Bacon's Rebellion

Democracy Thrives in Sunlight

Don’t Panic!!

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by

James A. Bacon
in ,

The Comprehensive Transportation Funding and Reform act of 2007, which institutes the most momentous changes to Virginia land use law in a generation, is slowly grinding its way through the system. Currently, local government officials are trying to figure out what it all means.

Bob Burke attended a recent daylong summit, co-sponsored by the Virginia Municipal League, the Virginia Association of Counties and other organizations, dedicated to sorting through the dteails and answering questions. His observation: No one seems terribly enthralled with the legislation, which will preoccupy local officials for years to come. But no one is predicting death, doom and destruction either. For the most part, people are still trying to get answers.

One preoccupation: impact fees. When can you impose them, how do you calculate them, and what can you spend the money on?

Another question: What role are “New Urbanism” design principles supposed to play in newly created Urban Development Areas? The legislation is exceedingly vague.

Burke has the story here: “Don’t Panic.”

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16 responses to “Don’t Panic!!”

  1. Larry Gross Avatar
    Larry Gross

    re: ..”No one seems terribly enthralled”

    that’s because most localities don’t like the idea of tying land-use to transportation.

    It really complicates things for them when they have to be responsible for the transportation consequences of rezones.

    If you are a concientious elected official and/or planner, who is interested in managing growth then you will WELCOME the legislation so that you can add to your toolbox and not have to swallow bad projects that degrade infrastructure and don’t adequately mitigate their impacts.

    If, on the other hand.. you’re a “all-growth-is-good” type official then these new laws are indeed …. troubling… much harder to navigate the loopholes…

  2. Anonymous Avatar
    Anonymous

    Impact fees are at least partly a fraud. They are a targeted tax, levied without representation, and they wind up hurting the very people they are supposed to protect.

    We may not have any better answer, but this one is really bad.

    Suppose that evey locality had the same regulations against growth and the same impact fees. How would that be a discriminator agaist growth? It wouldn’t be, and growth would continue to be driven to the same places it is now.

    Consequently, jurisdictions compete the same as they do over teachers salaries, in an attempt to beggar thy neighbor.

    This idea is nothing but dumb.

  3. Larry Gross Avatar
    Larry Gross

    what is the purpose of an impact fee?

    It’s not to stop growth.

    It’s a fee for service – for infrastructure.

    Would you consider a water/sewer hookup fee any different?

    Do you think that water/sewer hook-up fees are intended to stop growth?

    Impact fees are not about stopping/redirectly growth but upgrading/improving infrastructure to maintain levels-of-services – for everyone.

    If you used your logic to outlaw water/sewer fees – what would be the result?

    Well.. the result would be the same degradation to water/sewer services that we see to other services like roads when there are no “hook-up” fees.

    The bottom line is that infrastructure now days costs money and if you experience growth and you do not take measures to maintain your infrastructure then you are being irresponsible two ways.

    first – for not maintaining an acceptable level-of-service – for both existing and new residents.

    second – fiscal irresponsibility for deferring infrastructure that will cost 2, or 3 or more in the future than it would cost right now.

    by not taking impact fees – you are increasing the tax burden of everyone at the same time you are degrading their levels-of-service.

  4. Anonymous Avatar
    Anonymous

    My opinion is based on my analysis of economic scholarly papers, and I stand by it.

    Impact fees cost the locals as much as they protect the locals. They are, in fact, used to prevent growth. They are discriminatory, they are taxation without representation, and they don’t solve the problem.

    There may be some justification for impact fees, but as presently calculated they do not account for either the fact that everyone uses new infrastructure, or the fact that much infrastructure in place was inadequately provided and cared for to begin with. They do not take into account the fact that the “new” users have in fact been paying for old infrastructure for years, without the benefit of using it.

    You will never convince me that the present use of impact fees is anything but cynical robbery. Even my local supervisors have publicly called it bribery.

    Is there some justifcation? Yes, but current practice is all wrong.

    RH

  5. Larry Gross Avatar
    Larry Gross

    Would you consider – the concept – of chargimg a new homeowner for water/sewer connections unfair “taxation”?

    what is your view about the concept of charging for water/sewer hookups?

  6. Anonymous Avatar
    Anonymous

    I don’t have the data to argue that point, and I’m tired of hearing about it.

    When I built my house in Alexandria I was charged $6000 for a sewer connection. To an existing sewer, that was at least thirty years old, that was already on the property. I saw the pipe. It was old an brittle.

