MPDU Program - General

• Produce moderately priced housing so that County residents and persons working in the County can afford to purchase or rent housing that is affordable to them;
• Help distribute low and moderate-income households throughout the growth areas of the County;
• Expand and retain an inventory of low-income housing in the County;
• Provide funds for future affordable housing projects by sharing the windfall appreciation when MPDUs are first sold at the market price after expiration of the resale price controls;

Today, there are approximately 4,000 MPDU units currently under control. There are about 400 households on the MPDU waiting list who have been issued a certificate and need to win a Random Selection Drawing to purchase a unit.

The MPDU program markets units to renters and first-time home buyers with incomes up to 70 percent of the Washington Metro Area Median Income (AMI), which is approximately $79,500 for a family of two or $99,500 for a family of four. Priority in the sale of the MPDUs is given to people who either live or work in the County.

Over the past decade, 2010-2020, an average of more than 300 MPDUs have been produced annually. Because of the high demand for the MPDUs, the County conducts drawings to select potential purchasers of the units in each offering. The units range in price from $150,000 for a 2 bedroom condominium to approximately $220,000 for a 3 bedroom townhouse with a garage. Final prices depend on amenities and options provided by the developer but are reviewed to confirm affordability.

The MPDU program is established under County legislation adopted by the County Council and approved by the County Executive. Certain program requirements such as income limits, maximum sales prices and rental rates are set through executive regulations developed by the Department of Housing and Community Affairs and approved by the County Executive and the County Council.

The MPDU program is primarily implemented through two sections of the Montgomery County Code: Chapter 25A, known as the Moderately Priced Housing law, which lays the foundation for the MPDU Program – and Chapter 59, The Montgomery County Zoning Ordinance, which specifies the applicable zones, sets the applicable zoning bonus densities, and sets the site plan requirements Montgomery County.

• Moderately Priced Dwelling Unit (MPDU) Program Chapter 25A requires the County Executive to set income and eligibility standards for consumers of MPDUs, including: • Set maximum incomes by size of household • Enforce first-time homebuyer requirement • Establish maximum sales prices and rents of MPDUs, based on established factors • Establish the procedures for the sale and rental of units • Establish procedures for establishing resale prices and any shared profit required.
• Chapter 59 Montgomery County Zoning Ordinance - The zoning ordinance contains provisions for residential and mixed-use development that provides both flexibility and restrictive controls over the construction of moderate cost housing in new subdivisions. The MPDU requirement is applicable to residential projects of 20 units or more.

Laws and Regulations Concerning the MPDU Program

• Executive Regulation 21-22, Sales Prices of Moderately Priced Dwelling Units

• Executive Regulation 13-05AM

  Requirements and Procedures for the Moderately Priced Dwelling Unit Program. NOTE: this regulation was superseded by 11-18A. It has been left here for historical purposes only.
   

• Complete Montgomery County Code and Regulations

  Courtesy of American Legal Publishing Corporation

Program administration involves both the public and private sectors. The local government handles regulatory and administrative functions and the building industry produces the housing.

• Builders must coordinate with the MPDU office prior to applying for building permits and constructing the units. Developers must also notify the MPDU office when units are ready to be offered for sale or rent.
• The MPDU office certifies the eligibility of individuals and families who want to purchase units under the program; enters into agreements with builders for staging the construction of the units; establishes the MPDU sales and rental prices; trains and oversees leasing offices in carrying out the requirements of the rental program, and oversees the selection of potential buyers through a lottery selection process. The MPDU section also enforces the occupancy and resale provisions of the law and oversees the resale of existing units.

Program funding: The Housing Opportunities Commission (HOC) receives funding to acquire MPDUs. That funding comes from a variety of sources including federal acquisition-without-rehabilitation program funds, local tax exempt bonds, private sector investment in federal low-income housing tax credit partnerships and funding through the Maryland Housing Finance agency.

• Early 1970s

  High demand for land, restrictions on new water/sewer connections, and a growing number of young families wanting to move into the County led to housing affordability challenges. In this context, developers began building the largest, most profitable houses on limited land. Given housing affordability challenges, housing advocacy groups, e.g., Suburban Maryland Fair Housing and the League of Women Voters, recommended that builders should supply a percentage of all units in new residential developments at prices affordable to low and moderate-income households.

• 1971

  Council adopted two resolutions (Resolution 7-119 and 7-370) that formalized Council commitment to affordable housing.

• 1972

  After receiving input from community activists, developers and political leaders, Montgomery County Council considered Bill 3-72, an innovative, County-wide inclusionary zoning and density allowance program The legislation proposed that builders of most residential housing make a portion of the housing units available at below-market rate sales prices or rental rates.

• 1973

  On October 23, 1973, the County Council unanimously approved the Bill, which ultimately became Chapter 25A, the Moderately Priced Dwelling Unit law. The legislation required that 15 percent of the total number of dwellings in every subdivision containing 50 or more units be affordable to moderate-income households, for a control period of 5 years. The total density of the subdivision could be increased by 20 percent. An amendment gave the County's public housing authority (The Housing Opportunities Commission or HOC) the right to purchase one-third of the moderate priced units produced in each subdivision, to assist low-income tenants. The County Executive vetoed the legislation over concerns on constitutional issues, invasiveness, and administrative difficulty. On November 6, 1973, the Council overrode the veto.

