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Washingtonpost.com:

The Virginia state Senate is expected to vote Monday on a measure that would weaken a land-use tool used for decades by local governments to get builders to add roads, parks and other improvements to new home developments.

The bill, which calls for placing restrictions on what local officials can ask for in development negotiations, is one of two measures working its way through the General Assembly. A House version of the bill passed 68-27 last week.

Both measures are generating strong opposition from local officials in Northern Virginia, where development deals have helped shape the character of some of the region’s fastest-growing communities.

Fairfax, Loudoun and Prince William county officials say that changing the legislation would hamper their ability to negotiate for extra amenities from developers that, in the past, have been crucial to community support for new housing in places like Merrifield or Woodbridge. Officials also argue that amending the land-use tool would open them up to lawsuits if builders whose projects were rejected argued that they were denied because of their refusal to agree to “unreasonable” proffer requests.

“For a community to support new development, the community needs to be assured that the development pays for itself,” said Corey A. Stewart, chairman of Prince William County’s board of supervisors. “These new restrictions that the General Assembly is proposing to place on localities make it more and more diffficult for us to say to the community that a development is paying for itself.”

Do developments ever pay for themselves?  Do developers really pay for the new schools, roads, community centers and open spaces required?  Most do not.  However, it appears that the state of Virginia wants to hog-tie localities even more to eliminate the appearance of  holding a developer hostage.

The Washington Post further adds:

Sen. Mark D. Obenshain (R-Rockingham,) who co-sponsored the Senate bill, said the aim of the legislation is to keep local governments from making far-fetched and arbitrary requests.

 The bill requires that proffers be limited to offsetting impacts that are directly attributable to new residential developments or new uses for existing developments. Local governments can require developers to offset the impact to off-site public facilities — such as a sewer system — but only if that builder’s new development also benefits from the improvement.
In the end, it sounds like the citizens are who are getting skinned.  Do local governments know land use issues, as suggested by Supervisor Bulova of Fairfax, or does the state know land use issues.  Who pays if the developer doesn’t offer proffers?  The taxpayer, of course.
The other side of the coin is that when there are proffers, the prospective homebuyer has those proffers built into the cost of the home.  Well, how not unfair is that?  If you want a new home with amenities, why should I pay for it, sitting over here in my 30 year old home?
This new legislation sounds like it should be headed to defeat.  It hurts counties like Prince William, Fairfax and Loudoun.  I am not sure who it helps or what its sponsor, is thinking.  He obviously has some strong developer friends who want to be able to skate into their millions without ponying up, as they should.
Corey Stewart should be hollering bloody murder as should those leaders in Loudoun and Fairfax Counties.  It sounds like they are.

29 thoughts on “Virginia attempts to rein in proffers?

  1. Watching

    What goes around comes around. This is what happens when people elect small government, tea party Republicans. I bet LaRock won’t get re-elected’

    “Western Loudoun Del. Dave LaRock (R-33rd) supported the bill, while Del. Randy Minchew (R-10th) was present but abstained. In supporting the measure, LaRock voted at odds with the county’s policy-stated decision”

    Barbara Favola supported it too and two other Republicans abstained. Ouch.

  2. Steve Thomas

    I do support reasonable proffers. However, developers don’t bear the entire cost of the added burden placed on public services that a new development would generate, nor should they. First, the developers don’t pay the proffers…the buyer does, as these are wrapped into the price of the houses sold. Second, these homeowners will continue to pay for these services through their property taxes, for as long as they own the home.

    1. I think what we should be looking for is balance. It seems that the locals know more about community needs than the state.

    1. What stirred all this up? It certainly seems that Loudoun, Fairfax and we have different needs than whoever is stirring up this hornets’ nest.

      On the other hand, what is the alternative? No growth or runaway development?

