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HomeMy WebLinkAbout2014-7-08Tentative BOARD OF SUPERVISORS T E N T A T I V E JULY 8, 2014 5:00 P.M., ROOM 241 COUNTY OFFICE BUILDING 1. Call to Order. 2. Joint Meeting with Planning Commission: a. Discussion: Cash Proffer Policy b. Matters not Listed on Agenda. 3. Adjourn to July 9, 2014, 3:30 p.m. Return to Board of Supervisors Home Page Return to County Home Page file:////coba-webapp01/BOSForms/Agenda/2014Files/0708/0.0_Agenda.htm [10/6/2020 1:18:39 PM] COUNTY OF ALBEMARLE EXECUTIVE SUMMARY AGENDA TITLE: Cash Proffer Policy SUBJECT/PROPOSAL/REQUEST: Discussion of the Cash Proffer Policy STAFF CONTACT(S): Foley, Walker, Davis, Kamptner, Graham, Cilimberg, Allshouse, McCulley, Ragsdale and Fritz PRESENTER (S): Bill Fritz LEGAL REVIEW: Yes AGENDA DATE: July 8, 2014 ACTION: INFORMATION: X CONSENT AGENDA: ACTION: INFORMATION: ATTACHMENTS: Yes REVIEWED BY: BACKGROUND: On April 2, 2014, the Board directed staff to hold a roundtable to receive comments from the public on the Cash Proffer Policy, to conduct background research on the practice of other localities, and to assemble data for Fiscal Impact Advisory Committee (FIAC) calculations. Staff has completed these tasks and is presenting this information to the Board and Planning Commission at this joint meeting. Staff will request guidance from the Board on how to proceed after the Board and the Commission have reviewed this information. The purpose of the Cash Proffer Policy in 2007 was to accept cash contributions from a developer to address the impacts on public facilities for schools, transportation, parks, libraries, and public safety resulting from a rezoning of property for residential use. The amount of the cash proffer is intended to be the proportional value of the public facilities deemed necessary to serve the proposed residential development on the rezoned property. Prior to 2007, this impact on public facilities was determined on a case-by-case basis. The Cash Proffer Policy addressed concerns of the development community and the County that the case-by-case approach for developing acceptable proffers was too lengthy and created uncertainty for developers in their financial planning for projects. STRATEGIC PLAN: Goal 2. Provide community facilities that meet existing and future needs. DISCUSSION: Staff conducted a roundtable on May 15, 2014. The invitees included those members of the public who had been involved in a rezoning since 2007 and those who had expressed an interest or who were likely to have an interest in the County’s cash proffer policy. In addition, notice of the meeting was distributed by A-Mail. Attachment C provides a summary of public comments made at the roundtable and Attachment D provides staff’s summary of the roundtable discussion. The public provided a broad range of input on the cash proffer policy, ranging from expanding the cash proffer policy to eliminating the policy completely. There was no clear consensus in the comments received. Staff’s research on other Virginia localities’ approach to cash proffers also failed to provide a clear consensus (see Attachment G). Most localities either make no use of cash proffers or are not enabled to accept cash proffers. The localities enabled to accept cash proffers but which show little or no cash proffer revenue collected or pledged either may have had no or few rezonings, or as a matter of policy do not desire to have new residential development address impacts on public facilities through cash proffers. A few localities, including some of Albemarle County’s peer localities, have made extensive use of cash proffers. Staff’s only conclusion is that cash proffers are one tool availab le to localities to provide funds for capital improvements. How localities use this tool is a political decision that is based on the circumstances and needs of each locality. No clear evidence exists that any particular policy approach is better than another. Based on the public input received at the roundtable, staff identified three distinct options for the Board to consider as to how to proceed, but does not believe any of these are clearly preferred by the community. Those options are: 1. Limited changes to current policy – The changes to be considered under this option would be limited to recalculating the maximum proffer amounts and revising the policy to allow full credit for by-right development that is possible on the property. The Board allowed such a credit for a rezoning it approved on December 11, 2013. These limited changes would require the FIAC to calculate new, lower, maximum proffer amounts, and would address the concerns raised at the roundtable that the amounts are too high. Adjustments to the formula for calculating maximum proffer amounts would have to be made. This would be the quickest and AGENDA TITLE: Cash Proffer Policy July 8, 2014 Page 2 easiest option to implement, and a revised policy could be considered by the Planning Commission and the Board this Fall. 2. Broader changes to current policy – The changes to be considered under this option would include the limited changes discussed in #1, above, as well as additional policy changes for credits (see Attachment E, section 6), adjustments, or both. If this option is chosen, staff requests Board direction on specific parts of the policy to be considered for revision to assure a comprehensive review. Staff estimates that this approach would extend the completion date of its work to January 1, 2015. 