I suppose it was inevitable that the Clintons are keeping an enemies list. After all, someone has to show Richard Nixon’s fans how this is really done. Well, I’ve got two lists: the people who make me happy and the ones who don’t.
The Good List
Mike Miller
Big Daddy’s decision to conquer, err, run again is the best news of the month. He is a blogger’s dream and has given us a lot of great material over the years. I am so pleased that he is coming back that I am even willing to forgive him for proposing that dreadful blogger tax.
Dana Beyer
Another politician that just keeps on giving back to bloggers. Whether it’s chasing away shower nuts, taunting right-wing zealots with campaign announcements or running amok on Teach the Facts Vigilance blog, Dana just can’t stop herself from raising Hell regardless of whether it’s good for her politically. If Robin Ficker had joined the County Council staff, I would be sitting in the council lobby with a video-camera every day to watch him go at it with Dana.
Rich Madaleno
He is my State Senator and will one day build us a new Forest Glen Metro entrance, so he has to be on this list. Hmmm… I guess that came across the wrong way. No Rich, you are here because we really, really like you!
Marc Korman, Bob Fustero, Sharon Dooley, Alan Banov, Eric Luedtke, Joe Davidson, Dana and the Rest of You
We really appreciate everyone who regularly reads and comments on this blog. It is both encouraging and necessary that we get feedback, good and bad, on our posts.
The Bad List
Planning Department Transportation Managers
Knowingly relying on a congestion measurement system that their own research proves is flawed is really intolerable. The new Planning Board members, whoever they are, must deal with this issue.
Montgomery County Council Member Marc Elrich
I like Marc and he should not be on this list. But Marc is not happy unless someone is mad at him, so here he is. I’ll come up with a reason for his inclusion later.
MCDCC
They haven’t done anything lately and that’s the point. They used to give us tons of great stuff in the good old days. But recently they have been so quiet and even constructive that I have been reduced to the sad fate of actually praising them. Come on, Central Committee Members, go back to your old ways and help a blogger in need!
And the Worst of the Worst…
My Blog Brothers
David has re-appeared, but what about the rest of you? Why are you making me do all the work?
Showing posts with label Marc Elrich. Show all posts
Showing posts with label Marc Elrich. Show all posts
Friday, June 13, 2008
Sunday, February 17, 2008
New Committee Assignments on MoCo Council
Mrs. Praisner's passing has left vacancies on the Planning, Housing & Economic Development (PHED) Committee, which she chaired, and the Management & Fiscal Policy (MFP) Committee, which she chaired for many years. Those vacancies have now been filled by Mike Knapp (PHED) and Phil Andrews (MFP). Marc Elrich is the new PHED Chair. But these committee assignments are temporary pending the special election for Mrs. Praisner's seat in District 4. After that election, all of this (and more) could change.
You can view the new committee structure here.
You can view the new committee structure here.
Wednesday, February 6, 2008
It's Just Not That Strange, George
The Washington Post just carried an article in which Montgomery County Council Member George Leventhal complained about a school fundraiser at McDonald's. I've got news for you, George: given what's already going on, it's just not that strange!
According to the Post, the "McTeachers Night" fundraisers feature teachers serving students at McDonald's with the schools getting a cut of the proceeds. Upon hearing about this at a council meeting, Leventhal reacted with disbelief:
And that's not all! Looking through my inbox, I see a lot more weird things going on. Hmmm, let's go through the list of upcoming events:
March 8
Fundraiser for County Council Member Marc Elrich, Federal Realty Headquarters, Rockville, MD. Special guests: Neighborspac Executive Director Drew Powell and Doug Duncan.
March 29
Fundraiser for _______________ at Georgia Avenue/Forest Glen Road intersection, Silver Spring. (Errr, one problem with this. We can't get any politicians to appear for fear of endangering their lives at the Intersection of Death.)
April 17
Casa de Maryland hosts rally for County Executive Candidate Chuck Floyd, Wheaton. Special guests: District 18 Delegate Ana Sol Gutierrez and Help Save Maryland Founder Brad Botwin. Start of petition drive calling for removal of MCPD Chief Tom Manger.
