The Albemarle Planning Commission wants further study of the county’s cash proffer policy to determine if a different model would help generate more revenue to cover the cost of new infrastructure.
Last year, the Board of Supervisors directed the Fiscal Impact Advisory Committee to review the policy to determine whether it was discouraging developers from building the new neighborhoods called for in the county’s Comprehensive Plan.
“The [committee] was asked to look at some possible credits for different types of development and to consider credits for by-right units,” said Bill Fritz, the chief of special projects in the community development department. “FIAC was also asked to update the maximum per-unit cash amount.”
Albemarle adopted a policy in 2007 that requires developers to pay $20,987 per single-family dwelling, $14,271 for each townhome and $14,871 for each unit in an apartment complex.
However, over the course of 18 meetings, the committee was told that a change in state law will require cash proffers to be lowered.
“Since the adoption of the cash proffer policy, the code of Virginia has been amended to significantly reduce those items that can be considered in a cash proffer policy,” Fritz said. “Only those items that expand capacity [of community infrastructure can] be considered.”
Fritz said the county’s capital improvement program and its capital needs assessment now are largely about maintenance, so their costs cannot be used to calculate the cash proffer amount.
If the calculations were changed to reflect the mandate, Albemarle could only charge $4,918 for each single-family unit, $3,845 for townhomes and $5,262 for each apartment unit.
Steve Allshouse, the county’s manager of economic analysis, said Albemarle has for many years used a formula known as the Cost-Revenue Impact Model to measure the fiscal impact of development.
“Every time there was a rezoning, I did a report that calculated the net fiscal impact to the county and compared that to what could be built under the by-right scenario,” Allshouse said. “The difference was seen as the amount the county would be taking on.”
Allshouse said the numbers showed that residential development did not pay for itself. In other words, the additional property taxes generated did not cover the additional spending required for schools, fire departments, police and other government services.
In 2006, the county began to pursue charging a standard cash proffer amount for every housing unit created by a rezoning. That policy was adopted in 2007.
Planning Commissioner Bruce Dotson said the cash proffer amount could shift frequently as the county takes on new projects.
“You could have a huge capital expense in the capital improvement program but then you don’t do it again for decades,” Dotson said.
Commissioners asked for ways the amount could be nudged higher.
Planning Commissioner Rick Randolph wanted to know how educational costs are factored in the calculations.
“When the school system cites a figure of approximately $12,000 for the average [annual] cost to educate a student in Albemarle, and we’re looking at a potential of under $5,000, that means if a family moves here with three children, we’re recovering essentially one-sixth of the overall cost,” Randolph said.
Allshouse said he understood Randolph’s point, but that’s not how the cash proffer system is intended to be used.
“The specific purpose of the proffer is to attempt to recapture the cost of capital that is associated with expansion,” Allshouse said. “It’s not going to get you all the dollars you would need to capture all the costs associated with a new dwelling unit.”
One member of the fiscal impact committee cautioned that the cash proffer policy can’t solve all of the county’s funding problems.
“This policy should be labeled what it is and not what we wish it were,” said Jeff Werner of the Piedmont Environmental Council. “It is to offset cost and not cover the costs. There’s a lot of community assumptions that proffers pay the way.”
Werner said many developers who have already had their properties rezoned but have not yet built their units could come back for amendments so they can pay the lower figure.
“I think staff needs to find out if there are developers who are not sure what to do,” Werner said.
The commission adopted a motion to recommend the Fiscal Impact Advisory Committee continue to study certain aspects of the policy. In particular, the committee will be asked to study if other models would yield a higher cash proffer amount.
The Board of Supervisors plans to spend all of Friday at a strategic retreat on how to fund urban infrastructure in a growing community. The event begins at 8:30 a.m. at Morven Farm.