3. New approach - Some who commented at the roundtable believe the current policy should be eliminated and replaced with either a case-by-case evaluation of a proposed rezoning’s impacts, without the guidance of a cash proffer policy, or alternative funding approaches, such as increasing the real property tax rate. This “new” case-by-case approach is substantially the approach that was used by the County prior to the adoption of the Proffer Policy in 2007. Staff anticipates that extensive research and analysis would be required to best implement a new case-by-case evaluation process that is efficient, ensures that impacts will be appropriately addressed, and assures that any proffers will satisfy the statutory and constitutional requirement that they be reasonable. Staff believes that deciding how to proceed ultimately becomes a question of which approach bests balances the community interests. For this reason, staff believes the Board may find it necessary to establish a task force that considers all of the options and provides the Board a recommendation. Depending on the Board’s direction on the best approach forward, it is anticipated that significant staff resources may be needed in 2015 and/or would likely require delaying work on several other Comprehensive Plan priorities. BUDGET IMPACT: Once the Board determines which option it wants to pursue, staff will further research and calculate the budget impact related to that option and will present it at a future Board meeting. Cash proffers are currently a valuable source of revenue to address impacts on public facilities resulting from development, and they support the funding of important and needed capital improvements that would otherwise be funded through general tax revenue. Cash proffer revenue for needed capital improvements builds capacity in the CIP by freeing up funding for other projects. RECOMMENDATIONS: After review of the public input and staff supplied information, staff requests that the Board provide direction on its preferred option for proceeding. ATTACHMENTS: A – Cash Proffer background information B – Information on Cash Proffers in other localities C – Roundtable Summary D – Staff Summary of Roundtable Discussion E – Current Cash Proffer Policy F – Historical and Current Cash Proffer Amounts G – Summary of Survey of Responses from Localities Accepting Proffered Cash Payments H – List of Rezonings Subject to Cash Proffer Policy and CIP Projects that have made use of cash proffer funds Return to agenda ATTACHMENT A Cash Proffer Background Information and Data Cash Proffer Expenditures in Albemarle County In the time Albemarle County has collected cash proffers the amounts have ranged from $41,400 (FY 2006) to $2,018,745 (FY 2013). (See Table below) The amount of cash proffers expended since funds from the cash proffer program have been available ranges from $7,000 (FY 2009) to $423,242 (FY 2004). Using current assessed values for property in the County, the amount of money received from the cash proffer program is approximately equivalent to a tax rate of 0.044 and the amount expended is approximately equivalent to a tax rate of 0.025. It should be noted that the CIP has been primarily focused on maintenance projects for which cash proffer funds cannot be used. As the CIP includes more projects eligible for use of cash proffer funds the amounts expended will increase and may in some years exceed the amount received in a year. This situation has occurred in FY 2004, FY 2006, FY 2008, FY 2010. Cash proffer funds have accounted for 0.8% of the CIP since FY 2007. CASH PROFFER ACTIVITY FY 2007 - FY 2013 FY 2007 FY 2008 FY 2009 FY 2010 FY 2011 FY 2012 FY 2013 Proffered $1,631,100 $44,169,724* $0 $0 $0 $754,000 $1,595,713.00 Collected $1,189,183 $262,743 $391,748 $122,879 $209,880 $859,241 $2,018,744.98 Expended $181,772 $1,589,011 $7,000 $191,410 $186,265 $113,223 $206,291.95 *Includes the Biscuit Run rezoning, which lands have since been donated to the State for a State park. Cash proffers are only paid for residential development where a rezoning has occurred. Some of the comments received from the public are a concern that “by-right” development results in the same impacts to County resources as development that occurs due to a rezoning. Due to the method of data collection, staff was not able to readily research the number of building permits applied for since FY 2007 where a cash proffer was involved. The information is only readily available since FY 2010. Since FY 2010, the County has received 1,876 building permit applications for single family attached, single family detached, townhouses, multifamily, duplexes and mobile homes. Of those 306 (16%) have had cash proffers associated with them. CASH PROFFER POLICIES IN OTHER LOCALITIES LOCALITY PROFFER AMOUNTS BY DWELLING UNIT TYPE FACILITIES COVERED BY POLICY/OTHER NOTES CREDIT PROVISIONS Caroline $17,632.36 Schools, parks, fire & rescue, libraries, & roads -No credit given for improvements otherwise required by VDOT or ordinance. -Value of in-kind improvements based on assessed value. -Credits for off-side road improvements may be given. -May also give credit for any unique circumstances of a development that mitigate impacts and create a dem onstrable reduction in capital facility needs. [Policy not specific] Chesterfield $18,966 Schools, parks, fire & rescue, libraries, & roads -No credits for by-right development. -Substantial upgrades to current design/development standards and ordinance requirements. -In-kind or off-site improvements. -Unique circumstances that mitigate the development’s projected impact on public facilities or create a demonstrable reduction in capital facility needs. (e.g., regional road projects or age- restricted developments). -Revitalization projects where project is in county’s enterprise zones or blighted area or when the development proposal includes commercial uses in addition to housing. -Minor amendments to rezonings approved within the past 5 years may not be subject to higher proffer amounts. Goochland $14,292 Schools, parks, fire & rescue, libraries, & roads Separate Road Cash Proffer System -Value of in-kind improvements based on assessed value. -Credits for off-side road improvements may be given. -May also give credit for any unique circumstances of a development that mitigate impacts and create a demonstrable reduction in capital facility needs. [Policy not specific] Hanover $2,306- 50 lots or less Transportation Only 50 lots or more-individualized analysis to determine cash proffers -No credit policy. -Accept in-kind improvements that could offset cash proffer amounts. Loudoun $45,923-$59,470- SFD $30,716-$40,385- TH $17,837-$23,758- MF Amounts vary based on Capital Improvement Factor areas (Eastern, Central, and Western) Schools (70-80% CIF), parks, libraries, fire & rescue, and transportation. -No credit policy. -Accept in-kind improvements that offset cash proffer