Bacon's Rebellion

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Kaine on Land Use: “This is Not the Work of One Session or Two.”

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by

James A. Bacon
in

Lost in the controversy over transportation funding is the fact that the GOP transportation bill, as amended by Gov. Timothy M. Kaine, will make significant changes to the way local governments approach land use and transportation. We’ve chronicled that un-sung aspect of the transportation debate on this blog, mostly from a Republican perspective, mainly because Republicans got out front on the issue.

Now, we hear from Gov. Kaine. Responding to a question from yours truly during a blogger conference yesterday, Kaine praised the land-use elements of the controversial HB 3202. The bill has several worthwhile features, said Kaine, who gave specific credit to Del. Clay Athey, R-Front Royal, for his role in writing the legislation.

Said Kaine: “UDAs and UTSAs are very good ideas. We’ve turned the corner and we’re embracing the notion that land use has to be a part of transportation.”

By UDAs, Kaine was referring to Urban Development Areas, which would require fast-growth counties to create districts designed to accommodate future growth. Local government would concentrate their infrastructure in the UDAs and encourage more compact, New Urbanism-style development, while developers would be forewarned that efforts to develop outside the areas would not be supported. Kaine liked the idea so much that he expanded the eligibility to far more counties and cities than the Republican authors originally contemplated.

By UTSAs, Kaine was referring to Urban Transportation Service Areas, which would typically overlay the UDAs. Kaine amended the legislation to expand the authority of local governments to levy impact fees. He expects that most eligible jurisdictions will jump at the chance “in fairly short order.” Impact fees will help raise revenue for transportation projects and offset development taking place outside the UTSAs.

I don’t yet fully understand the impact-fee aspect of the legislation, but I anticipate that it could become the most far-reaching piece of the bill. We can anticipate lots of sturm and drang as local governments debate setting up UTSAs and adopting impact fees, especially if local home builders associations mobilize to oppose them. Normally, I’m leery of impact fees, which can load disproportionate impact of new development onto developers and newcomers, increasing the cost of real estate and making housing unaffordable. But they may prove worthwhile if they’re used as a cattle prod for developers to create more balanced, more compact and better connected human settlement patterns.

Perhaps the most encouraging news from the Governor is that the current legislation is not the last word on land use reform. Last year, the state broached land use issues when it passed a bill requiring the Virginia Department of Transportation to analyze the regional traffic impact of rezoning projects, Kaine said. This year, UDAs, UTSAs and impact fees constitute another step forward. Looking ahead, Kaine said that his transportation accountability commission is looking into land use issues as well. “I think there will be more [legislation] to come. This is not the work of one session or two.”

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17 responses to “Kaine on Land Use: “This is Not the Work of One Session or Two.””

  1. Jim Bacon Avatar
    Jim Bacon

    I posted this item earlier this morning and somehow Blogger zapped it, along with a handful of comments. I have resurrected the original post from Waldo’s blog aggregator — God Bless, you Waldo — but could not save the comments. Sorry, folks.

  2. Tyler Craddock Avatar
    Tyler Craddock

    Jim,

    There are two impact fees in the Governor’s substitute. One is the authrority for by-right agricultural parcels outside of UTSD’s as you seem to reference in your post. The other is an expansion (with modifications) of the existing road impact fee statute that currently only applies for the most part to Northern Virginia localities.

    I did an off-the-cuff summation of some of the land-use highlights (please pardon the grammar as I did this on the fly and I am elbow deep in alligators at the moment):

    Urban Development Areas
    •Population Brackets – requires for localities with at least 20,000 people and 5% population growth OR 15% or greater population growth
    •The planning horizon for the area required to be designated for future growth may be as for a short a time as 10 years, but no more than 20 years (it was 20 years in the original bill)
    •Clarifies that the area is to be for a minimum of 4 units/acre gross for residential and a minimum gross FAR of .4/acre for commercial
    •Directs that state transportation, housing and economic development funding is to be directed to the UDA to the extent possible

