Citizens for Balanced Growth

Category: Proffers; Tax Impacts (2007-2015) (Page 2 of 2)

“Proffer Increase Vote Set for Next Month”

by Tara Slate Donaldson, The Gainesville Times

5 September 2007

“The Republican chairman of the Prince William Board of County Supervisors and his planning commissioner, Gary Friedman, have been meeting with reporters recently to explain why proffers ought to be increased. “It’s still more than a month before supervisors take up the issue, but Corey Stewart is already firing the first salvo in his bid to get proffers increased on new homes built in the county.
“In the coming months, the board is expected to vote on whether to increase the proffer amount by 36 percent.

“The current proffer for a single-family house will rise from $37,719 to $51,113. The proffer on a townhouse will increase from $31,927 to $43,262 and the proffer for a multifamily unit will go from $19,526 to $26,545.

” ‘The staff has recommended $51,000, and that is the honest cost to the county to keep up with the cost of what is built,’ Stewart said, explaining that each new family with children costs the county an average of $51,000 in extra schools, roads, public safety and other services.

“The issue was initially raised in the spring, and supervisors were set to vote on a proffer hike in June.

“The original plan was to increase proffers for homes, businesses and nonprofits, such as churches. A general outcry led the supervisors to scale back plans so that only homes would be subject to higher proffers.

“The residential proffer hike was then delayed until the fall so that supervisors could see the latest housing numbers before making a decision. But it won’t make much difference.

” ‘Everybody knows what the housing numbers are going to be; they’re going to be bleak,’ Friedman said Tuesday. Nevertheless, ‘We have the remaining escalating problem that the cost of providing infrastructure continues to rise.’

“Friedman and Stewart maintain that since it’s becoming more and more expensive to build roads and schools, the only way to keep up without raising taxes is to raise proffers.

” ‘It has to be paid for one way or another,’ Friedman said.

“Builders haven’t been pleased.

” ‘The building industry does want to pay its fair share,’ Mark Granville-Smith, president of the Prince William Chapter of the Northern Virginia Building Industry Association, told the board when the issue first came up earlier this summer.

“But, he added ‘we have issues with the numbers.’

“Granville-Smith argued that the 36-percent increase, on top of last year’s increase, is a hard blow to an industry already being battered by a falling housing market.

” ‘It’s not time to kick an industry any more when it’s down,’ he said. ‘We do believe now is not the time to raise those fees.’

“The other problem, Granville-Smith had said, is that adding more than $51,000 in fees onto the cost of a home makes the county’s affordable housing problem worse.

“He and other members of the building industry have argued that builders will have no choice but to pass the additional fees on to home buyers.

“But Stewart said he doesn’t believe that. The chairman has long maintained that the market determines the price of a house. A house may cost $1 million to build, but if the going rate is only $500,000, it won’t sell for $1 million, he said.

“With the housing market in a slump, Stewart said he hopes that the higher proffers will prompt developers to stop building in the county for a while.

“Stewart and Friedman call the proffer hike a win-win for residents because development will slow down and the resulting decrease in supply will mean that existing homes will be valued higher.

“The only ones hurt will be the building industry, and it needs to pay its fair share and cover the cost of the new residents it’s bringing in, Stewart said.

“The downside, he acknowledged, is that ‘an awful lot of business’ in the county depends on the building industry, and a lot of residents are employed by building-related companies.

” ‘There’s no question about that,’ he said. ‘Because of the housing market, a lot of people are losing their jobs; businesses are hurting.’

“But, he added, ‘The positive side is at last this cooling off of the housing market is allowing us to catch up with roads and schools.’

“In addition to raising proffers, the resolution will also change the date on which new proffers take effect.

“Currently, when a developer files an application, that development is then subject to the existing proffer. If the proffers increase, the developer is still grandfathered into the old rates.

“The problem, said Friedman, is that sometimes several years pass between the time the application is submitted and the time the development goes to a public hearing. The proffers may increase several times, but the developer still gets to stick with the old, lower rates.

“The new regulations will set the proffer date as the date of the first Planning Commission hearing, which is the first public hearing on a new development. From that time on, the developer will be grandfathered in. That significantly shortens the amount of time that a developer can hang onto the old rates and the difference will come to millions of dollars for the county, Friedman said.

“The supervisors are expected to take up the proffer issues on Oct. 19. Stewart said the timing is important for two reasons.

“First, he said, there are no major projects in the works right now. If a developer had already applied for a huge number of houses, increasing the proffers and simultaneously shortening the grandfather clause would prompt huge opposition. Since things are quiet at the moment, the timing is ideal.

” ‘What better time to do it then right now when we’re going to get less resistance?’ he asked.

“The other reason is that all eight supervisors are up for re-election in November. Even those who aren’t inclined to increase proffers may be disinclined to be seen as siding with developers so close to an election.

” ‘It’s important to get it done before the election because once the election is done, inertia for everything goes away,’ he added.”

“Stewart Seeks To Raise Residential Proffers”

by Keith Walker, Manassas Journal Messenger

31 August 2007

“Prince William [Board of County Supervisors] Chairman Corey A. Stewart, R-at large, is set to impose higher proffers on residential development.  Proffers are contributions developers pay to offset the negative effects their developments have on the surrounding community. They make the payments in exchange for favorable rezonings.