    At the same time, I hired a contractor to dig a trench 600 feet in the opposite direction and lay/supply/connect the water line.

    That was $3000. And he was in and out in a day. Vepco, on the other hand, welched on their original estamte to supply power, and they showed up with five trucks and ten guys for two days to install one pole,transformer. and 300 feet of wire.

    The water connection itself was $2500,as I recall. In 1989.

    When I replaced the well and septic on the farm, the work was far more complicated, and cost much less. And I have better water.

    I think I got robbed blind by Fairfax for that hookup.

    Then, VDOT charged me $2500 for a driveway permit, when I was using the same driveway as the existing house.

    I think that the way we charge for things is a total COS unrelated to the real marginal costs. My personal experience, on more than one occasion, leads me to believe that the supposed efficiencies of urban areas are blown all out of proportion, primarily because of the complexity and paperwork involved.

    OK, maybe the $6000 I spent for tha sewer connection will somday be used to replace the sewer line.

    I doubt it. That line will leak for a hundred years before it is replaced. But that $6000 dollars is just for the right to connect. I still have to pay for the service, and I still have to pay my own plumber to connect.

    do I think new users should have to contribute to the total capital costs of systems they use? Yes. Do I think they should help pay for 30 years of previous neglect? No. Do I think they should get “some” credit for paying for thirty years of services they never got? Yes.

  7. Larry Gross Avatar
    Larry Gross

    Why would you catagorize it as 30 years of neglect?

    And exactly who would you have pay for that if it were true?

    Would you retroactively … on a pro-rata basis go back and charge folks?

    So the ones who lived there for 30 years would pay 30 times the folks that lived there for one year?

    and how would you compute the total amount of money that represented the “neglect”?

    What you advocate is already done in fact because the hook-up fee is used for “expansions” and the monthly use fee is used for maintenance and repair of existing lines and everyone pays for that.

    I don’t know about policies in NoVa but down here.. the hook-up fee has two components.

    The first is an “availability” fee and the second is the cost per foot to bring the line from the public infrastructure to your house.

    The first is your share of what it cost to bring that pipe from wherever it started – to the front of your house.

    and yes.. it may take 30 years for a locality paitently waiting for each new hookup to go to pay the bond payments.. for the line.

    I’m not sure what the complaint is about.

    Is it that you feel that infrastructure costs more than it should?

    If it is.. then join the club but unfortunately we don’t get to decide how much we think is fair – we have to pay what it costs.

  8. Single Avatar
    Single

    Here we not only have the ‘impact’ fees but they have tacked on ‘system development fees’ – which really are nothing more than a tax. In addition, if you are in the wrong area they will hit you with a ‘urban renewal district’ which is suppose to mean that all the taxes collected there will go strictly towards increasing and enhancing the area that the money is collected from. At sometime in the future, the ‘area’ will be have that designation taken off it and the extra money from all the renewal stuff will go back into the normal coffers.

    Here is the problem – out of over 25 ‘urban renewal districts’ only 3 have ever come back into the normal mainstream. The rest of them had the ‘renewal’ tag reinstated and they are their own little tax district for another 5 to 10 years. The other thing is as someone who worked for government and watched how the money flowed there was more ‘laundrying’ of money than happens with the mafia. We find and work at ways to transfer money from one place to another. Bottom line, the money RARELY gets where it is suppose to go.

    Impact and subsidy fees are really bad.

  9. Tyler Craddock Avatar
    Tyler Craddock

    Would you retroactively … on a pro-rata basis go back and charge folks?

    Larry, folks who advocate impact fees, proffer taxes and the like are basically saying that new residents should pay a premium above and beyond government’s normal tax take in order to offset their impact on capital facilities. What I have always thought is that if new residents are going to be asked to make this extra investment then it is patently unfair that existing residents are not as well. They have the same impact. Thus, that is why we should emphasize broad-based sources. If you are going to single out new development, then a CDA works much better in many cases, IMHO, than proffer taxes or imapct fees.

    Also, folks ask how are water and sewer impact fees (aka tap fees) different. Well, to be sure, they certainly are a tax on new home buyers that affects affordability. They differ, however, from proffer taxes and new road impact fees in that most systems, espcially newer ones, have generally been charging them from day one. Thus, every user has paid that premium for capital facilites.

  10. Anonymous Avatar
    Anonymous

    Thanks folks, I was beginning to think I was whistling in the wind.