April 26
Joint Fundraiser, District 39 Senator Nancy King and Delegate Saqib Ali, Montgomery Village. Special guests: Governor O'Malley and Comptroller Franchot. Also appearing: Abraham Van Helsing and Dracula.
May 10
Reverend Donald Wildmon hosts fundraiser for District 18 Delegate Candidate Dana Beyer, Chevy Chase. Special guests: District 31 Delegate Donald Dwyer and District 18 Delegate Jeff Waldstreicher. Also appearing: Itchy and Scratchy.
According to the Post, the "McTeachers Night" fundraisers feature teachers serving students at McDonald's with the schools getting a cut of the proceeds. Upon hearing about this at a council meeting, Leventhal reacted with disbelief:
"Teachers are enlisted by McDonald's to work behind the cash register at McDonald's, and students are recruited to go to McDonald's that night to see their teacher dishing out the Big Macs?" he asked with horror. "I never heard of that."Now look, George. It's seventy degrees out and it's February, and that's causing some odd behavior. Governor O'Malley and State Superintendent of Schools Nancy Grasmick kissed and made up. Immigrant-baiting Republicans are voting for John McCain for President. And even you and Marc Elrich are cooperating(!) on a bill to protect domestic workers. So maybe it's not so strange that among these oddball alliances, the teachers are teaming up with McDonald's.
About 20 minutes later, Leventhal spoke up again. "The McDonald's thing really bothers me a lot," he said, his sentiment partly fueled by a concern about childhood obesity. "I mean, I don't know if we'd have a fundraiser at the local cigarette store."
And that's not all! Looking through my inbox, I see a lot more weird things going on. Hmmm, let's go through the list of upcoming events:
March 8
Fundraiser for County Council Member Marc Elrich, Federal Realty Headquarters, Rockville, MD. Special guests: Neighborspac Executive Director Drew Powell and Doug Duncan.
March 29
Fundraiser for _______________ at Georgia Avenue/Forest Glen Road intersection, Silver Spring. (Errr, one problem with this. We can't get any politicians to appear for fear of endangering their lives at the Intersection of Death.)
April 17
Casa de Maryland hosts rally for County Executive Candidate Chuck Floyd, Wheaton. Special guests: District 18 Delegate Ana Sol Gutierrez and Help Save Maryland Founder Brad Botwin. Start of petition drive calling for removal of MCPD Chief Tom Manger.
April 26
Joint Fundraiser, District 39 Senator Nancy King and Delegate Saqib Ali, Montgomery Village. Special guests: Governor O'Malley and Comptroller Franchot. Also appearing: Abraham Van Helsing and Dracula.
May 10
Reverend Donald Wildmon hosts fundraiser for District 18 Delegate Candidate Dana Beyer, Chevy Chase. Special guests: District 31 Delegate Donald Dwyer and District 18 Delegate Jeff Waldstreicher. Also appearing: Itchy and Scratchy.
Tuesday, February 5, 2008
It’s Time to Protect Domestic Workers
Back in 2006, the Montgomery County Council commissioned a study by researchers at George Washington University about conditions faced by the county’s domestic workers. The study found that domestic workers were frequently paid less than minimum wage, often did not receive overtime pay, rarely had written employment contracts, did not know their rights under U.S. labor laws and did not have enough contact with their peers to facilitate unionization. On that basis, Casa de Maryland and other groups called for a “domestic workers bill of rights” to protect these workers from employment abuses.
The council did not implement the broad-ranging bill of rights, but Council Members George Leventhal and Marc Elrich recently introduced Bill No. 2-08 mandating employment contracts for domestic workers. Under the bill, any employer of a domestic worker must negotiate a written employment contract with that worker. The contract must specify days and hours of work, wages, paid and unpaid time off, and many other conditions of work. Furthermore, live-in domestic workers must have a private room for sleeping with a lock as well as reasonable access to a kitchen, bathroom and laundry facilities. Employers are forbidden to retaliate against workers requesting such an agreement. Any worker who suffers an agreement violation can file a complaint with the County’s Office of Consumer Protection.
