County to review cash proffers it expects for homes in new developments

It was just two years ago that Albemarle County made significant changes to its cash proffer policies .  Proffers are the voluntary contributions a developer makes to mitigate the impact of their project and incentives to help gain the support of local officials for a rezoning request.  Now one Supervisor is calling for the proffer policy to be reexamined given the decline in new home construction and a challenging economic climate.

Supervisor Ken Boyd (Rivanna) is the only elected official on the County’s Fiscal Impact Advisory Committee .  In a committee meeting Tuesday, he said the cash proffer methodology needed to be reexamined.

“There is concern in the development community that the proffers are inflating in costs while their sales prices of their homes are deflating,” said Boyd. “In talking to one person that has a project before the Planning Commission now, it’s making it almost impossible to make the thing work because of what they have to pay in proffers.”

In mid-2007, Albemarle County raised the one-time cash proffer expectation from about $3,200 to $17,500 per single family detached home.  Further, the cash proffers were required to include an escalator clause for inflation.  Thus, even when no homes are being built in an approved development, the cash proffers have the potential to increase every year until construction begins.

Members of the Albemarle County Fiscal Impact Advisory Committee
(L to R) Ken Boyd, Jamie Spence, Don Franco, and Wayne Cilimberg

At the time, the advisory committee made its recommendations for a new cash proffer system after studying the approach taken by Chesterfield County.  A methodology was developed that looked at the 5-year and 10-year projected capital needs of the County and allocated some of the costs for major projects to new development.

Cash proffers are typically used to fund infrastructure needs like schools, roads, libraries, and public safety.  For the current fiscal year, however, Albemarle cut its overall capital budget by around $100 million and very few cash proffers have been collected in the current year.

At their meeting, the committee expressed an interest in revisiting the methodology.  Members asked if the specific dollar amounts per home should take into account the shrinking expectations about what capital projects could actually be built in Albemarle over the next decade.

Planning Commissioner Don Franco (Rio) was recently appointed to the advisory committee and introduced himself as “the developer” on the commission.  Attending his first meeting, he asked if the County’s smaller capital improvement program (CIP) should lower the proffer expectations.

“The CIP really ought to be tied more to required projects,” said Franco.  “One of my complaints early on, when the proffer policy was going forward, there seemed to be a lot of ‘Let’s create all the CIP [projects] we can and put them out there.’ Some of them were development related but many of them weren’t.”

Committee member Morgan Butler, representing the Southern Environmental Law Center, called for the committee to identify cash proffers that represent “to the fairest extent possible, the cost of the impact of each new unit of development.”

“Once we come up with that figure, it’s up to the Board’s discretion to adjust it one way or another to take account of some of these factors, like the poor economy,” said Butler.  “I don’t think our goal in revising these numbers should be to come up with a number that’s more conducive, or that helps the development community in a time of fiscal uncertainty.”

“I am concerned about the overall economic sensitivity of the County,” responded Boyd. “Somebody once told me that our factory workers in Albemarle County are our construction workers and a lot of these job losses are keyed to that.  I am just trying to take a look at the big picture [to see] if we can stimulate some building that’s going to help the economy overall.”

The Fiscal Impact Advisory Committee will hold additional meetings this fall and into the spring to revisit the methodology and ultimately make recommendations to the Board of Supervisors for consideration in next year’s county budget.