Committees back 20-year tax-abatement pilot to convert vacant commercial buildings to housing with 10-year review

Montgomery County Council committees on Wednesday advanced Bill 2-25E, a pilot program that would exempt converted high-vacancy commercial properties from county real property tax for a fixed period to encourage conversion to residential housing.

The joint session of the Government Operations and Fiscal Policy Committee and the Economic Development Committee recommended the amended bill to the full Council after adopting several committee amendments: raising the minimum MPDU requirement to 17.5% (from 15%), limiting the abatement term to 20 years (reduced from 25), and adding a 10‑year sunset and review provision. The committee also approved a transition amendment to allow certain projects already at the planning stage to qualify and a technical clarification to ensure projects that do not require planning site plan review remain eligible under the intended timelines.

Why it matters: Montgomery County faces elevated office vacancy and a housing shortage. The pilot is intended to convert underused commercial inventory into housing supply by offsetting some of the development cost through forgone property tax revenue in exchange for guaranteed affordable units. Committee members framed the package as an incentive tradeoff: short-term foregone property tax revenue in return for new housing, later higher tax receipts and other revenues, and removal of vacant, nuisance properties from the market.

What the bill would do and who qualifies - As introduced, expedited Bill 2-25E would require the director of finance to offer a payment-in-lieu-of-taxes (PILOT) pilot for residential development that converts a property designated for commercial use to residential use if the property had at least 50% vacancy at the time of the qualifying application. The conversion must comply with the expedited approval…