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.

Steve Bohnel is the county government reporter for the Frederick News-Post. He can be reached at sbohnel@newspost.com. He graduated from Temple University, with a journalism degree in May 2017, and is a die-hard Everton F.C. fan.

(5) comments

jerseygrl42

Some folks just love to take and spend other peoples money.....unfortunately we apparently don't have enough to afford school supplies and others have to go out and beg for them

petersamuel

The Fitzwater bill is tokenism — the number of affordable houses that will result is so pathetically small and it’s at the expense of county taxpayers. High time that County government looked at itself as the source of the problem. The County limits the land available for housing. It levies fees on development. Its zoning provisions are so complex and limiting they prevent affordable housing. Fitzwater-style ‘reforms’ that do nothing to address the root causes of unaffordable housing are a phony-baloney exercise in virtue signaling — pretending to address a problem but ensuring that taxes rise, the problem continues, and with it a constituency of voters begging for handouts.

gabrielshorn2013

Agreed petersamuel. Basic economics law of supply and demand at work here. If demand is high, but supply is metered, the cost of housing will go up, thus pricing many out of the market. Ms. Fitzwater's proposal will not collect enough money to build any affordable housing.

timothygaydos

Stay on top of this McKay, because if things are not solid on the % rates over the next several years and where the $$$ is actually going to be spent who knows how the $$$ will be evidently diverted into other funds... maybe we should investigate how to divert $$$ from other benefits into affordable housing and give those folks that are using these benefits choices to select from a menu rather than keep providing more benefits...

shiftless88

The source of the $$, the recordation funds, are only for re-finances according to the article. Interest rates generally dip during a recession, which induces more people to refinance. So it seems like a good "self-correcting" budget item.

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