Tag Archives: economics

Albemarle Economy Weathers the US29/Rio GSI Storm?

FORUM WATCH EDITORIAL

By. Neil Williamson, President

The early economic indicators are in.  While there are limitations in the initial data set, it looks like the significant efforts to mitigate the economic impact of the US29/Rio Grade Separated Interchange (GSI) may have worked as designed.

Please let me explain our logic.

Back in 2007, Free Enterprise Forum Research Associate Natasha Sienitsky authored the Workplace 29 report that found:

The Workplace 29 study area:
• supports more than 20,000 jobs, conservatively providing more than $800 million ($874,216,408) alone in direct salaries each year.
• generates 35% of taxes by all non-residential uses in Albemarle County and the City of Charlottesville; approximately $ 33,019,354 in total tax revenue paid to Albemarle County and Charlottesville City in 2006.
• provides per acre tax revenue of $24,700 for non-residential uses, compared to the entire county average of $335 per acre.
•produces approximately 45% of the county’s total tax revenue in 2006.

In addition to the above economic impacts it was determined that the Workplace29 study area generated 57% of all of Albemarle’s sales tax income.  Considering this was prior to the construction of Stonefield, Costco, and several other retail establishments it is not a reach to suggest that number has remained steady.

The conclusion of Workplace 29 stated:

Non-residential uses in Workplace 29 generate significant jobs and taxes for Albemarle County. The master planning process must continue to engage owners of these properties as the economic vitality and level of government service in Albemarle County and Charlottesville City have a close relationship to revenues generated by non-residential properties in the Workplace 29 area. The current Places 29 plan calls for a reconfiguration of the road network which will cause significant business disruptions along US Route 29 during an extended construction period. Neither the extent nor time frame of disruptions has been addressed.

Although changes in the character of US Route 29 may have long term economic benefits, short term disruptions, through extended construction periods, most likely would negatively impact business and as a result the revenue stream for Charlottesville City and Albemarle County. Therefore, careful consideration should be given to the impact of master plan formulation and implementation on business.

Our 2007 hypothesis does not hold up based on recently released 2016 economic data.

Book1The Charlottesville Regional Chamber of Commerce regularly reports regional sales tax data.  Their reports provide both updates as well as historical sales tax data.

The report last week, for all of Albemarle County, indicated sales tax revenue for the first half of 2016 was up over 2015 by greater than $495,000 (+7.25%).

Considering the significant disruption to the corridor including the closure of the intersection from May 23 – July 18, 2016 [opening date corrected 12:50 8/29-nw], one must conclude the intense marketing efforts, signage and business assistance efforts had an impact.

Back in March [in our Lemonade Post], we mentioned our appreciation for the marketing efforts of the Virginia Department of Transportation (VDOT), the Thomas Jefferson Planning District Commission (TJPDC) as well as Albemarle County.

With these early returns, it seems their mitigation efforts, which continue today, are having the intended results.  While we continue to witness economic dislocation (Better Living, PJ Networks, Sultan Kabob), much of this dislocation may have occurred with or without the new GSI.

As Albemarle prepares to produce a small area plan for the US29/Rio area, they would be wise to attempt to capture intersection specific economic data to confirm our conclusions based on county wide data.

We have not yet seen the July numbers but considering the trend for the first six months, I anticipate they will continue to be slightly ahead of 2015.

Absent a more detailed metric, I believe it would be appropriate to congratulate all the businesses involved for weathering a difficult storm; and to congratulate the speedy construction, all of the marketing and business outreach teams for a job well done.

As for our failed 2007 hypothesis, I am happy to have been wrong but one might wonder what the numbers would look like with a longer construction period and absent the unprecedented outreach efforts.

Respectfully Submitted,

Neil Williamson, President

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20070731williamson Neil Williamson is the President of The Free Enterprise Forum, a public policy organization covering the City of Charlottesville as well as Albemarle, Greene, Fluvanna, Louisa  and Nelson County.  For more information visit the website www.freeenterpriseforum.org

 

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How Local Government Accelerates Income Inequality and Reduces Economic Output

By. Neil Williamson, President

During last night’s joint Albemarle County/ City of Charlottesville Planning Commission meeting, I wondered if these bodies truly understand the economic impact of the regulations the propagate and enforce.  Considering this community’s interest in “income inequality” [Remember Occupy Cville?] it is curious that there has not been significant attention to local government actions that may be accelerating the so called  1% getting richer.

Please let me explain.

