Bacon's Rebellion

Democracy Thrives in Sunlight

Is Bill Howell the Last Lawmaker Left Who Cares About Sprawl?

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by

James A. Bacon
in

While political maneuvers swirling around transportation taxes garner the newspaper headlines, some members of the General Assembly are quietly working to address critical issues that shape the transportation debate: the financing of roads, schools and other public improvements through proffers and impact fees.

In a letter addressed to key industry and conservation groups, House Speaker William J. Howell, R-Stafford, has outlined some of the key issues. Writes Howell:

It is fair to say that members of [the House of Delegates] understand and are sympathetic with industry concerns about housing affordability and the affects of the current cash proffer system. Members also recognize, however, that local governments may have few alternatives to replace the cash proffer payments they are now receiving, and that any change in the existing proffer system must therefore provide an effective avenue to meet infrastructure requirements. Further, the ongoing strain on existing infrastructure and land conservation efforts caused by increased sprawl bring additional challenges to the table which, in my opinion, must be a part of any solution.

Howell notes that the House Rules Committee voted to widen the scope of a two-year study on proffer reform to encompass the larger set of issues. He continues:

To be truly successful, I believe the outcome of the discussions should recognize what the General Assembly was trying to accomplish when it passed the forward-looking land-use portions of the Comprehensive Transportation Funding and Reform Act of 2007 (House Bill 3202), which I patroned last year. Specifically, we charted a new way forward toward more efficient and compact growth management, which preserves open space outside of designated urban development areas. Virginia state law and public policy now embraces the fact that neither the state nor local governments can afford to continue development practices of the past that sometimes resulted in unbridled sprawl.

Howell is clearly on the right track, although he hasn’t quiiiiite stretched his thinking as far as it needs to go. Not only should proffers and impact fees be considered in the large context of land use and governance structure, so should transportation funding. But he appears to be light-miles ahead of Virginia’s other political heavy weights.

Sadly, Gov. Kaine, who once campaigned on making the transportation-land use connection, appears to have abandoned the cause. Sen. Majority Leader Richard Saslaw, D-Fairfax, has no discernible interest in the issue. Howell may be Virginia’s only hope.

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  1. E M Risse Avatar
    E M Risse

    Well put,

    IF Bill can stretch that little bit further to understand that new development needs to be redevelopment inside the Clear Edges in the Urbanside and in the Counrtyside, and

    That the result of new development must be Neighborhoods, Villages and Communties with a Balance of J / H / S / R / A, and

    With this new settlement pattern, the the key to Mobility and Access will be a Balance between the vehicle travel demand of the settlement pattern and the capacity of the Mobilty and Access system, and

    That a system to meet future economic and energy constraints will not be based on Large, Private Vehicles.

    OK it may be a bit more than a small stretch…

    EMR

  2. Anonymous Avatar
    Anonymous

    These would be very good tests for Gov Kaine’s 13 May presentation in Woodbridge.

  3. Anonymous Avatar
    Anonymous

    The complaints from the real estate industry suggest quite strongly that they cannot always pass along all of their costs in terms of higher prices for new homes. Gee, more lobbyist rhetoric is found to be contradicted by the facts.

    In the absence of manipulation, market conditions determine prices. Methinks the builders are eating a goodly portion of the costs for proffers, similar to what was found in the Contra Costa County, California study.

    TMT

  4. Jim Patrick Avatar
    Jim Patrick

    Anonymous3:42 may well be completely wrong. In a sluggish market, reducing prices increases volumes; conversely raising the price depresses trading farther. In an industry that makes its living on margin or percentage (real estate and developer) there may well be real cause for concern when government acts to depress an already low market.

    Jim – you must trust our fearless leaders more than most observers. The noise you hear is A) the usual ‘don’t raise our costs’ and B) the objection to state proffers over and above local proffers.

    The second objection is realistic. The state has a long and well-documented history of taking money and returning it —or the services— on a politically biased, inequitable and imbalanced system. Transportation is a good example.