On its face, this is a strong system of protection for a very vulnerable class of workers. But as David Lublin has noted, the bill has its critics – even among progressives. Among other things, they question whether employment contracts with domestic workers who are illegal immigrants are binding, whether an illegal immigrant would have to acknowledge his or her immigration status during the contracting process, and whether increased education would be a more appropriate alternative than contracts.
As I’ve probably told our readers before, I have spent my entire adult career in the building trades section of the labor movement. We have to deal with the anarchic intersection of illegal immigration, sometimes murky tax and employment laws and predatory employers on a daily basis. Believe me that these are not easy issues. The critics’ questions are legitimate and deserve to be answered.
1. Is an employment contract with an illegal immigrant binding?
Contrary to popular opinion, it is not illegal for an employer to hire an illegal immigrant. Under the Immigration Reform & Control Act of 1986 (IRCA), an employer may not knowingly hire an illegal immigrant. An employer has a duty to ask for a list of documents from any job applicant but has no duty to verify them with the federal government. When prosecutors go after an employer for hiring illegals, they must prove knowledge of their illegal status in court, which is not an easy task. (That’s why there are so few prosecutions.)
Illegal immigrants execute all manner of contracts in the U.S., including car purchases, business agreements and even mortgages. These contracts are enforceable in court. Labor unions and other organizations routinely recover wages owed to illegals who have been cheated by their employers. Many illegal immigrants are covered by employment agreements, including union-negotiated collective bargaining agreements. So employment agreements involving illegals do not inherently violate the law.
2. Would an illegal immigrant be forced to acknowledge his or her status by this bill?
Bill No. 2-08 is silent on whether the worker is to be classified as an employee or a contractor. That is a meaningful distinction, but not necessarily for immigration status.
Generally speaking, employers may classify workers as independent contractors if they face substantial business risk from their operations, control their own performance and hours of work and own their equipment and capital. When employers set schedules, control work conditions, closely supervise performance and own the relevant equipment and tools, they are supposed to classify workers as employees. Employees are eligible for social security, workers compensation and unemployment benefits while contractors are not. (Because of the immense costs at stake, this distinction is often abused.)
If a worker is classified as an employee, they will be expected to supply a social security number (SSN) and a number of documents establishing legal residency. The employer has no duty to verify them. Illegal immigrants can and do use false SSNs to establish employment (and credit). I have personally audited construction jobsites on which three-quarters of the SSNs used were false. IRCA’s document requirements have spawned a massive phony documentation industry, but that is an inevitable byproduct of a large number of illegal immigrants and a large number of employers willing to hire them.
The consequences of using false SSNs are usually minimal. When a false SSN is used for social security withholding, the Social Security Administration sends “no-match” letters to employers requesting that they provide corrected SSN information. But there is no requirement that the workers be fired, much less deported. (If workers were frequently terminated over no-match letters, half the construction jobsites in America would shut down tomorrow. Trust me on that.) A recent attempt by the Bush Administration to require employers to fire workers with false SSNs was recently turned back by a federal court. It seems unlikely that a President McCain, a President Clinton or a President Obama would seek to institute such a requirement.
It’s much more likely that employers of domestic workers will instead classify them as independent contractors. In that case, the employer would issue a Form 1099 to each worker reporting their compensation for tax purposes. The Form 1099 reports the recipient’s “identification number.” That could be an SSN or an Individual Taxpayer Identification Number (ITIN), which is available to anyone regardless of immigration status.
The IRS is generally forbidden to share taxpayer information with other federal agencies and is delighted to issue ITINs. As IRS Commissioner Mark W. Emerson told the New York Times last year, “We want your money whether you are here legally or not and whether you earned it legally or not.” In 2006, 1.4 million people used ITINs to file income tax returns and many of them were undoubtedly illegal immigrants.