For years, some in the environmental community have asked that an ecological impact statement be considered for any new rezoning or amendment to the comprehensive plan.  Now it seems like we may be nearing a time when localities might be able to calculate the aggregate production impact of development restrictions.  Interestingly, many of those same folks who advocate for increased regulatory red tape also advocate for affordable housing.  Recent research supports the Free Enterprise Forum position that regulation inflates housing costs.

Thanks to our old friend,  Michael Harvey, this year’s summer reading list includes two papers released this Spring that use economic calculus to determine the impacts of regulatory restrictions on housing supply, housing affordability and Gross Domestic Product.

The first paper, Deciphering the fall and rise in the net capital share, is written by Matthew Rognile, a 26 year old MIT graduate student.  Presented to the Brookings Papers on Economic Activity conference, the paper argues counter to the prevailing economic theory that rich capitalists have an upper hand in generating new wealth based on their ability to invest rather than labor, instead Rognile links the “recent trends in both capital wealth and income are driven almost entirely by housing”.

His paper is filled with mind numbing calculations supporting his thesis but it is one of his charts that brings the meaning into much clearer focus:

rognile chart

In reviewing Rognlie’s work, The Economist suggests this new analysis suggests we rethink how we deal with income inequity:

But if housing wealth is the biggest source of rising wealth then a more focused approach is called for. Policy-makers should deal with the planning regulations and NIMBYism that inhibit housebuilding and which allow homeowners to capture super-normal returns on their investments.

Writing on Zerohedge.com blog, Daniel Drew highlights his hometown as a poster child for the regulatory red tape that can create inflated housing prices to the point that it becomes unsustainable.

Take a look at San Francisco’s zoning map, and ask yourself if that is what a free market looks like.

San Francisco Zoning Map

And if you were wondering what all those yellow squares were, this explains it:

Single Unit Zoning

As you can see, the entire city has been designated as a perpetual single-unit metropolis, and with water on three sides, the sprawl potential is limited. After seeing this, it’s no surprise that houses from the 19th century cost $1 million.

Greg Ferenstein, writing on The Ferenstein Wire, takes us back to the Joint Planning Commission meeting last night as he writes:

Local housing boards have made it damn-near impossible to build new condos. After much infighting, San Francisco plans on building up to 50,000 more units. But, San Francisco’s chief economist, Ted Egan, estimates that that the city would need at least 100,000 new units to stem increasing costs, let alone bring prices down to something more affordable.

If Rognlie is correct and we really care about inequality, it might be wiser to redirect anger towards those who get in the way of new housing, rather than rely on taxes to solve our problems. emphasis added – nw

While we have been providing anecdotal evidence of Rognlie’s point for well over a dozen years, it is very helpful to have an economic analysis, even if it is mathematically over our head, to support our position.

Perhaps even more impactful, is the April 2015 paper Why Do Cities Matter? Local Growth and Aggregate Growth by Chang-Tai Hsieh (University of Chicago) and Enrico Moretti (University of California, Berkley). This paper quantifies the impact of restrictive land regulations.

In economic theory, total-factor productivity (TFP), measures the efficiency of all inputs to a production process.  TFP  is a variable which accounts for effects in total output not caused by traditionally measured inputs of labor and capital. If all inputs are accounted for, then total factor productivity (TFP) can be taken as a measure of an economy’s long-term technological change or technological dynamism.

According to the paper:

We estimate that holding constant land but lowering land use regulations in New York, San Francisco and San Jose to the level of the median city would increase U.S. output by 9.7% In essence more housing supply would allow more American workers to access the high productivity of these high TFP cities.  We also estimate that increasing the regulations in the South would be costly for aggregate output.  In particular, we estimate that increasing land use regulations in the South to the level of New York, San Francisco and San Jose would lower U.S. output by 3%.

Interestingly, the paper concludes with two very different options for public policy, the first calling for the Federal government to constrain U.S. municipalities ability to set land use standards.  The second, seeks to link labor and jobs absent housing:

An alternative is the development of public transportation that link local labor markets characterized by high productivity and high nominal wages to local labor markets characterized by low nominal wages.

The Free Enterprise Forum appreciates the suggestion of the public infrastructure but anecdotally has seen the private sector stepping into this space in several ways including company sponsored van pools, telecommuting as well as remote office locations.

Back to our little part of the world, I have to wonder if given empirical data regarding the economic harm extensive land use restrictions create combined with the income inequalities that are accelerated by their imposition and the measured ecological benefit, might the discussions be more focused on the facts rather than feeling good about limiting private property rights.

Considering the discussions at the Joint Planning Commission meeting last night, I tend to think it wouldn’t make a hill of beans of difference; and that’s a shame.

