Charlottesville: How Much Leverage Over Developers Is Too Much?

It’s a perennial question: What’s the proper balance between planning and free markets in governing a municipality? That issue has come into sharp focus in Charlottesville as city leaders juggle property rights, economic development, transportation capacity, affordable housing and quality of life. Some developers are warning that the city’s effort to exert more control over future development downtown could backfire and deter growth, reports Seth Rosen with the Daily Progress.

Last week, the Planning Commission endorsed height limits on buildings in order to preserve the pedestrian-friendly character of downtown. Meanwhile, the planning staff is seeking to decrease by-right building densities downtown in order to force developers to apply for special permits, which in turn gives the City more leverage in extracting monetary concessions from them. The tighter regs, says commissioner Mike Farruggio, provide “some more latitude and control to make sure it is healthy development and is what we want to occur.”

Oliver Kuttner, who has re-developed several downtown properties, condemns the proposed changes. “If you drop the by-right you basically stop all development downtown,” he says. “Any developer who buys property buys it strictly on by-right calculations.”

It’s a tricky trade-off. Handled incorrectly, Charlottesville’s proposed new approach becomes a mechanism by which the political class extorts wealth from developers for redistribution to favored causes and constituencies. If developers are spooked, downtown could stagnate.

On the other hand, a laissez-faire approach towards development has its drawbacks. Re-developing old properties at higher densities increases requirements for parking, street capacity and municipal services, which the city must bear. If the city embraces the principle that growth should pay its own way — otherwise taxpayers wind up subsidizing the developers — it needs a mechanism for developers to contribute to the added strain their projects impose on city infrastructure and services.

The strategy proposed for Charlottesville is very similar to the way Arlington County conducts business. Arlington officials tout their development model, but they warn that it requires certain political preconditions. First, there must be a long-term consensus on what the community should look like and how development takes place — no whip-sawing back and forth between conflicting policies. Second, Arlington hires top professionals in their fields, including men and women with hands-on experience in the private-sector side of the business, who can approach negotiations with realistic expectations and creative, problem-solving ideas. Charlottesville leaders would be well advised to consult the Arlington County experience before proceeding with their experiment.

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  1. Larry Gross Avatar
    Larry Gross

    I’m just totally shocked .. that in a Dillon rule State that they permit “takings” private property rights.

    gee.. you’d think all those overbearing Home Rule Cities would chase the developers into Virginia.. right?

    My first thought.. is that the news article sounds like it was penned by a developer… 🙂

    Is Charlottesville’s current policies proposed to be changed:

    1. -more restrictive than other Va cities

    2. – less restrictive?

    3. – about the same.

    How about Arlington?

    oh yeah.. and the REALLY scandalous aspect to this.. is the idea that folks who already live in the community might actually have some say … (visioning)…

    but those GA guys in Richmond… maybe they ought to add to the committee studying proffers.. “abuses” like we are seeing in Charlottesville?

    In a Dillon Rule state – it makes perfect sense to have the developers set the rules…right?

  2. Anonymous Avatar

    “make sure it is healthy development and is what we want to occur.””

    Who is “we” and who decides what is healthy?

    “there must be a long-term consensus on what the community should look like and how development takes place — no whip-sawing back and forth between conflicting policies.”

    And there’s your answer.

    Apparently, at one time there was a consensus that some development rights should be “by-right” that is attached to the property. To change that now amounts to stealing property, s well as a whipsaw in policy.

    If “we” set teh policy and “we” expect to have a say in the consensus that develops and enforces it, the “we” should expect to pay for (some of) what we claim we want and ultimately get.

    This isn;t a matter of the developers setting the rules, Its a matter of the political class setting the rules, and sending the bill to “developers”. Of course, we already know that won’t happen.

    We already know, and can show with multiple examples that this kind of thing results in increases in the cost of property. In the end, “we” wll pay for what it is we get, and supposing or suggesting that the developers will pay it is intellectually dishonest.

    If “we” insist on haveing a seat at the table as stakeholders, then we should be willing to admit that developers are stakeholders, too. We should also be willing to pay for our share of the stake.


  3. Groveton Avatar

    Charlottesville and Arlington are two of the very few places in Virginia that work. You are seeing the future – higher taxes and an aggressive local government willing to intervene with developers. The General Assembly has failed. Only municipalities that take control will succeed.

    The big question is whether the developers (having lost control in many local governments) will try to buy the state government and rule from “Richmond”.