So under either of the above arrangements, a worker would not have to confess his or her immigration status and any possibility of deportation is extremely unlikely. If the bill really did threaten to cause deportations, Casa de Maryland would not be supporting it.
In any case, while the above issues raise some questions, the workers are not better off working “off-the-books.” In my experience, off-the-books arrangements lead to cheating, abuse and exploitation far, far more than the employment contracts proposed in the Leventhal/Elrich bill.
3. Would greater education be sufficient to protect these workers?
The key determinant of whether a worker’s rights under the law are protected is not the worker’s knowledge of them. It’s the available enforcement mechanisms. I have worked on many organizing campaigns in which education of the workers is an important, early component. But even when workers knew their rights, the employers could and did decide to ignore and violate them. Whether the workers were ultimately able to get their rights respected depended on the vigorousness of government enforcement (which was usually weak), the financial strength of the company and the success of the union’s tactics in countering the law-breaking employer. This is a harsh, HARSH country for workers – even those who are citizens, know their rights and have strong unions.
In the case of domestic workers, education in and of itself would be a challenge. How can the government reach them, especially those who live with their employers? How many languages must the government use? How can the government persuade the employers to respect those rights? And exactly what are the workers supposed to do when their rights are violated? Individual domestic workers have almost no power in their workplaces. That’s why they’re so vulnerable. That’s why they’re in need of real protection.
The way I read it, the Leventhal/Elrich bill will not cause mass firings or deportations of domestic workers. And it may very well bring them up out of the working poverty they currently inhabit. It gives them something almost all union members have: an enforceable, written contract that protects them. It’s a good bill. All progressives should line up to support it, perhaps discuss improvements to it, and ultimately pass it.
The council did not implement the broad-ranging bill of rights, but Council Members George Leventhal and Marc Elrich recently introduced Bill No. 2-08 mandating employment contracts for domestic workers. Under the bill, any employer of a domestic worker must negotiate a written employment contract with that worker. The contract must specify days and hours of work, wages, paid and unpaid time off, and many other conditions of work. Furthermore, live-in domestic workers must have a private room for sleeping with a lock as well as reasonable access to a kitchen, bathroom and laundry facilities. Employers are forbidden to retaliate against workers requesting such an agreement. Any worker who suffers an agreement violation can file a complaint with the County’s Office of Consumer Protection.
On its face, this is a strong system of protection for a very vulnerable class of workers. But as David Lublin has noted, the bill has its critics – even among progressives. Among other things, they question whether employment contracts with domestic workers who are illegal immigrants are binding, whether an illegal immigrant would have to acknowledge his or her immigration status during the contracting process, and whether increased education would be a more appropriate alternative than contracts.
As I’ve probably told our readers before, I have spent my entire adult career in the building trades section of the labor movement. We have to deal with the anarchic intersection of illegal immigration, sometimes murky tax and employment laws and predatory employers on a daily basis. Believe me that these are not easy issues. The critics’ questions are legitimate and deserve to be answered.
1. Is an employment contract with an illegal immigrant binding?
Contrary to popular opinion, it is not illegal for an employer to hire an illegal immigrant. Under the Immigration Reform & Control Act of 1986 (IRCA), an employer may not knowingly hire an illegal immigrant. An employer has a duty to ask for a list of documents from any job applicant but has no duty to verify them with the federal government. When prosecutors go after an employer for hiring illegals, they must prove knowledge of their illegal status in court, which is not an easy task. (That’s why there are so few prosecutions.)
Illegal immigrants execute all manner of contracts in the U.S., including car purchases, business agreements and even mortgages. These contracts are enforceable in court. Labor unions and other organizations routinely recover wages owed to illegals who have been cheated by their employers. Many illegal immigrants are covered by employment agreements, including union-negotiated collective bargaining agreements. So employment agreements involving illegals do not inherently violate the law.
2. Would an illegal immigrant be forced to acknowledge his or her status by this bill?
Bill No. 2-08 is silent on whether the worker is to be classified as an employee or a contractor. That is a meaningful distinction, but not necessarily for immigration status.