Respectfully Submitted,

Neil Williamson, President

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20070731williamson Neil Williamson is the President of The Free Enterprise Forum, a public policy organization covering the City of Charlottesville as well as Albemarle, Greene, Fluvanna, Louisa  and Nelson County.  For more information visit the website www.freeenterpriseforum.org

 

Albemarle’s Mad Hatter Paradoxical Proffer Policy

FORUM WATCH EDITORIAL

By. Neil Williamson, President

“If I had a world of my own, everything would be nonsense. Nothing would be what it is, because everything would be what it isn’t. And contrary wise, what is, it wouldn’t be. And what it wouldn’t be, it would. You see?”
Lewis Carroll, Alice’s Adventures in Wonderland & Through the Looking-Glass 

This Wednesday afternoon (9/3) Albemarle County’s counter productive paradoxical cash proffer policy and calculations could get some much needed sunlight – or the Supervisors could direct the Fiscal Impact Advisory Committee (FIAC) to simply treat a couple symptoms instead of the underlying problem.  The resulting discussion could have significant ramifications for the future or not.

Please let me explain.

For those just arriving a cash proffer is a set amount of money a landowner “voluntarily” pays for the opportunity to construct a new unit.  The amounts vary by type of unit.  In Albemarle, the cash proffer amount for a single family home is almost $21,000.

It is important to recognize, Albemarle’s  land use philosophy can be summed up in one sentence; development in the designated development area.

For many years, some have said that cash proffers do not impede growth in the development areas.  A recent memo drafted for the Board of Supervisors to send to the FIAC supports reduced or eliminated proffers (in some conditions) will encourage development.

The Board of Supervisors is directing the Fiscal Impact Committee to:

1) Analyze possible credits for:
-Development in targeted areas. Targeted areas are those areas shown as Priority Areas identified in each Master Plan Area.
-Mixed use developments.
-Development supportive of growth management strategies of the Comprehensive Plan.

2) Provide recommendations on changes to existing credits in the policy, including the credit that may be provided for by-right units, now available by policy only in limited circumstances (Policy § C(6)(c)).

3) Update the County’s maximum per unit cash proffer amount by dwelling unit type, using the methodology used in 2007.

Did you see the underlying theme in the first direction? 

This memo may be the first official document I have seen that acknowledges the Bizzaro economic theory of Albemarle’s current cash proffer policy. 

If the FIAC is to consider giving cash proffer credits in the “targeted areas” (We called these “Super Development Areas” in our opposition to the Places29 master plan) then this memo implicitly recognizes the $20,986.76 Single Family Home  cash proffer must have negative impact on development.

But wait, why is Albemarle considering credits ONLY in the targeted areas? 

If the fundamental land use philosophy is to encourage development in the development areas and you have identified a barrier to such growth, why would you not change it for the ENTIRE development area?  As we have said in a previous post “It’s all about the money, money, money”.

While the Free Enterprise Forum appreciates Albemarle’s willingness to address some of the symptoms, we continue our call for a full repeal of cash proffers.

Counting noses, I doubt the current Board of Supervisors will significantly change the charge to the FIAC.mad-hatter-1-300x240

Just as the Mad Hatter in Alice in Wonderland is busy celebrating unbirthdays, the Albemarle supervisors will  likely celebrate their symptom addressing charge  to the committee and happily continue to  knowingly undercut the philosophical underpinnings of their much lauded land use plan.

So it goes.

Respectfully Submitted,

Neil Williamson

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20070731williamson Neil Williamson is the President of The Free Enterprise Forum, a public policy organization covering the City of Charlottesville as well as Albemarle, Greene, Fluvanna, Louisa  and Nelson County.  For more information visit the website www.freeenterpriseforum.org

Photo Credit: Disney

Is The End of Cash Proffers Near?

By. Neil Williamson, President

If the goal of cash proffers is to “make growth pay for itself”, the policy has failed.piggy-bank

If the goal of cash proffers is to suppress market demand with increased regulatory costs, the policy has succeeded.

On Tuesday afternoon, the Albemarle County Board of Supervisors and Planning Commission will hold a special joint meeting to discuss cash proffers.  The Free Enterprise Forum is hopeful the discussion includes success metrics.

A cash proffer is an amount money that some (not all) new home builders must pay a locality for the privilege of constructing  a new home in the community.  These funds are in excess of the water/sewer hook up fees, sidewalks, streets, street trees, stormwater management, open space and affordable housing requirements.

But not all localities inflict cash proffers on their citizens.

The vast range of costs locally are illuminating.

 

Locality Maximum Cash Proffer
Albemarle Single Family Detached $20,986.76Townhouse $14,870.61

Multi Family $14,270.99

Charlottesville No cash proffers
Greene $5,778 per unit
Fluvanna $6,577 per unit
Louisa $4,362 per unit
Nelson No cash proffers

Albemarle has been aggressive in their regular increase in proffer cost while the BOS has been underfunding their required capital improvement program (CIP).