  5. Groveton Avatar
    Groveton

    “The second objection is realistic. The state has a long and well-documented history of taking money and returning it —or the services— on a politically biased, inequitable and imbalanced system. Transportation is a good example.”.

    Yes – education is also a good example of this. Let’s have every region in Virginia raise its own taxes and pay for its own services – in total. No subsidies to anybody. Any cost that cannot be directly attributable to a region (e.g. governor’s salary) will be “charged back” in proportion to the population of that region.

    Jim Patrick – what do you think of this “no geographic subsidies” proposal?

  6. Groveton Avatar
    Groveton

    TMT:

    “In the absence of manipulation, market conditions determine prices. Methinks the builders are eating a goodly portion of the costs for proffers, similar to what was found in the Contra Costa County, California study.”.

    Eating is an interesting term. If you mean that the proffers are cutting into developers’ profits – I agree. If you mean they are losing money because of proffers – I disagree.

    Builders have a set of costs that associate with building a house. Let’s say the builder is building a “spec” house. That means he will build the house and then hope to sell it for a profit. The builder doesn’t know the ultimate buyer when the builder buys the land, clears the land, designs the house, builds the house.

    How does a builder think of this transaction? They assume a sales price for the house. Then, they add up all the costs (including any required proffers). The difference is the profit that the builder will make. The builder then looks at the amount of capital that will be tied up and for how long. For an expensive house, the builder may have $1M tied up in the house at peak financing. The savvy builder then considers alternate uses of the capital. It could be invested in a CD, in the market, in an Indian mutual fund, in oil and gas stocks, etc. If the expected return on the house is better than the alternative investments – the builder will build the house. If not, the builder will not build the house and will invest the capital in an alternate investment.

    So, assuming a rational developer (far more likely than an honest developer), the houses being built (proffers and all) must be expected to generate a better return than any other reasonable investment (after adjusting for risk). The fact that builders keep building (even with the proffers) means:

    1) Builders just don’t get the basic economics of their business and will build at a loss.

    2) Builders don’t understand the concept of alternative investments and commit their capital (by building a house) at a lower return than available elsewhere.

    3) Builders still make enough money (even after proffers) to generate a profit in excess of the profit that would be generated by the same amout of capital under an alternate investment.

    Which are they doing?

    I say 3).

    Builders normally make a great profit. Their supernormal profit cokes from:

    1) Zoning variances which allow them to buy lad below its rezoned value then rezone the land to a higher value. This supernormal profit must be lowered somewhat by the cost of political campaign contributions and possible bribes required to help ensure that rezonings are likely.

    2) Subsidized infrastructure. Builders do not pay the full costs of new infrastructure required by their building. For example, a multi bedroom home in an area with crowded schools will almost certainly require that new school construction be undertaken (in aggregation with other homes). Each kid in the new home will need a seat in school and the schools ae crowded. New schools need to be built and that need is created by new housing. The ongoing real estate tax may pay for the operation of a school but does not cover its building. Developers realize supernormal profits when they are able to build homes without paying for the obvious, necessary and required infrastructure that goes along with this home. This supernormal profit must be lowered somewhat by the cost of political campaign contributions and possible bribes required to help ensure that proffers stay unlikely.

    I believe that developers are currently building houses at less than supernormal profits due to proffers. Given their pig-like addiction to supernormal profits, they are disappointed by this. The figure that they have made their contributions and paid their bribes. They can’t understand how government officials are continuing to agitate for mandatory proffers after the government officials have been “bought and paid for”.

  7. Jim Bacon Avatar
    Jim Bacon

    Groveton, I like your analysis. Now, go test it by checking the profitability of publicly traded home building companies. NVR Homes, which has a large presence in NoVa land would be a good place to start.

  8. Anonymous Avatar
    Anonymous

    Mr. Bacon, you state: “Sadly, Gov. Kaine, who once campaigned on making the transportation-land use connection, appears to have abandoned the cause.”