Generally speaking, employers may classify workers as independent contractors if they face substantial business risk from their operations, control their own performance and hours of work and own their equipment and capital. When employers set schedules, control work conditions, closely supervise performance and own the relevant equipment and tools, they are supposed to classify workers as employees. Employees are eligible for social security, workers compensation and unemployment benefits while contractors are not. (Because of the immense costs at stake, this distinction is often abused.)
If a worker is classified as an employee, they will be expected to supply a social security number (SSN) and a number of documents establishing legal residency. The employer has no duty to verify them. Illegal immigrants can and do use false SSNs to establish employment (and credit). I have personally audited construction jobsites on which three-quarters of the SSNs used were false. IRCA’s document requirements have spawned a massive phony documentation industry, but that is an inevitable byproduct of a large number of illegal immigrants and a large number of employers willing to hire them.
The consequences of using false SSNs are usually minimal. When a false SSN is used for social security withholding, the Social Security Administration sends “no-match” letters to employers requesting that they provide corrected SSN information. But there is no requirement that the workers be fired, much less deported. (If workers were frequently terminated over no-match letters, half the construction jobsites in America would shut down tomorrow. Trust me on that.) A recent attempt by the Bush Administration to require employers to fire workers with false SSNs was recently turned back by a federal court. It seems unlikely that a President McCain, a President Clinton or a President Obama would seek to institute such a requirement.
It’s much more likely that employers of domestic workers will instead classify them as independent contractors. In that case, the employer would issue a Form 1099 to each worker reporting their compensation for tax purposes. The Form 1099 reports the recipient’s “identification number.” That could be an SSN or an Individual Taxpayer Identification Number (ITIN), which is available to anyone regardless of immigration status.
The IRS is generally forbidden to share taxpayer information with other federal agencies and is delighted to issue ITINs. As IRS Commissioner Mark W. Emerson told the New York Times last year, “We want your money whether you are here legally or not and whether you earned it legally or not.” In 2006, 1.4 million people used ITINs to file income tax returns and many of them were undoubtedly illegal immigrants.
So under either of the above arrangements, a worker would not have to confess his or her immigration status and any possibility of deportation is extremely unlikely. If the bill really did threaten to cause deportations, Casa de Maryland would not be supporting it.
In any case, while the above issues raise some questions, the workers are not better off working “off-the-books.” In my experience, off-the-books arrangements lead to cheating, abuse and exploitation far, far more than the employment contracts proposed in the Leventhal/Elrich bill.
3. Would greater education be sufficient to protect these workers?
The key determinant of whether a worker’s rights under the law are protected is not the worker’s knowledge of them. It’s the available enforcement mechanisms. I have worked on many organizing campaigns in which education of the workers is an important, early component. But even when workers knew their rights, the employers could and did decide to ignore and violate them. Whether the workers were ultimately able to get their rights respected depended on the vigorousness of government enforcement (which was usually weak), the financial strength of the company and the success of the union’s tactics in countering the law-breaking employer. This is a harsh, HARSH country for workers – even those who are citizens, know their rights and have strong unions.
In the case of domestic workers, education in and of itself would be a challenge. How can the government reach them, especially those who live with their employers? How many languages must the government use? How can the government persuade the employers to respect those rights? And exactly what are the workers supposed to do when their rights are violated? Individual domestic workers have almost no power in their workplaces. That’s why they’re so vulnerable. That’s why they’re in need of real protection.
The way I read it, the Leventhal/Elrich bill will not cause mass firings or deportations of domestic workers. And it may very well bring them up out of the working poverty they currently inhabit. It gives them something almost all union members have: an enforceable, written contract that protects them. It’s a good bill. All progressives should line up to support it, perhaps discuss improvements to it, and ultimately pass it.
Thursday, January 17, 2008
Special Report: Why Are We Talking About Rent Control in MoCo?