Albemarle proffer amounts 07-14

Those supporting cash proffers would say this is one way to get development to pay for itself.

But it doesn’t.

Too often this is just a new piggy bank to fund pet projects that have tangential relationship to new development.

Attachment F in the Staff Report highlights proffer expenditures including almost $300,000 for North US29 Study, $50,000 for a Western Park Master Plan Study and $15,000 for a feasibility study for Northside library.  While each of the studies may have merit, can the case really be made that rezoned property created these needs?  Why should the new home buyer have to bear the burden of determining if the community has ALREADY outgrown their existing library?

Other expenditures are equally disturbing

$150,000 to upgrade the Wireless Area Networks at 4 Schools serving Still Meadows Residents

Did the rezoned land make the existing Wireless Area Network obsolete?

$302,199.32 for the Crozet Library

Crozet had been seeking a new library since the 1990’s.  New development did not create this need but it did pay for it.

$83,379 for the Ivy Fire Station

Is the new development that partially funded the construction of this new station even in the response area of the station?

The reality is the cash proffer policy is fatally flawed and produces  unintended negative economic and planning impacts.  Some localities have already done the right thing and repealed this “rezoning ransom” and replace these funds with more dependable and equitable infrastructure funding options.

The discussion Tuesday should not be about how to tweak the existing cash proffer system instead it should be a discussion by the Board on how to equitably dismantle the system.  A full repeal is a much more economically and ecologically sensible and sustainable alternative.

Cash proffers are per unit fees “voluntarily” extracted from applicants seeking to rezone their property. In theory, such “voluntary” proffers would be directly tied to the costs associated with the increased density of a rezoning. In reality, cash proffers lower land values, encourage development contrary to comprehensive plans, and create false hope for outside infrastructure funding.

Cash proffers have produced a plethora of Contradictory Consequences without achieving significant benefit. Now is the time to repeal this rezoning ransom and replace it with a more sensible and equitable alternative.

clip_image0024_thumb.pngNeil Williamson is the President of the Free Enterprise Forum, a local government public policy organization located in Charlottesville. The full Contradictory Consequences report can be found at www.freeenterpriseforum.org

Hook Up Fees Again on The Docket in Greene

By. Brent Wilson, Field Officer

Greene County’s Board of Supervisors (BOS) have been discussing the cost for initiating public water and sewer service (also called “hook up fees”) for well over two years.  Most recently on August 27th, Vice Chairman Davis Lamb (Ruckersville) initiated a committee to more formally study what changes should be made to the Water and Sewer Equivalent Dwelling Unit (EDU) policy to incentivize development.

Greene County Administrator John Barkley heads up the work group that includes County Planner/Zoning Administrator Bart Svoboda, County Consulting Engineer (from WW Associates) Herb White and Supervisor Lamb. The stated goal of this work group is to reduce barriers to development in Greene County.  The BOS has identified the EDU fee as a detriment to projects moving forward.

In the September 24th meeting of the Board, Barkley presented an interim report.

The Rapidan Wastewater System Purchase Policy (2004) and Ruckersville Water System Purchase Policy (2006)  each provide a current foundation for the County’s EDU process and costs. These would need to be amended if a different payment schedule is to be adopted including a meter based connection system.

Barkley outlined the assumptions the committee were given:

  • The Board wants to incent economic growth in Greene County
  • The Board believes the current fee structure limits growth
  • EDU’s (Equivalent Dwelling Unit) currently are purchased at the time of issuing of a building permit
  • The General Fund is paying for water and sewer costs
  • Ideally, Reserve Funds should only be utilized for emergency or capital needs
  • The has been no increase in the water and sewer connection fees since January, 2007
  • Fee structures should be reviewed annually in synch with the budget process

Barkley then went on to outline payment and process options. The benefit to an incremental payment schedule would make it easier for smaller customers to afford starting up. Delaying the payment of EDU’s to the time of occupancy would ease the burden for customers. The risk is that if payment is not made timely then more collection effort would be required.

Meter based connection fees were then discussed – using meter size (from 5/8 inch to 10 inch) and usage as a basis. This would allow flexibility in fee schedules and limits could be set for monthly usage – as allowed by state law.

The next steps for the committee will be to research how other localities receive payments. The committee will consult with legal counsel regarding legal and process issues. Benchmarking vs. other neighboring localities fee structures for meter based connections is to be reviewed. The hope is to make recommendations to coincide with FY 2015 Budget, Tax Rate and Fee approval process. The committee will update the BOS monthly on October 22nd, November 12th and December 10th.