    The switch from laissez-faire local government to interventionist local government is the result of voters (largely correct) perception that the developmer community has too much power. The voters (through their local officials) are putting the brakes on unchecked development. Smart developers would do wee to start “cutting deals” with local governments rather than bashing the new reality. Oliver Kuttner can say what he’d like about by-right development and how progress will halt. However, Arlington County tells another story. It’s a story of a county government taking back contol from runaway development and making a better community.

  4. Darrell -- Chesapeake Avatar
    Darrell — Chesapeake

    I’m betting a lot of local pollys are going to be joining the choir. VDOT just slammed the bank vault closed on primary and urban road projects.

    Guess the boys in Richmond are meeting in their back rooms, having a hell raising game of mumbley peg.

  5. Anonymous Avatar

    The state supreme court has made it clear that, as a part of a review of a Comprehensive Plan, a local jurisdiction can decide that existing density is too much for the public facilities and reduce the permitted density. What cannot be done is to reduce landowner A’s density while permitting neighbor B to keep the same density.

    What goes up, can go down. Except in Fairfax County that is. Where everything goes up well beyond the capacity of the infrastructure to support it.


  6. Larry Gross Avatar
    Larry Gross

    right.. and not only density but uses.

    For instance, a locality can decide where and where not a tattoo parlor can go.

    I have the same concerns as Groveton.

    I can see the development community working at the State level to restrict places like Charlottesville.

    That would be another nail in the Dillon Rule coffin..

    All communities and their residents should have the right to decide how they want their community to grow and develop as long as those policies do not favor or harm specific individuals.

    but I was curious since the developers were asserting that more restrictions would harm development .. whether or not.. C’ville is looking at tighter restrictions than other communities… OR .. is it catching up to other communities?

    there is no question in my mind that one of the reasons Route 29 through C’ville is such a mess is due to “by right” development that did not institute access management and inter-parcel connections and the like.

    So here you have an important transportation link that has been seriously degraded due, at least in part, to property “rights”.

  7. Anonymous Avatar

    “one of the reasons Route 29 through C’ville is such a mess is due to “by right” development that…”

    Why blame by-right development for this?


    1). The (elected officials and others) that put the by-right regs in did so without planning sufficiently.

    2). They had a plan that was never funded or exercised.

    3). They figured everyone OUGHT to have SOME rights, which could be bought and sold later.

    Whatever happened, by-rights were named that way for a reason. people and businesses have invested in land (and the promised rights). To eliminate them now requires recompense.


  8. Larry Gross Avatar
    Larry Gross

    Unless property owners have paid for their rights then why should they expect refunds?

    Isn’t this like someone saying that because they bought a stock to invest in that they should be compensated if the company suffers because of a new law or regulation?

    The Va Constitution and General Assembly give C’ville the “right” to designate land-use and density.

    Legally permitted.

    Saying that this is “stealing” .. isn’t that a little like saying the Government is “stealing” when it collects taxes or requires you to pay for a license tag.. or business license.. etc?

  9. Anonymous Avatar

    “Unless property owners have paid for their rights then why should they expect refunds?”

    They do pay for their rights. And under law they have been granted refunds.

    “Any developer who buys property buys it strictly on by-right calculations.” Even if you dont plan to develop it, you will recognize that as part of the properties “worth”. And even if you never develop it, losing those rights reperesents a very real opportunity cost in that you paid for development rights you never used, and now cannot sell.

    So a buyer wants a piece of property, and under the rules it has two developemnt rights, or four. Which one will he pay more for? Which one will he have more competition to get?

    And when he does, the county will gladly collect the transfer tax based on that value – as established by the market.

    If, after he buys it at the market established price, and the county decides to make it one development right, retroactively, they could easily bankrupt someone.

    This has already happened and the courts have already ordered compensation. The problen is not whether this is correct and has legal precedent. That has been established in a number of cases, in several states.

    The problemm is that ordinarily, the rules are so tilted against the land owner that it is extraordinarily difficult to get standing to sue. You must first extinguish all of your administrative options before you can get to court, and that might easly take decades and cost more then the property is worth.

    So, now the county reduces our friends by-rights from four to one. Do they refund him part of his transfer tax? Of course not.

    But now, suppose his lawyer had been smart, and included the four by-right development rights in the property description on the deed. since the county records that deed, then, they would have an obligation to protect and defend that property.