    Gov. Kaine expanded the use of road impact fees in HB 3202 to help local governments pay for new roads/improve existing roads when the state could not. He endorsed the creation of Urban Development Areas and Urban Transportation Service Districts by signing HB 3202. Also, in 2007 he helped foster a re-write of the Highway Access Management Standard and Secondary Road Acceptance Standards to preserve the capacity of existing and future roadways.

    In 2006, he helped broker cluster zoning mandates, authority for transfer of development rights, and traffic impact studies.

    You will have to go back to the 1970s to find a period of time when more impressive land use legislation was enacted.

    TMT: In part, you are correct. In the Richmond area, Henrico County has zero cash proffers while Chesterfield’s are +/- $15,500, yet new comparable homes in Henrico cost as much or more as those in Chesterfield. Go figure.

  9. Larry Gross Avatar
    Larry Gross

    this is a really fine line but none-the-less a Constitutional one.

    And.. hold on to your hat, I actually agree with Roger Provo – at least as a second, alternate path to governance and decision-making.

    the first path is for the State to go back and merely ENABLE taxes for each locality to approve or not with the carrot/stick much like the VRE 2% gas tax and other “local option” taxes.

    In other words, you get to use the tax if you approve it locally by vote or referenda in each jurisdiction and you get to keep part of it and part of it goes to the regional authority – where just like with the VRE Unelected Board (and other regional boards) – they spend that money on narrowly defined purposes – like Transportation projects.

    If folks thinks this is still illegal, then the funding method for VRE itself – as well as other Regional Authorities are – also at risk.

    The second path that Rodger mentions is an elected regional board just for Transportation whose boundaries are defined by our existing Planning District Boundaries (Friendly amendment here – MPO boundaries – otherwise we’ll have a nightmare of overlapping and competing rules).

    Portland Oregon is the only citizen elected MPO in the country.

    Portland Oregon also puts to the voters major new spending and projects for approval.

    It’s not pretty – but it involves voters in both transportation and land use issues.

    I think it’s disingenuous on the part of those that say that the state should be responsible for – taxing locals and then turning right around and giving that money back to the locals to spend with only cursory approval of citizens via the current arcane process that virtually no citizen understands much less can influence.

    Six Year Road plans in Virginia are a joke in terms of meaningful citizen involvement.

    What this does is let local officials use transportation money for economic development while blaming VDOT for the traffic problems that are created.

    It’s really a bogus .. irresponsible approach to land-use decision-making in my view.

    If we want the state to tax for transportation then the state should also determine land use decisions.

    Take those decisions away from the localities and put them in the same hands of the folks who have to someone make limited transportation dollars “work”.

    In other words, whoever makes the land-use decisions needs to be accountable for the impacts to the transportation grid for those decisions.

    For years and years, I have watched local BOS do their own version of rope-a-dope with regard to essentially evading responsibility for their land-use decisions and blame VDOT.

    So.. yeah.. they’d love the State to take the hit for higher taxes for transportation instead of having to directly tax the locals to fix the problems caused by land-use decisions.

    Roger has advocated statewide land-use planning and if folks think about it – that’s what the Virginia Homebuilders have asked for – even though they may not realize it.

    By advocating for state control and sanctioning of impact fees, they are, in effect, inviting the state to further determine where those fees should be implemented and how much.

    so two potential paths –

    * enable local option taxes for regional transportation authorities (really just expanding the existing 2% gas tax option)

    * have regional authorities governed by elected reps from each jurisdiction.

    I suspect that the former is going to be the path of least resistance but one problem that it will not solve is the one is HR/TW where there is not unanimous support for regional authorities at the jurisdictional level.

    but you can’t really accomplish regional planning if half the localities in the region do not want to do it.

    Those jurisdictions still want VDOT to fund roads via an increase in statewide taxes… but I don’t think this is going to happen…either…

    The choice at the end of the day problem is going to be – the ability for the jurisdiction to
    impose local-option transportation taxes – or not.

    Most of RoVA, outside of the urban nodes, has virtually no interest in doing this – at least right now.

