Proffers: They’re Baaaaack!

Gentlemen may prefer blondes but localities prefer proffers.  A proffer is an arrangement between a locality and a land developer whereby the developer offers something of value in order to get a rezoning request approved.  Why do developers want land rezoned?  For residential development they want to build more homes on the land than the land’s current zoning allows.  Why would localities object to these rezoning requests?  Theoretically, the locality’s strategic and financial plans are based on providing services at an overall population density dictated by the current zoning.  Adding more density increases the locality’s costs for services like public schools.  Localities are understandably worried about the unfunded mandates that up-zoning can cause.  How do proffers help?  Items of value (money, land, astroturf, etc) are given to the locality by the developer in order to fully or partly cover the additional costs to the locality of development at higher density than was planned.  These proffers reduce the developer’s profit margin on the project at hand so they are not popular with the development community.

Problems with proffers.  On the surface, proffers seem like a reasonable way for localities to recoup some or all of the additional costs of a rezoning to higher density.  However, while most localities have rough guidelines for establishing proffers these guidelines are imprecise.  They have to be imprecise since a fair proffer depends a lot on the specific parcel of land to be rezoned.  Localities and developers end up negotiating proffers on a case by case basis … with some odd results.  In one case a developer provided new artificial turf to Stafford County high schools as part of the proffer.  Developers found the process to be time consuming and expensive.  But where could the poor, downtrodden members of the besieged land development industry go for redress of their grievances?

Enter the General Assembly.  The real estate and construction industry is the largest donor (other than PACs) to Virginia politicians.  In 2018 – 2019 real estate / construction donated a whopping $5,650,858 (as of this writing).  Across all the years that VPAP has kept records (since 1996) the real estate and construction industry has lined the pockets of our elected officials to the tune of $148 million.  These guys make Dominion look like slackers.  In 2016 the Virginia General Assembly was only too happy to help their good friends in the real estate and construction industry.  After all, why should developers pay for the costs they create when there is still plenty of money in rattling around in taxpayers’ pockets for stuff like that?  SB549 – Conditional zoning; provisions applicable to certain zoning proffers was put forth by chief patrons Mark Obenshain, R-Harrisonburg, and …. wait for it …. Dick Saslaw, D-Fairfax.  Over the years Mark Obenshain has taken in $531,643 from real estate / construction while Saslaw has $982,649 on his tally.  Yes, these two state senators have accepted 27% of the money given by real estate / construction interests since 1996.  Obenshain and Saslaw had 1,514,292 reasons to get rid of those damned proffers.  The legislation passed the General Assembly and was signed into law by former Governor Terry McAuliffe (who took in $4,129,194 from real estate / construction for his campaign to be governor and no doubt will be back for more as he tries to occupy the Oval Office).

D’oh!  The reaction of the localities was as swift as it was predictable — rezoning approvals slowed to a trickle.  Our General Assembly learned for the umpteenth time how difficult life can be for those who are simultaneously greedy and dim-witted.  Development shifted to land parcels where the existing zoning would allow for profitable construction, namely rural and exurban areas.  Areas that often could not afford the costs of development without proffers.

Send lawyers, lobbyists and money, Dad, get me out of this.  Bob Thomas, R-Stafford, is a newly elected member of the House of Delegates from the George Washington District in Stafford County.  Thomas is an ex-Marine, technology entrepreneur and former member of the Stafford County Board of Supervisors.  In 2017 he won his HoD election by 82 votes with real estate / construction as his biggest non-political donor industry.  Does anybody see a pattern here?  Thomas was the chief patron for 2019’s HB 2342 Conditional rezoning proffers; extensive changes to conditional zoning provisions.  This bill essentially undoes the 2016 legislation.  However, developers haven’t made all those campaign contributions in vain.  The new bill restricts the proffer to covering costs directly attributable to the specific construction project at hand.  No more new astroturf for the local high schools.

— Don Rippert

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17 responses to “Proffers: They’re Baaaaack!

  1. The end resulting being (as Favola and Thomas couldn’t keep the factions in line, the NOVA counties couldn’t agree on much and then unknowingly shot holes in their own High Growth Coalition, while Stanley impatiently pulled strings behind the curtain) a bill that split the baby, made things even worse (in the minds of both the developers and the counties) and ensures that the topic will be back before the GA next year, presuming some developer doesn’t get uber ballsy and decide to take it court.

    • “Our General Assembly learned for the umpteenth time how difficult life can be for those who are simultaneously greedy and dim-witted.”

      The Politburo in Richmond has some bizarre, anal retentive desire to reduce everything to a process that a dog could execute. Why not just let the developers negotiate with the localities? Yes, some localities have incompetent politicians who will negotiate poorly. The voters in those localities can vote them out.

