Doing the math

The Virginia General Assembly defanged the existing law regarding cash proffer policies during its 2016 session.  The new law took effect on July 1, 2016.

Since then local governments and developers have been scratching their heads over the convoluted language of the new law and searching for ways to use the rule change to their advantage. What might be described as the first skirmish in this conflict between Goochland County and developers took place at the October 5 meeting of the Planning Commission.

The agenda contained three residential rezoning applications. One, filed by HHH Land, LLC for a 55 plus community in West Creek, requested, and was granted, a 30 day deferral. Another submitted by Readers Branch Partners, LLC and Hockett Road Partners, LLC included substantially  revised proffers submitted on the day of the meeting. As its bylaws give the Planning Commission the option of declining to hear a case with proffers submitted fewer than eight days before the public hearing, the Commissioners unanimously deferred this case to its November 2 session. These two applications, if approved as submitted, could add more than 800 new homes to the eastern part of Goochland. Both are expected to be heard at the November 2 meeting of the Planning Commission,

A third application, filed by Dover Branch,  LLC for a dozen homes off of Hermitage Road near its intersection with Manakin Road, was heard.  It too submitted revised proffers within the eight day window, but they were deemed not to include substantial changes; the Commissioners waived the rule and heard the case.

Developer, Gibson Wright expressed frustration that he was obligated to go through the entire rigmarole of preparing a development impact statement (DIS) for a few houses that will have no impact on county facilities. There were other difficulties with his case—two different zoning categories in a single subdivision and lot sizes under two acres—that did not hinge on cash proffers. His amended proffers included a $3,063 per home cash proffer.

Wright contended that the studies needed to prepare a DIS “is a burden”  and that it would have been cheaper for him to pay the county’s previous full cash proffer, which was $14,250 per home before the new state law went into effect.

Wright’s application was recommended for approval by a 3-2 split, with Derek Murray, District 3; John Shelhorse, District 4; and John Myers, District 1, voting in favor. Commission chair Tom Rockecharlie, District 5, and Matt Brewer, District 2, were in dissent. The Planning Commission is an advisory board, the supervisors make the final pronouncement on land use matters.

Before the 2016 legislation, jurisdictions were  able to establish cash proffers—a “voluntary” payment by residential developers to mitigate the impact of new homes on capital infrastructure like schools, fire-rescue stations and equipment; parks; and roads. These amounts were computed with formulas that estimated the burden each new dwelling unit would place on county infrastructure, such as .3 students per home. Salaries for teachers, deputies, fire-rescue providers, and other staff are assumed to be paid for by revenues generated by the ongoing increase in real estate taxes resulting from development.

Goochland also has an EMS cost recovery policy that charges a fee plus a mileage cost for hospital transport that offsets part of the expense of fire-rescue staffing.

Cash proffers apply only to residential rezoning. Each time land is rezoned, it becomes an ordinance—a  law—that applies to the particular property in question. Not all new homes pay proffers. Kinloch, for instance, was zoned before the county adopted a proffer policy in 2000, and pays no proffers. Breeze Hill, currently under construction on Fairground Road, pays about $20 thousand per home, the cash proffer in place when that land was rezoned.

According to comments made by Director of Community Development Jo Ann Hunter to the Commissioners, Goochland has 39 proffered subdivisions in place— representing 2,336 homes that are zoned but unbuilt—which are estimated to generate more than $18 million. Cash proffers are paid at the time a certificate of occupancy is issued for a new home.

As no rezoning was involved to permit apartments in West Creek, proffers did not apply. However, donation of an as yet unidentified several acre site for a new fire-rescue station within West Creek was part of that arrangement.

The DIS requirement includes mitigation strategies, which may include construction of road improvements.  The catch seems to be that these do not have to take the cumulative effect of many new homes into account. For instance, if a residential project is estimated to add 30 students to the school system, the DIS must only address the expense of those students, not the current capacity of the schools. If those 30 new students increase the school population enough to trigger the need for a new school, the fiscal impact is greater than the additional children in our schools.

Some jurisdictions, like Henrico, do not use cash proffers. Henrico, whose population following the 2010 census was 306,935 versus Goochland’s approximately 21,000, may be better able to absorb increased capital costs by issuing bonds to pay for them and spreading the debt service among its many  residents. Henrico also has an airport, hospitals, malls, and soon a Facebook data center, to generate tax revenue.

Henrico takes care of its own roads, while Goochland is at the mercy of VDOT—the state agency whose motto is “Oops!”—for all transportation needs, a cumbersome and slow process.

Therefore, new homes, especially in large numbers,  have a significant impact on our facilities and how they are funded.

Several studies are underway to craft a clear picture of the cost of  responding to population growth, as well as replacing and renovating aging facilities. The school division recently completed a comprehensive facility master plan that includes costs for replacing, expanding and renovating schools. This replaces the long held notion that the county needs to build new elementary school somewhere in the eastern part of the county for about $24 million. A countywide capital impact model based on all of these studies is expected in February, 2018.

Goochland is not the only jurisdiction dealing with these issues, and there is hope that the General Assembly will address the confusion that the 2016 law caused. Until then, the county and developers will continue something akin to a porcupine mating dance as rezoning applications wend their way through the process.