  3. Watching

    From what I have heard, albeit second hand, it was the developers who pushed this through. They are probably second only to Dominion when it comes to campaign contributions. If you look at LaRock’s contributors on VPAP he had almost over 25% ($92K of $333K) of his contributions from this sector.

    http://www.vpap.org/candidates/43383/donors_sector_totals/

    I just think it is a shame because Loudoun seemed to have a working model better than PWC, where developers paid a greater share, services kept up and some really nice housing was going in with a tax base to support the services. There seems to be no one around explaining why this change is needed.

    1. I think Loudoun is horribly over-developed. I used to go down Old Braddock Rd on snow days. I would see fields, horses, foxes, beaver, etc. Now I see endless townhouses.

  4. Ed Myers

    In Loudoun new homeowners also expected new schools and new roads. Meanwhile older communities that had well worn schools were forced to contributed their tax money to buy the land and pay for site prep for that new infrastructure even if some of the construction was funded by bonds that the new homeowners taxes would fund. Also property taxes were gong to fund roads (a traditional state responsibility being ignored by Richmond) squeezing out money for things like full-day kindergarten and other county initiates that would benefit all–new communities as well as old. Proffers provided a way to fold the non-bond portion of infrastructure into the price of a new homes. The additional cost of new homes because of proffers keeps the price of existing homes from depreciating in the face of cheaper new (subsidized) construction.

  5. Maximus Meridius

    @Steve Thomas

    The homebuyer does not pay the proffer.

    The proffer comes out of the developer’s bottom line and does not impact the price paid by the homeowner. No developer in the history of the world has ever given a homebuyer a price break because they were given a break on proffers or impact fees. The developer will always charge the homebuyer the highest price the market will bear. If the developer pays proffers, those amounts come out of the developer’s revenue thus reducing their net profit. By not paying proffers or impact fees the developers are able to shift many of the costs of their projects, such as roads, schools and other infrastructure, to all taxpayers. This new legislation will result in extended taxpayer subsidies to developers.

    1. Then tell me why Republicans (or anyone for that matter) are supporting the bill?

      I guess I see your point. If the developer can get 700k per home, he isn’t going to ask 600k just because he didn’t have to pay proffers.

  6. Maximus Meridius

    @Moon-howler

    I think “Watching” answered that question. The Republicans and Democrats who supported this bill are motivated primarily by money (campaign contributions). The increase in taxes to subsidize the developers is very opaque. It’s not a check from the local government made out to the developers but rather greater costs to build new schools and roads, and upgrade others, to maintain some semblance of public services as the developers’ new projects add to the demand for those services. Any politician from either party claiming this move strengthens the free market is being very dishonest and disingenuous. This is crony capitalism at its worst. Republicans and Democrats behind the bill should be called out for what they are.

    1. Let’s also not forget about libraries and fire departments and police. Gainesville has 2 libraries now. How does it rate?

      Hmmmmmmmmm…..I don’t mind driving to Gainesville for things but apparently it doesn’t work both ways.

  7. Maximus Meridius

    @Moon-howler

    I’ve never been to the Gainesville library but agree with you that all of the service areas are important. Tax dollars are finite. We can use them to fund and maintain the quality of our public services, reduce the tax burden on our citizens, or subsidize developers.

    1. Bull Run Branch is in Gainesville District and so is the new Gainesville Library. Just saying…..

      I think Gainesville is all too willing to get the things THEY need but hedge on the rest of the county.

  8. Steve Thomas

    @Maximus Meridius
    “The homebuyer does not pay the proffer.”

    And corporations pay income taxes and don’t build that into their “Cost of Goods Sold”, too. If you’ll excuse me, I need to go fill up that Turnip Truck that you think I drive.

  9. Maximus Meridius

    @Steve Thomas

    I don’t know you personally and am unfamiliar with what sort of vehicle you drive, but this is Econ 101. If developers did not charge the maximum price homebuyers were willing to pay, whether they did or did not pay proffers or impact fees, they are doing a disservice to their stockholders and other investors. Supply and demand in the marketplace determine price. Cost does not drive price. Those costs include lumber, shingles, interest payments, taxes, proffers and many other things. If developers could simply pass on proffers to homebuyers with no impact on themselves, why do they spend so much money on lobbying and buying politicians?

