Delegate Tarasa Proposes Ban on Fees‑in‑Lieu to Force Production of Inclusionary Affordable Units

Delegate Jen Tarasa introduced House Bill 1444 to bar local jurisdictions from using developer fees in lieu of onsite affordable housing requirements in inclusionary zoning. She said fee‑in‑lieu policies tend to concentrate low‑ and moderate‑income housing in limited neighborhoods and the fees are often set too low to produce the number of units that on‑site requirements would yield.

The nut graf: Sponsor argued that on‑site affordable units produce more housing and better spatial integration, while opponents said fees in lieu can be a useful tool to leverage scattered funding and achieve more units in some circumstances; counties urged local flexibility.

Tarasa described how fees have been insufficient compared with construction costs, citing a Howard County example where a fee of $3.65 per square foot would not cover the real cost of constructing a unit. She said a developer will rarely choose to build an affordable unit when a much lower fee is allowed.

Michael Sanderson of MACo and the Maryland Building Industry Association testified against a statewide ban. They said the fee‑in‑lieu option is widely used as one tool among many; counties said fees sometimes allow them to combine resources, leverage other funding and produce larger projects where scattered site or location choices make sense. Sanderson called elimination of the tool “throwing out the baby with the bathwater.”

Ending: Sponsor argued the bill would increase actual affordable unit production and reduce neighborhood segregation by income; MACo and building industry representatives urged the committee to preserve local discretion and use collaborative approaches rather than a categorical prohibition.