Monthly Archives: March, 2008

C-ville Places in Top Twenty for Starting a Business

CNN and Money Magazine has put together a list of the top 100 places to start a business and raise a family.  As with many of such lists, Charlottesville placed in the top twenty.  In addition, it is important to note the list considered the entire metropolitan statistical area (MSA) so we’re all Number 18.

As a general rule such lists do two things: create controversy and sell magazines.  This list has achieved the first of these goals (based on a visit to the magazine’s blog) and I anticipate in time it will achieve the second goal.

Of interest to me is that Charlottesville is not the only Virginia city on the top 100 and in fact C-ville is not the highest ranking Virginia city.  The Virginia cities in the top 100 include Virginia Beach (14), Charlottesville (18), Leesburg (31), and Blacksburg (43).

It is not surprising to find that Bert Sperling (who named C-ville the best place to live a couple of years ago) was a significant part of the selection criteria.  According to the website the list was developed by ranking  the “296 Census-designated metro areas by business friendliness (Launching Score, % New Businesses) and lifestyle offerings (Living Score). Then, through reporting, we picked the town within each of the top 100 metro areas that best blends business and pleasure.”

It is relatively clear that the study group would be challenged to determine the “business friendliness” of our MSA.  Most of the businesspeople I speak with have variant views of the different localities included in the study.  Many cite the higher level of zoning complexity and detailed requirements in Charlottesville and Albemarle and the lack of significant infrastructure in the outlying counties. 

I am sure the level of entertainment and social activities moved Charlottesville up the list.  With the opening of The Paramount and The John Paul Jones Arena coupled with the vibrant community theaters and the just concluded Festival of the Book our glass does runneth over with opportunities from Professional Bull Riding to deep academic discussions of Aging in Place (two choices over the past couple of days). 
 

Philosophically it is amazing the very existence of  this list (and others like it) awakens a competitve spirit in the region.  If we are not number 1, why not?  Aren’t we the greatest? 

I think it is important to look at such lists with a long lens and consider the reasons we, for the most part, choose to live here.  Then using the list see if there are characteristics from the MSAs above us we should or should not choose to emulate. 

While I did not join the chorus bemoaning Charlottesville’s selection as the best place to live a few years ago,  I am happy to be #18.

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Do Cows Go to School?

Albemarle County’s Land Use taxation policy is again in the news as a resident raised the issue at the Board of Supervisors meeting earlier this month.  Charlottesville Tomorrow has the podcast. 

The concept of Land Use Taxation, where land receives preferential property tax treatment based on its use, was created by the Virginia Legislature in 1982.  The concept was, and is, to provide tax benefit to those land owners who were actively pursuing agricultural enterprises.  By providing this incentive, the financial pressures to develop such farm land would be reduced.   

This high minded view of preferential treatment to encourage one use over another is interesting from a social engineering/market interference angle but The Free Enterprise Forum tends to think of this policy on a crass economic benefit model. [It is important to note, the primary residence and surrounding two acres of the parcel are taxed at the regular real estate tax rate.] 

Albemarle County Supervisor Sally Thomas and I tend to agree on the economic benefits of land use taxation.  Ms. Thomas is often quoted stating that “Cows don’t go to School”.  I would add that as a rule cows, sheep, and other agricultural enterprises do not place significant demands on the county departments of police, fire, community development or social services.   

The idea is that any land in land use taxation status is, by virtue of its use, not generating significant costs to local government.  While this is true for direct costs (schools, fire, rescue, transportation infrastructure), it is not true for the indirect, but very real cost of the revenue sharing agreement between the City of Charlottesville and Albemarle County.     

Some are suggesting significant changes to the current program.  One concern noted is the land use tax credit being given to parcels that have no further actionable division rights.  On the surface this argument makes sense to me but what of the many land owners who have voluntarily placed their land into a conservation easement, thus extinguishing their actionable development rights?   

Another suggested reform is to require the parcels be larger than the current 20 acres in the ordinance.  While I recognize the goal of this line of thinking, I am told that the fastest growing agricultural enterprise in our region is wine grape production.  As one who has worked in the Virginia wine industry for many years, I know several winery owners who use several separate small holdings to produce excellent wines.  As most of these vineyard holdings are less than the currently required 20 acres, I would be opposed to increasing the parcel size required for land use.  