    Higher production costs have an impact on supply, reducing the marginal profit companies earn. With proffers included, profit margins fall and fewer housing units are likely to be built. Lower supply can raise the equilibrium price on the units sold, but the proffers still come out of the developers’ pockets.

    Please cite even one example of a homebuyer paying a lower price to a developer because the developer was not required to pay proffers. That would be a more convincing reply than reference to vegetable transport services.

  10. Ed Myers

    Markets are not static. If the developer has to pay proffers then projects that can afford the proffer and sell at the price homeowners will pay will get built. If the proffers are too expensive builders will leapfrog lots of land and start building in the next county with different (or no) proffers. In this case part of the cost transfer from new to old construction is transportation infrastructure costs which are also subsidized, but less so than schools. Or, builders will increase density or change the mix of residential/commercial.

    1. Developers are welcome to move on to the next country. I think most of us would be delighted.

  11. middleman

    The bills were written by the building industry lobbyist. Expect your real estate property taxes to rise more than double the inflation rate in the future while home builders increase their profit margins.

  12. Mom

    @Moon-howler
    It’s no longer if, its when.

    1. I really feel this bill is a betrayal.

  13. middleman

    The bills have already passed. They just need to be combined now. The BOCS was too busy beating up DEQ and arguing about concealed carry fees to do much. They passed a resolution AFTER the bills passed.

    1. Then they were asleep at the switch. They will blame Ms. Gordon though. I have see that before.

  14. middleman

    Ms. Gordon has been lobbying for weeks on this. I wonder if any of our supervisors bothered to pick up the phone to tell their Buda in Richmond to kill the bills. Or put a delegation together to lean on legislators. Makes you wonder if the resolution is just window dressing..

    1. Probably not. They probably didn’t even know or care. Some of them were too busy trying to give away revenue all in the name of being too conservative. Gotta get that con-cred!!!!

      I expect they will still try to blame Ms. Gordon.

  15. Gary Friedman

    Found it very interesting to read this thread.

    As one who served on the PWC Planning Commission for six years, I can state without hesitation that residential developments of any sort do not pay for themselves. The notion that they do, or can, is a fiction some members on the BOCS have been promulgating for decades, usually with the complicity of statements from the planning office. This inescapable fact is why tax burdens for county citizens have increased year after year for decades, regardless of which party holds the BOCS chair, and regardless of the fact that the BOCS has been dominated by so-called fiscally conservative Republicans for decades.

    The dynamic is simple: Developers are the primary source of campaign money for these politicians so they pretty much get whatever they want when BOCS vote time rolls around. The “proffers” never cover the adverse fiscal impact the developments inflict on the county, so in order for the county to provide needed public infrastructure, taxes increase. The fact that the development industry has been trying for many years to make the “proffer” a thing of the past is merely a play to shift even more of the financial burden onto citizen taxpayers. The same political dynamic applies in Richmond, where developer lobbyists find sympathetic ears accompanying outstretched hands.

    1. Hi Gary Thank you for your input. So it really worked this time. There are further proffer restriction.

      What I find amusing is that the SoN/Candland is always carrying on about getting more proffers out of developers. Looks like he was asleep at the switch on this one. In fact, the SoN always holds up Loudoun as the model.

      What have we heard from him on this subject….?????????~~~~~crickets~~~~~~
      I guess its more jollies to pick on Marty or trumpet about Corey/Pete.

  16. Gary Friedman

    Happy to add my 2 cents MH. Unfortunately, neither Corey, nor Marty, nor Pete have the chops to have any meaningful impact on this issue. Whatever they say or do on this are primarily for show and for local consumption. The only way to address this issue in a meaningful way is to develop and adopt a rational Comp Plan that is skeptical of more residential development and welcoming of more commercial development, wihich is usually revenue positive for the county. To do so is well within the power of the local body but requires political leadership and the political will to serve the interests of the citizens. I haven’t seen anything lately that demonstrates such political leadership or will exist in PWC.

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