WASHINGTON BUSINESS JOURNAL: Developers ignore long-term fiscal impacts of the projects, policy sponsor says.
A controversial policy proposal that would curtail residential development outside the Beltway in Prince George’s County, whether it moves forward or not, is yet another example of real estate interests and local lawmakers not seeing eye to eye.
County Council Chair Tom Dernoga, D-District 1, along with three other members of the 11-member council, on Sept. 26 introduced County Resolution 83, which proposes capping the number of residential building permits the county government could issue — outside the Capital Beltway, most especially — on an annual basis from 2024 to 2029. Dernoga says it’s to control sprawling developments, which outpace the county’s ability keep up with key infrastructure and services. The development industry is roundly against it, saying it would chill growth and exacerbate the housing crisis, echoing similar concerns raised about local legislators’ recent moves to regulate rents and restrict townhouse development.
Who’s right? Maybe both. It’s far from clear whether or how they might compromise or reconcile their views.
The county council’s planning, housing and economic development committee, on which Dernoga sits, is scheduled to consider the proposed resolution at its Oct. 16 meeting. Dernoga told me he’s “agreed that the resolution needs further discussion” and that it won’t pass out of committee Monday, though what happens thereafter isn’t settled.
Specifically, the proposal would cap residential building permits in 2024 to 2,800 countywide, allocated disproportionately across three major geographical sections of the county called “transportation service areas,” or TSAs. Dernoga said that number has an empirical basis, being the annual average of the number of building permits issued for new construction over the last 20 years. TSA 1, inside the Beltway for the most part, though bulging beyond in some places, would be allowed 2,100 permits. TSA 2, representing the middle of the county, more or less, would be allowed 670 permits. And TSA 3, representing the county’s western and southern outskirts, would be allowed only 30 permits.
The 2,100-permit ceiling in TSA 1 isn’t a practically meaningful limit, in that developers aren’t likely to build that many units anyway. Dernoga and Lori Graf, CEO of the Maryland Building Industry Association, agree on that much. Both worry more about the outer parts of the county, though for different reasons.
“We are pretty adamantly opposed to this. It’s all hands on deck,” Graf told me in an interview. “Instead of trying to shut down development outside the Beltway, we should figure out how to incentivize development inside the Beltway.”
Among other objections, she’s concerned limiting new residential development would exacerbate the region’s dearth of housing supply. Generally speaking, crimped supply is indeed widely agreed to be a primary, though not the only, driver of why so many households struggle to afford housing in the region.
Others caution the proposed restriction signals that Prince George’s eschews growth, which risks deterring investment. In particular, one source familiar with developmentin the county told me, under the proposal as it’s currently written, builders who’ve already sunk millions into predevelopment costs for projects in the earlier stages of planning would risk seeing the carpet pulled out from under them and their investment lost. That would dissuade others from taking speculative risk in the county. Even if the resolution doesn’t move forward, it might have that effect anyway, simply by having been floated in the first place, the person suggested. Though Dernoga told me he’s willing to work out grandfathering provisions.
On the other side, Dernoga argues the county already isn’t keeping up with the infrastructure and services required by sprawling developments, which he defines not just as single-family tract housing, but also townhomes and multifamily buildings built outside areas designated for that kind of density. For example, as it stands, schools in certain parts of the county are already over capacity, police staffing vacancies have been trending up for years, and most fire stations listed in the capital improvement program lack identified funding in the next six years, according to documents Dernoga’s staff sent me.
Moreover, while developers build a community and then move on, that community’s long-term fiscal impacts on the county’s coffers “aren’t their problem,” Dernoga lamented. Indeed, once you build new roads, sewers, schools and so forth, those things need to be maintained and replaced, effectively forever, a person familiar with development and planning in the county told me. And single-family and townhomes in particular, depending where they’re built, don’t bring in “anywhere close” to enough property taxes to pay for the infrastructure that supports them, the person said.