    So – in the end – this could end up being the creation/enabling of local option taxes – on a statewide basis… take the deal or not…

    Any group of adjacent localities that wants to take the deal… can.

    is whether or not -they want to do local option

  10. Larry Gross Avatar
    Larry Gross

    I apologize for the above OLD post… somehow it got dredged up…and used instead of what I had written..

  11. Larry Gross Avatar
    Larry Gross

    what I was TRYING to say..

    was that I think developers have a legitimate gripe in terms of the arbitrary and unpredictability of proffers.

    Two adjacent localities in the same housing market can have different proffer schedules for schools and roads.

    Then one or both of them can.. without any market/economy reason change the proffers….

    on the other hand.. localities are behind the eight ball on how to pay for 40-100 million dollar schools without going to the bond markets and having to raise property taxes to pay back the loans.

    and in smaller, faster growing localities – the debt load ratio can get you in fiscal trouble… and the only way out is very large property tax increases and that will help you find a new line of work.

    I think localities would go along with a state standardized approach as long as it did two things:

    1. – it recognized local cost factors – employment and cost of living

    2. – it was adjusted annually for inflation

    but I don’t see how this has anything to do with Sprawl – per se

    … unless you want to call all land development in bedroom communities as … “sprawl”…

    jeeeez.. I hope this is what gets posted…

  12. Groveton Avatar
    Groveton

    Interesting dinner in Denmark…

    Small country in Northern Europe / Southern Scandanavia …

    Population of 5 million …

    4 major cities with Copenhagen being the largest and best known …

    Considerable rural land as a percentage of total …

    Top income tax rate of 68% …

    Car purchases taxed at 180% of car cost …

    Significant VAT tax in place …

    About 1/4 of people voting work for the government in some capacity ….

    Social issues around immigration (foreign reidents are about 9% of total population) and relations between Christian and Muslim Danes…

    “In 2006 and 2007, surveys ranked Denmark as “the happiest place in the world,” based on standards of health, welfare, and education. The national capital and the largest city, Copenhagen, was ranked the third most liveable city in the world by Monocle magazine in 2007.”.

    People say socialism doesn’t work. It appears to be working in Denmark.

    And … suburban sprawl does not appear to be in the national vocabulary.

  13. Jim Bacon Avatar
    Jim Bacon

    Groveton, I would quibble with your observation that “socialism” appears to be working in Denmark. I would suggest that “market socialism” would a more appropriate term. The Danes are famous for their system of providing extensive re-training for people who lose their jobs — but setting unemployment benefits low enough that they are incentivized to get back to work instead of loitering around as a ward of the state. From my understanding (and I don’t pretend to be an expert) the private sector of the economy is very much geared towards capitalism and competes very effectively on the world stage. The Odense shipyards are world class.

  14. Jim Bacon Avatar
    Jim Bacon

    Anonymous 7:56, I credit Gov. Kaine early in his administration with making important contributions to land use: most particularly pushing legislation that requires VDOT to conduct traffic impact studies on major rezoning projects, and also his administration’s work on corridor management, as well as the items you pointed out. I have highlighted all of those initiatives in this blog and the e-zine. Of course, that was 2006.

    However, while Kaine did sign HB 3202, House Republicans did the heavy lifting on the land use legislation. Love it or hate it, they are the ones who deserve the credit/blame for it.

    The point of my post is not to disparage Kaine’s past accomplishments, but to ask, what has he done since? How is it possible to pass intelligent legislation on transportation funding on the state level without addressing at the same time the issues of infrastructure funding (mainly roads) at the local level?

  15. Anonymous Avatar
    Anonymous

    Mr. Bacon – In 2007 it was Gov. Kaine that expanded road impact fee authority from 8 to 57 counties. Check the bill history.

    It appears that you, like many these days, want an instant solution to all problems. Why cannot you give the land use changes of the last two years time to work? Cluster zoning mandate was not effective until July 2007; UDAs do not have to be designated until 2011; TDR legislation needs fixing and a legislative study commission will be looking at changes. Land use changes occur incrementally.

