JUST FIGURED

IT OUT

Ike Leggett's Blue Ribbon Panel Commission has studied, analyzed, interviewed, calculated, absorbed, synthesized, counterbalanced, questioned, sliced and diced the data.

And, after all these months, used all of that effort to reach a groundbreaking and shocking conclusion:

Apartment rents are high in Montgomery County.

"Golly!," exclaimed Gomer Pyle, in the front row at the press conference last week.

I'd like to welcome Mr. Leggett and the Washington Post to the table. I've been talking about this issue for several years now.

Some are now calling for "rent control" in Montgomery County. That can be put to rest rather quickly, because that is not only a foolhardy approach, but - get real - a developer-controlled council and Planning Board will never pass rent control.

There are really two separate issues to address when tackling the high cost of rent in Montgomery County: First, using the free market to lower prices. And related to that, ensuring that the free market is in fact operating unfettered.

And, before I get into that, let me add that I'm talking just about rent here; those in the market to buy will find some very good prices on single family homes, townhouses, and condos outside of the Bethesda/Chevy Chase/Downtown Rockville/Downtown Silver Spring areas. Which really negates any need for "affordable housing" owned by government or its "partners."

Those low prices are showing us how misguided, and even detrimental, the county's "affordable housing" strategy is for the taxpayer and non-wealthy home shopper.

Now, about that free market. And making sure it is actually "free." We've been told by Dr. Yes and Rollin Stanley that high-density apartments are to be built around Metro stations. However, in downtown Bethesda, the Arlington Road corridor had multiple properties adjacent to the Bethesda Metro station. Every one of those properties has been shifted from the original plan to boutique luxury condos and apartments. Instead, small buildings with a few dozen units are being approved and built behind the Metro station, and in "Old Bethesda." In fact, when an additional building was proposed for the Bethesda Metro plaza, on top of the station(!), it contained no housing at all!

Similarly, a building proposed for the corner of Silver Spring and Thayer in downtown Silver Spring - which will be on the proposed Purple Line route - is said to be 45 feet tall, while the zoning allows for 60 feet.

Meanwhile, in areas such as White Flint and the Rockville Town Center, similar luxury apartments and condo buildings are struggling. Some property managers have gone to desperate lengths to fill their buildings in the first sign of the financial consequences of holding prices high in a down market. The Fenestra decided to turn itself into a college dorm like Park Bethesda once did. Nothing says high-class luxury like a frat party, right? Luxury condo building The Palladian in Rockville Town Square is only 47% owned. The other 53% are either rented or vacant. This not only reduces the sale value for current owners in the building, but also makes it more difficult for potential buyers to obtain financing. Recently, the City of Rockville warned the Palladian that one of its Federal housing qualifications is in jeopardy because of its low ownership ratio.

These sorts of desperate measures make clear that high-priced luxury buildings are simply not viable in today's market. My hope is that supply and demand will belatedly take effect in the county, just as it has in the homebuying market.

But the county isn't helping by inserting itself in the real estate business. By using taxpayer funds to buy properties, the county is artificially propping up the market. It would be better to let prices drop and give a tax incentive to fix up a foreclosed house, at only a fraction of the current cost to the taxpayer.

Secondly, the county and its "partners" own too many apartment buildings in prime locations. Every unit controlled by government takes another one off the market, thereby boosting prices. I believe that this is one reason rents are staying high, even while purchase prices are dropping.

Third, at some level, rent should become tax-deductible. If we can't provide a credit at the county level, we should press for this at the state or Federal level.

Finally, the Planning Board needs to stop its hypocrisy. Don't tout "smart growth," and then approve small buildings near Metro stations. Surely, 100 units equal the same profit as 50 units at twice the rent.

But right now, despite my worries in the past, I am starting to find indications that the market may be working. The best choice might be for government to get out of the way, stop buying up properties, and see what happens. If Big Government can control itself, and the Federal government keeps the economy in recession with its big-spending/grow-Government ways, relatively affordable, free-market housing could be just around the corner in Montgomery County.

Of course, that may be precisely why our elected officials are eager to intervene. Because affordable free-market housing means the loss of government-dependent citizens. And that's always a losing strategy for Big Government.