    Transportation Impact Fees
    •Expands existing road impact fee authority to many more localities
    •Applies to commercial and residential development
    •Population Brackets – same as for UDAs (localities with at least 20,000 people and 5% population growth OR 15% or greater population growth)
    •Based on roads benefiting new development (the old language was roads “necessitated by and attributable to”)
    •Strikes language that prohibited them from being used to fund improvements to existing roads
    •Service areas and credits must be spelled out in the Comprehensive Plan
    •Allows up to a 20-year planning horizon for computing road needs in an impact fee service area (it is 10 years in the current statute)
    •Fees are paid at building permit (it is at the time of Certificate of Occupancy in the current statute)
    •Allows a credit for cash proffers, special tax districts and CDAs

    Urban Transportation Service Districts
    •Allows for their creation – would apply in Chesterfield County to transportation only, but for a full range of services (roads, schools, public safety, etc.) in other places where UTSDs are allowed
    •Still allows for road impact fee authority on by-right development of agricultural parcels for residential– while crediting cash proffers, the credit language does not include other items in the broader authority that is proposed

  3. Roll Tide Avatar
    Roll Tide

    Mr. Bacon,

    I would also like to add to Mr. Craddock’s good summary of Urban Transportation Service Districts.

    First, it only applies to counties over 90,000 population – basically the six largest counties in the state – that do not currently maintain their own roads.

    Second, if a UTSD is created, the legislation specifically requires the county to take over the maintenance of the roads within the service district.

    Third, if a UTSD is created, the county would receive from VDOT an amount equal to the Urban Maintenance Allocation, currently paid only to cities and large towns, for road maintenance in the serice district.

    Finally, if a UTSD is created the county is authorized to levy an additional real estate tax within the district to pay for road maintenance.

  4. Tyler Craddock Avatar
    Tyler Craddock

    Roll Tide,

    Thanks for the compliment, and thanks for expanding on the various and sundry provisions about UTSDs.

    -tc

  5. Jim Bacon Avatar
    Jim Bacon

    Gentlemen, At one point in the legislation, they were referring to Urban Transportation Service Areas (UTSAs). Are they calling them UTS “districts” now?

  6. Groveton Avatar
    Groveton

    Jim:

    I wonder if you can really talk about land use reform without also talking about income distribution. The following article from the NY Times is, in my opinion, poorly written but full of interesting facts:

    http://www.nytimes.com/2007/03/29/business/29tax.html?ei=5065&en=f30aed8087a73065&ex=1175745600&partner=MYWAY&pagewanted=print

    The demarcation point between the top 10% of American incomes and the lower 90% is earnings of about $100,000 per year. Given the average incomes in counties like Fairfax and Loudoun it seems that these localities are far, far from the American income averages. I suspect that other urban and urbanizing counties in Virginia are also far from the statistical American average.

    Doesn’t the strategy to incent people toward more functional settlement patterns depend a lot on the disposable income of the people in question? For example, Loudoun County is reported to have a median income of $98,000 (although I believe this is family rather than individual income). The American top 10% for income (individual, I believe) is $100,000. Loudoun County’s residents are very, very skewed from the US averages. Convincing them to behave in a more functional manner may be a far different thing than convincing a county full of people who are closer to the US income averages – no?

    Remember – the rich are different from me and you – they have more money.

    Just a thought.

  7. Roll Tide Avatar
    Roll Tide

    Mr. Bacon,

    It is hard not to get confused with the nomenclature when you work in land use and planning.

    In HB 3202 there are Urban Development Areas to be designated as suitable for high growth.

    Not mentioned prominently but referenced in the bill are Impact Fee Service Areas where road impact fees may be levied and used.

    Finally, there are Urban Transportation Service Districts, which are available to six counties.

  8. Larry Gross Avatar
    Larry Gross

    These are tools …. for planning.

    I wonder how these tools differ from what is available already to towns, Alexandria and Henrico.

    Are they, in fact, based on what cities have in their toolbox already in Va?

    But if I remember correctly, besides Stafford, most NoVa counties had the right to assess road impact fees to start with – and chose not to employ them.

    Stafford found that doing so required a high level of planning similiar to what it sounds like will be required by UDAs and UTSAs.

    What I have observed locally with fast growing counties is that they were not prepared to plan effectively.

    Not only did they not have adequate professional staff but they lacked policies and ordinances and more than that – they lacked a will at the BOS level to do it.

    They actually did not want to be burdened with thinking about the longer-term consequences of their land-use decisions.

    They preferred to blame VDOT and like you read right now in HR/TW – you can still hear the phrase “we don’t do transportation – VDOT does”.

