A bill intended to encourage the construction of affordable housing in Montgomery County could cost the county as much as $57 million in funds for school and road construction, a new analysis shows.
Introduced by County Councilwoman Nancy Floreen, D-at large, the bill exempts from paying development taxes developers of residential buildings where at least 25 percent of the apartments have below-market rents.
If the builders of all of the major rental housing projects currently planned in the Great Seneca Science Corridor, White Flint and Shady Grove-County Service Park West took advantage of the tax exemption, the county would lose $56.8 million, the analysis by the county's Office of Management and Budget and Department of Finance shows.
Development taxes account for 9.3 percent of the county's transportation construction funding and 10 percent of school construction funding.
County Executive Ike Leggett on Tuesday proposed a 3 percent cut in Montgomery County Public Schools' construction budget, prompting the school system to seek additional funding from the cash-strapped state. According to Leggett, the loss in development taxes would make the situation worse.
"We can't absorb that loss."
Councilman Craig Rice, D-Germantown and one of the bill's sponsors, agreed that the loss of funds would be difficult to stomach, especially now.
Though the council members behind the bill knew affordable housing would come at a price, Rice said he was not expecting it to cost $57 million.
"It's pricey because there's that much work that needs to be done," he said. "We just really have to decide what's important to us."
The estimate also might not be accurate, Floreen pointed out.
The analysis assumes the construction of 635 affordable-housing units, more than is realistic in the near future, she said.
"Even if they were right, the fact of the matter is we would get ... over 600 more affordable units," Floreen said. "That's a benefit to the county in the long run."
Without the incentive the bill provides, the county is unlikely to increase its stock of affordable housing, she added. "Nobody is making money on affordable units."
A public hearing is scheduled for Tuesday at 1:30 p.m.