Editorial
Sunday, September 25, 2005
Cash proffers offset burden of development
Development is often seen as a way to boost a local government's tax base, but more often than not, subdivisions and shopping malls end up increasing the tax burden. That's because roads, and water and sewer lines have to be extended, more students have to be educated, and more people end up pressing for an array of other government services from police to fire to trash pickup. To offset some costs of new development, Lynchburg officials are considering asking developers for cash "proffers" when they seek to rezone land. Anytime a developer wants to rezone a piece of property, he is essentially changing the city's adopted land use plan. The city should never agree to rezone property without a close look at all the potential impacts, and if it can recoup some costs up front, all the better. The city has a recent example of how proffers could have helped seal a deal that was otherwise unattractive. Plans to develop a shopping center off Wards Ferry Road were rejected in City Council because of traffic concerns. If the developer had offered to pay for traffic improvements up front, the city would likely have been more receptive to the rezoning request. Cash proffers are widely used in Northern Virginia where infrastructure is quickly buckling under the weight of more and more people. Statewide, however, only 38 of 142 eligible local governments used cash proffers during the 2004 fiscal year, according to the Virginia Commission on Local Government. While that represents only 27 percent of localities, the interest in proffers is growing, up 15% from 2003. State law allows Lynchburg to accept cash proffers because it is next to Bedford County, a locality with more than 10 percent population growth last year. City Council would have o change local law to accept such proffers. It should do so.
For too long local tax-payers have been subsidizing new development. Developers make their money and walk away, while taxpayers pick up the tab for local infrastructure and services.
A study some years ago in Prince William County showed that even though its residents paid the highest property taxes in the state, the cost of services for each new house exceeded tax revenues by $1,688--per house.
Lynchburg's Planning Commission delayed a vote on requiring proffers at its last meeting to give lo cal developers--and others--a chance to react. Some local real estate agents weighted in right away. Rick Read with Coldwell Banker Forehand & Co. Realtors said he thinks proffers put developers in an unfair position, and that taxpayers should be paying for infrastructure and services. "That's what the taxes you pay for should go to," he said. Chris Gentry of Milton Realty Service Co. said he has mixed emotions, but the idea would be more palatable if the money were really used to offset the costs of development, and not used for some other purpose. He makes a good point. He also said the cost might just be passed on to the customer, which would increase the cost of housing. That's undoubtedly true, but the source of the money is less important than the principle--new development should not cost taxpayers more. Read also complained that Lynchburg might lose its competitive edge and development might go elsewhere. Here's a novel idea. Maybe some people in Lynchburg would like development to go elsewhere if it's adding to their tax burden. The notion that more development is always a good thing has proved wrong time and time again. Here's another radical idea that's starting to leak into the mainstream. New development can cost less by being more environmentally friendly. That was the point Randall Arendt, an expert on smart growth, made at a recent forum in Moneta organized to discuss growth around Smith Mountain Lake. For a 100-acre tract, it's better to put 20 homes on 30 acres and preserve the other 7 acres as open space than to put each home on a five-acre parcel, he said. Trees can be incorporated into the design, streets can be smaller and designed to promote safety, and residents can have village greens, walking trails and picnic areas in their own backyards. "Would you rather have a two-hour walk and a three-minute mowing job?" "Or would you rather have a two-hour mowing job and a three minute walk?" Subdivisions built this way are more attractive to potential buyers. One developer in Indiana credits Arendt's designs with adding $10,000 to the value of each lot. It's time for all localities to start thinking about smarter, more sustainable growth that doesn't continue to add to the local tax burden and doesn't leave permanent scars on the landscape. All localities should think about cash proffers and changes in density allocations as two ways to accomplish those goals.
