Recommendation
Consider the attached resolution supporting the MHP request for tax credits from the State of Maryland Department of Housing and Community Development.

Discussion
Montgomery Housing Partnership (MHP) is a nonprofit organization that provides affordable rental housing for low-moderate income households. MHP has a number of affordable rental properties throughout Montgomery County, but has been best known in Rockville for its conversion of a former hotel at the corner of North Washington Street and Dawson Avenue into the Beall's Grant Apartments. MHP now proposes to develop property it owns behind and adjacent to the existing Beall's Grant into a new 109 unit multi-family apartment building to be called Beall's Grant II. The development will include the demolition of a small, vacant obsolete building currently located at 13 Beall Avenue. Because the proposed development will largely be built on existing surface parking, the new and the existing facilities are to be provided with two levels of new structured parking.

The development of Beall's Grant II was approved by the Planning Commission on July 23, 2008. The only remaining required action for the project by the Planning Commission will be the approval of a record plat to consolidate the several parcels of land owned by MHP upon which the structure is to be constructed.

In order to assist the financing for the proposed new development, MHP plans to submit an application to the Maryland Department of Housing and Community Development for $1,200,000 of low-income tax credits. The tax credits are to be in effect for ten (10) years for a total of approximately $12,000,000 in development assistance. One of the requirements for submission of an application to the State of Maryland is a resolution of endorsement from the Chief Elected Official of the locality in which the development is located. In the City of Rockville, that designation refers to the Mayor and Council.

The Mayor and Council approved a letter of support for low-income tax credits for Beall's Grant II at its meeting of March 31, 2008. That endorsement letter contained language referring to the completion of the City's development process. Since that time, the State has advised MHP that, "Support should not be contingent upon the completion of tasks or improvements..." MHP has also learned that a resolution of endorsement, rather than a letter from the local government is required as an indication of local support. For these reasons, MHP is now requesting the adoption of a resolution which endorses the project for inclusion in its application to the State of Maryland. MHP intends to submit a revised application to the State in the December 2008 offering period. The resolution requested from the Mayor and Council is to be incorporated as part of the revised application.

The Low-Income Tax Credit Program is the federal government's primary vehicle for producing affordable housing. The program is administered through the Internal Revenue Service (IRS). It allows for-profit entities to invest in low-income housing while receiving tax credits on investment. The program is coordinated through the state housing finance agencies which allocate the credits and administer the program at the state level. To qualify for the tax credits, a developer must rent either 40% of its units to tenants with incomes less than 60% of the area median income (AMI) or rent 20% of its units to tenants with incomes less than 50% of AMI. Rents may not exceed 30% of the tenant's qualifying income. The unit rents must remain at these levels for at least a thirty-years or the investors will lose the tax credits. Developers receiving tax credits offer them for sale to investors who can receive a dollar for dollar reduction in their federal income tax liability in exchange for providing capital to be used to develop affordable rental housing. The tax credits can be claimed in equal annual installments over a ten year period to offset federal taxes owed.

There is opposition to the approved development of Beall's Grant II from several residents in the West End neighborhood. Among the concerns raised have been impact on Beall Elementary School and increased traffic in the West End community. The Mayor and Council, on October 13, 2008 received and discussed a report from the City Transportation staff which indicated that the proposed apartments would have minimal impact upon streets in the West End. A meeting was also conducted on October 16, 2009 by the West End Citizens Association (WECA) for the purpose of discussing issues raised about Beall's Grant II. Members of the Mayor and Council, City Staff, along with a representative of Montgomery County Public Schools, attended that meeting. The City has also received emails and letters of support from several individual sin the community, which cite the need for affordable housing in Rockville.

At the end of the October 16 meeting the WECA members present passed a motion which called for the creation of a committee to meet and to work with MHP to achieve a development that would meet the concerns of the community. Subsequently, MHP made contact with the WECA leadership to schedule those meeting and in fact did meet with some of the residents who opposed the project. The President of WECA, Patricia Woodward, attempted to create a committee of 13-15 community residents who were to meet with MHP to discuss the project. At the November 13, 2008 of the WECA Executive Board, however, it was decided not to create that committee and a motion was passed to contact MHP to request that they conduct charettes in which residents of the West End community, serving as a "Committee of the Whole," could meet to discuss the project as currently planned and how it could be improved to meet community desires. Absent formation of a WECA committee, MHP twice met with a group of areas residents to hear their concerns and offer options for addressing their concerns. A WECA committee was formed in early December and met with MHP representatives on December 10, 2008. The committee took action, by a vote of 13-2 requesting the City defer a decision on the Resolution for 90 days to allow MHP to continue its discussion with the community. MHP expressed its commitment to continue to confer with area residents in the hope that a mutually-satisfactory compromise can be reached, which MHP would present to the Planning Commission as an amendment to its approved Use Permit.

Mayor and Council History
The Mayor and Council, at its meeting of March 31, 2008, approved a letter to the Maryland Department of Housing and Community Development supporting a request by Montgomery Housing Partnership for low income tax credits to assist in the financing for the development of Beall's Grant II. The project was discussed at the Town Hall Meeting with West End on April 27 2008. The Mayor and Council also discussed the traffic implications of the project on October 13, 2008 and members of the Mayor and Council were in attendance at the WECA meeting of October 16, 2008. On November 24, 2008, the Mayor and Council voted 5-0 to place the Beall's Grant II resolution on the December 15, 2008 agenda. During the course of that discussion, members of the Mayor and Council directed questions to representatives of Montgomery Housing partnership and instructed them to meet in order to develop mutually acceptable compromises before the December 15, 2008 Mayor and Council meeting at which the request for an endorsement resolution will be considered.

Public Notification and Engagement
The Planning Staff mailed Post cards to the residents of West End on two occasions to notify the Community about the Planning Commission consideration of the Use Permit Application for Beall's Grant II. A meeting was held by the West End Citizens Association Executive Board on September 18, 2008 to discuss the proposed development and a meeting of the WECA general membership was held on October 16, 2008 to discuss Beall's Grant II. The need for a resolution from the Mayor and Council was mentioned at all meetings.

Boards and Commissions Review
The Planning Commission approved Use Permit USE2007-00708, Beall's Grant Apartments II at its meeting of July 23, 2008.

Attachments
RESOLUTION: To endorse the Beall's Grant II housing development project and support the project financing in the form of low income tax credits.

Department Head:



Susan Swift, Director of Community Planning and Development Services
Approved on: 11/26/2008

City Manager:

Scott Ullery, City Manager
Approved on: 12/11/2008