Montgomery County MPDU: Housing Mitigation Since 1974

Since January 1974, Montgomery County has required that most new developments of 20 or more homes set aside 12.5-15% of their units as Moderately Priced Dwelling Units (MPDUs) -- affordable, income-restricted housing built and sold or rented at regulated prices. Widely credited as one of the first mandatory inclusionary zoning programs in the country, MPDU is a direct cost and design factor for anyone planning subdivision-scale residential development on Montgomery County land.

This page covers what's specific to Montgomery County. For the general explanation, see the national guide.

A nationally pioneering program, still in force after 50 years

Montgomery County's Moderately Priced Housing Law took effect January 21, 1974, codified today as Chapter 25A of the County Code. It is widely cited as one of the first successfully implemented mandatory inclusionary zoning programs in the United States -- meaning the county doesn't just encourage affordable housing through incentives, it requires it as a condition of approval for qualifying new residential development. More than 12,000 affordable units have been created under the program since it began, and it remains active and enforced today, more than five decades after adoption.

The mechanism is straightforward in concept: any new development with 20 or more units must include a set percentage of those units priced and income-restricted as MPDUs -- a minimum of 12.5%, rising to 15% under certain circumstances defined in the county's regulations. An MPDU must be affordable to households earning up to 65% of the county's Area Median Income (AMI) for garden-style apartments, and up to 70% of AMI for high-rise apartments and for-sale homes -- income ceilings the county's Department of Housing and Community Affairs (DHCA) updates annually, typically each April.

What this means for a land buyer planning residential development

This is not an Agricultural Reserve issue -- MPDU applies to conventional residential development anywhere in the county, most relevantly in the suburbanized two-thirds outside the Reserve where subdivision-scale housing actually gets built. If you're evaluating raw or underdeveloped land specifically because you plan to build 20 or more homes on it, MPDU set-aside percentages need to be built into your pro forma from the start, not discovered during permitting: roughly one in eight units (or more) in the project will need to be priced and sold or rented under DHCA's income and price restrictions rather than at market rate, which affects both project economics and unit-mix design.

MPDU units also carry resale controls that run with the unit itself, not just the initial sale: the current control period is 30 years for units first sold after April 1, 2005 (some earlier units carry 10- or 15-year controls), during which any resale must first be offered to the county and the Housing Opportunities Commission (HOC) under a right of first refusal, at a controlled price rather than market value. For a developer, this means MPDU units built today remain subject to county oversight on price and eligibility for three decades after initial sale -- a long-tail compliance obligation distinct from ordinary market-rate units in the same project.

A program currently under review -- confirm current rules before relying on this page

MPDU is not a static, settled program. Montgomery County planners and officials were actively reconsidering aspects of it as of early 2025 and into 2026, including questions raised in Bethesda Magazine reporting about the program's overall effectiveness and specific proposed changes to income-eligibility rules (including how a household's income is verified and treated after the initial sale). Given that active reconsideration, a developer or land buyer should treat this page as background rather than a substitute for confirming the current, in-force set-aside percentage, AMI thresholds, and control-period rules directly with DHCA and Montgomery Planning before finalizing any project pro forma.

Practical first steps: confirm with Montgomery Planning (part of M-NCPPC) whether a specific parcel's zoning and unit count would trigger the 20-unit MPDU threshold at all, ask DHCA for the current set-aside percentage and AMI-based price/rent ceilings that would apply to the project today, and factor the 30-year resale-control and right-of-first-refusal mechanics into any long-term financial modeling of the project's affordable units -- these are binding regulatory obligations, not optional design choices, for any qualifying Montgomery County development.

Housing Mitigation Requirements in Montgomery County: The MPDU Program

A nationally pioneering program, still in force after 50 years

What this means for a land buyer planning residential development

A program currently under review -- confirm current rules before relying on this page

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