Thursday, October 18, 2007

The Reality of Impact Fees and Cash Proffers

This week one of the other debates in addition to the Roseland zoning case was the issue of "impact" fees. The Planning Commission voted down the use of impact fees as a matter of policy.

The use of impact fees would have allowed the County to put in place a measure to revisit a funding source that was unavailable on properties that were zoned by the County before the 1989 passage of the Cash proffer Policy. There were some 9K lots that would have been charged impact fees to go towards roads and infrastructure. These lots were zoned but in most cases may still remain undeveloped.

The current Cash Proffer of $15,600 will certainly have to revisited should the County have any real chance of meeting maintaince obligations on our roadways. Of the current rate some $8915 go directly towards roads and the rest to County services. The current Board has voted down an increase in the last year that would have taken the level of proffer to a little over 22K.

Question. Do you believe Chesterfield is a wonderful place to live and raise children? If so, could you put a price tag on that quality of living. A level in which you would be willing to pay when you finance your home purchase because you "want" to be in Chesterfield. I only ask because the basic arguement over raising proffer fees on developers has always been that it will be passed onto the consumer in the sale price of the home and would price people out of the market. I have never spoken with a single person who would not buy the house they wanted over 3% difference in price. The issue people are not focusing on is the fact we do not have affordable housing being built across board which is what is doing more harm to placing people out of the market. How many sub-250K new homes are being constructed right now in Chesterfield. If we pay our educators say 40K a year in salary, exactly what new homes could they qualify for here in the County? The issue is not the costs being carried to the consumer because if one can afford a 400K they are most likely able to afford a $415K home. Increasing proffers will not keep residents out of the market.

Need a few examples?

Look to our sister counties to the North. Prince William County currently has a $37,719 per lot cash proffer and is voitng on taking it to $51,113 with home starts growth rates ever increasing and Loudon County has a proffer of $47,000 with great growth in home starts over the past five years. Spotsylvania County will be increasing their proffer to $46,514 per lot. The comparison is given as an example to illustrate that we as the fourth largest locality in the Virginia are lagging behind in the securing adequate proffer fees from developers to basically provide the same services as out sister counties. Som eof those areas are larger in population to be sure, but the point is that the very same developers selling a five bedroom 2 bath home with about 3,200 square feet up in NVA are often the same ones developing here in Chesterfield. In my opinion, developers get a larger lot with less fees and access to a growing market on the cheap when compared to home sales in both areas. They are building the same models there as here in some instances. Are the costs of construction independent of county fees that different? Probably not but the costs of the lot themselves may certainly be and yet when taken as a whole people are not being placed out of their markets based on price.

The impact fee proposal would have brought $5,820 in fees for the lots that were zoned prior to the Cash Proffer Policy. The descision based losely on the idea of living in the past in that because these owners had their lots zone thirty year ago or prior the County has to be obliged to keep the current zero fee in place on those lots based on the policies of that era out of good faith.

Well maybe local government should have thought about "good faith" when they allowed development to outpace our ability to sustain our quality of life in terms of services. Folks, its too late. We all eventually will have our taxes taken back up over $1.00 per in an effort to remain in good faith with the owners of 9K lots. I have no issue with that should those lots be developed by residents who own those lots and who have contracted a Chesterfield contractor to build them a new home which contributes to our local economy, but what I do have a problem with is if these lots are owned by developers who can build a home and sell it in the open market free of proffer or impact fee.

Chesterfield will get 45 million over the next 6 years from the State, which works out to be about 6.43 million a year. This will not be nearly enough to impact our problems. Impact fees could have been a part of the solution. Not a solution, but a part of a plan the Board could put together to address these issues.

The Board has also the opportunity to move forward on a real estate and business liscence tax set aside plan that could bring in 300 million over the next 10 years to address our needs but as of yet has not ruled on the plan. Maybe the new Board will.

Impact fees certainly were not given a far shake in my view. Its a tough call to be sure, but in the end Supervisors may just find themselves having to come back and raise property if they continue down the path of the 80/20 citizen to business ratio in terms of funding.

Frankly, my question to candidates for Supervisor is if we say that we are growing too fast why not increase the Cash Proffer Policy to 22K and increase the burden on developers as a means of slowing down the growth as we bring up our capacity and level of service for our roads and infrastructure. No one would be denying zonings per say, but would be seeking greater contributions from developers for services. Should developers not wish to participate and cease the construction of new homes then certainly existing home would see a rise in value as the number of new homes available on the market would be decreasing.

