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An Interesting Vote Breakdown
By Greg L | 18 October 2007 | Prince William County | 14 Comments
After Tuesday’s Citizen’s Time marathon regarding immigration policy at the Board of County Supervisors, there was a vote on proffer reform, which would increase the proffers required for residential rezonings. Voting for proffer reform: Chairman Stewart and Supervisors May and Stirrup. Voting against proffer reform: Supervisors Barg, Caddigan, Covington, Jenkins, and Nohe.
Is it just a strange coincidence that all of the Supervisors opposed for re-election voted for increasing proffers, and all those not opposed or not seeking re-election voted against this? Maybe not.
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14 Comments
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What good would it do increase the proffers when Stewart has placed a “no rezoning” until December 31, 2007. He raised the proffers once this year and so far has collected zero dollars from his proffers. I would hate for him to be my business manager.
Not to mention the fact that raising the proffers will only serve to further depress the new home market in the county.
Adding another $ 40,000 per lot into the profit margins of any builder is going to have consequences.
I think that right now we can convincingly argue that there are enough existing homes to more than satisfy existing demand. Rezoning existing agricultural land for new home developments is hardly something the county needs to promote.
Want to help the residential real estate market? Hold housing supply stable for a while.
I do think developers should pay more. Looks like they do in Fairfax and Loudoun. I hate seeing houses crammed together so that you can actually stand between them and touch both by stretching out your arms. Oh, and don’t forget the townhouses - the many many many townhouses. I would like to see more businesses in this county not more and more and more townhouses.
I worked for a developer who built townhomes and condos in Arlington and parts of Fairfax who made tons of money and did shortcuts on things he shouldn’t like sound proofing between floors. I think a lot of these developers are sick with greed. They don’t care about our infrastructure at least the one I worked for didn’t.
If you think all developers care about schools and roads, you’ve got your head in the sand. If some of them ever got audited they would make Enron look like the company of the year.
Here’s something disgusting–my sister lives in a brand new condo in Falls Church City. Greedy builder used illegal workers. Her neighbor had a plumbing problem and they had to break through the drywall. In the walls they found bottles of urine!
Wonder how many illegals made Daventry up in Springfield??? The pipes that were used were the cheapest kind and lots of houses flooded…EVERY home in the neighborhood got entire new plumbing because of it.
Another example of houses gone wild is right across from the McCourt Building. Houses that are connected like townhouses!!! GOOD GRIEF Charlie Brown!!!
I’m sure those “illegals” were responsible for supervision of the work crews, required inspections before the wall was enclosed, and specs and purchase of the materials they were installing. You should probably put the blame for substandard construction where it lies - on those that set and accept the standards. That would be the builder and the inspector.
Monticup,
Peter gets it right. That’s the fault of a bad builder and/or a bad construction supervisor.
I always laugh when I hear that if the illegals were gone then prices for things would go up. We all know that NONE of the savings from using the illegal labor were passed onto us. The greedy execs just kept the extra margins for themselves. Don’t believe for a second that prices would need to go up if they were all gone. Just simply don’t stand for it if they try to raise prices. Demand an audit of their past 3 years to see where those profits went. A LOT of heads need to roll over this fiasco.
Three big myths surround the proffer issue that I want to discuss, but first let’s look at what proffers are. Developers must pay their direct costs of building (land, labor, permitting, etc.). However, residential development entails indirect costs that the developers can avoid. Those include providing public services such as education, transportation infrastructure, fire & rescue, police, etc. to the residents of those developments. Prince William County has striven for decades to provide a high quality of life and level of service to its citizens. Those services are not cheap.
In the absence of proffers, impact fees or other means of shifting those indirect costs back to the developers, citizens must pay higher taxes to subsidize the development. We pay the costs also in the form of a lower quality of life. When roads, schools and other public resources fail to keep pace with residential development we all suffer through congestion, overcrowding and other reductions of the levels of service we would otherwise receive. Either way, this is corporate welfare financed from our bank accounts and quality of life.
Residential development does not pay for itself from the taxes we as County taxpayers provide. Last year, when Prince William Citizens for Balanced Growth was fighting the comprehensive plan amendment and rezoning applications for the proposed Brentswood development, I calculated that a residential unit had to be assessed at over $900,000 to generate enough tax revenue to break even. Even then, most residential units in the County did not hit that mark. Home prices are now plummeting.
Who am I to do such analysis? I worked for five years as the financial analyst in the Prince William County Government’s Finance Department focusing on issues such as fiscal impact analysis, revenue forecasting, valuation of economic development projects, etc. I served as the liaison between the County and George Mason University on development of fiscal impact models and helped develop the proffer methodology the County uses now. I reviewed the “economic impact analyses” that the developers paid mercenary economists to concoct and know all of their angles. Currently, I have my own business that includes doing a great deal of investment and financial analysis for private clients (individuals and charitable investment portfolios; not sham economic propaganda). I know what I’m talking about.