    It took a few years to get us in this mess and it will take a few years to get us out of it.

  16. Anonymous Avatar
    Anonymous

    “Eating is an interesting term. If you mean that the proffers are cutting into developers’ profits – I agree. If you mean they are losing money because of proffers – I disagree.”

    It is both. This has been evaluated and measured time and time again, in various places, using different experiments, and with similar results.

    When proffers or other kinds of impact fees or expenses are involved, the new owner pays a third of the cost and the previous landowner pays two-thirds, because with these expenses in place the developer won’t pay as much for the land.

    While proffers are sold and promoted as a tax on developers, they don’t pay it. Their margins are nto big enough to pay it. Instead it is really a tax on new residents, but mostly on (usually older) previous residents.

    Basically, the concept of proffers against developers is an outright lie.

    RH

  17. Anonymous Avatar
    Anonymous

    Ray – you are right to a point. If a builder owns land, pays proffers and market conditions are favorable, he/she will recover most of, if not all of , or even more than, the costs of the proffers in the price for the house/condo/etc. But if we change the conditions of the market, the builder may not be able to charge a price that would recover all costs, including proffer costs, and the same expected profit level. In some instances, the house will still be profitable, albeit less profitable, with the proffers. I’m sure that there are, however, instances where a builder loses money on a house. Sometimes, cutting one’s losses is the most that can be done.

    If we have a bad market and proffers, but our builder/developer has not yet purchased land for the next project, a couple of things might happen. The builder might still buy the land, but offer the owner less money. (The old landowner eats some of the proffer’s costs.) Or the builder might purchase land somewhere else. The proffers, in this case, hurt the guy trying to sell the parcel.
    Or possibly, the builder simply learns a new trade until the market improves.

    My only point is that the argument made by developers and builders that they can always pass along the costs of proffers is simply wrong. Sometimes the market just won’t permit it to occur.

    TMT

  18. Anonymous Avatar
    Anonymous

    “But if we change the conditions of the market, the builder may not be able to charge a price that would recover all costs, “

    Generally speaking, if he can’t recover all costs, he won’t build. His margins are too small and his risks and uncertainty are too large. there is too much “public participation” in his business.

    Builders usually don’t purchase the land until their project is approved: instead they buy a purchase option, or make the sale contingent on approvals.

    What might happen is that his costs go up, but his profit is the same on his portion: the earned value. In that cse his margin goes down, overall but his profit on his work is the same.

    What is more likely, is that his costs go up, and he adds his margin to the additional costs. This was documented in an Extensive article about Toll Brothers, ppublished in the NYT Magazine. “We love environmental regulations- they add to our profits.”

    SOME of what you say may happen. But my point is that this has been studied to death, and the result is that it is overwhelmingly locals who pay the costs, not developers. Either new locals who pay the higher home prices, previous locals who sold the land, or existing locals who pay higher real estate taxes based on the imputed higher value of their properties, which are in turn a reflection of artificially high new home prices.

    All this seems perfectly clear and logical to me, and it is reflected in things we can easily observe. Fauquier makes it hard to build, so we have more homes farther west, in Warren and beyond. We demand people buy larger lots, and that’s what happens. We demand runnoff control and storm drainage so builders wreck all the trees in order to comply. Someday the trees will grow back, and the naked subdivisions we have today will look more like Falls Church, with its heavy and mature urban forest.

    I don’t see why it is so hard to believe. Other than it kind of knocks back the popuar sport of developer bashing.

    RH

  19. Larry Gross Avatar
    Larry Gross

    We’re sorta treating proffers like they are some sort of a tax or penalty… an “added cost” for the developer .. and he gets nothing for it.

    Let me use an example.

    When a new home gets to the point where it needs water & sewer, there are substantial fees.

    We don’t call these fees “proffers” but they really function the same way.

    proffers pay for real live infrastructure that that home needs.. schools and roads.

    a seat in a school costs easily 40K – and even spread out over 30 years – the taxes on most new homes only cover about 1/2 of the cost.