Folks, help me out. Am I wrong on all this? Increasing the proffer is not Anti-Business or Anti-Growth. Its Pro-Quality of Life for Chesterfield.


James said...

So was it merely a political stand be taken against impact fees by the Commission? In the past they seem to have been usurped by the Board in terms of issues like these. Will the Board vote on these fees as well or seek a dialogue with residents going forward? I guess it may be left to the new Board to do so but the rate of the cash proffer has to be increased.

Anonymous said...

No, it was not merely a political stand. The difficulty the Planning Commission had with the impact fee proposal is that there was no plan with regard to how to use the funds. At this point, it is just the government saying, "I am going to take your money because I can."

The mandated use for the impact fee money is transportation (meaning roads). The amount of money forecast to be raised by the proposed impact fees is $50,000,000 over 10 years. The road funding needs for the county are estimated to be $1,300,000,000, so, even with the impact fees, we would be $1,250,000,000 short. None of the much publicized "solutions" (meaning sources of funds) that came from the transportation summit held by the Board of Supervisors last year were put into effect.

If the proposed impact fees were part of a comprehensive plan to provide specific services (or to improve specific parts of the infrastructure), the Planning Commission might well have recommended their adoption. As it is, however, there is no plan, and it seems unjust to take from any minority group of taxpayers just because the General Assembly has now given the authority to do so.

I will respond to the proffer issue later.

Dan Gecker

Anonymous said...

While I agree with Mr. Gecker assertion reagarding the necessity of a "plan", it is the Commssion role to recommend the policy direction the Board should take on zoning matters. Of course, this BOCS has seen not to go along with the Commission at times but it is none the less the Commissions role.
There does not seem to be a real fairness that ripples through our current policy. We will charge proffers to new zonings for the purpose of assiting with services, but not on new homes built on lots zoned prior to the proffer policy which will certainly tap the same resources.
I fail to see the legitimate fairness. I tend to suspect given the turnout it played into the politics of the day and that though we want to speak to planning when push comes to shove our leadership again came down on the wrong side. I am sure there is an argument to be made that the fees would essentially be a tax on the individuals land owners currently in possession of the lots and yet is the proffer on the developer not indirectly paid by the consumer in his purchase price.
Mr. Gecker is right that about the potential of this being directed at a small group but each of us needs to pay our share if we are going to build and connect and require county services and use the roads.

Will said...

So are we saying that the "impact" fees are viable but only if the are earmarked for roads. Does that imply that if the County was to get the revenues without earmarks that they would find a way to spend it somewhere else. If so then it demonstrates the leadership issues we have.
I had not heard of the plan you mentioned in terms of the real estate and business set asides. I wonder why that is? Could it be because while it looks nice to talk about this board has no desire to put any more on the business community. Can someone out there post some info as to what the break down from the Dept. of Economic Development just exactly what jobs are truly coming to Chesterfield and from what industries.
I suspect its mostly retail. I know there is a newwer technology park in the Bermuda district growing but what does it say about the long term job growth plans for the county if its mostly retailers who do not on balance have a true vested interest in our community from a corporate standpoint.

Anonymous said...

I agree we have a huge issue in terms of housing. My question is are we zoning these highly expensive developments because we have allowed ourselves to get where we are today and need the property taxes off of more expensive homes to pay for things. I just cannot get over how many new upper echelon homes are going up. I recall when Reeds Landing went in it was treated like an "exclusive" area, well now I think the word exclusive is obsolete in Chesterfield.
I see the point to lower priced new homes as well. Its as only the small home builder is building those around the county where the large national firms would rather build highly densed Townhomes in the 200 to 250,000 range. I thinking along The Grove and Providence Road for example. I am sure there will be more to come.

Anonymous said...

The Planning Commission is required to give advice regarding land use policy to the board. That is why impact fees were before the Planning Commission for public hearing. The policy direction recommended by the commission is that funding should follow plans, plans should not follow funding. In addition, the fairness of the imposition has to be considered. If you believe, for example, that the cost of infrastructure improvements necessitated by the failure to account adequately for past developments' impact should be borne by existing and future development alike, then you have to question why a small subset of existing landowners (those who happen to have lots large enough to still subdivide) should be the only existing landowners asked to pay. To take from the few and give to the many is not the Planning Commission's view of good government policy.