amounts. LOCALITY PROFFER AMOUNTS BY DWELLING UNIT TYPE FACILITIES COVERED BY POLICY/OTHER NOTES CREDIT PROVISIONS Prince William $44,930-SFD $39,837-TH $26,778-MF Schools, parks/open space, libraries, fire/rescue & transportation. Schools receive $20,694-SFD, $17,489- TH, $10,300-MF -On-site or off-site improvements. -Uses that have reduced or no impact on certain levels of service. -Targeted or desirable land uses. Spotsylvania $33,285-SFD $24,088-TH $11,539-MF General government and judicial services, fire and rescue, transportation, parks and recreation, libraries, schools, law enforcement, and solid waste management. Policy provides for reduce proffers for age- restricted housing. Policy includes list of “Development Criteria” (list of other proffers that may be appropriate) -Dedication of land and other in-kind improvements. -Engineers report required as proof of value. Stafford $46,925-SFD $40,338-TH $25,935-MF $25,935-Age Restricted $28,116-MH Fire and rescue, general government, library, parks and recreation, and schools Transportation Impact Fees-$2,999/unit -Future taxes paid. -In-kind construction and dedications-based on assessed values and engineers estimate of improvements. No credits given for on- site private amenities or off-site improvements that only benefit the proposed project. James City County Schools: $17,115-SFD $14,870-SFA $15,166 MF-$ Water: $1,364-SFD $1,030-TH/MF Separate proffer policies for parks/ recreation. Proffers based on needed improvements/# of dwelling units or cash equivalent. Cash amounts set for schools and water. -No credit policy. -Accept in-kind improvements that could offset cash proffer amounts. Henrico No cash proffer policy Individualized analysis of rezoning impacts and how they should be mitigated. Other proffers accepted, including road construction according to their Thoroughfare Plan. Page 1 CASH PROFFER POLICY ROUNDTABLE MAY 15, 2014 ATTACHMENT C CASH PROFFER POLICY ROUNDTABLE MAY 15, 2014 MEETING SUMMARY Note: Although there were four Board members present at the meeting, they did not participate in the roundtable discussion other than listen. A quorum of the Planning Commissioners were in attendance constituting a meeting, refer to the separate minutes of their meeting for details. Moderator/Presenter-Mark Graham, Director of Community Development Mr. Graham welcomed everyone to the meeting and let them know the purpose of the meeting was to gather all ideas related to the cash proffer policy, not to achieve consensus. Mr. Graham presented a PowerPoint presentation to review the current cash proffer policy, including why the County has a cash proffer policy and provided an overview of issues that were considered when the County developed the policy. Mr. Graham then led the attendees through a series of questions (in bold below) to gather public comments on the current policy. Questions about Current Policy?  When was the policy adopted? October 10, 2007  Is there a link between the housing choice voucher program and cash proffers?  Before 2007, rezonings were looked at on a case-by-case basis and a fiscal impact analysis was done for each. There was variability for developers and it took longer to agree on proffers. One project took two and a half years.  The proffer policy establishes a maximum cash proffer amount and the County could accept less than that amount.  Recent zoning map amendments were approved that gave credits for all units possible under by- right zoning—this is a recent interpretation by the Board of the credits section of the policy.  How does our current cash proffer amount compare to other localities?  Why does the proffer policy only apply to rezoned projects? Virginia doesn’t allow impact fees.  Has there been any consideration of an “endowment” or do proffers go to the capital fund and are spent on one-time capital projects?  Have you assessed the impacts being off-set by these proffers?  Need more detailed numbers about the amount of proffers collected under the existing policy. The current cash proffer policy has stated goals of: – Simplifying evaluation of rezoning applications, Page 2 CASH PROFFER POLICY ROUNDTABLE MAY 15, 2014 – Creating certainty for developers, and – Providing an additional means of funding an increasing demand for infrastructure improvements associated with growth. QUESTION: Do you believe these are the right goals for the policy? If not, what should be the goals?  Concern that that policy is not meeting the growth management goals of the County  There should be a 1:1 where one development right gained in the Development Area, means one development right is given up in the Rural Area and impacts are “neutralized” like a Transfer of Development Right (TDR) program.  There should be an assessment of whether the current proffer system is both equitable to the County and equitable to the developer.  There is no guarantee the proffer funds collected go to the specific area where the development paying them is located.  How are we doing and is there adequate funding associated with new residential development? This is a question to explore.  A connection should be made between the growth management goals of the land use plan and proffer policy. We should be providing incentives to developing in the Development Areas and not disincentives. Now things are unbalanced because of Rural Area growth that does not pay proffers which is an unintended consequence of the policy. (4-5 people said they also agreed with this comment.)  There should be a mutual understanding between developers and other taxpayers, not an us v. them feeling as there is now, which results with no one being happy about the current system.  Too bad the state doesn’t allow impact fees because that would be consistent and fair for everyone. Right now the proffer system is painful for everyone.  Need data, not anecdotes, about growth being pushed into the Rural Areas because that isn’t what the numbers reviewed so far are showing. Some people are even moving into the City.  Using proffers presumes other existing funding tools aren’t adequate. What about a 1 cent increase on the tax rate, which would double the funds received under the proffer policy and be more equitable?  