Matthew M. Gordon
Partner
Inside the Maryland Housing Certainty Act
The State Legislature recently adopted a meaningful bill which provides greater certainty to some housing developments
The Maryland General Assembly’s adoption of the Maryland Housing Certainty Act (“Housing Certainty Act”) earlier this spring represents a significant and positive change to the historical standard for “vesting” zoning and development approvals in Maryland. Maryland’s status as a late “vesting” State means a developer’s right to build does not become irrevocable until construction has actually begun pursuant to a valid building permit. This creates risk for developers as they are required to expend considerable resources and time pursuing development approvals, knowing that the governing jurisdiction may change the applicable zoning and development standards prior to the commencement of construction. Maryland’s late “vesting” rule was established by the Maryland Court of Appeals (now known as the Supreme Court) in Prince George’s County v. Sunrise Development Limited Partnership in 1993. Thankfully, and as discussed below, the Housing Certainty Act modifies the late “vesting” standard for certain housing development projects and thus mitigates considerable risk that would otherwise constrain the production of housing throughout the State.
Until the General Assembly adopted the Housing Certainty Act, the only exception to the late “vesting” rule in Maryland was the use of a Development Rights and Responsibilities Agreement (“DRRA”). A DRRA is a mutually beneficial development agreement which provides local jurisdictions with the opportunity to bargain for enhanced public benefits in exchange for vesting of discretionary land use approvals prior to visible commencement of construction. While many jurisdictions have adopted local enabling legislation to allow for the use of DRRAs in Maryland, the Housing Certainty Act creates broad protections for housing developments throughout the State, including projects in Montgomery and Prince George’s Counties that are reviewed by the bi-county Maryland-National Capital Park and Planning Commission (“M-NCPPC”).
The Housing Certainty Act defines a housing development project as “new construction or substantial renovation of a residential real estate project” and requires that a local regulatory authority (including M-NCPPC) review and decide (approve, conditionally approve or deny) such housing development project based upon the duly adopted laws and regulations at the time of submission of a complete application. Additionally, the Housing Certainty Act provides that after a housing development project has received all required approvals, the developer of the housing development project shall have a vested right to that use and authorized development for the longer of: (i) 5 years; or (ii) a period determined by the local regulatory authority or M-NCPPC. In this respect, the Housing Certainty Act provides protection to housing developers that do not currently exist (absent the negotiation of a DRRA) that will mitigate the risk caused by changes in rules or regulations very late in the development review process.
In addition to the important changes to “vesting,” the Housing Certainty Act also defers the time that a local jurisdiction can require payment of a development excise fee or development impact fee to no more than 30 days prior to final inspection for a residential real estate project. Prior to the Housing Certainty Act, development impact fees are often required to be paid at the time of building permit issuance and represent a significant cost to a housing development at the front end of the process. The Housing Certainty Act defers the payment of these costs until the final stages of the development process, which will enhance the economic viability of many housing projects.