Supervisor Clarence “Buggs” Peyton (Stanardsville) spoke to thank Davis Lamb for initiating this process and then thanked Mr. Barkley for reducing the plan to writing. He believes it is critical since the current EDU policy doesn’t fit with today’s economy. The current connection fees deter growth in Greene County and therefore don’t allow growth in sales tax revenue.

According to Peyton, Greene needs growth, especially in the Gateway Center in Ruckersville. It was never the intent to have residents subsidize the sewer rates, but that is effectively what is happening. We need to act quickly to get in place a new policy before the Reserve Fund is spent. Small contractors need help and a meter based system seems to be a good fit. Peyton’s final comment was that he doubted that the economy would get much better.

Chairman Jim Frydl (Midway) believes this report is a good first step and that the hiring of Barkley as County Administrator is a good start in revising the system. Frydl recommended two things be done. First, would be to change the payment schedule and defer payment from the issuing of a permit to the issuance of the certificate of occupancy. Second, is to review the current system. The volume of fees collected today is not paying the total cost being incurred by Greene County.

When asked after the meeting if the committee would have a recommendation by the December 10th meeting, Barkley was not sure if the study would be completed by that time.

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Brent Wilson is the Greene County Field Officer for the Free Enterprise Forum a privately funded public policy organization.

The Free Enterprise Forum Field Officer program is funded by a generous grant from the Charlottesville Area Association of REALTORS® (CAAR) and by readers like you.

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

Greene EDUs Cost Issue – Not Insanity

By. Brent Wilson, Field Officer

“Insanity is doing the same thing over and over again and expecting different results”. Whether this is attributed to Einstein, Franklin or Rita Mae Brown , it now no longer holds true for the Greene County Board of Supervisors relative to having EDUs purchased (or not being purchased).

By means of background an EDU or Equivalent Dwelling Unit is the unit of measure by which the Authority charges for tying in to the water and sewer infrastructure.  In concept, the existing users have paid into develop the system that exists and this surcharge allows the provider the funds to ensure debt service on existing infrastructure and capital for future expansion.  An Equivalent Dwelling Unit or EDU is defined as one-single family residential household.  Multi family residential units and non residential facility EDU assessments are also calculated on a fixed “EDU basis” depending on the use.

At the request of Supervisor Davis Lamb, he May 28th BOS meeting was preceded by a workshop that the BOS held to receive comments about improving business in the county . After many complimentary comments to the BOS, Steve Jones, President/COO of the Fried Companies, Inc. spoke on the $20,000 hook-up fee (water and sewer combined) in Greene Co. vs. other counties averaging $2,500.

Jones further explained that these high fees are truly hurting residential development. The fee is a flat $20,000 regardless the size of the home. Commercial entities have a difficult time getting up to a level of business to absorb this significant start-up cost and, therefore, it restricts business development. He suggested that the county look at a meter size based system and increase user rates for commercial users.

Fast forward to the most recent BOS meeting – June 25th – and Chairman Jim Frydl brought up the issue for discussion with the rest of the BOS (minus Eddie Deane who was absent from this meeting). There was agreement among the supervisors that something needs to change in order to attract more business. While the payments start for the water and sewer system it is critical that Greene County look for innovative ways to generate income – either capital fees and/or operating fees – to help offset these costs.

When Frydl was asked about this issue after the meeting he stated, “ the Board is very interested in attracting and supporting business growth and will explore strategies to further these goals”.

The hiring of John Barkley to the County Administrator position effective July 1st  (he did attend the June 5th BOS meeting) should help expedite the analysis of this issue.

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Brent Wilson is the Greene County Field Officer for the Free Enterprise Forum a privately funded public policy organization.

The Free Enterprise Forum Field Officer program is funded by a generous grant from the Charlottesville Area Association of REALTORS® (CAAR) and by readers like you.

US29 Bypass – Building a Roadblock is Easier Than Building a Road

By. Neil Williamson, President

VDOT-logo_thumb.jpgOn Thursday, May 23rd, from 5 pm – 7 pm at the University Area Holiday Inn,  The Virginia Department of Transportation (VDOT) will be holding an open house style meeting to discuss alternative designs to the southern terminus of the US 29 Western Bypass.  But the question is will “the public” focus on the meeting topic or use this meeting as a platform for opposition to this much needed safety improvement to US29?

Based on the e-mbypass-survey-results-graphic-2012.jpgail and Facebook traffic I have seen this week, I fully anticipate the “roadblock builders” to be out in great numbers at this meeting.  Does this mean the public is opposed to the road? 

