The amount of money developers pay in exchange for a rezoning is likely to decrease significantly after a committee concludes a review of Albemarle County’s cash proffer policy later this summer.
The amount developers pay per new home could return once again to levels previously thought inadequate to cover the costs of community infrastructure.
“The proffer system in its current form doesn’t work, and I think we’ve identified that,” said Frank Stoner, a developer with Milestone Partners.
In 2007, the Board of Supervisors enacted the policy to standardize the development review process and to find additional revenues to pay for new infrastructure. It raised the one-time cash proffer expectation in a rezoning from about $3,200 to $17,500 per single-family detached home.
Today, because of an inflation escalator in the policy, the cash proffer for each single-family detached home is $20,987. The amount is $14,271 for each townhouse unit and $14,871 for each unit in a multifamily structure.
Developers have complained that the cash proffers are too expensive and discourage them from seeking rezonings. Several have opted to develop by-right, which creates housing stock that is less dense than recommended under the county’s Comprehensive Plan.
“The numbers where they are right now provide a significant disincentive to rezone,” Stoner said Wednesday at a meeting of Fiscal Impact Advisory Committee. “Particularly in multifamily units where the proffers amounts in some cases are worth more than the land.”
Milestone recently opted to build by-right in a portion of the Lochlyn Hills development off Rio Road that is within Albemarle’s borders.
In September, the Board of Supervisors directed the advisory committee to determine whether the county had established the right formula to calculate proffers.
The formula is based in part on the county’s Capital Improvement Program, a list of all the funded infrastructure projects expected to be worked on in the next five years. Proffer amounts also factor in costs in the county’s capital needs assessment.
However, changes in state regulations since 2007 now restrict localities from using the full capital improvement program to calculate proffer amounts.
“What changed with state regulations was that the capital costs have to be for expanding services rather than for maintenance,” said county attorney Larry Davis.
Staff produced two scenarios to establish new proffer amounts.
The first scenario factors in both the CIP and the needs assessment. Under this scenario, the proffer amount for a single-family detached home would drop to $4,918. A townhouse unit would be reduced to $3,845 and a unit in a multifamily complex would be lowered to $5,262.
The reductions were even lower under a scenario in which only the next five years of capital needs were included. Those numbers are $487 for a single-family home, $1,477 for a townhouse and $2,144 for a multifamily unit.
Stoner said the recalculations demonstrate that the cash proffer amounts have been faulty all along. He said the logic of the formula assumes that the cost of growth to Albemarle since 2007 has been around $81 million.
“In that same period of time, the county has collected $6 million in proffer funds,” Stoner said. “That leaves a $75 million gap. If those impacts were real, you would have had to have a tax increase of roughly $9.5 million each year just to keep up.”
Stoner said the county should be more concerned with generating more revenue rather than quantifying the costs of growth.
The county’s population is expected to climb to 154,814 by 2040, according to estimates from the Weldon Cooper Center at the University of Virginia.
“If growth is going to be dealt with in a way that’s consistent with our Comprehensive Plan, then there is going to have to be more services, more infrastructure, and it’s going to cost,” Davis said. “Proffers are just one component to pay for growth. They are just one element of a package of revenues that is necessary.”
Supervisor Kenneth C. Boyd told the advisory committee that the county is currently putting together another committee to look at how to pay for new infrastructure anticipated for future growth.
“They’re going to look at service districts and things like that, which could greatly impact proffers,” Boyd said. “They’re under a deadline to get a report back to the board by November.”
The fiscal impact committee also was asked to review whether credits should be given to developers if they build in priority areas, build mixed-use developments or do something else that supports the Comprehensive Plan.
“If we’re going to go with the [new] proffer number, which is so low, then that to me sheds a very different light on what we would owe in terms of credits,” said Johanna O’Loughlin, a member of the advisory committee.
Currently, the county only takes into account impacts to schools, libraries, transportation, parks and public safety.
One possible recommendation of the committee might be to add more categories to the formula, including the impacts of population growth on jails, landfills and other facilities.
“There are many of us around the table that would like to see all of the costs reflected somewhere,” said Tim Keller, a member of both the advisory committee and the county’s Planning Commission. “That’s not necessarily saying that’s going to make the proffer amount go up.”
The committee is scheduled to meet again July 8 to finalize its recommendations. Once it has made them, the matter will be referred to the Planning Commission for its input.
“There’s a lot more process left to do before it goes back to the [Board of Supervisors],” Davis said.