    So heere is what happened in my neighborhood. In the 50’s it was still rural and homes were on well and septic. Eventually it built up and water ans sewer were supplied. The bill was added as a factor to your tax bill for a number of years.

    My lot was three times the size of the normal lot, so it paid more for sewer and water. There were two sewr lines on in the front under the street and one across the back in an easement across my property.

    My original home had a well, but when water was supplied the wells were turned off, you could not even use them for auxiliary use like watering. Partly because your sewer bill was based on water usage.

    I later subdivided tthe lot and built on the rear portion, connecting to the rear sewer line.

    That line was long since paid for and never used by the property. I dug the trench and installled the pipe to connect, and hired a plumber to come and instll the saddle and final connection.

    Permission to do that was $6000.

    I think it is taxing twice for the same thing. It’s a rip.

    ——————–

    Then consider the situation in Warrenton. The sewer system is at capacity. Part of the reason is that it has been ill maintained and it is leaking. Ground water flows into the pipes and adds clean water to the load on the treatment facility.

    The town uses the fact that the system is at capaciity to deny new residences.

    If they build a new facility, it will be subject to much hihger standards of treatment, and that treatment will apply to everybody.

    They can stall the problem by fixing the leaks in the existing system. One prospective builder has offered to do that as part of his proffers, figuring that lowering the clean load will allow enough extra capacity to handle his development.

    But why should that existing maintenance problem be passed on to his plate? Or assuming a new and better plant is built, why should the costs devolve only to the new residents?

    I think Tyler is right: sometimes you need to use broad based sources and existing residents are still part of the impact.

    Larry seems to think that if so much as a dime of new expense is billed to existing residents, then it is an affront to their “rights’ and stealing to boot. At some level he has a point, but at another level it is niggling, small-minded, and obstructionist.

    RH

  11. Larry Gross Avatar
    Larry Gross

    re: …”They differ, however, from proffer taxes and new road impact fees in that most systems, espcially newer ones, have generally been charging them from day one. Thus, every user has paid that premium for capital facilites.”

    Oh come on folks.

    There was a time when water/sewer did not charge for hookups. There are actually some places in Virginia that still do not but they are fewer and fewer.

    Would you tell a locality that if they did not start out charging for water/sewer than they could not start – no matter what?

    In low growth areas infrastructure can be offered to new residents without adding premiums.

    In high growth areas – the simple reality is that you cannot “save up” for that new school. It has to be built up-front to serve the new residents.

    The same is for roads.

    Ever try to “fast track” a road?

    In high-growth counties – infrastructure is very expensive and if that cost was placed on existing residents – no matter what the growth rate was – you’d drive the property tax to the point where existing residents “affordable homes” would go away.

    People on fixed incomes, people who work locally in more modest income occupations would be forced to move to outlying counties – like they are right now in places like Fairfax.

    This is not due to high proffers. It’s due to the tax rate on existing properties.

    We just had a dust-up in Spotsylvania when it was discovered that the water/sewer authority was using monthly customer fees to finance system expansion so that they could keep the cost of the hook-up fees .. down.

    And of course, there was a stampede for those “cheap” hook-ups.

    I guess Tyler and Ray would find this practice acceptable.

    From what I know – if you get a Federal loan/grant for water/sewer – this violates the law.

    Don’t mistake what I am saying. I’m not saying these guys favor illegal activities.

    Instead, I’m saying… there is a reason why the Feds .. as a condition of grant approval.. require separate accounting…

    and that reason… is the same reasoning that is behind proffers and imact fees.

    I think ya’ll are ignoring the fact that behind that new school – that there are annual teacher salaries that have to be paid for by ALL residents.. and we know for a fact that each new kid costs 8-10K per year and that each typical median price home generates 2-3K in taxes of which the school cost is but one component.

  12. Larry Gross Avatar
    Larry Gross

    re: affordable homes verses affordable housing

    I note the following:

    “Builders question proffers
    Fees on new homes are pricing buyers out of market, analysis says”

    ….”They say the fees push the cost of housing higher — and force some prospective homebuyers out of the market.”

    http://www.timesdispatch.com/cva/ric/news.apx.-content-articles-RTD-2007-08-05-0252.html

    so… I guess one could make the argument that water/sewer hookup fees are pricing folks out of the market.

    I think this is a totally bogus concept.

    There is a difference in my mind between “affordable homes” and “affordable housing”.

    If builders wanted to agree to build housing that was median priced so that median income buyers could afford them – they could and I would further posit that if they were willing to do that – that localities would cut them some slack on THAT KIND of housing.

