Should Albemarle Pay The PEC $57 Million in “Reverse Density” Cash Proffers?

By. Neil Williamson, President

Jonathan Swift once wrote of “A Modest Proposal”.

This blog post, while not nearly as well written or important, is drafted from a similar satirical philosophical positioning.

Is local infrastructure spending a zero sum game?

If one has to pay to increase residential density in the development area of Albemarle County, shouldn’t one get paid for decreasing residential density in the rural area of Albemarle County?

If one accepts the argument that cash proffers should be paid by landowners seeking rezonings to pay for increased infrastructure required by said rezoning (and to buy in for infrastructure previously paid for by existing residents), should it not naturally follow that if a rezoning application was submitted to reduce the development potential, the locality should pay the landowner for this reduction in infrastructure requirements.

Huh?  Please let me explain.

Under Albemarle County’s current cash proffer program land owners seeking to rezone their property, in accordance with the approved comprehensive plan, must pay $19,753.68 per single family home (SFD) included in the development, regardless of the existing density.

On Tuesday night (9/10), the Albemarle County Planning Commission will be considering an application from the Piedmont Environmental Council (PEC) seeking to reduce the development potential of a previously approved, not yet built, rural residential neighborhood. 

According to the staff report, if developed to the maximum potential the existing zoning could support well in excess of 3,000 residential units (34 units an acre + commercial/industrial uses) the proposed rezoning proposal would reduce development potential to 80 units.

To be clear, the Free Enterprise Forum has no opinion regarding this specific application; in addition we do not believe the “reverse density” cash proffer concept is good public policy.  Rather we believe this extreme example helps illuminate our concerns regarding the logical underpinnings of the entire cash proffer system.

How much would the “Reverse Density” proffer be worth If “reverse density” cash  proffers were in place for the PEC application this would result in a check from Albemarle County to the applicant for $57,682,720.97 ($19,753.68 SFD Cash Proffer * (3,000 – 80)) lost density.  That’s a great deal of money.

In any rezoning, the applicant is desiring to make a change in the property’s development potential.  As such change is a discretionary decision on the part of the Board of Supervisors, Virginia State Code allows for “voluntary” proffers to be offered to mitigate the impact of the development (VA Code § 15.2-2298). 

If a locality is enabled to increase the cost of development (and reduce housing affordability) for a perceived increase in infrastructure demands, why shouldn’t it be required to pay when such demands are decreased?

Some might argue the locality is already providing incentive by reducing the tax liability on the land that is not as intensely developed.  Using the same logic would be an argument NOT to utilize cash proffers as the locality is receiving increased tax benefit by the increase in residential density.

Others may contend that any application that reduces potential rural residential density furthers Albemarle’s Comprehensive Plan for rural preservation thus should be considered in a different light than one seeking to increase density.  The reality is that every rezoning in the development area that is seeking to increase density is also following the goals of the community supported Comprehensive Plan.

While a development area rezoning often has an increase in value with an increase in density, significant tax benefits exist for land placed into conservation easements (and Ag/forestal districts).  In the application before the Planning Commission Tuesday night cites the desire to place the land into a protected status as the reason for the request for rezoning.  As a rezoning is not required to place the land into conservation easement, it would be disingenuous to suggest monetary influence  It would be hard to argue that any applicant would engage in the costly and time consuming rezoning process without some economic benefit.

So the question remains, if Albemarle is willing to demand significant cash proffers for development area density, will they be willing to pay “Reverse Density” cash proffers of equal value for rural area development rights that are extinguished?

Why not?

Perhaps the reality is that infrastructure spending is not, and never has been, a zero sum game.  Localities, including Albemarle, are using proffer revenue as a new piggy bank and are growing to rely on proffer income to fund existing needs (see Stonefield’s $500,000 cash proffer being used to to fund Northside Library).

No, we are not advocating Albemarle County cut a $57 Million Dollar check to the applicant but we do believe this example shows the faulty logic that is at the core of the cash proffer paradigm.

Respectfully Submitted,

Neil Williamson

clip_image0024_thumb.pngNeil Williamson is the President of the Free Enterprise Forum, a local government public policy organization located in Charlottesville.  www.freeenterpriseforum.org

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3 responses

  1. “Perhaps the reality is that infrastructure spending is not, and never has been, a zero sum game.”

    BINGO, for stating the very heart of all this so plainly in one sentence there.

  2. H. Watkins Ellerson | Reply

    Proffers are legalized extortion. The fiction that they are “voluntary” demonstrates the extent to which we lie to ourselves to justify the unjustifiable. The General Assembly should quickly move to revoke the proffer system statewide.

    Proffers were smugly dreamed up as a “punishment” on “greedy developers,” but developers don’t pay those proffers! They are passed through by developers to the individual purchasers of the properties subject to the proffers. They also amount to an (intentional) “entry fee” to discourage newcomers from moving into a subject area, and that is downright un-American!

    Most of us living in established homes did not have to pay extra for the roads, schools or sewers we use nor for any other “public” amenity built with revenues from prior taxpayers. That so many “public” amenities have now been conditioned upon the payment of “user fees” is ludicrous. Such amenities are supposed to be “public” for a reason, that government SHOULD furnish some things to everyone via taxation. Taxation is the price we pay for a civilized society.

    So, let’s get civilized and get rid of proffers!

    H. Watkins Ellerson
    PO Box 90
    Hadensville, VA 23067

  3. In my opinion, the PEC has financially harmed non-rich people who want to buy or rent shelter in Loudoun County. We have the highest household income in the nation. Why? It takes a lot of money to buy a home here or pay rent. Why? Our Board of Supervisors adopted a draconian green land use plan promoted by the PEC that restricts public water and sewer use in most of the county, necessary for traditional middle class housing. There is, however, plenty of land for McMansions in our “sustainable community.”

    People have to live somewhere in job-rich Loudoun. So the PEC choice is for future growth to be high density transit-oriented villages around expensive Metrorail, the “Region Forward” plan. Yes, the PEC is not against growth; it’s just that it will decide where you can live, unless you are wealthy, of course. (See PEC’s Douglas Stewart’s letter to the editor in The Washington Post, 3-15-13.)

    PEC influence profoundly changes our economic system. Builders must answer to the PEC through its government proxy, rather than to the consumer. I conclude by recommending that the PEC pay subsidies to all those people whom they have harmed and to pay for Metrorail, necessary for its “Agenda 21” (“sustainable development–smart growth”) land use planning.

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