What then, if anything, should be done to improve the land use taxation program? 

The Commonwealth of Virginia has recently mandated that all localities of a certain level of population increase determine and enact urban growth areas where the localities wish to see development occur.  Albemarle County completed such determination in 1980.  It is amazing to me that the State mandates land use tax be permitted in BOTH the growth areas and the Rural Areas.    I contend that it is reasonable to go to Richmond and request the authority to remove the requirement that Land Use Taxation must be offered in both the development areas and the rural areas. 

If such action is successful, I would anticipate the limited number of agricultural parcels receiving land use in the development areas will be under increased economic pressure to shift from agricultural to residential (or commercial) use.  While the potential loss of development area farmland will likely be met with an uproar from the neighbors, it would be one more tool to encourage development in the development areas.   

If Albemarle County is interested in increasing development in the development areas, I believe this is a proposal that can be widely supported.   

The Cost of Complexity

By Neil Williamson

The creation of laws and ordinances has often been compared with sausage making. In reality it is nowhere near as organized or efficient as your typical pork packaging plant.In addition, the process rarely includes a clear understanding of the further implications of regulation on the end user. Just last week, an Albemarle County Supervisor asked me if I thought the proposed cost of a rural residence erosion and sediment control (ENS) permit was too high at $230. I explained the real cost impact is the designing of the ENS plan which would far outweigh the cost of the permit.

Last week, I heard from an Albemarle County rural landowner who is working to build a house in time to have her children start in a new school this fall. As she is one of the first landowners to go through the new regulatory labyrinth she is encountering significant unforeseen delays to starting construction. This is placing her children’s academic placement in question (as she currently lives in another school district).

A couple weeks ago, I was at a meeting with a Supervisor from one of the outlying counties and we were discussing the size of the Albemarle County Community Development staff. This Supervisor was amazed at the significant number of people dedicated to this task and wondered aloud why it took so much staff. The answer is the high level of detail required in applications and the amazing complexity of overlapping ordinances.

By creating an incredibly complex regulatory environment, government must grow to properly implement the goals and intentions of their ordinances. Such government expansion requires funding from one of two sources, user fees or taxes. In either case, it is the citizenry who end up paying more to live in this highly regulated environment.

In a February 2008 paper on housing prices, University of Washington Professor Theo S. Eicher used regression analysis to study housing prices and their relationship to regulatory environment in five major cities in Washington State (Everett, Kent, Seattle, Tacoma and Vancouver). His findings, reprinted below, are not surprising but are eye opening.

“Aside from demand factors, housing prices are found to be associated with cost-increasing land use regulations (approval delays) and statewide growth management. For example, after accounting for inflation, regulations are associated with a $200,000 (80 percent) increase in Seattle’s housing prices since 1989, while housing demand raised prices by $50,000. This constitutes about 44 percent of the cost of a home in 2006. Cities with less stringent land use regulations had significantly lower price increases due to regulation.” Emphasis added – NW

If we accept the conclusion that an onerous regulatory environment increases the cost of housing, is this perhaps the true goal of such regulations? Each time housing affordability comes up in meetings when regulations are being considered, such concerns are quickly dismissed because the homes that are being built are not designed to be affordable.

If we fail to recognize the impacts of regulation on affordability across all price points, we will end up with government induced housing inflation pushing the working class even further out creating increasing demands on our transportation infrastructure and leaving only the very high end and the very low end in our urban core. Complexity breeds bigger government and bigger government breeds increased complexity. It is in everyone’s best interest to strive for clarity of intent and implementation at the front end of the sausage factory.

 
 

Albemarle Supervisors Advertise $0.71 Tax Rate

Supervisors advertise $0.71 tax ratAt their March 17th work session, the Albemarle County Board of Supervisors decided to advertise the 2008 real estate property tax rate at $0.71 per $100 of assessed value.  This rate represents a 3 cent rate increase over the 2007’s rate of $0.68.  The advertised rate is the maximum possible tax rate for 2008.  The Board of Supervisors will hold a public hearing on this tax rate on April 2nd.
The Board also received an assessment of funding shortfalls in this year’s budget.  Bob Tucker, the County Executive, indicated that the local government budget is facing a $900,000 deficit for the coming fiscal year. Tucker indicated that each penny increase in the tax rate would increase the budget $300,000 in the current fiscal year. A three cent increase would be necessary to balance the budget in the coming fiscal year. Staff’s calculations project a $3.5 million deficit for FY 2010. The Board discussed future funding of initiatives including affordable housing and the funding of frozen staff positions.

