approach. In his first move, Elrich sent a message that he intends to pursue strong, responsible fiscal management and work within fiscal constraints.

Throughout the campaign, Elrich repeatedly explained, at times to deaf ears, that he wants to reshape country government to make it more efficient. He understands that this is imperative if only because the county’s current fiscal path is simply unsustainable.

Moreover, Elrich wants to realize savings precisely because he wants the county government to do more. If the county maintains its current trajectory, that won’t be possible. Squeezing more out of residents isn’t really much of an option, as previous councils have already more or less maxed out the local income and property tax.

It’s a pity that the opinion pages that predicted an Elrich administration as dire for business and proper fiscal management haven’t paid more attention.

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Courthouse Offices: 2018 Results

You can also find the above chart and others on the Seventh State Results Tracker.

The table above shows the party that won the five courthouse offices of State’s Attorney, Clerk of the Circuit Court, Register of Wills, Judge of the Orphans’ Court, and Sheriff. Montgomery and Harford allocate the Orphans’ Court responsibilities to other officials.

Nine counties have all Republican teams: Allegany, Caroline, Carroll, Cecil, Garrett, Harford, Queen Anne’s, St. Mary’s, and Worcester. In Frederick, all but one judge of the Orphans’ Court are Republicans. In Somerset, the Sheriff is the only Democrat.

Six jurisdictions have all Democratic teams: Baltimore City, Baltimore County, Charles, Howard, Montgomery, and Prince George’s. In Dorchester, all but the Clerk of the Circuit Court are Democrats.

There are at least two officials from each party in six counties: Anne Arundel, Calvert, Kent, Talbot, Washington, and Wicomico. Calvert, Talbot and Washington are a bit of a surprise to me, as they lean heavily Republican in other county and state elections.

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