Montgomery County Executive Marc Elrich is giving a tour of sorts around downtown Bethesda. It’s a mild, sunny day in late December, and he’s dressed in a leather jacket, playing equal parts chronicler and fortune teller of the pressures on affordable housing.
As he points up and down Wisconsin Avenue, Elrich reels through a litany of planning terms: MPDUs (the “moderately priced dwelling units” the county requires in large development projects); affordable units (cheaper than MPDUs); and NOAH (the “naturally occurring affordable housing” he wants to protect).
Chief among Elrich’s grievances is when a developer razes affordable units to make way for a gleaming high-rise, mixed-use development that offers market-rate housing and the requisite quantity of MPDUs—but that figure is smaller than the number of NOAH units that existed previously. “Net loss” offends him personally.
This building has X MPDUs, that one over there has Y, this project has a net loss of Z affordable units, Elrich says as he walks by. When Elrich runs the net loss numbers through his head, he stares at the site a little askance and then bows his head. Looking down the middle of Bethesda’s Battery Lane, where the bulk of the housing stock is NOAH, Elrich bows his head a lot.
Older apartments here are slated for replacement with buildings similar to those on the eastern end of Battery Lane, where bay windows, portes cocheres and rooftop terraces dominate. The Aldon Management-owned properties’ redevelopment is expected to result in a net loss of 171 affordable units, he says.
“It’s actually far worse than anybody thinks,” Elrich says in a video released on July 13, three days before the Democratic primary, titled “Housing Reality.”
Renters who browse Zillow for one-bedroom apartments in downtown Bethesda can expect to see dozens of units starting at $2,500 per month. In Silver Spring or Rockville, it’s not much cheaper. Across the county, the median price of a home sold in 2022 was $555,000, according to data from the Greater Capital Area Association of Realtors.
Such prices put county life beyond the reach of many families whose breadwinners range from house cleaners and delivery drivers to firefighters and teachers.
There’s an equity impact when market rates answer to a median household income of $112,854, per Montgomery County Planning Department data for 2021, but Hispanic families had a median income of $86,302, and Black households had a median income of $83,194.
In 2019, Metropolitan Washington Council of Governments data determined that Montgomery County should build 23,100 more low-cost housing units by 2030—a goal the County Council adopted over Elrich’s objections.
But by the end of 2021, the county had already fallen 3,400 units off pace to meet the Council of Governments goal, according to the county’s Housing Opportunities Commission. In addition, up to 11,000 units of naturally occurring affordable housing are expected to be lost by 2030, according to the county’s planning department.
Many developers, politicians, cost-burdened tenants and landlords agree that the affordability situation is untenable.
Currently in his second term as county executive, Elrich says he hopes to adopt rent stabilization on pre-2005 buildings, increase the requirement for moderately priced and affordable units, and develop a no-net-loss policy.
Housing terms and more
AMI:Area median income
Moderately Priced Dwelling Units (MPDU): The Moderately Priced Housing Law, which dates to the early 1970s, requires that between 12.5% and 15% of housing in new subdivisions of 20 or more units be MPDUs. In order to qualify for an MPDU, applicants generally have to earn 65%-70% of AMI.
Naturally Occurring Affordable Housing (NOAH):Montgomery County has more than 25,000 units affordable to those earning under 65% of AMI, according to the Department of Housing and Community Affairs. Between 7,000 and 11,000 of them are deemed at risk because of likely rent increases.
Cost burdened: Households spending 30% or more of their gross income on rent. A demographic distribution from the county’s Office of Legislative Oversight shows 33% of Asian renters, 40% of white renters, 60% of Black renters and 66% of Hispanic renters are cost burdened.
Deeply cost burdened: Households spending 50% or more of their gross income on rent.
By his own calculations, these efforts won’t meet the growing need for affordable housing, and they’re certain to face pushback from developers and from leaders of the County Council. But in Elrich’s mind, the county won’t be a party to the “bad deals” he finds so offensive.
