This article is part of a limited series exploring the history, current policies, and initiatives to create equitable transit-oriented development in the region. The complete series is available here. And then learn more by tuning into the series’ companion webinar, moderated by George Kevin Jordan, GGWash’s editor-in-chief.
Transit-oriented development (TOD), a term for walkable mixed-use projects in close proximity to transit stations, is useful in getting more people to use public transportation. These developments also lessen traffic congestion and help the environment. But residential and commercial projects around new transit stations can also have negative impacts.
For example, the Purple Line — a light rail project that will connect several Maryland suburbs of DC — has great potential to whisk passengers to jobs, appointments, family, and recreation when it finally opens, in 2026 or thereabout. But it also brings with it increased land value and redevelopment that threaten to displace long-time and low-income residents, the very people it could most benefit.
With new transit lines, “home values, rents and land speculation can increase rapidly after service starts, bringing opportunity to some and displacing others,” explains the Purple Line Corridor Coalition (PLCC) Housing Action Plan. The greatest housing need is for those earning 60% or less of the area median income (AMI). As an earlier GGWash article explains, “if you were to line up each household in the area from the poorest to the wealthiest, the household in the middle would be the median household.” Those below 60% AMI include a disproportionate number of “people of color and non-English speakers [who] are most vulnerable to rent increases and evictions.”
As of 2019, the Purple Line corridor had some 17,000 housing units priced affordably for households earning $70,000 or less annually, three-fourths of them in Prince George’s county, with 8,500 units along the corridor having some rent protection. This is not enough. The Montgomery County Housing Needs Assessment in 2020 found a supply gap “for households earning up to 65% AMI,” with accelerating demand driving the gap ever wider.
Montgomery needs about 60,000 new housing units overall by 2040 to meet the demand of current and some 200,000 new residents expected over the next 25 years. Meanwhile, housing prices are already rising everywhere; in Montgomery County, rents are up about 3% a year, according to a 2020 housing preservation study for the county. And with “this new piece of infrastructure that’s long-awaited … there’ll probably be a huge impact on rent,” Lisa Govoni, a research and special projects housing planner at Montgomery Planning, told me.
Robert Goldman, president of the Montgomery Housing Partnership, said in an interview he is especially worried about market-rate affordable housing, also known as naturally occurring affordable housing that the market provides without government intervention, in Long Branch and Langley Park. The pandemic, along with economic disruption, has made the construction of low-income housing “more expensive, unpredictable, and complex,” added Govoni.
Rising rents have already reduced the number of affordable housing units along the Purple Line corridor, most notably in the Bethesda area, according to the 2020 Montgomery County Preservation Study, which also states that the future Purple Line “will add additional stress to the existing” naturally occurring affordable housing (NOAH). Currently, some 5,200 such units are located within a half-mile of future Purple Line stations in Montgomery County, with prices expected to rise.
In Prince George’s, an estimated 16,700 households, 48% within a half mile of the future Purple Line, are at 60% or less AMI, according to an analysis provided to me by the National Center for Smart Growth/Purple Line Corridor Coalition. An additional 9,000 households, 27%, are at 30% or less of AMI.
Building owners along the Purple Line corridor will see their property values — and ability to increase rent — rise greatly through no effort of their own. “The same landlord doing nothing all of a sudden … can charge more rent” due to improvements “paid for by the government,” said Goldman. The question is how to capture some of this value to plow money back to long-time and low-income residents.
Tools to preserve affordable housing along the corridor
Even the mere knowledge that a new light rail is coming has led some rents to rise. A University of Maryland study currently out for review finds “that rents for units located within one-half mile of anticipated stations have increased well before transit service is expected to begin,” imposing “costs ranging from about $450 per year for a 2-bedroom unit to over $1,200 per year for a 3/4-bedroom unit.” To combat such increases, the paper argues “that anti-displacement and land value capture strategies” should “be adopted well before transit service begins.” In other words, local governments need to begin alleviating stress on low-income communities early in the process of building new transit.
Montgomery County and Prince George’s County have a variety of tools to help preserve or create affordable housing, including Right of First Refusal (ROFR), “in which a local government and/or housing authority may match” other bids “for an existing rental building” that is being resold, said Govoni. Martinez explained it as “a pool of affordable housing developers … to get first dibs on Naturally Occurring Affordable Housing that goes to market.” However, this may be distressed housing that needs serious upkeep and maintenance. Often, the government will work with a nonprofit to keep the housing affordable.