Costs are passed to the new homeowner who really pays the proffer. Couldn’t we just raise real estate taxes?  Should there be a policy that is countywide to address the funding issue? Example: Special taxation districts that Northern Virginia does to pay for roads. Currently, new or expanded infrastructure (schools, transportation, parks, libraries, public safety) is funded by a combination of cash proffers and County taxes. QUESTION: Do you believe this is the right approach to fund these improvements? If not, what should the County consider?  Need to find the right funding approach.  Would taxes be a better way to fund improvements?  Tax a special increased rate for a fixed period of time then revert back to regular tax levels Page 3 CASH PROFFER POLICY ROUNDTABLE MAY 15, 2014  Some rezonings have proffered Community Development Authorities.  Balance the playing field, get away from using proffers as excuse for not building affordable housing.  Proffers don’t cover a significant portion of capital costs. Even in Loudoun where proffers are much higher, they cover about 5% of the capital budget. Proffers are a small piece of the overall funding needs. Should it still be a piece of funding? Need to recognize if proffers are eliminated, there would be a cost or it would mean a “proffer disappearance penalty”.  There needs to be a stronger connection between proffers collected and the CIP. There is an expectation improvements will be made with our master plans but they are not being made. Tie proffers more closely to specific projects and a commitment to build the projects is needed from the County.  Proffers aren’t paying for the CIP. Current system is broken and we want to drive development to the Development Area not the Rural Area.  The fundamental issue is the idea that new development creates impacts. People create impacts wherever they chose to live, the DA, RA, existing housing, etc.  What is the % of new residential units built from proffered rezoned units v. by-right development?  In the 2000s to 2007 there was a slow increase in cash proffers from around $800-$1200-$2000, to $4200 around 2007. Developers were able to absorb those amounts. Then, with the proffer policy, there was a BIG JUMP combined with a market crash. Now it’s too much to absorb. The example was given of Marty Schulman’s property in Crozet, it is shown for higher density in the Crozet Master Plan but is competing with Old Trail, which would has a $1000 proffer for townhouses. Through a rezoning, Mr. Schulman would be subject to a proffer of around $14,000 a unit. It’s just too much and the county should back off the big number. The recent by- right credit interpretation of the cash proffer policy has helped. Albemarle County has a marvelous growth policy!  Mr. Graham asked if developers would be willing to send a pro forma, even a hypothetical one, to illustrate this problem. Vito Cetta offered to send some information.  The multifamily proffer costs are at, or above, per unit what you usual pay for the cost of land.  It’s not one size fits all. There needs to be a holistic review of the issue. The funding needs shouldn’t fall on the backs of a few. Rooftops are needed for commercial.  Landowners who have been holding land for retirement to cash out can’t do so because of proffer system.  We should know the amounts we’ve collected under the cash proffer policy.  $14,000/unit over 20 years really adds to the rent of apartments and makes them unaffordable.  Compare by-right growth to proffer policy growth.  Proffers are a disincentive to developing in the Development Area where we want growth to occur and not the Rural Areas. Page 4 CASH PROFFER POLICY ROUNDTABLE MAY 15, 2014  Staff asked for clarification. Comments have meant Development Areas more generally and not the Priority Areas in master plans.  There is a gap between the service expectation and what we are getting.  Other ways to generate revenue?  Transportation impact fees are enabled and would distribute funding more fairly. o How would that money be spent when roads are taken care of by the state? o Stafford is an example of a locality that uses transportation impact fees.  Can we assess/use real estate transfer fees to collect revenue?  There are other costs that have increased, not in proffers. This includes water and sewer connection fees, roads are required to be wider now, the costs of providing an affordable housing unit means it must also be subsidized by the market rate units,etc.  Impacts are from the people---increase fees on vehicle registration by $20 and we could collect what we do in proffers  There is a cost to the county when properties develop by-right. For example, a property zoned R4 that is 3 acres could yield 12 single family dwelling units which would cost the county more and be a greater burden on infrastructure than if the property was upzoned for 70 apartments based on the comprehensive plan recommendations.  It’s not one size fits all  Would transportation impact fees be limited to residential or also apply to commercial?  Need data on amount of proffers collected and what infrastructure costs they have off-set. Track what we’ve received and what has been built.  Cash proffer system may be flawed. Receiving land for parks, for example, would have a more lasting affect than one-time cash payments. Currently, the policy considers schools, transportation, parks, libraries and public safety for calculating the costs. It does not include other public facilities such as jails, solid waste facilities or government offices. QUESTION: Should the list of considered facilities be changed? If so, how?  Transportation improvements are not given enough credit. The developer pays for road improvements then pays a cash proffer amount that includes transportation costs factored into the amount. Developers are double paying.  We need to take a look at the Fiscal Impact Advisory Committee proffer calculation/methodology. There are projects included in the model that proffers shouldn’t be paying for like “technology upgrades”.  Water and sewer improvements are not covered by the policy. They are the closest we have to impact fees.  