No, in fact our 2004 transportation survey, Charlottesville Tomorrow 2012 survey [graphic] (and others) as well as the 2011 Rivanna District Supervisor election all seem to indicate the pubic is in favor of the road.

However, when a cohort of any population, regardless of size, is in opposition to a project that cohort is generally more energized than the cohort that is in support of an already approved project.  Therefore, I anticipate the “road blockers” to dominate the attendance at Thursday’s citizen informational meeting.

While the Free Enterprise Forum applauds this vocal minority for remaining engaged, we question the structural integrity of their current six part “GO29” argument.

Please let me explain. 

On their website, The Southern Environmental Law Center (SELC) advocates for several steps to relieve the congestion on US29 other than the bypass. 

The first step in building an effective roadblock is to redefine the argument.  If you can include portions of the opposition’s solution in your solution, you will have them chasing their rhetorical tail.

By branding this as “GO29”, the SELC seems to think the public will not recognize that many parts of “their” solution are already in process at the direction of those supporting the bypass {and were included in Places29].

From the SELC website:

We can’t bypass our problems. Our community has developed an approach that addresses traffic backups directly, and also gives drivers more ways to reach destinations. Our Go29 video highlights six key pieces of the solution:       

    1. Improve the interchange with the 250 Bypass near Best Buy;  
    2. Build a compact overpass at Hydraulic Road to eliminate a major source of congestion and allow through-traffic on 29 to flow without stopping;
    3. Extend Hillsdale Drive parallel to 29 to give local drivers ways to reach destinations without having to use 29;
    4. Build a second compact overpass at Rio to solve this traffic snarl (same concept as Hydraulic);
    5. Extend Berkmar Drive up to Hollymead Town Center and beyond, so that drivers could go from Kmart to Lowe’s to Target without getting on 29; and
    6. Eliminate the bottleneck between the Rivanna River and Hollymead by widenin100_0404_thumb.jpgg 29 in both directions.

Wait a minute, four of these items are not issues.  There is community consensus (and in some cases studies completed and even funding) for:

  1. The Best Buy Ramp
  2. Hillsdale Drive Extended
  3. Berkmar Drive Extended
  4. The widening of US29 North of the Rivanna River

By suggesting these other items won’t be built, SELC is knowingly constructing a multi faceted false choice argument designed to obfuscate the simple question Expressway or Bypass?  

Should vehicles without business in the North US29 corridor be forced to go through the corridor or should they be given the option to bypass it?

But none of this is the topic of Thursday’s meeting.

According to VDOT:

The purpose of this Citizen Information Meeting is to provide an opportunity for interested citizens and organizations to review preliminary alternatives for the proposed interchange at the southern terminus of the project. . . The project will include construction of a new interchange at the southern terminus of the project that will replace the existing U.S. 250 Bypass interchange at Leonard Sandridge Road. VDOT is considering three alternative configurations for this proposed interchange. Displays showing each alternative under consideration are being presented at this meeting for public review and comment.

So the question remains, will Thursday’s meeting be about the alternatives to the southern terminus of UAlice-Falling-Down-the-Rabbit-HoleS29 Bypass or a trip down the roadblock builder’s rhetorical rabbit hole?

Will the vocal minority succeed in redefining the meeting agenda to include settled issues or will VDOT be able to maintain the focus on the three proposed southern terminus options?

Clearly in Albemarle County, and many communities, building a roadblock is much easier than building a road.

Stay tuned.

Respectfully submitted,

Neil Williamson,President

 

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

Photo Credits: Free Enterprise Forum, Disney

Graphic Credit: Charlottesville Tomorrow

Greene BOS Budget Balancing Act: Capital Needs, Reserve Fund,Tax Rates, Services

By. Brent Wilson

At the March 12th meeting of the Greene County Board of Supervisors   the discussion centered around the Capital Improvement Plan vs. the growth in the Reserve Fund. The BOS had previously approved the county’s CIP in total but had struggled to identify which projects would receive funding in the next 3 to 5 years.

Several projects were immediately identified as needing to be accomplished in the near future – a Rescue Squad building and an expansion to the high school cafeteria (there are four lunch periods starting at 10:42 am due to the lack of space)  – all agreed these need to happen soon. One possible source of funding for the school cafeteria expansion is by retiring of existing school debt.

The BOS discussed whether the new task force on CIPs should handle the prioritization or should a request go back to each department to sort out their critical needs in the next 5 year. Chairman Jim Frydl (Midway) proposed that the BOS request all departments to provide back a list of 5 year must have projects with written justification for each project. This was agreed by all 5 supervisors.

