More on SB 768

Bacon’s Rebellion has a good post today about the previously-referenced bill that would mandate impact fees on new development and eliminate proffers.
The bill would remove localities’ ability to negotiate (some say extort) proffers from developers; but … is this the consequence the bill authors were looking for?

“Be careful what you wish for,” warns Corey Stewart, chairman of the Prince William County board of supervisors. SB 786, which would eliminate proffers and impose uniform impact fees on new real estate development, “will shut down residential development all over the county. I will make sure it shuts down residential development in Prince William.” So reports Kipp Hanley with the Manassas Journal-Messenger.

In every negotiation, I try to find the win-win solution for the parties. I don’t see how this is an equitable solution. I’m open to being proven wrong, and welcome any insight into how this bill will benefit Virginians.

Update: 2/13/08 – I corrected the title from SB 786 to SB 768.

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  1. Neil February 9, 2008 at 11:39

    The concept of impact fees, which would be levied on ALL new construction rather than just rezonings seems to answer a fairness question.

    If we ignore the amount that is in the bill and focus on the concept for this discussion, what should impact fees pay for?

    The infrastructure impacts of the new housing, increased governmental operating expences ???

    What then shoud tax revenue pay for?

    In recent years Charlottesville/Albemarle has seen residential growth but not growth in the number of school children. My guess is many families with school aged children are opting to move into existing housing stock.

    Over the last 40 years the region has been under paying for water and sewer and deferring much work, should new residents pay for this?

  2. Jim Duncan February 9, 2008 at 13:59

    If we ignore the amount that is in the bill and focus on the concept for this discussion, what should impact fees pay for?

    That is an excellent question. I’ll need to think on that.

    Another question – who should pay for deferred maintenance and negligence?

  3. Scott February 9, 2008 at 22:11

    Neil points out the two major negotiating points for discussions underway now at the General Assembly about how to salvage the bill. The problems with the details of the bill are myriad, but the concept is sound; in fact, conceptually, it’s exactly what counties and municipalities have been begging for for years. Unfortunately, when they wrote the bill, the Home Builders seem to have decided arbitrarily that $5000 was a nice round number for impact fees (and threw property owners under the bus by including a grantor’s tax increase, too; thankfully, Virginia REALTORS helped strip that provision out of the bill in Senate Committee last week) and seemed to disregard some details and a few political imperatives…like trying to reach agreement on several salient points with counties and municipalities on the front end, rather than blindsiding them with the bill. The trouble now is that no one’s really had a chance to give much study to the implications of the proposed legislation, and so the natural response is to try to kill it. Enter the bombastic Corey Stewart and others…

    I’d like to think that the very real concerns of VML and VACo can be addressed and the bill modified to be something we all — REALTORS, home builders, counties and municipalities — can live with. It would be a far sight better than the current proffer system. But I’m not hopeful, and I suspect the bill will be carried over to next year, so major surgery can be performed on it this summer.

  4. Jim Duncan February 10, 2008 at 07:57

    Thanks Scott, for providing clarity and for pointing out the arbitrary nature of the $5k.

    Knee-jerk reactions tend to be reactionary by nature and not well-considered, hence the “shut down growth” rhetoric. My concern is two-fold – the bill seems to be one-sided in its intent, due to the lack of consideration. Secondly, the local impact – either through less funds or through less needed development.

    It is frustrating to see that in Albemarle after a long trying process, they finally agreed to ~$17k in proffers only to have the state say “nope.”

    The Dillon Rule is a multi-edged tool.

  5. TrvlnMn February 10, 2008 at 14:20

    It’s frustrating to watch the “developers lobby” reach out and make the state continue to give them their “free ride” at the taxpayers expense.

    What is the purpose of having a local government if the state is going to tie their hands at every turn? Is state Rep or Senator from one part of VA going to understand or appreciate the needs and desires of one locality when proposing a law that will affect them? My guess is no.

    I think having local governments “shut down development” (including the related rezoning requests) is a appropriate response to any law that continues to give the developers a free ride at taxpayer expense.

  6. Jesse Richardson February 10, 2008 at 17:57

    Almost anything would be preferable to the cash proffer system. It’s a joke. Impact fees would be uniform and consistent. I think the cap is unconstitutional, but so is a local government “shutting down development” because they don’t like the impact fees. Is this kindergarten or state or local government? I’m going to hold my breath until I turn blue…

  7. Lonnie February 11, 2008 at 10:44

    I suppose one elephant in the room here is whether we trust localities or the state more to regulate local growth? Personally, I feel that localities need a range of tools to make decisions about growth and zoning. At the final meeting about the Rural Ordinances in Albemarle Slutzky said he would prefer TDR, but they can’t to make decisions until it finally passes. In other words, we sometimes end up with policies that aren’t ideal because localities aren’t authorized to use methods that’d be more fair.

    I can’t help but wonder that if you gave localities more tools, instead of more restrictions, if local voters would ensure that local official are accountable and use growth tools more responsibly and far better than the State ever could. After all, Highland County doesn’t have the same issues that Albemarle does, so a blanket restriction on proffers can’t work for all counties.

    Besides, $5000 of impact in Wise just isn’t the same as $5000 of impact in Charlottesville.

  8. Neil Williamson February 11, 2008 at 15:54

    Lonnie raises a good point.

    What if the impact fee [which IMHO should pay for infrastructure needs] was calculated on the basis on the amount of money the locality had spent per existing house on capital improvements?

    Simplified Math (the only kind I know) Example:

    Over the last 5 years (recalculated every year) Locality X spent $100 anually per existing residence on capital projects, and related debt service. To help reduce the impact of the new residence, the new home carries an impact fee of $500 to buy into the community infrastructure. In the same 5 years, Locality Y spent $1,000 per existing residence annually thus would be able to leverage $5,000 impact fee.

    This approach requires the acceptance that local taxes should be sufficient to support the operating expenses of government.

    The benefit is the community that is investing in infrastructure will generate a higher impact fee than one that is not making said investment.

    A side benefit is the equalization of cost as referred to in Lonnie’s post.

    Just an idea.


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