Much of the balance of the revenue to support public services comes from businesses. Virtually all commercial development pays much more in taxes than it consumes in public services. This is mainly because businesses do not generate pupils for our public schools. They help subsidize our schools and help educate our kids.
The Prince William Board of County Supervisors (BOCS) has failed for many years to promote a balance between residential and commercial development in Prince William County. The ratio of commercial to residential real estate in our tax base has been deteriorating for years. That means that we have a poorly diversified economy and tax base, and are now suffering because we are so dependent on residential real estate tax revenue to finance our public services.
Now, the myths. Developers must pass on the cost of proffers to home buyers, thus raising home prices and the size of mortgages people need. This is not true. The market (supply and demand) determines price. Developers will always charge the highest price the market offers for their product regardless of their costs, including any proffers they pay. They should do this because they are rational, profit-maximizing businesses responding to the market’s price signals. Proffers increase the developers’ costs and narrow profit margins. Thus, if a home is not adequately profitable for a developer to build reflecting all direct and indirect costs, it will not be built. This reduces supply and supports home values.
The next myth is that proffers are a tax. This could not be more incorrect. Proffers are one of the few tools available to local jurisdictions in Virginia (a Dillon state) to recoup some of the indirect costs of development. Subsidizing these indirect costs, as described above, is corporate welfare that taxpayers are compelled to finance. Anytime you subsidize something, you get more of it. We have a glut of housing available with plummeting prices. The housing market may take many years to recover. Now is the worst time possible for the BOCS to be subsidizing developers and increasing the supply of housing at taxpayers’ expense.
The final myth I’ll address here is that proffers impede the creation of affordable housing. Affordable housing is an important issue but has nothing to do with proffers. Developers focus, for the most part, on higher priced single family homes, town homes and condos. Lower-cost housing is not a profitable sector of the market and most developers are not interested, with or without proffers. The BOCS, the community and the development industry must work together to address the affordable housing problem.
I am not opposed to residential development. The developers are an important part of our economy and built the homes in which we live today. I do oppose, however, being taxed to subsidize residential development. The market can address this problem if the BOCS would let it. We need balanced growth of both commercial and residential projects, while maintaining a commitment to preserving open space, and environmental and historical resources. We need a tax base that has more commercial real estate (including more good jobs) to generate the surplus tax revenue that holds down the growth of our citizens’ tax bills. None of this will happen if the BOCS continues its policy of subsidizing residential development at our expense.
Last Tuesday, all five members of the BOCS who are unopposed in the upcoming election (Covington, Nohe, Caddigan, Barg (not running for reelection) and Jenkins) voted against the proffer reform package as recommended by County staff. The Supervisors who are facing the voters (Stewart, Stirrup and May) voted for it. Sharon Pandak, who is vying with Corey Stewart for the Chair of the BOCS, emailed Prince William Citizens for Balanced Growth to express her support for approval of the staff recommendations for proffers. Candidates Keen and Royce also expressed their support.
We’ve posted more information at Prince William Citizens for Balanced Growth and invite you to have a look (www.pwcbg.org).
Bob
“Developers must pass on the cost of proffers to home buyers, thus raising home prices and the size of mortgages people need.”
It is ridiculous that the supervisors use this myth to justify their vote. If a homeowner spends $30,000 on high end flourescent green tile for their first floor, is he able to pass on that cost when he sells the home? NO!
Supply and demand is simple, so why don’t these supervisors understand?
anon said
“Developers must pass on the cost of proffers to home buyers, thus raising home prices and the size of mortgages people need.”
It is ridiculous that the supervisors use this myth to justify their vote. If a homeowner spends $30,000 on high end flourescent green tile for their first floor, is he able to pass on that cost when he sells the home? NO!
Supply and demand is simple, so why don’t these supervisors understand?
anon
If you spend that much extra in improvments to your home it should increase the value there for you are passing on the cost when you sell your home. If you do something stupid and ugly then your cost will not improve the value and there for you will eat what you spent.
Politicans want to be elected and they tell the gullible public what they want to hear. Blame the public for no one makes the profit that home owners have made over the years completely tax free and give nothing back to the county. These so called conservatives are turly LIBERALS for they expect someone else to pay their way in life.
Bob,
Great analysis and well laid out! I am printing your piece so I can pull it out of my pocket next time I see my Supervisor (Caddigan) to have her explain her vote on why she supported developers over the good of the county (and her constituents).
Bob,
Thank you, for the comments. I hope all see this, and really think about it. I will be visiting www.pwcbg.org