Pantops Master Plan Approved

The Albemarle County Board of Supervisors has voted 4-2 to approve the Pantops Master Plan that will guide planning in the Pantops development area.  The master plan was approved after discussion of the boundaries of the area and the Hansen Mountain Road connection to Route 250.

Fluvanna Reconsiders Land Use section of Comprehensive Plan

 
Fluvanna County is contemplating changes to the land use section of the Comprehensive Plan. The consultant hired by Fluvanna is recommending significant changes to the subdivision ordinance as it relates to large scale subdivisions. Other amendments to the Comprehensive Plan would include adoption of some new urbanist principles such as connectivity of roads, pedestrian orientation and mix of uses as required by the Commonwealth in “high growth areas”. The requirement also demands that Fluvanna establish urban development areas where they will concentrate infrastructure.The Fluvanna Friends of Rural Preservation favor restricting all by right subdivisions in the county by requiring mandatory review. The group is recommending amendments to the Comprehensive Plan that would support their initiatives to amend the zoning and subdivision ordinances. Changes to the Comprehensive Plan that would outline implementation strategies are also sought. Fluvanna Friends of Rural Preservation also support establishing a proffer policy. Fluvanna County has been undergoing tremendous growth with a thirty percent cumulative increase in population last seven years.  

Patterns – Migration, Commuting and Development

During the 1992 presidential campaign, Ross Perot made significant points referring to NAFTA as creating “a giant sucking sound as jobs migrated to Mexico”.  This quote came to mind as I reviewed the commuting and migration patterns for our region as outlined in the Thomas Jefferson Planning District Commission(TJPDC) “The State of Housing Report”.

According to the report from 1999-2004 there was a net in-migration of 7,818 persons to the TJPDC footprint (includes Charlottesville, Albemarle, Fluvanna, Greene, Louisa and Nelson).  It highlights that within the PDC there is “a distinct pattern of people moving out of Charlottesville and Albemarle and into the rural counties, with Fluvanna County receiving the most people from within the Planning District.  The patterns suggest that the cost of housing is a factor in the out-migration.”

Interestingly, the report shows over 15,000 workers were commuting from the outlying counties into the Charlottesville/Albemarle region it its important to note this number does not include the significant cohort commuting from Augusta, Buckingham, or Orange counties. 

The report correctly identifies the significant housing cost differential between the Charlottesville/Albemarle region and the outlying counties.  It also highlights the higher commuting costs and lost time with families.  In my experience, this is a decision home buyers consider carefully and almost universally choose more house and an increased commute (and the related costs). 

In a recent Atlantic article Christopher Leinberger of The Brookings Institute predicts the outburbs of McMansions will be the slums of tomorrow.   While I agree the market for urban residential housing is growing, I do not foresee Leinberger’s widespread doom of the suburbs as we know it.  Young families will still want to go where they can buy a single family home with a small yard for the children to play in.  These will be the minivans you see filling the streets on Saturday mornings running to soccer games and then to Sam’s Club.  The same vans will be ferrying their parents from their suburban oasis into the urban core of Charlottesville/Albemarle each and every workday. 

While past performance does not completely predict future action, building a community vision based on the faulty notion that a majority of consumers will be willing to give up their cars and live in condos above retail and take transit to work is foolish.

Bus Stop Thinking

Nationwide, we are starting to see an increase in the use of public transportation.  Much of this growth is tied to the increased cost of gasoline but transit is making improvements in their delivery systems that make them more attractive to the choice (as in “I have a choice”) rider.

