New Housing Could Finally Come To Montgomery’s Vacant Metro Station Land as County Council Approves Tax Incentive Regulations

Per Montgomery County:

Possibilities Grow as Amazon Announces Funding for Affordable Housing On Metro Stations; Grosvenor project starts moving

ROCKVILLE, Md., June 29, 2021—Today the Council unanimously voted to approve regulations that implement the More Housing at Metrorail Stations Act, which is a major economic development initiative that the Council approved by the Council in October 2020, after overriding the County Executive’s veto.

The plan opens development opportunities at every Metro station in Montgomery County. The incentive improves the viability of high-rise development for housing or commercial uses, by offsetting the exceptionally high cost of development on Metro stations, where station engineering, parking structures, and other expenses have prevented development in the County and across the region for decades.

“The County has a lot riding on our ability to transform the vacant land and parking lots on top of our Metrorail stations, up and down both sides of the Red Line, to meet our housing affordability and economic development goals,” said Councilmember Hans Riemer, who chairs the Council’s Planning, Housing and Economic Development Committee. “To fight climate change, this is exactly the kind of location where we should have as much housing as possible. To promote economic development, we need new housing and jobs around the station areas, and these high-rise buildings should help catalyze the market. With the potential for more than 8,000 units of high-rise housing, at least 1,200 of which would be set aside for below market rate programs, this measure should help us take a big stride towards our regional housing and climate goals.”

“This is Smart Growth in action and another piece of the puzzle toward creating more housing options and meeting the affordable housing challenge we face,” Councilmember Andrew Friedson said. “These regulations will help turn parking lots into vibrant places for new residents and businesses with near-immediate access to transit.”

By incentivizing high-rise development, the legislation could deliver as many as 8,600 units of housing at County Metrorail stations. The legislation, proposed by Councilmembers Riemer and Friedson, was supported by the Sierra Club, the Coalition for Smarter Growth and leading housing advocates.

The legislation and implementing regulations have taken on added importance in the wake of the recent announcement that WMATA and Amazon have forged a $125 million partnership to build 1,000 below market-rate housing units at Metrorail stations. Projects coming online because of the More Housing at Metrorail Stations Act could access the new WMATA/Amazon funding to bring even more below market-rate units to the development. The More Housing at Metrorail Stations Act makes sure that Montgomery County is ready to capture the benefits of this exciting partnership between WMATA and Amazon.

Background on the More Housing at Metrorail Stations Act
The More Housing at Metrorail Stations Act will make a significant impact on the viability of building new housing on Metro station property. Presently, there are no high-rise developments underway on any Metro station property in Montgomery County, nor have there been for many years.

The law took effect in Jan. 2021 and incentivizes new housing construction by providing a payment in lieu of taxes (PILOT) for a period of 15 years for new high-rise developments that include at least 50 percent rental housing. The PILOT exempts 100 percent of the property tax that would otherwise be due for a project constructed on property leased from WMATA at a Metro station in the County.

Currently, WMATA does not pay property taxes to Montgomery County. The law allows a new development on a Metro station property to retain that property tax exemption for 15 years. The developers will continue to pay impact taxes, and residents living in the housing will pay personal income taxes.

In addition to including 50 percent rental housing, the new high-rise developments would need to include at least 15 percent affordable housing, with 25 percent of that figure being housing affordable to people making 50 percent or less of the median income in the County.

According to Metro, station properties in the County have the capacity to deliver at least 8,600 units of housing, which would provide a significant contribution to the County’s long-term housing shortage. The high-rise buildings also would include between 1,200 to 1,300 units for the County’s Moderately Priced Dwelling Unit (MPDU) affordable housing set-aside programs. The law changes the economics of high-rise Metro station development and delivers the essential housing on top of Metro that the County needs to fight climate change, promote housing affordability and spur economic growth.