The discussion moved on to how to pay for the projects and whether the Reserve Fund could be a source of funds for some of the projects. Last year the BOS set a policy on how much should be maintained in the Reserve Fund, funded the schools budget request and then earmarked the remaining additional money in the Reserve Fund to various projects.

The Reserve Fund has continued to grow and exceeds the target level by over $4 million. Supervisor Buggs Peyton (Stanardsville) suggested reviewing what balance should be left in the Reserve Fund and then use any amount beyond that to help fund the capital projects that come back from all departments. Chairman Frydl questioned if the BOS wanted to modify the Reserve Fund policy that has already been set at 15% of the annual budget plus one month operating expenses. He suggested that the departmental requests for the next 5 years be compared to the excess Reserve Fund and if additional funds are required then the Board would have to consider a tax increase would be required to fund all projects.

Mr. Peyton said that the CIP is a wish list – “a Sears Catalogue” and he objected to additional taxes for capital projects but he would agree to pull down the Reserve Fund for the water and sewer project. Supervisor Davis Lamb  (Ruckersville) expressed concern about drawing down the Reserve Fund to zero and wanted to avoid going back to borrowing funds to be able to pay ongoing obligations.

Chairman Frydl commented that the preliminary audit has indicated the Reserve Fund is now approximately 32% of the annual budget of $53.5 million or $17.1 million. This compares to a minimum balance of 15% of $53.5 million or $8.0 million plus one month’s budget of $4.5 million for a total of $12.5 million Reserve Fund target. Therefore the Reserve Fund has grown, based on preliminary audit, by approximately $4.6 million since the Reserve Fund was set last spring.

Supervisor Eddie Deane (At-Large) expressed concern that he did not want the county to have to borrow to fund their needs. Discussion followed as to whether all excess Reserve Funds should be allocated to projects or not. This lead to a discussion of the property tax rate, given that the property assessments are expected to decline.

Supervisor Peyton stated that he would not increase taxes but would cut spending to balance the budget, the decision is “easy for me”.  When Mr. Peyton was asked for a clarification whether he meant he wouldn’t support raising the tax rate (generating less tax revenue) or raising total property taxes (equal to that of the prior year) that an equalization rate would provide, he indicated that he opposed an increase in the tax rate. He further explained that raising the tax rate to equalize tax revenue would cause some property taxes to increase and some to decrease and he didn’t believe that was fair.

Chairman Frydl summarized that the BOS needs the list of projects required to be done in the next 5 years. At that time, the BOS will be able to determine if there are enough funds for all projects by using the excess Reserve Fund. If more funds are required then the BOS will need to decide if additional tax revenue is required to fund all projects. He also noted that Albemarle County has acted to advertise an increase in their tax rate to equalize tax revenue since their property values have declined, similar to what Greene County is facing.

The key issue facing Greene County as it listens to each department’s budget request  is that the current tax rate is generating revenue to provide funding for operating budgets and growth in the Reserve Fund which is being used as a source of capital fund.

If the property tax rate is not equalized then there will be less tax revenue coming into the county which will result in less funds flowing to the Reserve Fund.  A decision will have to be made whether to maintain current levels of operating expenses by tapping into the reserve funds or use those funds for capital projects. There will not be enough revenue to do both.

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Brent Wilson is the Greene County Field Officer for the Free Enterprise Forum a privately funded public policy organization.

The Free Enterprise Forum Field Officer program is funded by a generous grant from the Charlottesville Area Association of REALTORS® (CAAR) and by readers like you.  To support this important work please donate online at www.freeenterpriseforum.org

‘Rezoning Ransom’: Repeal cash proffers

Rezoning Ransom OpEd Headline Daily Progress 3 March 2013This editorial first appeared in The Daily Progress on Sunday March 3, 2013.  The full “Contradictory Consequences” white paper can be found at www.freeenterpriseforum.org under the reports tab.  The Free Enterprise Forum is a privately funded public policy organization focused on local government in the Central Virginia region.

 

By. Neil Williamson, President, Free Enterprise Forum

There are times you have to say no to one thing because you said yes to something else. Such is the case with cash proffers.

If a community believes in citizen vetted comprehensive planning, preserving rural areas by densification of development areas and economic vitality, then such a community must say no to the fatally flawed cash proffer system.

In the recently released “Contradictory Consequences” white paper, the Free Enterprise Forum research and case studies explain the impacts of cash proffers. Sold to the public as a way to make growth pay for itself, the unintended negative economic and planning impacts have caused localities across the Commonwealth to repeal this “rezoning ransom” and replace these funds with more dependable and equitable infrastructure funding options. Today, rather than simply recalibrating their cash proffer calculation, as Albemarle County is doing, full repeal is a much more economically and ecologically sensible and sustainable alternative.

