State to opt for impact fees instead of proffers?

From WTOP: Va. Developers Consider New Ways to Compensate Localities:

Virginia home builders may ask state legislators to change the way they help defray the costs of municipal services required by new development.

Currently, developers offer cash and land for roads, schools or parks. Those voluntary commitments, called proffers, are usually negotiated with city or county leaders.

In recent years, however, some localities have made proffers an informal requirement for approval of a project.

The Home Builders Association of Virginia has distributed a position paper suggesting that proffers be replaced with an impact fee on new homes that could be set by state lawmakers. The proposal also includes a new tax on the sale of existing homes, although it is unclear whether buyers or sellers would pay the tax.

And where do sellers get money from, idiot?

The buyers! Duh.

Sellers don’t have an invisible pile of money around to pay for taxes…

Cash proffers have become “an unbridled tax on new housing in virtually every modest growth area of the Commonwealth,” according to the document from the builders’ lobbying group.

Discussion of an automatic impact fee is a departure for the home building lobby, which has opposed the concept in the past.

Some developers argue that cash proffers are to blame for the current slump in the housing market because the cost is passed on to buyers in the purchase price.

Del. Terrie Suit, R-Virginia Beach, who was recently briefed on the plan, said she would be reluctant to support anything that would further tax home sales.

“Our housing market is really stressed right now,” said Suit, a mortgage loan officer. “We need people to start buying homes, so increasing the cost of buying a home is not a good thing.”

The builders association argues that its proposal would increase affordable housing options by spreading infrastructure costs among more property transactions.

Del. Franklin Hall, D-Richmond, supports revamping a proffer system that he said “is exacerbating urban sprawl.”

The Virginia Association of Counties opposes any plan that would deprive local governments of the power to ask developers to help pay infrastructure costs, spokesman Ted McCormack said.

“We’d be reluctant to give up cash proffers unless we feel like the impact fee system would offer flexibility,” he said. “A one-size-fits-all approach is probably not something that’s going to work across 95 counties.”

The General Assembly convenes Jan. 9.

1 Comment

  1. The entire thing is crazy. The proffers are blackmail for counties that just raise the price for the buyer and make homeownership more out of reach. If the counties would actually use the money for improving things that directly relate to the construction (fire,EMS, poice, transportation), than sure, why not? Buyers are hard enough to find – let’s not make it more difficult.

    On top of this proffer issue, Virginia is going to (once again) try to increase the Seller’s “Grantor’s tax” which is paid at closing. Currently it’s $1 per $1000 sales price and the proposal will be $3 per $1000. They tried this last year and the Association of REALTORS were alone in the fight. I don’t know that they can stop it again. Everyone is attacking the Seller who is already bleeding money in this market.

    Why, Sellers aren’t able to do anything about it – homeowners are easy targets!

    Keep up the good posts, educating the public about things that actually effect them is an important task!

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