“Developers currently pay $31,719 per single family house. In May, the county planning staff recommended that amount be increased to $51,113.

“In 2006, the Prince William Board of County Supervisors raised proffers from the 2004 rate of $22,986 to the current rate.

” ‘I think it’s important that the whole $51,000 proffer be enacted and adopted, and I want it implemented as soon as possible,’ Stewart said.

“Stewart plans to bring a proposal to increase proffers before the board in October.

“When Stewart ran for the chairman’s seat in 2006 in a special election against Democrat Sharon E. Pandak, he proposed raising proffers to $47,000, so he is pleased with the county’s recommendation.

” ‘It’s even more than I thought it was going to be and that’s good,’ Stewart said.

“Pandak, who is running again for the chairman’s seat and will face Stewart in a general election in November, said Stewart’s proposal is ‘political grandstanding’ that is ‘too little, too late.’

” ‘I believe that we have to have new development cover its cost so that current residents don’t have to pay for it. But to suddenly bring it back up in October because it’s two weeks before an election to me has nothing to do with good policy,’ Pandak said.

“Whenever proffer increases are proposed, developers resist the increases, saying that they will have to pass the cost to homebuyers.

“Stewart doesn’t buy the argument.

” ‘They can’t add it to the cost of the housing. A house is sold according to what the market will bear,’ he said.

“Consumers simply won’t buy a house if adding proffers increases the price too much, Stewart said.

” ‘No one is going to say, “I’ll give you a premium on your house because you paid a proffer,” ‘ he said.
“The area’s slower real estate market offers the county the chance to catch up with infrastructure, Stewart said.

“Pandak said the real estate market slowdown and a year-long residential building moratorium the board imposed in December 2006 preclude any new proffers.

” ‘What kind of proffers are coming in?’ she asked. ‘In order to get proffers you have to have new development.’

“Pandak added, ‘What this looks like to me on Corey’s part is a last-ditch effort to suddenly say somehow he’s done something.’

“Stewart said he’s looking to the future.
” ‘It might not affect that many homes just because there aren’t a lot of rezonings requests coming through right now. This is really a long-term reform,’ he said.

” ‘The state of the market shouldn’t affect what we do with regard to proffers,’ he added.

“Stewart would limit proffer increases to residential development, since he believes the county should be trying to attract businesses.

” ‘We’re trying to encourage more office, high-end retail and other commercial development. We don’t want to discourage it,’ Stewart said. ‘What’s really taking a toll on our infrastructure is residential development.’ “

“Supervisors Reject Some Higher Building Fees”

by Timothy Dwyer, The Washington Post

7 June 2007, p. T1

“One by one, they lined up to speak. Contractors, builders, members of the clergy, Chamber of Commerce representatives, a bank vice president, and they all had the same message for the Prince William Board of County Supervisors: Don’t raise the proffer rate for residential, business and church construction. It would increase the price of homes, drive small and large businesses away and make the cost of building churches prohibitive.

” ‘Simply put,’ said Mark Granville-Smith, president of the Prince William chapter of the Northern Virginia Building Industry Association, ‘now is not the time to raise proffers again. Why is that? We are in such a serious market correction, and the market simply cannot bear another increase at this time.’

“The county charges proffers on new construction to help pay for public services. After hearing the objections, the board voted unanimously Tuesday to deny the increase for commercial and church construction and to defer indefinitely a vote on increasing proffers for residential construction.

“Last week, Chairman Corey A. Stewart (R) said that the board would implement a two-part gradual increase in the fees, but he voted with other members of the board to keep the rates as they are.

“The proposal called for a 36 percent increase in the amount developers would pay for single-family housing — to $51,113 for each house, up from $37,719 — and an increase from $1.91 to $3.80 per square foot for commercial and church construction.

“Supervisor W.S. Covington III (R-Brentsville) suggested that the board vote separately on commercial and church rates and on residential rates. The supervisors voted unanimously to follow his lead.

” ‘And then I would propose that we not close the county down to business and deny the increase in commercial proffers,’ he said.

“Supervisor John D. Jenkins (D-Neabsco) shot his hand in the air and was the first to speak on the issue, even before Covington had made his motion.

“I’d be happy to discuss this new tax,” he said in a booming voice. “This is nothing but a new tax on the people who can least afford it, our policemen, our firefighters and our teachers.”

“He said the increase would add $300 a month to the cost of a 30-year mortgage for the average price of new housing in the county. “You see how much additional tax you will impose?’ Jenkins said.

“Stewart and Supervisor Michael C. May (R-Occoquan) disagreed with Jenkins, saying it was not a tax but a cost builders and developers must pay to compensate the county for the cost of roads, firehouses, police stations, schools and libraries.

” ‘I do not believe that this is a tax passed on to the home buyer,’ Stewart said. ‘You can only sell a house for what the market will bear. If you spend a million dollars to build a house, you might not be able to sell it for a million dollars if the market won’t support it.’

“The board could not agree on how long to defer the vote on whether to raise residential proffers. Jenkins suggested waiting until at least the end of this year and noted that all members of the board may be motivated on this issue by it being election season. (Everyone on the board is up for re-election.)

“In the end, the board decided to take up the matter again after the county staff has had a chance to answer questions about the impact of the proposal.” [passage omitted on debate on county policy toward illegal immigrants]

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