    Which after all is the government’s primary job. To protect and defend people and their property.

    So it’s not like paying a business license. It’s like applying for a business license, having it approved, along with all the contingencies required, building stocking and opening the business. Doing all that government requires, and then having the government say, “Oh, we changed our minds, we are not going to let you do that”. So yes, if they require you to pay for a license and then don’t let you use it, it’s pretty much stealing.

    What you are saying is that government can do any damn thing they please, because they control everything. And that is certainly true, but it doesn’t make what they do right, fair, or ethical.

    It is one thing to designate land use and density, it something else again to downzone someone who previously paid for a (promised) density. One that is described as by right.

    We deserve a governmet that lives up to its promises and deals, reasonably and fairly with ALL of its citizens.

    So, you have a situation where the government made promises to one set of citizens. At some later time, some other citizens decide they will be bettter off, or live in a better situation, if they can only influence government to rduce future development. In other words, to steal their neighbors (promised) by-rights.

    And why not, these good citizens have already exercised theirs, they have nothing to lose. Their structures are grandfathered. So why should their structures be grandfathered any more than the previously promised development rights should be grandfathered? They are both valuable property, bought and paid for.

    Certainly government can change the density. But government, I believe, has the responsibility to point out that those that want to create a better situation for themselves should expect to pay for it; especially if it means their betterment comes at someone else’s expense.

    There are externalities on both sides of this equation. Liberty and justice for all requires that both sides of the equation; both sets of externalities, be evaluated equally.

    Like you say, government can do whatever it wants, but we have a name for that kind of government. I think we deserve better government than that.


  10. Groveton Avatar

    “1). The (elected officials and others) that put the by-right regs in did so without planning sufficiently.”.

    Yep – that’s pretty much the problem in a nutshell.

    Is by-right development guaranteed to a property owner. Let’s go to the videotape … er, uh, the US Constitution:

    I plead the 5th.

    Amendment, that is …

    “…nor be deprived of life, liberty, or property, without due process of law; nor shall private property be taken for public use, without just compensation.”.

    It seems to me that dezoning is a form of taking property for public use. The government can do it but must pay “just compensation”.

    I believe James Madison grew up in Orange County, Va. Maybe we can find a dezoning effort in that area and see if his Bill of Rights really matters.

    Groveton’s bottom line (sorry Jim) – Politicians are short sighted and often half-witted. When they confer by-right development they are binding future generations to that decision. They do things like that (on a good day) in order to foster unplanned economic growth and (on a bad day) to pay back campaign contributions and other favors. When society decides that the conferrence of by-right development has gotten out of hand society may have to pay for the stupidity of prior generations of politicians.

    All politicians from all parties must be watched closely and carefully. More transparency is needed in Virginia lest we find that we are wrapping our children in the nettles of today’s political lagrasse much as the politicos of the past have wrapped us in the barbed wire of excessive, unfunded by-right development.

  11. Anonymous Avatar

    Pretty much the way I see it. You can’t very well stick it to (some)current owners because of prior poor government.

    When society decides that the conferrence of by-right development has gotten out of hand

    I would only add this. It may be that development and even by-right development has gotten a bad name because of insufficient planning. But even if the planning and infrastructure and services are actually sufficient societ may decide to attack by-right development as a way of increasing their own (effective) holdings.

    It isn’t necessarily a services thing: it might just be greed. Maybe even greed riding environmental coat tails, as in “we need to protect our open space”. Which simply disregards that it is not our open space untill we buy it.

    I suspect that Forver Albemarle is in this camp. They see an option to lower their rates by raising rates for others. Eliminating the land use is reneging on a promise no less than downzoning is. But, in this case eliminating the land use tax (should) also amount to an up zoning.

    If it doesn’t then they have upzoned the tax rate on one group without doing so for others, which to me is clearly illegal.


  12. Larry Gross Avatar
    Larry Gross

    “Pretty much the way I see it. You can’t very well stick it to (some)current owners because of prior poor government.”


    If they didn’t pay for it or do anything to deserve it then why do they get to keep it?

    If the government does have the right to designate land-use and density.. and they do have the right – legally and constitutionally to up zone AND down-zone then what is the problem?

    Using your logic.. we could never enact new laws and regulations… EVER .. because in doing so.. someone would be affected.

    If government can raise taxes and fees then tell me why they cannot UPDATE their Comp Plans by changing land-use designations and by-right “uses”?