In his 36 years in elected office in Montgomery County, Elrich has made a name for himself as a left-wing firebrand. He has compared the Purple Line to “ethnic cleansing,” characterized high-rise developments as “vertical gated communities,” and vetoed a tax break for developers near the county’s metro stations—a veto that was overridden by the County Council. The editorial board of The Washington Post has described Elrich as an anti-business leftist with ties to Venezuela.
The county’s anti-Elrich camp accuses him of NIMBYism, the Not In My Backyard brand of knee-jerk opposition. Architect Eric Saul of Takoma Park created “Nimbee,” a satirical bee character who regularly dances around Elrich’s public appearances with a sign urging the public to “BEE against everything!” (Sometimes it’s Saul in the costume; sometimes it’s a friend.)
Elrich says he isn’t anti-development at all, and that opposing projects isn’t in his purview.
“I don’t have the ability to not approve anything,” Elrich says. “I cannot go down to my permitting department and say, ‘I’d like to see you bury this,’ because I can’t and I don’t do that.”
Elrich has a bully pulpit and the power to lead on broader initiatives, such as moving to increase the Housing Initiative Fund, which provides loans and grants that promote affordable housing; he increased its budget by 13.8% last year.
But unless a land-use decision involves county-owned property, the buck doesn’t stop with him, Elrich says. Among his stated second-term goals is getting a county executive-appointed member of the planning board, which makes recommendations to the County Council on land-use decisions.
A fundamental disagreement exists. Elrich says that under the current MPDU system, developers will never have legal or financial incentives to build enough moderately priced or affordable units to match the need. Developers say they won’t get financing if the MPDU requirement increases, and that they need county funding up front to build affordable housing.
Chris Bruch, president and CEO of Bethesda-based developer Donohoe, says the answer to the county’s housing crisis is to build more housing of all types. Though Donohoe primarily builds upmarket housing in the county, Bruch says his company has built one all-affordable project in Silver Spring and collaborates with the Arlington Partnership for Affordable Housing to build high-rises. He says Donohoe is able to do this because in Arlington, Virginia, the county takes the lead on financing. In Montgomery County, Bruch says, the private sector isn’t going to take the first step.
“We will do everything we can to educate our elected folks about our business,” Bruch says. “But it’s a two-way conversation. It can’t be a one-way conversation. The development community is very interested in putting forth solutions.”
Steve Silverman, who served two terms on the County Council, represents Bruch and other developers through his consulting firm, SS Gov Relations.
“You can’t wish below-market housing into existence if you can’t get investors and lenders who will make a project work,” Silverman says. “[Elrich] can say whatever he wants to say; he has first dibs on the budget.”
Elrich says the county doesn’t have the money developers are looking for and is unlkely to borrow it: The council is reluctant to issue bonds, stalling other projects like Bus Rapid Transit. With limited borrowing, immovable budget items like the school system, the police and fire departments, and pensions leave little room for capital projects, he says.
He argues that the county needs solutions that don’t entail capital investments.
The centerpiece of the county’s affordable housing policy, the Moderately Priced Housing Law, was passed in the 1970s, when the county was overwhelmingly white and middle to upper class. It aimed to secure housing opportunities for households that earned a little less than average (about 70% of the area median income). If a developer is building a project with 20 or more units, between 12.5% and 15% of them must be MPDUs.
The program has produced nearly 17,000 units since then, averaging 356 units a year, according to the Department of Housing and Community Affairs. That’s far short of the need.
Elrich wants to change the program—name and all—to serve a broader spectrum of income levels and to require that a third of new units be moderately priced.
“We all know it doesn’t serve the people who need help … ,” Elrich says, “and the need is a hell of a lot greater than 12.5 to 15%.”
But Silverman says the increased goal won’t work unless the county government invests in the projects, he says.