What is enabled that we aren’t doing now? Is there infrastructure associated with growth that we could fund in a different way? Currently the cash proffer policy allows credits for: – Dedication of land or infrastructure, Page 5 CASH PROFFER POLICY ROUNDTABLE MAY 15, 2014 – Operational expenses (e.g. transit funding), – No increase or small increase in density – Small infill developments, – Substantial upgrades to design/development standards , – Unique circumstances (e.g. age restricted housing) QUESTION: Should the credits be changed? If so, how?  How do we value credits developers may offer? Assessed value  What about road infrastructure credits? Should we credit the bond amount for new roads?  Why is the County requiring wider streets? Isn’t than counter to our Neighborhood Model goals? That is more cost to the developer upfront then there are more maintenance costs. It’s because of Fire Marshal requirements not VDOT.  Credit should be given for commercial located on the same site as residential. Example of Berkmar Drive project where proffers were required for apartments over office.  Credit should be given for getting a submittal right the first time.  Need to define in the policy what “substantial upgrades to design/development standards” means and how its applied as a credit to proffers. Right now this isn’t a credit that’s being applied or its obscure how it’s applied “quality credit”  How about not requiring proffers for a “cross zoning”. Example of a property being rezoning from HI to mixed use such as DCD. The county shouldn’t be extracting value if there is no substantial increase in value that results from a rezoning. QUESTION: Beyond the previous questions, are there other things to consider with the current policy? For example: – Benefits or detriments with the current policy? – If no policy, how should the County consider fiscal impacts? – Adjustments to how the infrastructure costs are calculated? – Discounting of cash proffers in recognition of local conditions? – Comparisons to other localities?  Former Supervisor Slutzsky made a comment a few years back that if we removed the proffer burden from developers, the cost increase for everyone would be about the cost of a beer and pizza.  Need to recognize that eliminating proffers is not eliminating the need or cost for infrastructure. It must be paid for somehow.  Cash proffers should be eliminated.  Need to look at allowing a credit for infill development.  There is no credit for the landowner who has lived for many years on 10 acres with one house.  We need data on the last 7 years and what proffers have been collected, etc. from rezonings approved under the proffer policy and CIP costs.  The fiscal impact model should not include the Capital Needs Assessment (CNA) but only include the 5-year CIP that will be funded, should not include 10 years+ out. Page 6 CASH PROFFER POLICY ROUNDTABLE MAY 15, 2014  We need to take a step back and look at the bigger issue of how we got here in the first place. Are we really building developments today that are better than Farmington, Montvue, Carrsbrook, etc. Cost of lots when Briarwood was first developed was $4,500/lot now its $70,000/lot. Hollymead took 5 years to develop and before it even started, it cost $1million in paperwork. The customer gets nothing for the added cost of proffers. There is no added benefit to a project. Is the new water ordinance worth the cost?  There are costs over and above proffers that add to a project, including legal fees, administrative fees, the time it takes for the hoops you have to jump through add costs to a project. Proffers should be considered in the context of all these other costs.  Roads, sidewalks, and tap fees are added costs that developers didn’t pay in the past. Roads in Hollymead cost $3million dollars. The water and sewer lines were built and then given to the Authority. When the mobile home park was developed it was $400/unit, now its $10,000/unit.  Albemarle is a magnificent and desirable place to live. 600 homes are built a year and developers will deliver the homes with or without a proffer policy. The proffer amounts should be lowered, cut in half even, that’s what developers can absorb.  There needs to be a middle ground.  People need to see what proffer money goes to.  Maybe increasing the tax rate by .002 cent would generate the same revenue we get from proffers.  Proffers are only 5% or less of the funding. The County needs to figure out how to fund the other 95% too.  The County needs to figure out how to pay for facilities neede in the Development Areas or the comprehensive plan falls apart. Need to figure out the County’s share of the deal.  Need to look at the build-out numbers in the comprehensive plan.  For every unit built in the Development Area, one should be “neutralized” and taken away in the Rural Area. [Like a transfer of development rights program]. Developers could contribute to the ACE program (Acquisition of Conservation Easements), which takes away development rights. Mr. Graham thanked those in attendance for their input and said that their comments would be provided to the Board of Supervisors in a work-session to be scheduled in July. If you have additional comments they can be sent to Bill Fritz, Chief of Special projects at bfritz@albemarle.org. The meeting summary and other information will be available on the County website. Page 7 CASH PROFFER POLICY ROUNDTABLE MAY 15, 2014 CASH PROFFER POLICY ROUNDTABLE CASH PROFFER POLICY ROUNDTABLE ATTENDEES MAY 15, 2014 COMMUNITY DEVELOPMENT STAFF & COUNTY REPRESENTATIVES Liz Palmer BOS member-lpalmer@albemarle.org Diantha McKeel BOS member Ken Boyd BOS member-kboyd@albemarle.org Ann Mallek BOS member Cal Morris PC Chair Mac Lafferty PC member Richard Randolph PC member Tim Keller PC member Mark Graham Director of Community Development Greg Kamptner Deputy County Attorney Rebecca Ragsdale Senior Planner Carla Harris Zoning Assistant Sarah Baldwin Senior Planner Wayne Cilimberg Director of Planning Amelia McCulley Director of Zoning/Zoning Administrator David Benish Chief of Planning MEMBERS OF THE PUBLIC Brian Wheeler bwheeler@cvilletomorrow.org Kim Swanson and Evan Nkawie99@gmail.com Keith Lancaster klancaster@southern-development.com Wendell Wood ulcwww@embarqmail.com Lettie Bien