Fitzwater aiming to amend affordable housing bill

Aug. 15--A bill that would permanently allocate part of Frederick County's budget to an affordable housing fund will likely be amended before it reaches a final vote.

County Councilwoman Jessica Fitzwater (D) introduced a bill on behalf of County Executive Jan Gardner (D) in early July that would allocate 1.5 percent of the county's recordation tax -- money collected during real estate transfers and when homeowners refinance their homes -- into the county's Housing Initiative Fund. The money would be diverted from the county's general fund.

Fitzwater said Wednesday that she probably would keep the rate at 1.5 percent for fiscal years 2020 and 2021, but increase the allocation by either one-half or 1 percentage point total over fiscal years 2022 and 2023.

She added, however, that she would gauge responses from colleagues on the dais next Tuesday.

"It is a significant increase, considering we've never had a predictable stream of revenue for this before," Fitzwater said.

Currently, the Housing Initiative Fund is funded by developers that pay fees in lieu of building moderately priced dwelling units, Fitzwater said. Among other things, the Housing Initiative Fund is used to match funds for state and federal grants for affordable housing, fund deferred loan programs for affordable housing developers and allow senior citizens to do minor home repairs.

Lengthy developer, rights and responsibilities agreements, or DRRAs, can mean it's unpredictable when these fees are collected, Fitzwater said.

Mark Long, vice chairman of the Affordable Housing Council, said earlier this week he supports Fitzwater's proposed increase, given the need for more affordable housing units countywide.

Long noted the affordable housing needs assessment from 2016, which showed a 6,700-unit gap for households making less than $25,000 a year.

Milton Bailey, the county's director of housing and community development, said if the bill is passed, enough money would be redirected in fiscal 2020 to potentially build 86 units, housing about 225 people, The Frederick News-Post previously reported.

According to a fiscal and policy note attached to the bill, $581,490 would be diverted from the general fund to the Housing Initiative Fund in fiscal 2020. Erin White, deputy director in the county's Division of Finance, projected 5 percent growth in the recordation tax in each of the next four fiscal years. That would equal $706,800 in fiscal 2024.

That note doesn't account for any amendment Fitzwater might propose. White said Wednesday that 5 percent growth each year is a conservative estimate, given the budget office usually uses 6 percent growth trends for the tax.

Councilman Steve McKay (R) said that while he is "generally supportive" of the bill, he would like to see county staff show what projects and related plans the new stream of revenue would fund. He's concerned with variability in the housing market given recent activity in the stock market.

"It's showing warning signs of a pending recession ... that has a big potential of putting a big dent in the recordation tax revenue, so that will come right out of that revenue stream," McKay said.

White said she understood McKay's concerns about the variability, including the possibility of economic decline.

"That's one thing about a budget, a crystal ball is not available of when a recession would happen," White said.

If Fitzwater and Gardner's bill is amended next Tuesday, another public hearing would be required the following week, per the county charter. The council then would vote on the final bill. The bill must be voted on before it expires Sept. 30.

Follow Steve Bohnel on Twitter: @Steve_Bohnel.

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