    What you have in HB 3202 is not something that localities asked for nor wanted because it puts the onus on them to plan better using these tools.

    It will be interesting to see if they are embraced and adopted because as I said a few lines up – if not mistaken Fairfax and Prince William were granted the ability quite some time ago – prior to Stafford to assess road impact fees and chose not to.

    is there anything in HB 3202 that actually REQUIREs adoption?

    … you can lead a horse to water but……

  9. Larry Gross Avatar
    Larry Gross

    One of the things that a localities Comp Plan is supposed to do is to lay out the intentions of the county with respect to when, where, how growth will be directed.

    What has been lacking was a way to functionally accomplish what it appears that UDAs and UTSA may be able to.

    I know our own county has just about finished updating it’s Comp Plan – so now – it will be – back to the drawing boards… but not before someone comes in front of the BOS and “explains” how to use these critters.

  10. Ray Hyde Avatar
    Ray Hyde

    Groveton raises a point.

    How are the rich or merely well off going to react when they find their choices are largely restricted to four units per gross acre?

  11. Larry Gross Avatar
    Larry Gross

    Well.. they’d react as they do everywhere – worldwide – they’ll find a way to get what they want.

    Money can overcome many obstacles.

    The market will always provide the optioins that people desire – for a price and those with money have the most options.

    Am I detecting a concern that
    UDAs and UTSAs are a bad thing?

    I guess I thought that better planning to ensure that infrastructure is upgraded and brought online in a timely manner consistent with ongoing growth is – a desireable thing – an improvement over what we do now.

    No?

  12. Roll Tide Avatar
    Roll Tide

    Mr. Gross,

    According to planners in Virginia, all localities can create UDAs right now; in fact, what is in HB 3202 was modeled on Frederick County. Several other counties have UDAs right now, but they call them by a different name.

    At the present time, eight counties are authorized to impose road impact fees, but Stafford is the only one that does. The governor’s amendments extend that authority to about 50 more as well as several cities and towns.

    Why is Stafford the only one? Planners say it is because the current law was drafted by the development community. The existing law has several problems, and the governor’s amendments seek to address some of those. Road impact fees will remain expensive to administer. Rumor has it that Stafford County has a consulting firm and at least one planner assigned full time just to comply with the administrative requirements of the law. Download the last version of HB 3202 and see what steps are required to adopt and maintain road impact fees in a locality.

    Why is the current law not being used? Other than the administrative requirements, localities could not impose impact fees on a development that paid any, any cash proffer; the impact fee had to be used for new construction and not to improve existing roads even if new development made the existing road worse; and localities could not collect enough impact fees from development to pay for the necessary road improvements. It has been reported that several counties did extensive studies on the current law and concluded that it was flawed. Perhaps the changes proposed by the governor will induce them to reconsider their decision.

    The changes in the road impact fee law may induce some localities to adopt them, but due to the administrative complexity, it is unlikely that the counties that are just beginning to see growth pressures – Shenandoah, Orange, Amelia, etc. – will not due to the administrative nightmare that the governor’s amendments are reported not to fix.

    What is now required of many, but not all local government? Cluster zoning from last year, UDAs from this year. Optional? Road impact fees and transfer of development rights from last year. UTSDs, along with their broad impact fee authority (except for Chesterfield), extra tax levy, VDOT urban maintenance allocation and road responsibility, is authorize for only six counties and they have only 18 months in which to create the districts.

  13. Larry Gross Avatar
    Larry Gross

    Roll Tide. Thank You!

    Yes – the problem is that using the tools in planning is complex and difficult both administratively and technically.

    The fundamental flaw, in my view, all along is that proffers and other per-project fees for infrastructure were limited for the most part to the immediate area where the project was located.

    So .. you’d have this road – all of it slated for developed .. and everyone realizing that the road would need to be upgrade along it’s length… but no one project could pay into a fund to do it and it made no sense to expand the road to 4-lanes ONLY in front of the new business.

    I look at this and think – “what if we did water/sewer this way?”

    With water sewer – we allow localities to collect a “hook up” fee that goes into a CIP where planners and engineers decide the priorities of where/when to spend the CIP money to expand/improve the overall system.

    and further – suppose we did water/sewer the way we do roads with respect to VDOT?