Cash proffers are per unit fees “voluntarily” extracted from applicants seeking to rezone their property. In theory, such “voluntary” proffers would be directly tied to the costs associated with the increased density of a rezoning. In reality, cash proffers lower land values, encourage development contrary to comprehensive plans, and create false hope for outside infrastructure funding.

Lower land values, lower property tax revenue – In concept, cash proffers are voluntary payments made by landowners to mitigate the impacts of changing the prescriptive zoning on their property. The concept works best when the rezoned value exceeds the increased cost of the proffer. Such a symbiotic relationship is difficult to achieve with automatic inflation increasing cash proffers and fickle housing markets not keeping pace.

Albemarle Single Family Detached $19,753Townhouse $13,432Multi Family $13,996
Charlottesville No cash proffers
Greene $5,778 per unit
Fluvanna $6,577 per unit
Louisa $4,362 per unit
Nelson No cash proffers

Basic economic theory indicates any increased cost must be paid by an entity that is a part of the transaction. Many believe the increased cost of a cash proffer will be borne by the end user, the new homebuyer. This can only occur in a housing market that has constant upward motion.

If, due to market conditions, the end user is not available to accept the cost of the cash proffer it is the land owner, whose land will be discounted by the increased entitlement costs that cash proffers create. In turn, such reduced land values reduce the locality’s real estate tax assessed value and revenue (absent an increase in the tax rate).

‘By Right’ Development Encouraged Charlottesville and Albemarle are currently updating their State mandated comprehensive plans. These community vetted plans suggest the manner in which the locality wishes to grow in the next twenty years.

In many, if not most, cases the zoning in a locality’s development area does not match the comprehensive plan designation. While the property owner does not have to agree to the comprehensive plan changes, they cannot act on those new designations until they have rezoned the property. Alternatively, if the land owner chooses to move forward with the existing, some might call “stale”, zoning, which likely does not agree with the locality’s comprehensive plan, they can do so immediately without paying any cash proffers.

In 2011, a developer acquired the rights to a project that included property in The City of Charlottesville and Albemarle County. Charlottesville does not have a cash proffer, while Albemarle’s exceeds $19,000 per single family home. After calculating the increased value of the land with the rezoning in each locality, the developer chose to rezone the property that was in the City (without cash proffers) and chose NOT to rezone the property in the county. This calculated decision was based on calculation of the cost (in money and time) of rezoning the County land exceeded the increase value.

Therefore, the land owner is incentivized to not to follow the community vetted comprehensive plan vision but instead to construct lower density, less thoughtfully designed developments. These projects are built to meet local building and zoning code but absent the enhancements and flexibility a rezoning might allow.

False Financial Hope – Forecasting cash proffer revenue is much like predicting snow in Central Virginia, localities do not know when it is coming, how much they are actually going to get or when it will stop. Cash proffers rarely, if ever, total the amounts localities are banking on.

In November 2012, the Albemarle County Board of Supervisors was presented a staff report outlining cash proffers that were in excess of $49.3 million dollars quite literally off the chart.

albemarle proffer 2012 chart with biscuit runAs one looks at this chart (right) and sees almost $50 Million dollars proffered, one might anticipate the cash proffer program is answering the very need it was designed but the Free Enterprise Forum estimates at least 28% of those proffers will never be collected as they are associated with the now defunct Biscuit Run Development.

It is interesting that while the State of Virginia acquired the property for a state park on December 31, 2009, Albemarle County continued to calculate those proffers as receivable in November 2012.

Rural Areas Jeopardized – According to the Piedmont Environmental Council, Albemarle County has in excess of 10,000 units already rezoned for residential development. Why have these not moved forward?

Have the embedded costs of development in Albemarle County, including cash proffers, created a cost burden the market is unable to bear?

If growth trends continue, won’t these embedded costs push residential development out of Albemarle County’s designated growth areas and into the rural areas?

The reality is that cash proffers contribute to the paradigm that rural residential development remains the least expensive, most profitable development option in Albemarle County.

If the cash proffers are pushing development into the rural areas and surrounding localities, what are the community costs of increased traffic, more costly government services delivery, as well as loss of ecologically contributing farmland, and productivity?

Cash proffers have produced a plethora of Contradictory Consequences without achieving significant benefit. Now is the time to repeal this rezoning ransom and replace it with a more sensible and equitable alternative.

clip_image0024_thumb.pngNeil Williamson is the President of the Free Enterprise Forum, a local government public policy organization located in Charlottesville. The full Contradictory Consequences report can be found at www.freeenterpriseforum.org