    We use to talk about “starter homes”.

    I know I bought one.

    It was 1000 square feet with an unfinished basement, a sliding door that had an imaginary deck, a gravel driveway, and no landscaping.

    Those kinds of houses can still be built – as well as townhouse and apartment versions of them.

    In LA – they are considering allowing apartments with 250 sq feet – and such apartments are not uncommon – legal or not legal in many places.

    So .. this proffer/impact fee argument is NOT about affordable housing – instead it is about affordable homes.. for those folks who make way higher than median salaries… and who want much, much more home than they really can afford to start with – and the builders cater to that market segment because it is .. profitable.

    If the builders truly want to develop a partnership with localities to actually address the affordable housing issue – I’m quite sure that both density bonuses and proffer/impact fees considerations would be possible.

    but it ain’t going to happen if the rhetoric is all about “poor” people not able to afford housing.

  13. Jim Bacon Avatar
    Jim Bacon

    Larry, following up on your observations about “starter” homes and the 250-square-foot apartments in L.A…. Reminds me of my year in graduate school at Johns Hopkins in Baltimore. I lived in an “efficiency” apartment — a single room with a tiny kitchen behind two folding doors, a tiny closet and a tiny bathroom. The darn thing probably was about 250 square feet. It wasn’t much, but it had a couple of advantages: (1) The rent was cheap, and (2) the apartment was a block away from campus and within walking distance of grocery stores and other essential services, which meant that I could sell my car.

    Not everybody wants to live that way. I wouldn’t have lived that way if I could have afforded better. But I couldn’t, so I was damn lucky that the city of Baltimore had allowed someone to build that apartment.

    How many efficiency apartments are being built today? What prevents the marketplace from responding to the needs of people in the same situation? We all know the answer. The problem isn’t “developers.” The problem is local policies that prevent developers from meeting the market demand.

  14. Tyler Craddock Avatar
    Tyler Craddock

    I agree, Jim. In addition to all of the cash proffers, impact fees and other taxes that drive up they cost of housing, another local policy that limits the ability of the marketplace to provide affordable housing is the use of conditional zoning powers to extract from developers proffers that dictate architectual features (such as requiring brick veneer) or square footage requirements.

    (Yes Larry, taxes drive up the cost of housing, just like any other commodity — maybe you can read a real economics book the next time you are sitting on your imaginary deck)

  15. Larry Gross Avatar
    Larry Gross

    Jim, I too lived that way both single and during early married years in a series of very modest apartments and rental homes and finally a “starter” home that we had to fight annual inflation to save up enough to buy.

    And that is my point – that even today, I suspect that it is a bit of a myth that affordable housing is not available and/or not provided by the market.

    We simply do not have “tent” communities where folks live who cannot afford housing have no other options.

    But, let’s suppose for the sake of argument that there actually is a crisis shortage of “affordable housing” – then let’s take the steps to deal with that specific problem.

    Incentives from the localities in the form of density bonuses and reduced proffers, etc, IF the housing is priced to be within the mortgage ability of median income folks and lower.

    And let’s not fool ourselves. These homes will not be appealing to the stereotypical middle classers, two-income families looking for granite counters and 3 baths and a sauna.

    I just think the issue tends a little toward the disengenuous sometimes… and think we could do a whole lot better if we were more clear about the issues.

  16. Larry Gross Avatar
    Larry Gross

    re: …”Yes Larry, taxes drive up the cost of housing, just like any other commodity “

    well.. duh! can’t you say that about any tax on anything?

    geeze… I know in my case, I sure couldhave afforded that fancier SUV if they didn’t charge those onerous taxes on new cars.

    so.. the answer to the onerous tax issue is to sock it to the folks who worked their entire lives at being a schoolteacher or a postal worker or a deputy or health care worker – and now live on a modest fixed income pension

    .. so that middle income up and comers can afford that “trophy” house with granite counters – instead of settling for a “starter” home.

    I’m all for policies to incentivize true affordable housing – housing that sells for the median income of local salary earners.

    I’m actually in favor of school districts – building – on school property – “starter” housing for entry level school teacher and deputies and the proffers exempted.

    I’m in favor of mixed use developments providing housing that the retail employees can walk to/from… and exempt those proffers.

    We could put a lot on the table to deal with the issue – if we can all agree to recognize that some of the “affordable home” advocacy is not really about “affordable housing”.

    fess up folks… I’m waiting with baited breath for the new statewide builder lobby – called Homebuilders for the Homeless.

    🙂

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