The Annapolis City Council approved changes to a long-standing affordable housing program Monday which will remove a payment option and will require developers to build more affordable housing units than previously mandated.
The Moderately Priced Dwelling Unit Program, established in 2004, requires developers offer a percentage of for-sale or rental units below the market rate of other units in the same project. In lieu of building affordable units, developers were allowed to pay a fee amounting to 4% of construction costs.
The bill, O-21-19, eliminates the fee and increases the required number of rental and for-sale units in each development to at least 15% of both units. The ordinance passed by a 7-0 vote with two members absent. Alderwoman Rhonda Pindell Charles, D-Ward 3, and Alderman DaJuan Gay, D-Ward 6, were not present.
Despite tweaks to the program by the council over the years, only 31 moderately-priced units — 21 rentals and 10 for-sale — have been built over the last 15 years, said Alderman Marc Rodriguez, D-Ward 5. Rodriguez is the lead sponsor of the legislation.
While the program is well-intentioned, changes are needed, Rodriguez said.
He used Eastport Sail Lofts as an example where developers built 10 market-rate units — some of which are being sold for more than $1 million — and paid an $85,000 fee to not build a moderately priced unit.
“That’s what we’re talking about,” Rodriguez said. “Why would anyone be incentivized and motivated to pay MPDUs?”
According to a city staff report, 11 developers have opted to pay a fee-in-lieu of producing affordable units. The report also found the city has collected about $1 million in fees from developers since 2013, which has been used to help new homebuyers with settlement assistance but isn’t enough to build housing.
“Fifteen years ago, If we had gotten that number right, we would have had a housing trust fund that could do much more real work in terms of building affordable units,” Rodriguez said.
The law extends the occupancy period — the amount of time after a unit is purchased or rented that it remains a moderately-priced unit — from 10 to 30 years for for-sale units and 20 to 99 years for rentals.
The council voted down an amendment 4-3 that would have eliminated a grandfathering clause and retroactively applied stricter guidelines to any project that hadn’t yet received final approval from the department of planning and zoning.
Alderman Fred Paone, R-Ward 2, voted against the amendment and called it “bad policy” for “moving the goalposts after the game has started.”
The responsibility for monitoring the number of moderately-priced houses being built is on the city, not the developers, said Alderwoman Elly Tierney, D-Ward 1. She also voted against the amendment.
“We realized we had a problem and now we’re trying to put a 10-pound potato in a 5-pound bag, but I don’t think that’s the developer’s fault,” Tierney said. “This one is on us.”
Mayor Gavin Buckley and Alderwoman Sheila Finlayson, D-Ward 4, also voted against the amendment. Alderman Rob Savidge, D-Ward 7, Rodriguez and Alderman Ross Arnett, D-Ward 8 voted in favor of it.
“We have a reputation of being an expensive place to live. Even if we were completely friendly to businesses … we would have more million-dollar housing. We would not have affordable housing,” Savidge said. “We need to correct the goalposts and move them where they should be.”
During the public comment period, Alex Kopicki, a principal with Solstice Partners, the developer of the proposed Lofts at Eastport Landing project, criticized the bill’s late addition to the agenda and warned of the potential unintended consequences of the grandfathering clause.
“Including affordable units within a mixed-use project that has market-rate units has proven to be an effective approach to what is a housing crisis,” Kopicki said. “I implore you as it relates to fairness with the business community and understanding that you should do things in a certain order without haste and be properly vetted.
