TOD Best Practices

Affordable Housing in Transit-Oriented Development​

​Addressing affordable housing1 requires comprehensive strategies that invest in communities and support housing policies and programs at all levels. It also requires coordinated efforts between government agencies, non-governmental organizations (NGOs), and the private sector.

Housing affordability can vary based on factors such as household income, family size, and proximity to work and services. Nevertheless, housing and transportation costs are usually a household's largest expenses and, therefore, transportation costs must be factored into any housing calculation.

If monthly housing costs, such as rent or mortgage, home insurance, and property taxes are low, but transportation costs to work, school, and other key destinations are high, because housing is located far from employment centers and community amenities, then housing may not actually be affordable.

This key concept also applies to fair housing plans since, as of January 1, 2023, (the effective date of 2021's HB 90), addressing housing access to areas of opportunity such as transportation facilities, job centers, and other amenities is required for all Maryland municipal and non-charter county comprehensive plans.

Maryland has encouraged Transit Oriented Development (TOD) since the Washington Metro system was built in the 1970s. A properly designed TOD2 creates walkable, dense, mixed-use environments, supported by efficient transportation systems. Preserving naturally occurring affordable housing and building new affordable housing in TODs not only help advance affordable housing but can also help reduce transportation costs.3

This is accomplished by enhancing multimodal access to jobs and services, especially for low-income and workforce households. Integrating affordable housing with TODs can also help grow transit ridership and build thriving, diverse, and sustainable communities near major transportation corridors.

Prince George's and Montgomery counties are leading the effort in Maryland to tackle affordable housing4 by building modern, affordable housing in and near transit stations, in partnership with the Washington Metropolitan Area Transit Authority (WMATA). However, building affordable housing around transit stations in the Washington, D.C. metropolitan region is challenging, since they tend to have higher real estate values.

To make such efforts more viable, the two counties have partnered with transit agencies, including WMATA5, as well as private companies that are expert in affordable housing and related financial and tax incentives to support it. Through a public-private partnership, Prince George's County has increased its support for workforce and low-income housing in its metro station areas, with the goal of preserving existing and providing new and diverse affordable housing.

One example is the Margaux​, a 291-unit apartment building for workforce income households, part of the 45-acre TOD adjacent to the New Carrollton transit station. The Margaux takes advantage of WMATA's Joint Development Program through a ground lease on WMATA property and is supported by $25.4 million in low-rate financing from the Amazon Housing Equity Fund, which has committed $125 million to help fund affordable housing near Metro stations in Maryland, Northern Virginia, and Washington D.C.

The project offers housing at below-market rates to families making less than 80 percent of the area median income. The area median income is $142,300 for a family of four. The Margaux is expected to be complete in late 2023.

Prince George's County also took a proactive role in supporting The Sovren​, a five-story building near the West Hyattsville Metro Station. The project reserves 50 percent of its 293 housing units for workforce housing (incomes of less than 80 percent of the area median income). 

To make the project feasible, the county not only sought a low-interest loan from the Amazon Housing Equity Fund but also approved a Payment in Lieu of Taxes (PILOT) and received $200,000 from the County's Housing Investment Trust Fund. The Sovren will be complete in fall 2024.

Montgomery County has a long history of policies, initiatives, and regulations to incentivize affordable housing. In January 2021, the Montgomery County More Housing at Metrorail Stations Act took effect, providing incentives for high-rise developments, including affordable housing on WMATA Metro station properties6, which currently do not pay property taxes.

The Act provides a PILOT for 15 years for new high-rises with at least 50% rental housing. The PILOT exempts 100 percent of the property tax for 15 years that would otherwise be due for developed WMATA properties. The developers continue to pay the impact taxes and future residents still pay income taxes. The Act requires 25 percent of the Moderately Priced Dwelling Units (MPDU) to be reserved for individuals with incomes at 50 percent or less of the area median income. Montgomery County expects the Act to help address its affordable housing crisis. 7​

Soon after the Act took effect, a developer moved forward with the Strathmore Square Project, the first TOD project to benefit from the legislation. In December 2022, a 2.2 million square foot mixed-use development, including 2,000 housing units, broke ground at the Grosvenor-Strathmore Metro Station. With additional support from the Amazon Housing Equity Fund and WMATA, the project offers affordable housing that fulfills MPDU requirements and the 2022 More Housing at Metrorail Station Act.​ ​

  1. ​Affordable housing in this article includes the workforce and low-income housing. Governments and other entities define affordable housing in various ways. The 2019 Maryland legislation (HB 1045) provides specific definitions and requirements for affordable housing including low-income and workforce housing.
  2. TOD has many transportation, environmental, and socio-economic benefits. Please visit this website for the detail.
  3. Studies on location efficiency​ show the land use pattern and location of a community affect how a resident travels and so his/her travel costs. The Center for Neighborhood Technology (CNT) finds "People who live in location­ efficient neighborhoods ​– compact, mixed-use, and with convenient access to jobs, services, transit, and amenities – tend to have lower transportation costs." For more information about location efficiency and its connection to housing and transportation affordability, visit the CNT's H+T Index website.
  4. ​For information on affordable housing problems in Maryland, please refer to "Housing Needs in Maryland: An Introduction to the Maryland Housing Needs Assessment and 10-Year Strategic Plan​," an article in the Maryland Department of Planning's January 2022 newsletter.
  5. According to WMATA, its station properties in Montgomery County could produce at least 8,600 housing units. Out of these units, the Montgomery County Council estimates 1,200 to 1,300 would be set aside for workforce and low-income households through the MPDU set-aside program.
  6. WMATA owns the land associated with the metro stations and leases it to encourage affordable housing near its stations by leveraging local, community, and corporate programs and financing sources to help grow ridership and support local sustainable development goals.
  7. According to the county, it has not been producing nearly enough housing to meet the demand from its population growth. Montgomery County also indicates that nearly half of the 120,000 rental households are cost­ burdened since more than 30 percent of incomes are used to pay for housing.

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