Other tools to preserve and extend affordable housing include deed-restriction, with limits to the sales price or rent, and preservation, often through a housing trust fund, which “provides loans to build new housing units, renovate existing housing, preserve existing affordable housing, and provide special needs rental housing,” said Govoni. The housing trust fund provides initial funds for potential developers to leverage investment. Inclusionary zoning is another key tool that mandates new developments set aside a certain percentage of their units for low-income people.
Affordability tools in action
Montgomery County, especially, has a long history of using such tools, providing “an affordable housing infrastructure that just doesn’t exist in Prince George’s right now,” said Ashanti Martinez, a research and policy analyst for CASA. Although rents have long been lower in Prince George’s, the county government is becoming more aggressive to face new affordability challenges.
The Prince George’s County budget is beginning to reflect this emphasis, with “$2.9 million for the HOME Entitlement and Program Income and $10 million for the Housing Investment Trust Fund (HITF)” for 2023, according to Alexis Yeoman, a public information officer and legislative liaison for the Prince George’s County Department of Housing and Community Development. An additional $10 million is coming from the State of Maryland. Prince George’s has also requested $7.3 million annual funding from the federal Department of Housing and Urban Development.
However, the need is so great that these combined programs “need to be funded at $80 million a year,” including federal and state money, according to Martinez. The funding needed to enable new construction of affordable housing and preservation of existing units far outstrips the current budget.
In Prince George’s, ROFR “is the main tool we utilize to” help preserve NOAH, said Aspasia Xypolia, director of the Prince George’s County Department of Housing and Community Development. Although ROFR has been on the books in Prince George’s since 2013, it wasn’t used until 2021 for complexes in Capitol Heights and Hyattsville, followed by two new locations in 2022. So far, ROFR has preserved a total of 759 affordable units, according to Yeoman, with more on the way. In November 2021, County Executive Angela D. Alsobrooks announced the expansion of ROFR by allocating $15 million over a three-year period, according to Xypolia.
Prince George’s has also recently “established a sustainable source of funding for the Housing Investment Trust Fund (HITF),” said Xypolia. Since October of 2021, over 500 units have been preserved. By the end of this year, “that number will have grown to over 1,000,” she added.
In Montgomery County, a network of tools is used to keep at least some housing affordable. Reacting to an increasing housing shortage, after much debate, the county has approved a roughly $200 million budget for affordable housing — much of it going to preserve existing affordable housing while adding new units, with some $20 million for rental assistance.
Thirty-two percent of units for those earning below 60% of Area Median Income (AMI) in Montgomery County are deed-restricted, with limits to the sales price or rent, according to the 2020 Preservation Study. Unlike the NOAH stock, the number of deed-restricted properties has been increasing, with a gain of nearly 5,000 units from 2000 to 2019. This will give some protection to low-income people, but the poorest remain at the greatest risk, according to the study: “Almost all households earning below 30 percent of AMI face a lack of affordable supply.”
Montgomery County has also set up “an acquisition fund with about $14 million,” which will provide short-term financing to developers to purchase properties that are at risk of losing affordability status, said Goldman. It will be managed by the National Housing Trust with a four-to-one match. This tool has a history of success; Govoni pointed to the Bonifant and Elizabeth Square as notable developments in downtown Silver Spring jump-started through a housing trust fund.
Inclusionary zoning has been used in Montgomery County since 1973, mandating between 12.5 and 15% of every new building with 20 or more units be set aside for low-income people. However, many advocates argue that inclusionary zoning is nowhere near the scale needed to make a dent in the affordable housing problem, for instance in this recent GGWash article.
Rent stabilization could be another important way to protect tenants, which ensures some predictability, although currently only Takoma Park has such a policy. During the pandemic, the federal government essentially imposed rent stabilization nationally, but the mandate has now been lifted. The Montgomery County Council also implemented emergency rent stabilization, said Martinez; extending it is currently under debate.
“The Purple Line is an unbelievable asset for low-income families to get access to transportation,” said Goldman. “We just need to make sure that … communities around it are not displaced.”
This article is part of a limited series exploring equitable transit-oriented development, made possible with a grant from Amazon. Greater Greater Washington’s editorial department maintains editorial control and independence in accordance with our editorial policy. Our journalists follow the ethics guidelines of the Society of Professional Journalists.