Last month, the Gazette reported that County Executive Ike Leggett told a meeting of 50 tenants in Silver Spring that he would sign a rent control bill if the County Council passed it. This no doubt pleased fellow attendee and County Council Member Marc Elrich, who was one of the prime supporters of rent control in Takoma Park when he served on its City Council. But other county council members may not be so happy with this hot-potato Christmas present from their executive.
So why are we talking about rent control?
Rent control is one approach to the issue of affordable housing, long one of the most intractable problems in Montgomery County (and the entire Washington region). No one from any side of the debate believes that Montgomery County has enough affordable housing. There is plenty of evidence for that view, including:
1. The Census Bureau reports that 46% of the county’s rental units required rents of 30% or more of the occupants’ income in 2006.
2. In that same report, the Census Bureau finds that 36% of the county’s owner-occupied units with a mortgage required payments of 30% or more of the occupants’ income.
3. Impact Silver Spring found that 47% of renters in Silver Spring were paying rents of 30% or more of their income in 2005. Silver Spring has long been thought to be one of the more affordable areas in Montgomery County.
4. The Montgomery County Planning Department reports that the median price of a new detached single-family home reached $1.1 million in the first quarter of 2007. That means half the new homes were sold above that price.
While the county has acknowledged affordable housing problems since at least the 1970’s, its recent difficulties occur in the context of two market realities: rising prices and slow population growth.
Rising Prices
The Montgomery County Planning Department reported that between 2002 and 2007’s first quarter, prices for new single family homes rose by 138%. Huge price hikes also occurred for new townhouses (91%), existing townhouses (105%) and existing single family homes (69%). These hikes may be tapering off, but no one believes that all the price gains of recent years will disappear.
Slow Growth
Since 1990, the county’s population has grown by a meager annual average 11,873 people, or 1.4% per year. In 2006, the county added only 5,000 people – its slowest population growth since 1983. These numbers mockingly lash the back of every wild-eyed MoCo activist who has ever used the term “hyper-growth.”
In fact, rising prices and slow growth may be related. Montgomery County has long been praised for its excellent schools, attractive parks, nice downtowns and quality government services. It is one of the most desirable places to live in the nation. So why does its population grow so slowly? The county simply does not have enough housing to accommodate everyone who wants to move in. Picture a giant bucket pouring endless numbers of people into a shiny, but small bottle. Not everyone will get in. Increasingly, it seems that those who do get in fall into two groups: those who are wealthy enough to afford high-price housing on their own, and those who are willing to tolerate overcrowded, substandard conditions. (The social tensions between these two groups, who sometimes live on the same block, are rising.)
And so when limited supply meets insatiable demand, home prices and rents rise. This is the experience of Montgomery County, most jurisdictions in the Washington area, and many parts of the country.
The county’s primary tool for encouraging the construction of affordable housing is its Moderately Priced Dwelling Unit (MPDU) program. Created in 1973, the MPDU program is based on a simple trade: developers are ordered to construct below-market-rate units in return for permission to increase housing density. Currently, the law applies to developments of 20 or more units. It mandates that 12.5-15% of the new units be affordable for families earning up to 70% of the area’s median income. In return, the developer may build up to 22% more units than called for in a parcel’s zoning. A new workforce housing program based on similar principles was approved in 2006 but has not yet begun operation.
There are three problems with the MPDU program. First, developers are allowed to “buy out” from the MPDU requirements by paying into the county’s Housing Initiative Fund. Second, the program depends on new construction. When the economy slows down and residential development declines, so does MPDU construction. Finally, the program has actually created very little affordable housing. Since the first MPDU’s were constructed in 1976, only 8,527 owner-occupied units and 3,520 rented units have been built. The county’s total stock of housing units in 2006 consisted of 241,108 owner-occupied units and 100,330 rented units. So after 30 years of the MPDU program, only 3.5% of the county’s owner-occupied and rented units are MPDU’s – a depressingly low total.
