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Senate advances bill to replace proffers
Impact fee bill clears Senate committeeDate published: 2/7/2008
RICHMOND-- A controversial bill that would dramatically revamp the way localities get development to pay for itself won approval from a Senate committee yesterday, clearing the way for a vote from the full Senate.Sen. John Watkins' bill would replace the current proffer system with capped impact fees, something developers want but has local government leaders complaining. Watkins told the Senate Finance Committee that the proffer system is "out of hand, it is out of control" because some localities charge proffers of up to $40,000 per new house. He said that raises housing prices, making homeownership less affordable, and artificially inflates real estate taxes. "We need to make a move in this direction," Watkins said. "We have a broken system with cash proffers and if we let this continue, the price of housing and the very idea of affordability is gone." Proffers are technically voluntary payments that developers pay to localities to cover the cost of services to those new houses, like water and schools. Impact fees do essentially the same thing, but are currently limited to road improvements. Watkins' bill would eliminate proffers, but apply impact fees to emergency services and schools as well as roads. It would also allow localities to charge impact fees on "stale zoning"--i.e., development of lots that are already zoned. Current law allows fees or proffers to be charged only on development that requires new zoning. But it would cap impact fees at $5,000 per house in most of the state and $8,000 in Northern Virginia. Localities say that would severely limit their ability to pay for the new services required by new houses. But Watkins thinks localities would recoup the money lost to huge proffers because of the provision allowing them to charge impact fees on lots that were previously zoned. "It greatly broadens the base of the revenue stream which makes up for a lot of the difference," he said. The Homebuilders Association of Virginia backs the bill, and worked with Watkins to write it. "We're not here to ask you to do away with the proffer system," said Mike Toalson of the Homebuilders. "We're here to ask for an alternative lower the per unit cost and spread the base. This is an honest good faith attempt to create an alternative."
Date published: 2/7/2008
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