Vote Nears on Developer Fees
Builders Say Kaine’s Plan Would Increase Home Prices
In a historic change, Virginia Gov. Timothy M. Kaine (D) has proposed giving local governments in fast-growing areas the right to impose fees on residential and commercial development.
The money raised from the fees would be spent on improvements to roads serving the development. Behind the change is the idea that developers whose projects contribute to traffic congestion should help pay to untangle it.
“What this impact fee legislation does is allow us for the first time to make developers pay for their own transportation improvements to support development,” said Corey A. Stewart (R), chairman of the Prince William Board of County Supervisors.
The General Assembly will vote Wednesday on the fee proposal, which is part of the statewide transportation plan that Kaine amended last week. Despite opposition from the state’s home-building industry to the impact fee, legislative leaders predict the plan will be approved.
The impact fees, which are unusual in a state that reveres the rights of property owners, would not be restricted to new housing subdivisions and commercial projects in areas that have been rezoned. Local governments also would be allowed to assess the fees on development that can occur under existing zoning, known as byright construction. Currently, most Virginia counties can seek money for roads, schools and libraries only from developers in the form of proffers for rezoning requests, not by-right development.
Kaine can’t take all the credit for the fees. House Speaker William J. Howell (R-Stafford) first included the impact fees in the statewide transportation plan, much of which he wrote. But the Republican plan allowed only six large counties to impose impact fees and only if they agreed to take over maintenance of secondary roads, currently handled by the state.
At the urging of county officials, Kaine dropped the road maintenance requirement, extended the impact fee power to 67 jurisdictions and expanded the scope of the fees to include commercial and residential areas. The addition of commercial areas would benefit parts of Fairfax County that officials have designated for revitalization, including Annandale, Baileys Crossroads and McLean.
Howell said he supports Kaine. “This is very significant and something that I have been pushing for from the beginning,” Howell said, adding that Kaine “was open to suggestions and my thoughts.”
Critics of Kaine’s proposal say the impact fees would place an unfair burden on the building industry, forcing developers to pass the cost on to homebuyers and leading to higher real estate prices.
“Virginia has had as a hallmark for decades, actually for centuries going back to Thomas Jefferson, a focus on property rights, and this is an effort of Big Brother to reach into the pocket of developers,” said Antonio Calabrese, a land-use lawyer and a partner in the Reston office of the law firm Cooley Godward Kronish. “The irony of this is that it seems politically expedient because you are taking money out of developers’ pockets, but it continues to increase the cost of housing.”
How much money the impact fees would raise for local governments is unclear because the formula is complicated. It involves the cost of transportation “benefits” divided by the number of new houses. How local governments define those benefits could have a significant role in setting the level of the impact fees.
Stewart estimated that Prince William could raise $540 million by assessing impact fees on byright construction currently pending. It is estimated there are 35,000 lots available for building in Loudoun County under existing zoning, 23,000 in Spotsylvania County and 26,000 in Prince William. Stewart said it costs Prince William about $20,000 for transportation infrastructure for every new house built, and that is the impact fee the county should charge developers for each house.
“The impact fee is absolutely essential to the passage of the bill,” said Stewart, who was elected board chairman last year after running on a slow-growth platform.
The Home Builders Association of Virginia recently sent a letter to state lawmakers urging them to reject the impact fee amendment.
“It is not fair to ask new homebuyers alone to finance the transportation needs of a locality,” the letter stated. “There is not enough money in new housing to finance the transportation needs of a community unless only the wealthiest Virginians are to experience the many benefits of home ownership.”
Jim Williams, executive vice president of the Northern Virginia Building Industry Association, said lawmakers in Richmond might have been better off raising the tax on gasoline to fund transportation costs instead of imposing impact fees.
“You know, I was trying to remember the last time I saw a house driving down the road,” Williams said.
Howell said he knows Kaine is “getting a lot of pressure from the home builders.” But he added: “It is an up or down vote. I may lose one or two votes if the impact fees are in there. They are going to stay in.”
Some elected officials said the impact fees are just a first step.
“I think it moves the agenda forward,” said Gerald E. Connolly (D), chairman of the Fairfax County Board of Supervisors. “It helps us to diversify our tax revenues and to finance transportation improvements with money we don’t have access to right now, and that is not trivial. We have got something we can work with, but we don’t want to raise expectations and say, ‘We’ve done it; we have solved the transportation problems,’ because the General Assembly, when it comes to transportation, is on the expanded cicada cycle. Every 17 to 20 years, whether we need it or not, they do something about transportation.” Staff writer Amy Gardner contributed to this report.