Sen. John C. Watkins, R-Powhatan, has submitted what could be the most important legislation of the 2008 General Assembly session: a bill that would transform the way proffers and impact fees are administered across the state.
The bill addresses one of the most critical issues facing Virginia today: how municipal governments pay for the infrastructure (roads, schools and public safety buildings) required to support growth. Watkins’ status as one of Virginia’s most experienced legislators and support from the Home Builders Association of Virginia guarantees that the measure will receive serious consideration.
(The bill hasn’t been posted online yet, but I have a copy, courtesy of Andrea Epps, of Watkins’ summary and some explanatory remarks. For details, click here.)
As Watkins describes the legislation, it would eliminate cash proffers (while still allowing in-kind, on-site contributions such as parcels of land) and substitute impact fees on residential and commercial development. Here’s the biggie: The impact fees also would apply to by-right residential and commercial development, currently exempt from either proffers or impact fees. The bill would put all forms of development on an equal footing.
Says Watkins: “The overall objective of the proposed legislation is to broaden the base of those that make growth-related contributions to the cost of public infrastructure, and consequently to reduce the per unit cost.” Using the example of Chesterfield County, which resides in his senatorial district, Watkins said that Chesterfield collected $27.1 million in proffers between fiscal 2004 and 2007. Under his legislation, the county would have collected $88.7 million.
Key features of the bill would:
- Eliminate cash from the proffer system. But grandfather any existing cash proffers that have been pledged.
- Retain the non-cash proffer system. The value of non-cash proffers would be credited against the impact fees.
- Enact an impact fee statute to cover roads, schools and public safety buildings. All cities and high-growth counties (5 percent population growth per decade or more) with populations over 20,000 could impose impact fees. Ordinances would apply “to all residential and commercial rezonings and by-right residential and commercial development (so-called stale zoned land) within an impact fee service area….”
- Require localities outside Northern Virginia and Hampton Roads to enact a Real Property Relief Fee. Property owners would pay 20 cents per $100 on the sale of their property to be deposited in a locality’s capital improvement fund. (NoVa and Hampton Roads already have such a fee.)
Here’s where it gets complicated. Ordinances would create “impact fee service areas.” The Watkins document I link to does not explains how these service areas would be set up. Would they be synonomous with the Urban Development Areas created under 2007 legislation? I don’t know. Additionally, Watkins alludes to Level of Service (LOS) requirements within the service areas, as well caps on impact fees.
Bacon’s bottom line: This sounds like a promising start, although the devil is in the details. Watkin’s proposal would advance the objective of “making growth pay its own way,” and it would put by-right development on the same proffer/impact-fee footing as rezoned development. By doing so, it would dramatically shift the balance of market power away from the scattered, disconnected pattern of growth associated with by-right development in favor of larger, more rationally conceived development projects. (It is no accident that Watkins has a big financial stake in such a planned development, the Watkins Center, in Chesterfield County.)
This bill is no cure-all by any means. But it does address one of the thorniest problems related to growth: how to pay for it. My initial reaction is favorable, although I want to hear what others have to say. If Bacon’s Rebellion still had outside funding, I would sic Bob Burke or Peter Galuszka, or both of them, all over this story to make sure all facets of the proposal were properly understood. Alas, we no longer have those resources, so we will have to content ourselves with tracking the bill on the blog. Hopefully, readers will contribute their insight.
Update: The bill, SB768, has been filed.