Coalition for Smarter Growth * Virginia League of Conservation Voters * Virginia Conservation Network * Piedmont Environmental Council * Virginia Chapter of the Sierra Club

For Immediate Release

Contact:
Stewart Schwartz, CSG, (703) 599-6437
Chris Miller, PEC, (540) 347-2334
Bob Lazaro, PEC, (571) 225-0198

Developer/Builder Bill Proposes Tax Increase on Virginians
Additional New Tax on Home Sellers Proposed

Developer/homebuilder lobbyists dropped a last-minute bill into the hopper that would make sweeping changes to Virginia's land use law and increase property taxes on Virginians.

The legislation, sponsored by Senator Watkins of Chesterfield County, himself a developer, SB768 would end most of Virginia's "proffer" system under which developers negotiate voluntary contributions to local infrastructure to address the impacts of their re-zonings. Removing local authority for cash proffer contributions and many in-kind contributions, the bill would substitute a state directed, capped, and technically complicated impact fee system, and increase home seller's "grantor's tax."

"We see this bill as a tax increase on existing Virginia homeowners and taxpayers," said Stewart Schwartz, Executive Director of the Coalition for Smarter Growth. "It pushes even more of the costs of new development onto existing residents."

The bill requires increases in the Grantor's Tax outside of Northern Virginia and Hampton Roads - paid by every home seller - by an additional 20 cents per $100 in value. That's $600 on the sale of a $300,000 home. Northern Virginia and Hampton Roads home sellers already face a 40 cent Grantor's Tax increase under last year's transportation bill to pay for the transportation impacts of poorly planned growth in their regions.

"This bill is a slap in the face of voters and taxpayers," said Schwartz. "The November 2007 county elections were dominated by voter anger over growth with smart growth candidates winning many races. And Loudoun County underwent a revolution, sweeping "growth-at-any-cost" incumbents out of office."

The 2005 Governor's election also turned on the issue of growth, particularly in the outer suburbs. Developers then blocked two attempts to strengthen local power to say no to development that would clog roads, but succeeded with burdening Virginians with new taxes for transportation.

"These impact fees are a bad deal for local governments," said Chris Miller, President of the Piedmont Environmental Council. "Capped by the state, the fees would be far less than the current value of cash and in-kind proffers, and would be reduced by so many credits, that they would shrink to virtually nothing. Developers would also evade even these fees by developing in rural areas where impact fees cannot be imposed under this law."

Developer/builders in Northern Virginia would pay on average only $8,000 per new single-family house, $6000 per townhouse, and $4000 per multifamily unit. In other parts of the state the payments would be $5000, $3750, and $2500. While some local governments might be tempted because these fees would apply to existing "by-right" zoning, a huge loophole is the exclusion of already filed subdivision plats and site plans.

"We believe that the fees will not come close to covering the huge infrastructure costs of major re-zonings," said Schwartz. "Moreover, we think this bill is will result in routine rejection of major smart growth, mixed-used developments. Without cash proffers, off-site proffers, and the flexibility of the proffer process, higher density redevelopment of places like Tysons Corner will be rejected by residents and elected officials."

In 2007, 88 counties, 36 cities and 157 towns were eligible to use cash proffers and many do. See: http://www.dhcd.virginia.gov/CommissiononLocalGovernment/pages....
Cash proffers are currently being used for roads, transit, schools, parks, police/fire, libraries, water/sewer and other needs generated by new development. In-kind proffers are also used and include land for school sites, interchange construction, etc. Loudoun County currently collects approximately $47,000 per each new house above by-right units in a rezoning, compared to the $8000 or less that would come from the new fees. When averaged out, the county nets about $15,000 per unit in cash proffers.