Colbien1@aol.com Frank Stoner fstoner@milestonepartners.com Vito Cetta vitocetta@mac.com Chris Henry chenry@pbmcap.com Cliff Fox Clifffox2@gmail.com David van Roijen DavidvR@earthlink.net Kathy Welch Kwelch34@comcast.net Brian Roy brianhroy@gmail.com C. Ray Beard cedarhilloffice@yahoo.com Jeff Werner Piedmont Environmental Council Katurah Roell Piedmont Development Group Morgan Butler mbutler@selcva.org Jane Ray jane@smartspaceonline.com Valerie Long vlong@williamsmullen.com George Ray Charlie Armstrong Page 8 CASH PROFFER POLICY ROUNDTABLE MAY 15, 2014 Neil Williamson Free Enterprise Forum—see attachment Don Franco ATTACHMENT D Staff Response to Cash Proffer Roundtable Discussion of May 15, 2014 and Recommendations Response to Roundtable Discussion On May 15, 2014 a public roundtable was held to discuss the cash proffer policy. Invitations were sent to 141 individuals. These included identified interest groups and those who had made a rezoning application in the past. Additional efforts were made to increase attendance by use of Amail, the County website and emails. The meeting was attended by approximately 25 people. The discussion was facilitated by staff in an effort to encourage as much dialogue as possible. The opinions expressed at the meeting were wide ranging and no clear consensus exists on the issue of cash proffers. Staff has organized the discussion of the meeting into the following main categories: - Request for Data - Equity - Credits - Market Factors - Alternative Funding Request for Data Data is provided in other attachments of the Executive Summary. Equity Concern was expressed that not all new development is subject to cash proffers. By-right development does not pay any proffers but still has impacts on County resources. For those projects that do pay cash proffers there was concern expressed that funds from the proffer are not used to serve the project. However, some cash proffers received prior to the cash proffer policy specify that they must be used for projects serving the development. While proffers that have been accepted under the cash proffer policy have been broadly designated for use towards CIP projects, staff still matches proffer funds to projects serving the developments providing the proffer revenue. Because cash proffers are anticipated with rezoning that increase density there was some concern that this may be serving to deter rezonings. Developers may choose to utilize existing development instead of going thru the rezoning process and that because of that the County is losing the opportunity to have development that is consistent with the Neighborhood Development Model goals. Credits The existing policy has credits that reduce the amount of the cash proffer. Concern was expressed that the current methods of determining credits are inadequate. Examples given of where the policy is inadequate include: - Insufficiently accounts for the level of development allowed by-right. - No credit for mixed use developments. - Does not adequately account for traffic impacts due to non-residential activity. - Does not have a quantifiable method for crediting “quality” development. - Does not acknowledge development occurring in “priority” areas. Alternative Funding Under the cash proffer policy, $13,564,44.22 has been proffered and $1,317,505. 60 collected. If no policy existed these funds would have to either be made up from other resources Impact Fees have been mentioned as a possible funding source. These fees would apply to all new development. However, Albemarle County does not have the authority to impose impact fees. The establishment of special tax districts has also been suggested. These districts may be established by the County. An example of how this may be done would be for the County to rezone an area and then place it within a special taxing district. Other major funding sources include the personal property tax or real estate tax. Market Factors Comments were received that the increase in cash proffer amounts in recent years has been rapid and had a negative impact on the ability to justify rezoning of property. In addition concern was expressed that the financing of projects is difficult when cash proffers are included as an upfront expense. This factor leads to a disincentive to rezoning. 1 APPENDIX B Adopted by the Board of Supervisors October 10, 2007 COUNTY OF ALBEMARLE, VIRGINIA CASH PROFFER POLICY FOR PUBLIC FACILITIES A. General 1. Authority: Virginia Code § 15.2-2303 enables the County to accept proffers as reasonable conditions to address the impacts resulting from a rezoning. This authority includes the authority to accept cash contributions to address impacts to public facilities generated by new residential development. 2. Policy: It is the policy of the County to require that the owner of property that is rezoned for residential uses to provide cash proffers equivalent to the proportional value of the public facilities deemed necessary to serve the proposed development on the property. Accordingly, the Board will accept cash proffers for rezoning requests that permit residential uses in accordance with this policy. However, the Board may also accept cash, land or in-kind improvements in accordance with County and State law to address the impacts of the rezoning. 3. Reasonableness: This cash proffer policy must meet a “reasonableness” test, which requires the Board to determine for each rezoning whether the amount proffered is reasonably related both in nature and extent to the projected impacts of the proposed development on public facilities. Through this policy, staff will recommend a maximum cash proffer in each case that meets this test of reasonableness. 4. Public facilities covered by this policy: The following public facilities will be funded by cash proffers: schools, transportation, parks, libraries and public safety. The County does not currently calculate a cash proffer value to fund public facilities such as water and sewer improvements, jails, landfills and other government facilities. B. Maximum Per Unit Cash Proffer Amount 1. Maximum: The maximum cash proffer that the Board will accept for public facilities from residential rezoning applicants is $17,500.00 per SFD; $11,900 per SFA/TH; and $12,400 per MF unit, to be adjusted annually without any further action by the Board according to the most applicable Marshall and Swift Building Cost Index, as determined by the Director of Community Development, and as expressly provided in the proffer statement. 