• 1974

  The Moderately Priced Dwelling Unit law became effective on January 21, 1974. The law was quickly amended in 1974 to: 1. allow an applicant to transfer finished lots to the County instead of constructing MPDUs on site; and 2. Include a strictly limited waiver provision for the MPDU requirement, which could be granted by the Planning Board due to “exceptional topographical conditions or other extraordinary situations or conditions of specific parcels of land and the strict application of the requirements would result in peculiar and unusual practical difficulties or exceptional undue hardship upon the applicant.”

• 1976

  The first moderately priced dwelling units (MPDU's) built under the program were offered for sale to qualified purchasers in 1976.

• 1980-81

  The County Council, at the request of the building industry, reduced the MPDU requirement to 12.5 percent but enacted two other amendments that strengthened the program: 1. to extend the control period from 5 years to 10 years; and, 2) to establish MPDU purchaser income limits.

• 1988

  A committee composed of builders, staff from the County's planning agency, Housing Department staff and members of the County Council studied the program again in 1988 and recommended substantive changes that were adopted into law in 1989. 

• 1989

  The amended law took effect. Major changes included:

  • Established shared profit in resales after the control period;
  • Extend the control period for MPDU rentals to 20 years;
  • Increase the bonus density from 20 percent to 22 percent;
  • Base MPDU requirement on a sliding scale ranging from 12.5 percent to 15 percent, depending on the bonus density achieved;
  • Required a portion of the appreciated resale price of an MPDU sold after the expiration of the price control period be paid into the Housing Initiative Fund to support affordable housing;
  • Permit an increase in the MPDU sale prices to enable builders to pay for architectural improvements in the design of the MPDUs to make them more compatible with the market rate houses; and,
  • Provided for alternative methods of meeting the MPDU requirement when the units are not affordable because of high condominium or homeowner's association fees and where the services provided cannot be eliminated or modified for the MPDU residents. An example would be a luxury high-rise, condominium building. The alternative program permits the developer to make a payment to the Housing Initiative Fund or provide units at another location; the alternative must result in more units or units that are more affordable.
• 1993-94

  Established more guidelines and requirements to benefit applicants:

  • Established the MPDU certificate system for the first time
  • Created a point system for eligible purchasers to provide weighted drawing system
  • Required owner occupancy during the control period and authorized County to collect rents if illegally rented MPDU
  • Established bedroom ratio requirements to match market rate units in rental developments so that number of efficiency and one-bedroom MPDUs do not exceed market rate units of the same size.
  • Require all single-family MPDUs to have at least 2 bedrooms
• 2001
  • Council amended the law to restart the MPDU control period if a sale unit is resold during the original 10-year control period. When an MPDU unit initially offered for sale after March 1, 2002 is resold, the unit must be treated as a new sale and a new control period begins on the date of the sale. (Bill 31-01)
  • Lowered MPDU requirement in the Central Business District, transit station residential and high density Planned Development Zones from 15 to 12.5% and increased the financial feasibility of providing MPDUs in high-rise buildings. (Bill 10-01)
• 2002

  Council amended the law to extend the MPDU requirement to smaller subdivisions of 35 or more dwelling units – unless the Planning Board finds that a project could not achieve a bonus density of 20% or more at that location or that providing MPDUs would not all compliance with applicable environmental standards or would significantly reduce neighborhood compatibility. (Bill 18-02)

• 2003

  Council amended the law to clarify that developers are not prohibited from voluntarily building MPDUs and using the optional development standards in subdivisions of less than 35 dwelling units.

• 2004

  Amended MPDU Law took effect April 1, 2005, to extend control periods and apply MPDU requirements to smaller developments:

  • Extend the control period on for-sale MPDU units to 30 years (and renew the control period each time the MPDU is sold within the existing control period)
  • Extend the control period on rental MPDU units to 99 years. 
  • Apply MPDU requirement to residential developments of 20 or more units. (Previously, developments with thirty or more units were required to provide MPDUs.)
• 2018

  Bill 34-17 MPDU Amendments. Signed Into Law on 08-02-2018; effective Oct. 31, 2018:

  • Connect MPDU eligibility expressly to household income as opposed to the MPDU sale price and financing information.
  • Require a payment to the Housing Initiative Fund (HIF) for developments of between 11 and 19 units.
  • Provide flexibility for DHCA to accept alternative payment and alternative location agreements. Alternative payments allow an applicant to satisfy MPDU requirements via a financial contribution to the Housing Initiative Fund. Alternative location agreements allow an applicant to satisfy MPDU requirements off-site from the proposed development by allowing an alternate payment or alternative location agreement to be used or placed in a different planning area than that of the development if the location is one of the county’s higher income planning areas, or after notice of “good cause” and a 30-day comment period is provided to the County Council.
  • Require 15 percent MPDUs in planning areas in which at least 45 percent of the United States Census tracts have a median household income of at least 150 percent of the countywide median household income.
  • Clarify that when an MPDU is first sold or leased under another government program, once the initial restrictions end, MPDU requirements apply for the balance of the MPDU control period;
  • Expressly provide that the conversion of an existing property from a non-residential use to a residential use which results in the development of 20 or more dwelling units is subject to the MPDU requirements;
  • Expressly provide that DHCA Director determines whether or not required MPDUs must be provided on-site in all cases (including where the Council sets a higher base MPDU requirement in the master plan approval process);
  • Require that an MPDU agreement provide for any requirement of for-sale age-restricted MPDUs to be satisfied by a payment to the HIF;
  • Prohibit the establishment of a condominium or homeowners' association consisting solely of MPDUs.