“It’s easy for the county to say, ‘We’re now going to require 25% below-market housing in each new development,’ but the projects aren’t financially viable at those numbers without significant gov
ernment support,” says Silverman, who thinks the county can provide more financial support via programs such as the Housing Initiative Fund and Payment in Lieu of Taxes, a tax exemption designed to support affordable housing.
Elrich wants to implement a no-net-loss policy that would require developers to construct the same number of affordable units that existed on plots of land that are being redeveloped.
Silverman says no net loss comes down to “a math issue.”
“You can construct a policy that says that there is going to be no net loss,” Silverman says, “but if the project doesn’t [work] financially, you can’t force a developer to keep in place the units they already have…the answer may well be that the government has to subsidize it.”
Council Vice President Andrew Friedson (D, District 1) says he is a “proud” supporter of no-net-loss policies and points to the Thrive 2050 master plan adopted last year, which made note of the issue. Still, he believes that Elrich’s definition of no net loss hinders progress.
“Nearly all the ‘naturally-occurring affordable housing’ at risk of redevelopment…[is] not restricted in any way,” Friedson wrote in an email. “So simply preserving older, unrestricted units without adding additional housing supply will never solve the problem alone. Unfortunately, when the County Executive calls for ‘no net loss’ of affordable housing, he often is also effectively advocating for ‘no net gain’ of affordable housing or new housing of any kind. Preservation should be a part of the solution, but we simply can’t come close to meeting our housing needs unless we build significantly more housing at all levels of affordability.”
(Jillian Copeland, co-owner of MoCo360, donated $3,000 to Friedson’s reelection campaign last year. Copeland is not involved in the editorial decisions of MoCo360 or its print publication, Bethesda Magazine.)
Elrich contests Friedson’s assessment, saying his policy looks to require no net loss as a baseline, meaning new construction and additional MPDUs add to the number of existing affordable units.
He is not without legislative allies on his housing goals. Council members Will Jawando (D, At-Large) and Kristin Mink (D, District 5) support rent stabilization, which would cap rent increases.
Elrich also has supported efforts to create affordable housing on county-owned land. In January, he appeared at a groundbreaking for a 195-unit development at Veirs Mill and Randolph roads in Silver Spring. The county partnered with two nonprofits on what’s billed as the county’s largest affordable-housing project.
He has sought development proposals for 18 county-owned parcels—some of them small, oddly shaped parking lots—and says the county has received more than 100 responses from developers.
Elrich has set a goal of reforming the permitting approval process so that developers don’t have to undergo separate vetting by the planning department and the executive branch. The red tape can delay construction and tack on months of interest to a project’s up-front cost, which migrates to the cost of the units, Elrich says. Critics, however, have called the suggestion a “power grab.”
Says Elrich: “I don’t benefit if there’s no development. That’s the other thing people don’t get: You can be left wing and have views on development, whatever they are. But at the end of the day, my budget relies on a successful economy.”
Even though parts of Elrich’s housing plan are underway, he would be the first to tell you that time is not on his side.
The planning department estimates that 40,000 households will come to the county by 2030, half of them earning 50% of AMI or less. If those numbers hold up, at least 20,000 new households will struggle to find housing.
County Council President Evan Glass (D, At-Large) echoed the urgency in those numbers in an interview.
Building about 40,000 units over the next decade “is what we have to do,” he says. “We have to make sure we accommodate people who want to continue living here and people who choose to live here so we can maintain our beautiful diversity. We can maintain our smart workforce and ensure that everybody is safely housed. That should be an area of common agreement.”
Elrich says he is willing to work with the council, but that he isn’t afraid to stick to his guns on affordable housing.
“If people expect consensus and that you’re just going to roll over and play dead, that ain’t happening,” Elrich says. “Because that’s not a two-way street. …People think that I’m anti-development. What I am anti is getting bad deals.”
John Besche reports on religion, urbanism, the confluence of the two, and a little bit of everything in between.
This story appears in the March/April issue of Bethesda Magazine.