Properly pitching proffers

Covering Chesterfield’s Board of Supervisor meetings for 15 years, I’ve watched the advancement of cash proffers from 1990 through today. I recall the “midnight massacre,” when in the eleventh hour 30,000 lots were zoned before cash proffers were put in place. I even know what a proffer is and the basic formula for how they are calculated; even though a lawyer who still had pimples on his face in 1990 lectured me recently on how proffers are calculated – insulting I think.

By the way, for those who don’t know what cash proffers are; it’s the money that builders or developers offer (before a zoning case) to pay for each new dwelling unit that is sold to offset costs related to the additional strain put on the county system, such as schools, libraries, fire stations, parks and roads. Uh oh, here comes another call from the guy with the pimples.

Cash proffers are currently a maximum of $18,966 per unit, per dwelling, including multi-family units. The problem is, according to some builders and developers, is that the cash proffers system is unfair and forces them to pass the additional cost to the buyer or renter. That is absolutely true. That’s what any good business person would do.

Now, I will say that the cash proffer system, as it is now, is unfair. For one thing the guy building the $500,000 house is paying the same proffer as she who is building the $200,000 home. That means that whoever buys the $200,000 house is paying 5.7 percent more per dollar than the couple buying the $500,000 house.

There are a number of options that could be win-win solutions to what builders call an unfair system. And there are a number of reasons why a system should be in place to offset the impact that new housing puts on facilities in Chesterfield.

There should be an equitable cash proffer system adopted that would allow different housing types; different purchase points and even what part of the county they’re built in, that would determine the amount of proffers paid. For instance, in different parts of the county, where we need to improve our housing stock, cash proffers should be lower or not exist; if a builder constructs a house on an infill lot (lot in an older existing neighborhood) the proffer would be different; workforce housing proffers should be less and one-bedroom apartments or age restricted housing should require a lower upfront cash-proffer offer.

Getting back to the home that costs $500,000, the builder should pay a cash proffer that is a higher percentage than that of the $200,000 or if the land rezoned is beyond current infrastructure or will require a new school or other facility. Overall, there would be a sliding scale, officially called differential cash proffers.

Some builders argue that cash proffers are passed right on to the new homeowner within the cost of the home. This stymies the building of workforce or lower priced housing although there is a huge inventory of lots in the county that carry no cash proffers at all – remember the “midnight massacre?” If the cash proffers went away or were lowered substantially, who’s to say that the builder would not leave the price at current market value and pocket some, or all, of what he pays in cash proffers currently? That’s a win-lose situation.  

If cash proffers were eliminated altogether, how would Chesterfield pay for new schools, road improvements and so on? The answer is taxes and fees. Every tax you can think of that exists in the county would have to go up. Property taxes, business taxes, you name it, even the taxes disguised as fees would go up. Then everyone would pay for new development.

Maybe the fee to hook up water and sewer to a new house would go up, let’s say $10,000 each. Uh oh, that’s about the same as proffers are today, only they would not be called cash proffers.

The funds for public facilities have to come from somewhere. A few years ago, State Senator John Watkins promoted a bill that would call for impact fees at approximately $5,000 per unit. Impact fees, similar to cash proffers, would have to be paid by builders according to state law, but Chesterfield did not support the fees because the fees would cover only a sixth of what it would cost the county to cover the impact new homes have on the county’s infrastructure.

There’s a solution, just like there is a solution to every problem. But one side can’t just say, “We don’t want ‘em.” And the other say, “We have to cover what new construction costs the county in infrastructure.” Cooler heads must prevail, and those who do come together to advance a solution should not be the same old cast of characters. They should be unbiased new blood.

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