  13. Anonymous Avatar

    “Using your logic.. we could never enact new laws and regulations… EVER .. because in doing so.. someone would be affected.”

    This is simply not true. But government would need to be more careful about passing new laws, because it would have to carefully consider who was affected and how much.

    They could still pass whatever new laws they like, but they would probably be disinclined to pass new laws that cost them more than they gain, unless they were pretty certain about longer term benefits.

    Since such laws would cost the present residents in actual dollars now, they would need a very good sales pitch to sell these things.


    “If they didn’t pay for it “

    As I have already explained, they did pay for it. the government set a land use rule that affected the market price. People bought land with certain benefits pre-approved under that market system.

    The government is responsible for affecting the market, and the government is responsible for protecting people’s property.

    “they do have the right – legally and constitutionally to up zone AND down-zone then what is the problem?”

    The problem is assymetric argument. If someone is upzoned, we expect them to pay huge proffers for their windfall, but if they are downzoned, then tough tutu.

    The other problem is assymetric benefit. There is a benefit to the institution doing the downzoning, but not to the one downzoned.

    Another problem is assymetric property rights. Thse that used their rights get grandfathered and those that have not used them yet (The most conservation minded, or the most speculative, take your choice,) don’t get their rights grandfathered.

    Now, you want to downzone everyone, and put the remaining rights in a lottery, go ahead. See how much enthusiastic local support you get when it might cost people their home.


  14. Groveton Avatar

    “If the government does have the right to designate land-use and density.. and they do have the right – legally and constitutionally to up zone AND down-zone then what is the problem?

    Has there been a modern US Supreme Court case regading down zoning land vs. rights cited in the 5th Amendment. I’d like to read that case.

  15. Anonymous Avatar

    No, there has not. The Supreme court is loathe to get involved in such local matters. I beleive the last major case, which is still the underpinning involved a Pennsylvania cola company which got sued ofer subsidence issues.

    “Pennsylvania Coal Co. v. Mahon, 260 U.S. 393 (1922)[1], was a case in which the Supreme Court of the United States held that whether a regulatory act constitutes a taking requiring compensation depends on the extent of diminution in the value of the property. The decision thereby established the doctrine of regulatory taking and the dimunition-of-value test, in contrast to other tests, such as the permanent physical occupations test (Loretto v. Teleprompter Manhattan CATV Corp.), the nuisance-control measures test (Hadacheck v. Sebastian), and the total takings test (Lucas v. South Carolina Coastal Council). “

    Lucas vs South Carolina was a case in which an owner bought two waterfront properties, zoned for development, at considerable expense. Subsequently the Coastal Council banned all development. To Lucas this amounted to a toatl loss for which he sued and won.

    The Pennsylvania coal case established the idea that substantially all of the vlaue must be lost before a taking is considered to have happened. This is substantially at odd with the well established bundle of sticks doctrine that allows an owner to sell various pieces of his property rights. This is the doctrine of property rights which makes conservation easements possible.


  16. Anonymous Avatar

    “Today, the Supreme Court quotes Justice Holmes in Mahon for the recognition of the invalidity of a government regulation that goes too far when it takes private property for public use under the Fifth Amendment. Among others the cases include: Goldblatt v. Hempstead, 369 U.S. 590, 594 (1962); Penn Central Transportation Co. v. New York City, 488 U.S. 104, 127 (1978); Agins v. City of Tiburon, 447 U.S. 255 (1980); San Diego Gas & Electric Co. v. City of San Diego, 450 U.S. 621 (1981); Loretto v. Teleprompter Manhattan CATV Corp., 458 U.S. 419 (1982); Keystone Bituminous Coal Association v. DeBenedictis, 480 U.S. 470 (1987); First English Evangelical Lutheran Church v. County of Los Angeles, 482 U.S. 304 (1987); and Lucas v. South Carolina Coastal Council, 505 U.S. 1003, 1014 (1992).”

    The principle is well established. However, from a practical standpoint it is nearly impossible to et standing to go to court. You must first extinguish all administrative remedies. This may be prohibitively expensive and take decades.

    Most jurisdictions are smart enough to devise their takings such that they fall short of taking “substantially all” of the value.

    This may change over time. For example, land zoned solely for agriculture may not lose substantially allof its value whne it is far from town and jobs. But when land is developed clse by, more jobs become available, etc. the potenetila value of the land may increase to such an extent that the former (reasonable) regulation may now become a taking of “substantially all” of the value.


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