2. Annual adjustment: Adjustments to the cash proffer amount due to projected public facilities costs may be considered every fiscal year. Staff will re-compute net costs based on the current methodology and recommend adjustments. C. Calculation of Per Unit Cash Proffer Amount for a Rezoning 1. General: Pursuant to this policy, staff will (i) calculate the annual net cost of public facilities; (ii) calculate the fiscal impact of a rezoning request that permits residential uses on those 2 public facilities; and (iii) administer the collection and expenditure of the proffered funds in accordance with State law. 2. Assumptions made in calculating the cash amount: Staff determines the cost of public facilities generated by new residential development by relying on the assumption that any revenue derived from growth (residential and commercial real estate taxes, sales taxes, fees, etc.) will pay the normal operating costs for services to residents of new developments and a percentage of the County’s Capital Improvements Program (CIP). 3. Determining number of dwelling units in rezoning: A rezoning’s impact on public facilities will be evaluated based on the gross number of proposed dwelling units. When calculating the gross number of dwelling units, staff will: a. Use the upper end of the density range allowed by the rezoning. b. Not give credits for those dwelling units permitted under existing zoning regulations (except as provided in sections C(6)(c) and (e)) or on agricultural lots, and will not consider the transferring of allowable units from other properties. c. Exclude dwelling units qualifying as affordable housing under the County’s definition of affordable housing. 4. Use of averages: In determining the net cost per dwelling unit of a public facility, staff relies on countywide averages, where possible. For certain public facilities, staff relies on averages established for geographic service areas or districts established in the County. a. Parks, libraries and public safety facilities: Since parks, libraries, and public safety facilities serve the entire County, the geographic service districts for these facilities are determined to be countywide. Rezoning requests will be analyzed on a countywide basis to determine impacts on these facilities and proffers may be spent to fund these facilities countywide. b. Schools: The impacts of a residential development on schools will be analyzed on a district basis to determine impacts on schools. In order to ensure that the cash proffered by an applicant is used to fund the public facilities impacted by or required for the development, the County is divided into three geographic service districts corresponding to the attendance zones of high schools. District 1 corresponds to the attendance zone for Albemarle High School, District 2 corresponds to the attendance zone for Western Albemarle High School, and District 3 corresponds to the attendance zone for Monticello High School. Funds collected from a development within a District will be spent on school improvements within that District or for any school improvement that provides relief for the District the development is in. c. Transportation: With respect to transportation, the fiscal impact of rezoning requests will be analyzed on a countywide basis, with cash collected from a rezoning expended on transportation projects in the County’s Comprehensive Plan and associated Master Plans, CIP/CNA, Strategic Plan, or VDOT Six Year Improvement Plan that relate to the impacts resulting from the rezoning. 5. Consideration of demand, service level and cost: In addition to the use of averages, staff will consider the four “components” involved in calculating what a new dwelling unit will cost the County in terms of providing public facilities. These components are as follows: 3 a. Demand generators: Staff uses the average for single family detached (SFD), Single Family Attached / Townhouse/Condominium (SFA/TH) and Multi-Family/Apartment (MF) to determine the number of persons per dwelling unit, the number of students per dwelling unit (for elementary, middle and high schools) and the number of daily vehicle trips per dwelling unit to calculate demand generators (population, population portion of population plus jobs, pupils, and daily vehicle trips) associated with a new dwelling unit. b. Service levels: Staff assumes that the public facilities contained in the County’s CIP/Capital Needs Assessment (CNA) and Strategic Plan will accommodate ten years’ worth of new development in a manner that will maintain present levels of service. Service levels are calculated on a per-person, per-pupil, and per-daily vehicle trip basis. (Service levels are calculated annually). c. Gross cost of public facilities: Staff calculates the gross cost of public facilities. The term gross cost is used because a credit (described in C(5)(d) below) for anticipated future revenues from a new dwelling unit will be applied against the gross cost. For example, to calculate the gross cost of park facilities, the average persons per dwelling unit is multiplied by the County’s per-capita CIP/CNA/Strategic Plan amount for park facilities. d. Net cost: Staff calculates the net cost per public facility or maximum cash proffer. This is the gross cost [(C)(5)(c)] per public facility minus the applicable credit [(C)(6)] per public facility. 