I would suggest also to anonymous that the turnout did not move the Planning Commission's position on this matter; the turnout was generated by the Planning Commission's position. The administration wanted to advertise the impact fee hearing only in the newspaper (legal notice but not effective notice). The Planning Commission voted to require the County to send written notice to every potentially impacted landowner. The effective notice was likely to generate turnout; the legal notice was not.

I agree that each of us needs to pay our share to keep this County a first choice community. I disagree with any assertion that the impact fee proposal, taken alone, accomplishes that goal.

It is worthy of note that all of the proposals to raise money target homeowners solely. I do not believe that there is a good reason why homeowners should be asked to pay the impact of new retail in our community, effectively subsidizing the movement of these businesses from one portion of the County to another. We need to pause and look at the County as a whole, decide in what direction we want it to head, generate support among our citizens for that vision, then appropriately fund it, with all participants sharing in that funding in an equitable manner.

Dan Gecker

Anonymous said...

It is interesting that Dan Gecker advocates the point about looking at the County as a whole when it appears as though the district of Midlothian and Matoaca seem to be getting a disportionate amount of zonings.
I thought Dan Gecker's point regarding to "take from a few to give to the many" is not good policy underscores most likely why Dan Gecker is NOT running as a Democrat but an Independent in Midlothian. That idea it seems to me has always been the Democrat mantra.

Anonymous said...

At some point I hope we have capable and far sighted enough leadership who will propose both proffer and impact fees that are fair and equitable, perhaps a sliding scale depending upon the value of the home being built, to encourage a mixture of affordable housing and not "kill off" any particular housing sector.

It is unrealistic to think that only new housing will solve the problem of unfunded and unbuilt infrastructure. At some point, hopefully when the electioneering is over, we will have honest conversations about what our priorities should be, how much it will cost to fund them, and where we can get the money from to do so. Then, let the voters decide on taxes or bonds and live with their decision. You can vote at the booth and you can vote with your feet.

Jim said...

I learned today that not only does our Planning Commission not support impact fee proposals as voted down last week but NONE of our candidates for Board of County Supervisors want to make a stand on raising cash proffers either.
People its politics as usual again.

At least Marlene Dufree in Matoaca sees the value to pegging them with other means of revenue like transportation districts.

This Planning not Politics is about winning an election not about solving our issues. gecker voted down impact fees and will not raise the level of proffers.

Have people taken a look at the number of homes zoned to come on line. Thats the approved zonings already that will allow developers to build the number of homes zoned today over the next twenty years. We are talking adding some twenty five thousand homes!!!!

Not only is it politics as usual but its Business as usual as none of this potential leaders want to take a stand aggianst the developers no matter what their campaign literature says.

Look at the record. Cast your vote based on that not rhetoric.

William said...

If you would like to read some of the issue points log onto

I've gotten plenty of mailers from Dan Gecker with his contention that Don Sowder is pro-developer and anti-people and yet he fails to mention that he voted down the measures that would hit the developers; impact fees and an increase in proffers.
Fact is both Dan Gecker and Don Sowder have a share of the blame here. Gecker has been on the Planning Commission since appointed by Ed Barber and we have seen a dramatic increase in developer activity. Its easy in an election year to attempt to portray yourself outside the problem, but where was Gecker two years ago or last year.
It appears as if he determined last November after to losing the special election to Sowder to put himself in this position to campaign as the "sides with us" candidate all along.
No impact fees and no proffer increase seesm pretty pro-developer to me.

J. Scott said...

I think Dan Gecker's position on the impact fee formula was one where he felt that from an integrity standpoint the county should not be going back on previous zoning measures and re-do the system against those who had the land zoned properly and in accordance with the plan at the time.
While I do support his vote on this measure per say I undertand where he is coming from on that point. I however believe since the land may not have been develop since its zoning pre 1989 we should create a measure in the future in which it pegs the time frame. We are talking zonings from almost twenty years ago and those individuals going forward should have to face the same provisions as the new homes going up. I assume there are substantial fees regarding the hooking up to county water and power etc that comes along with the new construction by a landowner so from that perspective I guess the goal is to lesson the financial impact on the individual. That said however, they will be using county services like any other homeowner and if a proffer is passed down through the price of a new home to the buyer my contention is it is unfairly targeting those that buy in a development versus those the build on one single zoned lot zoned prior to 1989.
There is to be transparent fairness.
Mr. Gecker stated he would reply to the cash proffer question, so I will let him respond to his views on that topic.

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