    The proffer covers about 1/4 of it and existing residents cover the other 1/4.

    the proffer pays for something real..

    treating it like it’s a “fee” that hurts the developers “bottom line” , in my mind.. is like claiming that having to pay for water/sewer “hurts” the developers bottom line.

    well sure… and so do granite counter tops.. but what’s point?

  20. Anonymous Avatar
    Anonymous

    The granite top does not hurt his bottom line, because he sells it to his customer and gets paid for it.

    Now, suppose that one jurisdiction mandates granite counter tops. It still doesn’t hurt him, because he sells it to his customer, but it does raise the minimum price he could charge. As a result he might decide not to build or to build someplace else.

    Nobody is saying that water and sewer or turn lanes are not needed or shouldn’t be paid for.What we are saying is that it isn’t a tax against developers, it’s a tax against us.

    But, it is easy for politicians to raise the proffers becasue they are sold and marketed as if the developers pay them. It ain’t so, we pay them.

    ——————————

    “and even spread out over 30 years – the taxes on most new homes only cover about 1/2 of the cost.”

    What are you saying here?

    A few years ago homes were built thtonly covered have of their supposed cost. Then they doubled in value.

    Are they still not paying their cost? And over thirty years, long after it is no longer a new home, has doubled in value twice, and the kids are grown and gone and it still isn’t paying it’s way?

    Is that what you are saying?

    That 30 years later when the new home becomes one of the existing residents, then it is still not paying its own costs, but somehow it is magically paying half of real proffer cost for it’s “new residents”

    Is that what you are saying?

    Help me out with this one. This is a little piece of Larry Logic that is like a mobius bottle: there is no outside, only an inside.

    ————————-

    Bottom line. Developers don’t pay proffers, we do. When you go around asking for higher proffers “on developers” it is really higher taxes on yourself.

  21. Larry Gross Avatar
    Larry Gross

    I don’t have a problem with developers for the most part and yes.. just like all business pass on costs to customers.. so do developers unless they get caught in a shifting market…

    re: the numbers for 30 years

    In a large locality with a small growth rate – say Fairfax… a million people with a 1% growth rate -the debt load for schools and the payback is different than for a small locality.. with a high growth rate.

    A county of 100,000 with a 6% growth rate cannot obtain sufficient financing to stretch out the payback… so that housing values “catch” up.

    At what point Loudoun County was building MORE than one new school per month – at 50-100 million per…

    that affects their debt-ratio which in turn affects how much money they can borrow and for what rate.

    make sense?

  22. Anonymous Avatar
    Anonymous

    “so do developers [pass along their proffer costs] unless they get caught in a shifting market…”

    My point exactly.

    They are now caught in a shifting market, but are still claiming that they can pass along all these costs in their prices. That’s simply wrong. The impact fee/proffers are reducing their profits or, in some instances, increasing their losses. I’d respect them if they actually told the truth.

    In more normal market conditions, there are studies that indicate the economic incidence of impact fees/proffers falls mainly on new home purchasers and sellers of land, but, even then, builders cannot recover all impact fee costs in higher prices. Studies have also found that impact fees boost the sales price of existing homes, contribute to measurably lower real estate taxes for existing residents and deter suburban sprawl. Studies have also found that, in real boom markets, builders can often recover more than their actual cost of impact fees.

    All things considered, I think that most people are better off with impact fees or cost-based proffers.

    TMT

  23. Larry Gross Avatar
    Larry Gross

    what if water/sewer was not bundled in the price of the house and instead was a fee that had to be paid to get an OP?

    That way the developer would have nothing to do with it.

    Now, let’s do the same deal with proffers.

    It becomes the buyer who must directly pay the proffer fees at closing… along with the water/sewer fees.

    So.. you go to closing.. and you have line items…

    one is for the house and lot
    another is for water/sewer
    another is for the title search
    and another line says this:
    “Community services availability fees”

    each one..you write a check for.. or you write a check for the grand total and the lawyer then pays the separate bills.