    What if the locality approved rezones and land-use but a state-level agency was responsible for water/sewer expansion and maintenance?

    UDAs and UTSAs will give localities the ability to do their roads.. similiar to how water/sewer is done but it will require an equivalent level of planning and operation functions for it to be effective.

    These things – not viewed as opportunities by some BOS but rather burdens.

    One of the problems – is if a county would like to “use” these things – who can they consult with to determine how to use them?

    You’d need not only a lawyer but one with extensive planning and Va law experience.

    What would be especially helpful would be for a team of GA Staff people (the ones who wrote the legislation) to be able to brief localities on the new laws and how to use them.

  14. Roll Tide Avatar
    Roll Tide

    Mr. Gross,

    Local government have the ability to collect cash proffers and ‘bank’ them until there are sufficient funds to pay for the needed public improvements. Localities have to do that since it is awful hard to build one-eighth of a high school.

    There is noting right now that prevents counties from doing their own roads. Many of the large counties spend tax or bond money on road improvements and hire either VDOT or private contractors. What is preventing them is the fact that the state is more than happy to give them the responsibility, but not the county’s share of the funding. That is known as an unfunded mandate.

    Also, if your county came along and created a special tax district to include you and your neighbors and said that your real estate tax would be raised to maintain and improve the roads in your area, you might like to see a commensurate reduction in your state taxes since you are paying for VDOT to provide the service.

    Finally, understand that even in those cities, towns and two counties that have the road construction and maintenance responsibility the almost all of them have to add local tax dollars in order to provide the service. The state funding is not enough to meet the needs. So, it is likely that even if the state gave counties the responsibility and the funds due, local tax dollars would have to be added for that service.

  15. Jim Wamsley Avatar
    Jim Wamsley

    The governor made the following changes in “impact fee.” See § 15.2-2318. Definitions.

    “”Impact fee” means a charge or assessment imposed against new development in order to generate revenue to fund or recover the costs of reasonable road improvements [necessitated by and attributable to] benefiting the new development. Impact fees may not be assessed and imposed for road repair, operation and maintenance, nor to [expand existing roads] to meet demand which existed prior to the new development.”

    Do these changes adequately address the concerns with the current code?

  16. Larry Gross Avatar
    Larry Gross

    Roll Tide.

    My understanding was that proffers for transportation were restricted much more so than proffers for schools or fire/rescue/ems.

    My understanding is that transportation proffers can only be used within a very few miles of a development and not be used in a general transportation CIP fund even for a specific road that the project was on.

    My understanding was that the ONLY viable path that most localities had for improving an entire corridor was to go through VDOT and the 6yr plan and that the proffers associated with it would likely expire by the time VDOT go to doing the work.

    In other words. You could collect the proffers but then you’d have to give them back.

    I believe that is why my county starting using CDAs instead.

    not true?

  17. Roll Tide Avatar
    Roll Tide

    First, the changes highlighted by Mr. Wamlsey address one of the concerns with the current road impact fee law. And in response to Mr. Gross, the concern he identified is one that local governments had with the currrent impact fee law.

    The current law requires local governments to designate impact fee service areas, to conduct an assessment of the road improvement needs in that area using a methodology specified in the law, and to only apply the collected impact fees to address any deficiencies that result from the new development.

    The governor’s proposed amendments do nothing reduce the administrative process noted briefly above. However, the change highlighted by Mr. Wamsley helps, as I said. The governor also proposes to remove the provision that forbade collection of impact fees from developments that paid any cash proffers, but the local governments must give credit against the impact fee for any road or other transportation improvement proffer paid or improvements made or dedicated. In addition, while local governments have to refund unused impact fees after fiften years, the governor’s proposed amendment add that if, after seven years, the locality cannot use the impact for a specific road project, the monies can be applied to any secondary road project within the impact fee service area that would benefit the development that paid the fee.

    As Mr. Gross indicated some localities are using CDAs, but those are similar to UTSDs. Both impose an additional real estate tax to pay for road improvements, or, in the case of the CDA, any other infrastructure improvments. One difference, however, is that bond rating agencies factor CDAs into a locality’s bond capacity since if the CDA should falter on its bonds, the burden of paying the bonds would ultimately fall to the locality. Such is not the case, unless the locality used UTSD additional revenues to back bonds.

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