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Chamber Proposes Affordable Housing Task Force

By: Mark Kleinschmidt

We can all agree that there is an affordable housing crisis in Anne Arundel County that impacts the entire range of housing from subsidized housing, workforce housing, rental housing, executive housing, and senior housing.  The Chamber applauds the Administration and Council for taking up the debate about the affordable housing crisis and encourages you to abandon the piecemeal approach of 78-23 and take steps to put together a comprehensive affordable policy based upon your own legislative research and the results of the pending state report called: Pathways to Removing Housing Obstacles Affordable.

The planning and construction of “for sale” and rental housing is complex and includes many variables. While there is a particular interest at this time in providing housing for “essential workers” a much better approach would be to develop a holistic set of solutions to increase the supply of all types of housing in the County.  The County Executive or County Council should  set up an Affordable Housing Task Force to take a holistic look at all the elements that go into the construction of  “for sale” and rental housing.  The Task Force should be made up of members from the public and private sector, be given a date certain to complete their work and produce a report with a set of recommendations that will help bring down the cost of housing across the board for all types of housing.

As written, Ordinance 78-23 has numerous areas of concern, here are a few:

  • The concept of decreasing Capital Facility Connection Charges and providing density bonuses for subdivisions of more than 9 units does seem like a viable method for expanding affordable housing at first glance. However, upon closer review of prevailing residential construction patterns, it’s clear that new housing construction is at a historically low level, and the prospects for upcoming projects are minimal.
  • Moreover, only 60% to 70% of the allowable density is being realized by subdivisions of more than 9 units due to the lengthy and uncertain approval process and regulatory expenses, making a density bonus a less than ideal incentive.
  • The Fiscal Note for 78-23 projects that only 221 new units would be produced each year and new staff would have to be hired to administer the MPDU program at an annual cost of $289,824, not a very good bang for the buck.
  • There is uncertainty about residency requirements.

The County Executive or County Council should establish an Affordable Housing Task Force to develop a comprehensive affordable strategy.  To get started, the Task Force should focus on two key questions:

Question #1: How can the cost of constructing “for sale” and rental housing be reduced?

Numerous studies and data is available to provide answers to this important question.  There are twelve major cost drivers in the construction that are listed below.  Many people are not familiar with the various costs that go into building a housing unit, particularly the time costs and the cost of regulation. Land for a project is obtained via loan and monthly payments are required, the longer it takes to get approvals drives up the price of a housing unit.  The National Association of Home Builders (NAHB) has found that on average, regulation imposed by all levels of government (local, state and federal) accounts for 24.3% of the final price of a new single-family home built for sale.

Taking a deep look at these twelve cost elements and coming up with creative ways to reduce their impact on the price of a housing unit can lead to significant cost reductions.

Major Costs for Residential Construction

Land Acquisition

Infrastructure Development

Engineering and Legal Fees

Construction Costs

Studies and Reports

Landscape Costs

Zoning Costs

Financing, Insurance, and Taxes

Permitting Fees

Sales and Marketing costs

Site Work

Time Costs

Question #2: What policies and programs will work best in Anne Arundel County?

Every community is unique and requires it own set of unique solutions to provide an adequate supply of housing for its residents.  The Task Force should look at best practices from around the country and find those that would be a good fit for Anne Arundel County. While some of these are already in place and others are being considered, taking a comprehensive look at potential programs and policies would be of great value to establish our own unique housing strategy.  Here are some suggestions of for initial consideration:

  • Public-Private Partnerships
  • Direct and Pass-Through Funding
  • Financing Tools
  • Direct and Pass-Through Funding
  • Expedited Permitting
  • Encouraging Employer-Assisted Housing
  • Housing Trust Funds
  • Inclusionary Housing Requirements
  • Supportive Services
  • Establish an Infrastructure Fund
  • Zoning Reforms:
  • Tax Incentives
  • Redevelopment: Commercial and Residential
  • Housing Vouchers

 

Answering these two questions will go a long way in the development of a meaningful affordable housing strategy for the County and will help ensure it is the best place for all.  With this in mind, the Chamber respectfully requests that you table Ordinance 78-23.

For additional information contact Mark Kleinschmidt, President/CEO of the Anne Arundel County Chamber of Commerce at mark@aaaccc.org

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