Palazzolo Says Germantown Multifamily Moratorium Result of Pent-Up Demand

By Bill Dries

When Germantown began exploring mixed-use development by opening up some commercial areas to residential development with commercial, the market responded quickly.

It revealed a pent-up demand in the larger market, said Germantown Mayor Mike Palazzolo.

“When there is pent-up demand for class A apartments in this entire region, then the market brings you something quicker than you may anticipate,” Palazzolo said on the WKNO/Channel 10 program “Behind The Headlines.”

Mike Palazzolo

“So we kind of did the old let’s get a time out. Let’s do a little bit of a refresher on evaluating our process and understanding what absorption means for our partners in our community,” he said.

The result was Palazzolo’s proposing to the Germantown Board of Mayor and Aldermen to declare a moratorium on all new standalone multifamily developments in the city’s Smart Code zoning districts. The board will vote on the moratorium Jan. 8.

Three of Germantown’s five commercial districts are considered Smart Code zoning districts where mixed use is possible.

“Part of that is the premise of let’s introduce a residency component to a commercial area,” Palazzolo said. “We would not introduce a commercial component to a residential area. So we’re trying to create that mixed-use area.”

The challenge is to keep it truly mixed use and not let one type of development dominate or overwhelm other types.

Forest Hill Heights is one of the Smart Code areas. Germantown’s planning commission recently approved the 310-unit Watermark apartment complex on 17.7 acres on the north side of Crestwyn Hills Drive east of Tyndale Drive.

“It is not the patio apartments of the past. It is much of the mixed-use variety with a lot of public space – a lot of communal area,” Palazzolo said. “It’s just how do you absorb that as far as bringing services to that area – police, fire, sewer, water pressure.

“We predicted that full absorption, or build-out, would be in about a 25-year period with about 2,200 housing units in that area,” Palazzolo said of Forest Hill Heights. “Well, you can’t bring multifamily to one area in year one – four or five developments – that’s not a good way to absorb in a planned manner.”

“Behind The Headlines,” hosted by Eric Barnes, publisher of The Daily News, can be seen on The Daily News Video page,

Part of the pending moratorium discussion is whether Germantown wants to consider impact fees on development to help pay for needed services.

Residential areas comprise 86 to 88 percent of the city’s total territory, which Palazzolo describes as a “traditional suburban bedroom community.”

The rest – about 2,000 of the 15,500 households within Germantown – vary from multifamily to condominiums, single-family attached and brownstones.

“We have some diversity,” he said. “We want to be able to offer everything to our current residents and residents of the future. … When we were getting a lot of developers coming at us at one time, that was an important pause that needed to be taken. How do we handle this? School capacity is one thing. Police, fire – all of those things have to be evaluated.”