IMHO public transit works for me when three key conditions are met: 

1.                 The route is close to my point of origin

2.                 The route is close to my destination point

3.                 The cost (in money, hassle and travel time) is no greater than driving 

In reviewing successful transit systems each will address these three issues.  When the METRO system was founded in DC one of the first thing government offices did was eliminate parking passes for all but the most senior staff.  The cost of parking increased along with the hassle of contracting a space; this pushed the equilibrium of #3 higher. 

The first two points are more difficult in the Charlottesville/Albemarle region.  These two relate to the density of housing at one point on the travel path and the density of employment on the other end.  This works exceedingly well in New York City where you have a high level of density employment in Manhattan but little housing available.   

The level of density required to support the introduction of transit increases as the cost of the method of transit increases.  While the number of potential consumers might support a limited rush hour bus service from the Greene County line into the University, the math would likely not support a regular bus stop.  Moving up the transit scale to light rail former Albemarle Planning Commissioner Pete Craddock  once said “I hope I am six feet under before we have the density to support Light Rail Transit” 

Recognizing the obstacles to transit will help us address the real (albeit limited)potential of transit.  In a town with significant parking options and relatively small parking costs and travel times, it is hard to imaging transit addressing all three of my needs for the majority of my trips. 

Fees as Growth Control Tool

In this Monday’s meeting, the Albemarle County Board of Supervisors indicated general approval of a new fee for residential development in the rural areas.  This new fee is designed to cover the cost of reviewing the newly required erosion and drainage engineering plans.   

The new fee, proposed to be around $230, is 50% higher than neighboring localities but is in line with fees Northern Virginia localities are charging according to Albemarle County’s Director of Community Development Mark Graham.  Interestingly, this new fee will help Mr. Graham “unfreeze” a position in his zoning department because the fee will generate enough revenue to cover the cost of this individual. 

In the discussion, Supervisor David Slutzky opined the new costs would not significantly increase the cost of housing in the rural areas and that is not where affordable housing is being built anyway.  He further indicated that if the fee did anything to discourage development in the rural areas it was a good thing. 

At a break in the meeting, one member of the Board of Supervisors came up and asked me what I thought of the new fee, ‘was it too much?’  I informed this supervisor that the cost for a full engineering document created for each new rural residence was where the impacts of the new regulations would be felt in the Thousands not hundreds of dollars.  The additional $230 is just one more burden placed on the rural landowner seeking to exercise his or her rights. 

The new fee schedule will be released in the coming weeks.  The fees will be significantly higher than other localities because of Albemarle County’s the high level of regulation.   

In the end the increased fees and onerous regulation make it more difficult to develop and conduct business in Albemarle County.   Maybe that’s the goal after all.

Do We Need a Regional Vision Checkup?

Last week, the Thomas Jefferson Planing District held the “Finding Common Ground” regional housing conference maintained a bold goal of “Creating an Action Agenda for Housing in our Region”. 

In the conference opening remarks, TJPDC Executive Director Harrison Rue mentioned his dismay that the most recently approved shopping center on Fifth Street did not include residential units above the big box stores.  He seemed concerned that despite the efforts of the planning community, developers are not embracing the vision of mixed use.

Interestingly, the audience was admonished to have a “Thumbs up attitude” throughout the day.  If you did not like a concept, you were instructed to offer something better (it was implied but not stated that if you did not like an idea and did not have a better idea you should keep your mouth shut).

In one breakout session, one of the mortgage bankers presenting recalled Rue’s remarks about the “Big Box” apartments and said he did not know of a single lending institution that would finance such a project.

I am not of the opinion that the market is demanding the creation of residential units above “Big Box” stores.  There are instances where such collocation has worked.  Reston Town Center and Pentagon City Mall come to mind.  These are very different markets than the Charlottesville/Albemarle market.

In the “Carrots and Sticks” breakout session, one participant asked why we all were so focused on creating new affordable housing units (described as $190,000 or below) when there are over 200 such units on the market right now.  While many of these units are beyond repair and would need to be demolished prior to rebuilding if half could be refurbished would not that be cheaper and help sustain existing neighborhoods?

Unfortunately due to another commitment, I was unable to attend the wrap up session of the conference.  As the attendees included a significant number of public officials and practitioners in the field, I hope the conference results include an opportunity to adjust the regional vision rather than blindly go forward with a smile and a “thumbs up” attitude.