The Charles County Government should consider pursuing partnerships with the private sector as a way to address the shortage of affordable housing in the county, the planning commission heard Monday.
Christina Pompa, the acting director of the county’s planning and growth management department, told the planning commission that partnerships with developers could complement federal incentives such as the Low-Income Housing Tax Credit, which also offers incentives for such partnerships.
“When we look to public sector like the [tax credit] program we also need to look to private sector answers as well,” Pompa said.
Pompa suggested that another way for the county to support the construction of affordable housing would be to subsidize part of the school construction excise tax.
The excise tax is levied on new residential properties for a 10-year period. Currently, the monthly tax on a new single-family detached or attached home is $145, and $120 for a multi-family home.
The tax revenue is then used to pay back bonds that were issued to pay for school construction and renovations.
“But the county is still a long way, I think, from making decisions to do something like that,” Pompa said.
Another obstacle to developing affordable housing in Charles County is the fees charged for water and sewer connections, which total more than $14,500 per new residential connection.
During her presentation, Pompa summarized the findings of an affordable housing study conducted for the planning and growth management department by the American Planning Association, which were first presented at a forum in January.
The study found that one-third of Charles County households spend at least 30% of their gross annual income on mortgage or rent, and nearly 7,000 households spend more than half of their gross income on housing in a given year.
The report recommended revising the balanced housing stock policy in the county’s 2016 Comprehensive Plan from its current mix, of approximately 80% single-family homes, 15% townhomes and condominiums, and 5% apartments, to include more multi-family residential housing.
The report also recommended modifying the county’s Moderately Priced Dwelling Unit program to require developers to include affordable and workforce housing units in all projects with 20 or more units, selling or leasing surplus county land to developers for the construction of affordable housing, and revising the county’s zoning code to reduce construction costs.
The county should also consider establishing an affordable housing board, the report suggested.
“We’re a long way from doing something like that,” Pompa said.
Planning commissioner William Murray said that there tends to be “a lot of friction when you get involved with the federal government, especially [the U.S. Department of Housing and Urban Development]” because of wage and payroll requirements, audits and other factors.
“All this adds cost to the product that you really don’t see on the ground,” Murray said. “Private sector solutions are naturally better than subsidized [solutions] and they don’t cost everyone forever.”
Even if an affordable housing project were to be constructed on county-owned land, Murray said, the cost of permits and fees would still constitute approximately 18% of the project’s total cost and would have to be paid up front.
Murray argued that in many cases, the school excise tax requirement may “unqualify” buyers of new townhomes from a mortgage that is already “at the top of what they can afford.”
“It actually in some ways drives down the quality of what we’re building in the county because we’ve got to build what people can afford,” Murray said. “That $145 a month is big on somebody’s mortgage.”
“When I look at the APA report, it gave us all the problems, but it gave us very few solutions,” Murray said.
Another issue affecting the construction of affordable housing is the availability of school seats, a subject that the planning commission previously announced that it intends to review with an eye toward recommending changes to the Charles County Board of Commissioners.
Planning commission chair Wayne Magoon pointed out that it is difficult for developers to plan for school seat availability for a new subdivision, and the process presents a financial risk for them.
“I think there’s some interesting conversation to have here about this,” Magoon said. “I think we can do that after we really compile those [school seat] numbers and see how it’s affecting current development.”
Planning commission member Angela Sherard inquired whether Charles County was at a disadvantage for getting federal assistance for affordable housing because of the rural nature of the county outside of the urban zones.
“I don’t think it’s a hindrance,” Pompa said of the county’s eligibility for low income housing tax credits. “I don’t think there’s a mark against us.”
“I think where we’re behind is that we haven’t decided if and how we would support and potentially partner with ... private projects that want to move forward as the low-income housing tax credit projects,” Pompa said. “They really do need county support, at least with a letter saying, ‘Yes we wholeheartedly support this project.’”
“Other counties are putting money into their budget ... annually for things like this,” Pompa said. “We don’t have anything.”
The earliest that the county would be able to include a line item for supporting affordable housing initiatives would be in the fiscal year 2021 budget, which is scheduled to be approved next May, Pompa said.
Earlier this year, Enterprise Homes Inc., a developer that has built affordable housing projects in Baltimore City, Halethorpe and Washington, D.C., approached both the board of commissioners and the La Plata Town Council seeking support for a four-building apartment complex on Washington Avenue that would have 60 units designated for people who earn below 60% of the area’s median income.
The project was not granted low-income housing tax credits in this year’s award cycle, Pompa said.
Pompa said that right now the county is ill-equipped to provide affordable housing to people who make between 30% and 80% of the county’s median family income of $110,300 for a family of four as established by the federal housing and urban development department.
However, many of the people who fall into that category are likely to work in the county’s hospitality and health care industries, which are two of Charles County’s biggest economic drivers.
“We need those people,” Pompa said. “We need those services because we all have an elderly parent that may be in assisted living, or we may find ourselves in a hospital or nursing home and need that care.”
“You can’t really have a functioning county without having people at all [income] levels,” Pompa said. “I think people forget that.”