    The county is charging you for the the capital costs associated with the services that you will need to occupy that home.

    so.. under the community services:

    a libary fee
    an EMS Fee
    a school fee
    a road fee

    each of these is the pro-rata share for that buyer for what it actually costs the county to provide them.

    Presto – changeO – no more proffers or impact fees to confound developers….

  24. Anonymous Avatar
    Anonymous

    “that affects their debt-ratio which in turn affects how much money they can borrow and for what rate.

    make sense?”

    Maybe, except Loudoun county has a AAA bond rating – because they (have been) growing so fast there is little risk they won’t be able to pay their bills.

    What makes Stafford any different?

    RH

  25. Anonymous Avatar
    Anonymous

    “So.. you go to closing.. and you have line items…”

    And one of the line items is that you have the right to subdivide x number of times. Regardless of what new neighbors think in the future.

    One line item gives you a 1% credit against future fees for each year one of your deed subdivision rights is not used. (Remember what you said about ROVA having paid for their roads over the last hundred years or so?)

    The calculation differentiates between service fees and capital expenditures.

    Your share of capital expenditures decreases if growth increases after you get hit.

    Your share of capital expenditures is reduced according to how fast your property value increases over time.

    Your share of capital expenditures is reduced by the amount that previous residents take advantage of (the new swimming pool or road or whatever).

    Now you have my attention.

    RH

  26. Anonymous Avatar
    Anonymous

    “So.. you go to closing.. and you have line items…”

    And one of the line items is that you have the right to subdivide x number of times. Regardless of what new neighbors think in the future.

    One line item gives you a 1% credit against future fees for each year one of your deed subdivision rights is not used. (Remember what you said about ROVA having paid for their roads over the last hundred years or so?)

    The calculation differentiates between service fees and capital expenditures.

    Your share of capital expenditures decreases if growth increases after you get hit.

    Your share of capital expenditures is reduced according to how fast your property value increases over time.

    Your share of capital expenditures is reduced by the amount that previous residents take advantage of (the new swimming pool or road or whatever).

    Now you have my attention.

    RH

  27. Anonymous Avatar
    Anonymous

    I have a problem here.

    On the one hand we claim that more densely populated places are more efficient and more functional.

    On the other we claim that growth is bad and expensive. That NEW residents (only) are not paying for their full costs. (We’ll conveniently ignore the benefits they bring).

    If the first one is true then, doesn’t that mean that growth should LOWER the costs for existing residents? And shouldn’t they be willing to contribute to the costs of growth that will increase functionality and efficiency, to their own benefit?

    For example, when I go to the Marshall Library, I may share it with five other users, on a given night. It is maybe a $200,000 facility, recycled from a former school.

    When I go to my library in Annandale, it may have a hundred users and maybe it is a $4 million dollar facility.

    And at the same time, don’t such facilities INCREASE the value of their homes, which they will eventually PROFIT from?

    Or is it that the hypothesis is disproven: more densely polulated places are NOT more functional and efficient?

    RH

  28. Anonymous Avatar
    Anonymous

    “I’d respect them if they actually told the truth.”

    Wait a minute. I don’t see ANY developers making that claim.

    I see Larry making that claim, which I dispute. Are there any developers in the house?

    What I see is what I claimed above. If developers cannot retrieve their costs, they don’t build. Or they build somepalce else. Until demand and price will support the costs (imposed by government), in addition to their costs of construction.

    Am I wrong, or did housing starts suddenly spurt while I wasn’t looking?

    Requesting increases in proffers is requesting a tax increase on ourselves. It’s a new tax. Accept it: this has been examined and measured to death. In multiple cities, with various growth rates, and differentiated growth restrictions.

    As far as I can tell, the facts DO NOT (generally) support the popular perception that prooffer are good for existing residents.

    That isn’ the same as saying that unbridled growth is always good. I beliee there is a point at which density is no longer cost effective, functional, efficient, green, safe, and comfortable.

