Build more housing in Montgomery County using this one weird trick

My recent look at zoning in the DC region revealed that 82% of land in Montgomery County (not including Rockville and Gaithersburg, which both have local zoning control) is either protected open space (35%) or restricted to detached single family zones (48%). These are staggering numbers.

So how did Montgomery build twice as much housing in the last seven years as Frederick County, coming in third in production behind Loudoun County and DC?

Where did all those houses land?

To get place-level estimates of housing, I went to the American Community Survey's five-year estimates, which have the smallest margins of error for this level of geographic detail. In this table, CDP stands for Census Designated Place, and it should be noted that these Census boundaries include a larger area than the county's urban district boundaries.

The majority of new housing units built in Montgomery County since the Great Recession have been in the county's two large municipalities and in and around the three urban districts, as already reported by Dan Reed. However, a very substantial chunk of housing growth is happening in the rest of the county — 44%, representing over 6,000 new homes. That's growth that was accommodated in mostly single-family areas. How?

Montgomery County's “optional method”

Unfortunately the M-NCPPC Planning Terms Glossary has not been updated since their zoning rewrite five years ago, so the description of the optional method of development there is out of date. However, it is still “a zoning procedure used in [some] zones that encourages land assembly and mixed-use development. Under the optional method, higher densities are allowed in exchange for significant public amenities and facilities to support that additional density.”

The optimal method is most often used in the county's Commercial/Residential zones. However, consultation of the actual Montgomery County code (scroll to section 4.4.2) reveals that it can also be used to build townhouses or duplexes in single-family zones.

The optional method is a unique administrative procedure created by Montgomery County as a careful compromise between by-right development and arbitrary zoning relief. Zoning should be, at heart, a tool that allows jurisdictions to serve the public interest. This involves a combination of protecting the public from harm and seeking to extract public goods from private developers.

The more restrictive zoning is, the more potential power the zoning authority has in negotiating this balance. In jurisdictions like Arlington County and Fairfax County in our region, the elected county legislature (e.g. the County Board or the Board of Supervisors) votes directly on every major development proposal because almost all of them require zoning relief.

While this seems to work for Arlington and Fairfax, many jurisdictions are wary of models like this because it can make the planning process extremely vulnerable to hijacking by small special interest groups, depending on the quality and transparency of the elected officials and the administrative process.

One alternative is to grant relatively generous by-right development, as is the case in New York City, Boston, and parts of Chicago (note: relative being the key word here). Many jurisdictions that do this use incentive zoning and/or impact fees to obtain exactions from developers by formula. Instead of negotiating zoning relief, developers simply purchase density bonuses.

Another alternative is to place zoning relief in the hands of an appointed board or commission instead of the elected body. Both the District of Columbia and Montgomery County do this. The county relies on the Montgomery County Planning Board, whose five members are appointed by the County Council to term-limited paid staff positions at M-NCPPC.

This model has its own critics, who may feel that these professional planning bodies are too developer-oriented and hand out zoning relief without sufficient exactions. Montgomery County's optional method has been carefully legislated by the County Council to address this.

When proposed commercial or mixed-use developments go through the optional method, developers can obtain additional density through a detailed structure of formulas and negotiations covering a wide range of possible community benefits that includes both staff and community review. For increased density in single-family zones, the formulas are even simpler. If the developer provides at least one additional unit above the 12.5% mandatory minimum set-aside for affordable housing through the moderately priced dwelling unit (MPDU) program, they can do townhouses or duplexes.

MPDUs in single-family zones: a real producer

The optional method has produced 3,751 townhomes or duplexes in single-family homes in the county since 2000, at least 12.5% of which were set aside as affordable.

For example, Grosvenor Heights, an EYA-built project located in North Bethesda, is located in the Residential-90 zone. While the predominant housing type in the R-90 zone is a single-family detached house, the developer built 15% of the new units as MPDUs. This percentage of MPDUs—more than the standard 12.5%—allowed EYA to build 143 townhouses and 12 single-family detached homes.

Nearby Symphony Park, another development in North Bethesda, was built in the R-60 zone, where the predominant housing type of the zone is single-family detached home. Through the optional method of development, this project resulted in 112 townhouses with 15% of the units designated as MPDUs.

Recently, the Montgomery County Council increased the required percentage of affordable units in certain areas of the county. Specifically, in planning areas where 45% of the census tracts have a median income of 150% of Montgomery County’s median income ($100,352 in the 2012-2016 American Community Survey), developers of residential projects are required to provide 15% of the units as MPDUs.

In these planning areas (including most of the western half of the county), developers are still allowed to receive a 22% density bonus, even though it is legally required (projects that provide the standard 12.5% are not awarded a density bonus).

Suburban incremental development

Densifying single-family areas while providing affordable housing checks a lot of environmental and social boxes at the same time. It's a concept that the City of Alexandria might want to take a close look at, as contributor Canaan Merchant recently explored.

However, Montgomery County's reliance on the optional method (as opposed to even incrementally denser by-right development) is far from ideal. Our region, and every metro region nationwide, is so far behind on building the supply of market-rate housing that we need, much less affordable housing, that we are definitely not going to get there one duplex at a time. However, that doesn't mean this “missing middle” housing can't be a substantive part of the solution.

The biggest problem with Montgomery County's optional method, in fact, is that the minimum lot size to use the optional method ranges from three to 34 acres, depending on the base zone, and there are not a lot of R-60 zoned three-acre sites left in the county to even build on. Since the minimum lot size for a single family home in R-60 is only 0.138 acres, a developer would have to assemble a contiguous collection of 21-22 single family homes in order to densify an already built-out area.

In short, there is no feasible way to use the optional method to incrementally densify an already built out area, for example, by replacing a single house with a duplex. This functionally leaves the huge portions of Montgomery County that are already occupied by single-family homes as frozen in time as the agricultural reserve. While accessory apartments are another potential solution, the current ordinance remains so clunky that only 40 to 50 units are being produced per year.

The council is currently considering revisions to address this, and the planning board has also already identified detailed changes that could be made to the zoning code through text amendments to increase missing middle production. Stay tuned for coverage of the council's work on these issues, as well as further exploration of accessory dwelling units in our region in a forthcoming post.

Special thanks to Lisa Govoni of M-NCPPC for the production estimate and her cogent explanation of how the MPDU ordinance has evolved.