In a recent Gazette column, four County Council members claimed that 31,616 housing units were currently approved for development with a projected buildout of 6 years. But how many of those units are MPDU’s? If we were charitable and assumed that 10% were to be MPDU’s and that all of them would be built, the MPDU percentage of the county’s housing stock would rise to a grand total of 4.1%. Even if every single one of these units was an MPDU, the MPDU percentage would only rise to 11.7%. Of course, this would never happen, but it would be a nice start.
There are other tools the county has to affect residential development, including master plans, Planning Board and planning staff reviews, rezoning decisions on individual parcels and zoning text amendments. But the provision of housing is only one factor affecting these decisions. Other factors including resident sentiment, environmental considerations, traffic tests, school capacity and compatibility with surrounding neighborhoods are also weighed. Inevitably, the number of units ultimately approved is less than would be built in a pure free market. And while the county offers rental and homeowner assistance through its Housing Opportunities Commission, these programs have not solved the affordable housing problem.
Deep in the long-lost regions of my mind that remember my college microeconomics coursework, a neoclassical voice cries out, “The government restricts supply, then micromanages construction and now is talking about fixing prices. Of course the housing market is broken!” But that view is too simple. Residential construction creates significant external costs that are not adequately priced in private buyer-seller transactions, such as pollution, school crowding and traffic. And these costs are not fully recovered by the county’s impact tax system. Some development limits are necessary to protect the county’s Agricultural Reserve, preserve the character of existing neighborhoods and prevent the county from resembling overdeveloped Rings of Hell like Phoenix and Las Vegas. But the cost of pursuing these worthwhile objectives may be to limit the provision of affordable housing, both owner-occupied and rental.
The two paradigms of development politics in this county do not have the answers for this problem. The affordable housing issue nicely demonstrates the critical flaws of each side of the ever-lasting development debate. Anti-growth people will not admit that limits on development tend to put upwards pressure on prices and rents over the long term. Pro-growth people will not admit that a true market solution to housing – allowing supply to meet demand – could necessitate massive new residential construction. No one knows the number of new units required to meet the true demand for Montgomery County housing – 50,000 or 100,000 or even more? – but that number is likely to be much greater than a strained county capital budget and a traffic-choked citizenry can accept.
And so we have market failure for affordable housing. And that’s why we are talking about rent control.
So why are we talking about rent control?
Rent control is one approach to the issue of affordable housing, long one of the most intractable problems in Montgomery County (and the entire Washington region). No one from any side of the debate believes that Montgomery County has enough affordable housing. There is plenty of evidence for that view, including:
1. The Census Bureau reports that 46% of the county’s rental units required rents of 30% or more of the occupants’ income in 2006.
2. In that same report, the Census Bureau finds that 36% of the county’s owner-occupied units with a mortgage required payments of 30% or more of the occupants’ income.
3. Impact Silver Spring found that 47% of renters in Silver Spring were paying rents of 30% or more of their income in 2005. Silver Spring has long been thought to be one of the more affordable areas in Montgomery County.
4. The Montgomery County Planning Department reports that the median price of a new detached single-family home reached $1.1 million in the first quarter of 2007. That means half the new homes were sold above that price.
While the county has acknowledged affordable housing problems since at least the 1970’s, its recent difficulties occur in the context of two market realities: rising prices and slow population growth.
Rising Prices
The Montgomery County Planning Department reported that between 2002 and 2007’s first quarter, prices for new single family homes rose by 138%. Huge price hikes also occurred for new townhouses (91%), existing townhouses (105%) and existing single family homes (69%). These hikes may be tapering off, but no one believes that all the price gains of recent years will disappear.
Slow Growth
Since 1990, the county’s population has grown by a meager annual average 11,873 people, or 1.4% per year. In 2006, the county added only 5,000 people – its slowest population growth since 1983. These numbers mockingly lash the back of every wild-eyed MoCo activist who has ever used the term “hyper-growth.”