    RH

  29. Larry Gross Avatar
    Larry Gross

    It is simply billing for infrastructure – period.

    and you can’t subdivide on have density without regard to making decisions about how much capacity to plan for.

    so how much subdividing/density is possible is determined by the scope and scale of the infrastructure that has to be planned, financed and built.

    The “availability” fee is the cost of what it cost to make that infrastructure available to you and it does not include the usage costs.

    why do you feel that someone else should pay for these costs?

    what process would you use to plan to provide infrastructure that would allow density/subdivision?

    for some reason you seem to have a philosophy that infrastructure should be paid for by other than those that need it.

    Proffers and impact fees are simply the fair and allocated charges necessary to pay the debt that was incurred in building the infrastructure.

    They are not “penalties” for density any more than when someone charges you to replace your furnace or put tires on your car.

  30. Rodger Provo Avatar
    Rodger Provo

    To All –

    Larry Gross thanks for the kind
    words deserving publication twice
    on Bacon’s Rebellion Blog.

    EMR I agree with your first posting
    in response to Jim Bacon’s piece –
    new growth must take place in older
    established areas in our cities and
    suburbs.

    Arlington County and Norfolk are
    great case studies relative to how
    this can work.

    Climate issues and high energy costs will force all of us to
    rethink how we live, play and
    work.

    I suggested in an e-mail this past
    week to Bill Howell (I live in
    Fredericksburg and he is our
    delegate) that the state should
    use this economic and environmental
    climate to promote that agenda,
    including:

    -encouraging private and government
    employment centers to be built near
    affordable housing markets

    -and encouraging new development to
    be used to rebuild our cities and
    older suburbs.

    Best wishes to all of you.

  31. Anonymous Avatar
    Anonymous

    Ray – I’ve spoken with a number of Virginia state legislators about proffers and impact fees. While this is hearsay, I’ve been told to my face that the real estate industry is roaming the halls of Richmond claiming that proffers and impact fees are passed through to purchasers (no mention of people selling developible land) all of time.

    Perhaps, I misunderstood. Perhaps, each of the legislators either misunderstood or were fibbing to me. Or just perhaps, the real estate industry lobbyists are making unsupportable claims.

    The problem in Fairfax County is that existing residents are under assault by development. We don’t have the infrastructure to support today’s population of residents and workers. Our taxes regularly increase to pay catch-up. But the real estate girls and boys are proposing even more growth.

    As I cited earlier in the week, there was a proposal before the Tysons Land Use Task Force that would increase daily car trips by 1,000,000 each day. The same proposal would require us to pay for 2.4 new grade schools, 0.5 new middle schools, and 0.5 high schools. It would also require $40-50 million to increase sanitary sewer/water treatment facilities. VDOT has just provided cost information showing that the costs for some, but not all, of the road, highway and interchange projects necessary to permit Tysons Corner to grow just to the size proposed in 1994 is $580 million. What would it cost to bring those FARS from c. 2.0 to 4.5-5.0?

    Then toss in the costs for Metrorail. The landowners’ tax liability is capped at $400 million.

    Who should pay for this infrastructure? Existing residents? If so, why? What do we get out of this?

    Save Fairfax; pave the Piedmont!

    TMT

  32. Anonymous Avatar
    Anonymous

    Like I say, this has been pretty well studied to death. Whatever anyone says about the political situation, it is pretty much psoosible to go in after the fact and study sales, taxes, etc. and then deconvolute the truth.

    I pay taxes in Fairfax, too, so I understand what you are saying. I dont think existing residents should pay for everything, nor do I think they should get off scott free, nor do I think they should be taxed on imputed value (which, as current events show, they may never see).

    All I’m saying is that if we allow people to convince us that “the developers should pay for everything new”, then we are allowing ourselves to be conned.

    No one should be cheated, and no one should get a free ride. But in order to do that, we need to be single-minded about seeking the truth, instead of promoting dogma and sales slogans.

    RH

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