Developers Say Montgomery County’s Red Tape Takes Wrangling To Get Around

Developers and elected officials agree that the residential construction process in Montgomery County needs to be simpler and more efficient.

And while it’s not clear exactly how that might happen, stakeholders say it should begin with cutting bureaucratic hurdles to new housing construction and housing affordability.

“We need to cut through some of the red tape here in these municipalities,” said Montgomery County Commissioner Thomas DiBello at Bisnow’s Montgomery County State of the Market event last week at the Valley Forge Casino Resort.

Housing prices in the county have skyrocketed amid high demand and relatively muted development.

The effective rent for multifamily units in Upper Merion, Lower Merion and Norristown came in at an average of just over $2K last quarter, according to a report from Newmark. That’s higher than any other submarket the brokerage analyzed outside Center City.

Buyers in search of single-family homes are feeling a similar crunch, said Montgomery County Commissioner Jamila Winder. She bought a rowhome in Norristown for $83K two decades ago, but its value has since ballooned to $225K.

Those exorbitant costs are keeping working-class people out of the county, even in relatively affordable municipalities like Norristown, Winder said.

“How do we create gateways to home ownership for the workforce that we don't want to bring in from Allentown or Reading?” she asked.

Some new housing is on the way in Montgomery County. Newmark counted almost 700 multifamily units under construction last quarter, which puts it above neighboring suburban Pennsylvania counties.

Many of those new and upcoming units are in transit-oriented, walkable neighborhoods.

“We do not do anything anymore that's not walkable,” said BET Investments President Michael Markman. “If it's not walkable, we're going to create retail on the site to make it walkable.”

Markman highlighted the Promenade at Upper Dublin, which has 400 apartments and 140K SF of retail, and a 200-unit complex in Ambler that will also include office space. Ambler also has a Southeastern Pennsylvania Transportation Authority station where the transit agency is looking to build another mixed-use project.

But overall demand still seems to be outpacing supply in suburban Philadelphia, according to a RentCafe report that found 11 prospective renters for every available unit. New apartments comprise just 0.1% of the rental stock regionwide.

“It’s a municipality-to-municipality challenge,” Hightop Development Director of Acquisitions Chris Egan said.

There are big differences in getting things done between the inner-ring suburbs of lower Montgomery County and the more rural areas that define the rest of it.

In the denser neighborhoods, “trying to even find real estate that can support a larger development project is hard” on its own, Egan said.

Even after a parcel is identified, developers often face major pushback from community members who are concerned about everything from parking to the impact on local school districts. That also bogs down the process.

“​​In upper Montgomery, they want to maintain the open space,” Egan said. “A lot of people there don't want to see dense development in their backyard, no matter what it is.”

Philadelphia Suburban Development Corp. Co-CEO Mark Nicoletti identified borough officials as “gatekeepers,” adding they should be incentivized to prioritize density and new construction.

His take on how to do so?

“You bribe them with a new fire truck, with a fleet of police cars, with more parks and rec money,” he said. “Where's that money coming from? Float a $100M bond issue, reinvest that money in townships that you reward for lowering their parking counts.”

The county and at least two of the municipalities where Markman is trying to build are prioritizing keeping rents within reach for middle-class residents. BET is being asked to keep 10% of the new units “attainable,” which Markman described as between 90% and 100% of the county’s median income.

While the developer said the initiative is a “noble cause,” he characterized the execution as flawed.

“I'm sitting in Lower Gwynedd right now, and it's taking them a year to figure it out because they've never done it before,” the developer said.

Markman would like to see the county “put together the resources to allow the townships to do this much more effectively.”