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