6. Credits: Staff calculates a credit to apply against the gross cost for each public facility. The County has issued and plans to continue to issue general obligation bonds to finance the construction of public facilities. New development will generate real estate and other taxes to the County and staff assumes that a percentage of these taxes will go to help retire this debt. So that new dwelling units are not paying twice (once through payment of a cash proffer and again through real estate taxes) a credit is computed. For FY 08, that percentage is assumed to be 6%. Credits are authorized for the following: a. Land and public infrastructure: In some cases, a rezoning applicant may wish to mitigate the development’s calculated impact on public facilities by dedicating property or doing in-kind improvements in lieu of all or a portion of the cash proffer. The dedication of land and the construction of public facilities recommended by the County’s CIP or its master plans, or otherwise identified as being necessary to address the impacts resulting from the proposed development. Land and improvements that are not identified in the CIP or in a master plan should be entitled to a credit only when it is found that the proposed development creates an immediate need for the land or improvement that is better addressed by the applicant dedicating the land or constructing the improvement than by receiving the cash equivalent. Credit for transportation may be allowed for off-site land dedication or improvements, as recommended by the Department of Facilities Development. (1) Determining value: The value of donated land generally will be based on the current assessed value of the specifically proffered property (not the assessed value of the property as a whole), not to exceed the cost per acre used in the calculation of the proffer. The value of improvements shall be the estimated cost as if constructed by a governmental entity. If the dedication or in-kind improvement does not fully mitigate the development’s calculated impact on 4 public facilities, then the dedication and/or improvement’s value may be applied as a credit against the development’s calculated impact on the applicable public facility. (2) Maximum credit: The credit cannot exceed the development’s calculated impact on the applicable public facility. b. Operational expenses: Operational expenses where the Board determines that the cash contribution reduces the demand for public facilities. For example, a cash proffer for the operational expenses of public transit that eliminates the need for planned road improvements could be entitled to a credit, which would be an amount comparable to the reduction in infrastructure costs. c. No increase or small increase in density: In rezoning applications where there is a minimal increase in density, a credit may be given for the number of residential units allowed under the existing zoning and the cash proffer amount will be based only on the estimated density increase resulting from the rezoning. This credit may be allowed only for those rezoning applications where the rezoning seeks the design flexibility allowed by the Neighborhood Model zoning district or seeks to amend a prior rezoning with no increase in density. The credit should not be allowed if the rezoning application seeks to increase density in a conventional, rather than a planned, zoning district. d. Small infill development with existing dwellings: In rezoning applications for small infill developments, a credit may be given for each existing dwelling that will remain. For example, if a rezoning application would rezone a lot with an existing house to allow three lots, only two new lots would be created allowing two new dwelling units. If the existing dwelling unit will remain after the rezoning, the cash proffer policy should apply only to the two new dwelling units. e. Substantial upgrades to design/development standards: The Board may consider development proposals that include substantial upgrades to current design/development standards and ordinance requirements as justification for granting a credit to the pre-existing lot yield. Pre-existing lot yields will be calculated using average actual recorded lot yields provided the applicant has not otherwise submitted documentation indicating higher lot yields in conformance with existing ordinances and reflective of site specific physical features. f. Unique circumstances: The County considers any unique circumstances about a proposed development that: (i) mitigate the development's projected impact on public facilities; and (ii) create a demonstrable reduction in capital facility needs. Unique circumstances may include, but not be limited to, such projects like an age-restricted housing project. Staff, the applicant or any other person may identify such mitigating circumstances. 7. Applicable policy: A rezoning’s fiscal impact on public facilities shall be established under the cash proffer policy in effect on the date of the last public hearing prior to the Board of Supervisors’ decision on the rezoning. D. Timing of Contribution and Expenditure of Cash Contributed 1. Timing: Payment of the cash proffer for residential development must occur prior to release of a building permit. Timing for dedication of property or in-kind improvements should be specified in the proffer. 5 2. Expenditure: The cash contributions shall be expended in accordance with State law. Cash contributions received under this policy must be used for projects identified in the Comprehensive Plan and associated Master Plans, CIP/CNA, and/or Strategic Plan. For public facilities having a countywide service area (parks, libraries and public safety), the cash contribution may be spent countywide. ATTACHMENT F Attachment G Summary of Survey Responses from Localities Accepting Cash Proffers Each year the Commission on Local Government releases the “Report on Proffered Cash Payments and Expenditures by Virginia’s Counties, Cities and Towns”. The report, along with other information, is available at: http://www.dhcd.virginia.gov/index.php/commission-on-local-government/reports.html#Cash-Proffers. This report offers the ability to easily view not only cash proffers in Albemarle County but also in all of the localities that accept cash proffers. Currently 298 localities are enabled to accept cash proffers. Only 162 localities are required to provide information to the state on the cash proffers they have accepted. Of the 162 localities, 37 (22.84%) reported cash proffer collection during FY 2013. The following summary captures significant components of the full report for FY 2007 through FY 2013. From this information it can be seen that the amounts collected and expended can be highly variable from year to year for all localities.