In fact, rising prices and slow growth may be related. Montgomery County has long been praised for its excellent schools, attractive parks, nice downtowns and quality government services. It is one of the most desirable places to live in the nation. So why does its population grow so slowly? The county simply does not have enough housing to accommodate everyone who wants to move in. Picture a giant bucket pouring endless numbers of people into a shiny, but small bottle. Not everyone will get in. Increasingly, it seems that those who do get in fall into two groups: those who are wealthy enough to afford high-price housing on their own, and those who are willing to tolerate overcrowded, substandard conditions. (The social tensions between these two groups, who sometimes live on the same block, are rising.)
And so when limited supply meets insatiable demand, home prices and rents rise. This is the experience of Montgomery County, most jurisdictions in the Washington area, and many parts of the country.
The county’s primary tool for encouraging the construction of affordable housing is its Moderately Priced Dwelling Unit (MPDU) program. Created in 1973, the MPDU program is based on a simple trade: developers are ordered to construct below-market-rate units in return for permission to increase housing density. Currently, the law applies to developments of 20 or more units. It mandates that 12.5-15% of the new units be affordable for families earning up to 70% of the area’s median income. In return, the developer may build up to 22% more units than called for in a parcel’s zoning. A new workforce housing program based on similar principles was approved in 2006 but has not yet begun operation.
There are three problems with the MPDU program. First, developers are allowed to “buy out” from the MPDU requirements by paying into the county’s Housing Initiative Fund. Second, the program depends on new construction. When the economy slows down and residential development declines, so does MPDU construction. Finally, the program has actually created very little affordable housing. Since the first MPDU’s were constructed in 1976, only 8,527 owner-occupied units and 3,520 rented units have been built. The county’s total stock of housing units in 2006 consisted of 241,108 owner-occupied units and 100,330 rented units. So after 30 years of the MPDU program, only 3.5% of the county’s owner-occupied and rented units are MPDU’s – a depressingly low total.
In a recent Gazette column, four County Council members claimed that 31,616 housing units were currently approved for development with a projected buildout of 6 years. But how many of those units are MPDU’s? If we were charitable and assumed that 10% were to be MPDU’s and that all of them would be built, the MPDU percentage of the county’s housing stock would rise to a grand total of 4.1%. Even if every single one of these units was an MPDU, the MPDU percentage would only rise to 11.7%. Of course, this would never happen, but it would be a nice start.
There are other tools the county has to affect residential development, including master plans, Planning Board and planning staff reviews, rezoning decisions on individual parcels and zoning text amendments. But the provision of housing is only one factor affecting these decisions. Other factors including resident sentiment, environmental considerations, traffic tests, school capacity and compatibility with surrounding neighborhoods are also weighed. Inevitably, the number of units ultimately approved is less than would be built in a pure free market. And while the county offers rental and homeowner assistance through its Housing Opportunities Commission, these programs have not solved the affordable housing problem.
Deep in the long-lost regions of my mind that remember my college microeconomics coursework, a neoclassical voice cries out, “The government restricts supply, then micromanages construction and now is talking about fixing prices. Of course the housing market is broken!” But that view is too simple. Residential construction creates significant external costs that are not adequately priced in private buyer-seller transactions, such as pollution, school crowding and traffic. And these costs are not fully recovered by the county’s impact tax system. Some development limits are necessary to protect the county’s Agricultural Reserve, preserve the character of existing neighborhoods and prevent the county from resembling overdeveloped Rings of Hell like Phoenix and Las Vegas. But the cost of pursuing these worthwhile objectives may be to limit the provision of affordable housing, both owner-occupied and rental.
The two paradigms of development politics in this county do not have the answers for this problem. The affordable housing issue nicely demonstrates the critical flaws of each side of the ever-lasting development debate. Anti-growth people will not admit that limits on development tend to put upwards pressure on prices and rents over the long term. Pro-growth people will not admit that a true market solution to housing – allowing supply to meet demand – could necessitate massive new residential construction. No one knows the number of new units required to meet the true demand for Montgomery County housing – 50,000 or 100,000 or even more? – but that number is likely to be much greater than a strained county capital budget and a traffic-choked citizenry can accept.
And so we have market failure for affordable housing. And that’s why we are talking about rent control.
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