      Government negotiates on a case by case basis all the time. Prosecutors negotiate plea deals. Virginia negotiated with Amazon to bring half of HQ2 to NoVa. the Trump Administration is trying to negotiate a denuclearization treaty with North Korea and a new trade agreement with China.

      The 2016 bill was an orchestrated bi-partisan sell-out to the developers. Crony Capitalist McAuliffe was only too happy to sign the bill. Instead of just repealing the 2016 law this General Assembly did try to split the baby. Stupid.

      Let localities deal with local matters. We neither need nor want the Nanny State in Richmond spoon feeding us.

      • Don, this was a nice synopsis of the proffer process. It has been a long time since I was closely involved in local government issues, but I do remember local government folks I talked to in 2016 being very upset with the proffer bill. And Haner talks about how tough it is to get anything passed over local government opposition!

        My experience has been that developers don’t want to have to negotiate with local governments. That is why they come to Richmond–to restrict the conditions under which local governments can deny rezoning and use the proffer system.

        • Dick, thank you and I agree with you. In New York it’s commonplace for New York City landlords to pull an “end run” around city officials and go to Albany to seek reductions in rent stabilization, etc. Sometimes the city’s representatives pretend to object but …. well, we lost upstate.

  2. Proffers were first adopted in lieu of impact fees. As I understand the purpose of proffers, they are to mitigate the impact of development on public facilities and are to be negotiated. Many localities have target cash proffers but all are supposed to be negotiable.

    In Fairfax County, I’ve generally found proffers to address local conditions. I’ve read about other jurisdictions seeking proffers for facilities that are not affected by the growth. I can see why a developer would object to that. But if you are building a high-rise residential building or a 500 home subdivision, you are affecting local schools, parks, roads, libraries, etc. Why should existing taxpayers suffer a diminished quality of life, higher taxes or both so that a builder can make some bucks and walk away?

    • I’m with you. I’ve never met a poor Northern Virginia developer. Proffers or impact fees are very reasonable.

    • You say, “The new bill restricts the proffer to covering costs directly attributable to the specific construction project at hand.” OK, no astroturf for a distant high school; but how about more schools, more roads, due to the project’s impact — isn’t such infrastructure “directly attributable to the specific construction project at hand” as the result of all the additional employment a project’s future occupants will necessarily generate? In other words, doesn’t the new law still allow for proffers that maintain the local “quality of life”?

      • Acbar –

        Truth is America’s local political systems are too weak, corrupt, and incompetent to propose, and regulate, sensible proffers such as you suggest. Instead they become weapons.

        For example, environmentalists use residential proffers to kill projects altogether. Like they kill roads, nuclear power, or anything else they are against. Hence affordable housing is typically out the window, esp. in their neighborhoods.

      • From https://www.baconsrebellion.com/wp/the-evil-these-proffers-do/

        TMT | April 13, 2013 at 12:18 pm | Reply

        Back up the truck. Proffers in Virginia are applicable only when land is rezoned to higher density. The proffers are intended to pay for additional infrastructure needed to support the higher density. Removing proffers (or impact fees) has the effect of making the costs public, while privatizing the profits. It sure sounds like corporate welfare to me.

        And I don’t buy the “gee, people benefit by urban development, so they should be willing to pay for the great benefit.” All development creates demand for more infrastructure and, over time, more operating expenses for local government.

        I challenge all of these New Urbanists to explain Tysons.

        reed fawell III | April 13, 2013 at 12:22 pm | Reply

        We must be having mental telepathy. This Saturday morning before this latest proffer article went up, I completed my conclusions on the evils of proffers within the earlier In Defense of Proffers article showing how proffers have open up a Pandora’s Box of Horribles in Tysons Corner.

        In this case I related those consequences to the most recent theft of Interstate I-95 by Fairfax County’s Tyson’s Corner. How proffers are being used as the prime tool to accomplish that theft, creating the illusion of solving traffic problem when in fact they reinforce and magnify it. Thus they leave an ever more intractable problem for generations.

        Here’s the post from the earlier article:

        TMT says: “and these folks will not only need roads in and around Tysons but roads to commute on to Tysons.” Larry replies: “Isn’t that a valid criticism of how Fairfax develops and externalizes impacts?”

        Of course Larry is correct. And I suggest Tyson’s Corner is the poster child for how often proffers twist the market to achieve bad results. Developers do not give away money for public good. They pay money to get results that make them more money. Here in the Tyson’s Corner example, they paid money in proffers to buy the right to build far more office space than multi-family space near the Metro than otherwise possible. Unenforceable caps was the fig leaf to cover up that very bad planning decision. Like so many bad decisions that have gone down before, the result will haunt our region for generations.

        This cynical policy will gridlock the interstate beltway north of Tyson’s Corner for some to 10 to 15 miles north into Maryland for the next 50 years. An interstate has in effect been shut down to interstate traffic in both directions by the use of proffers. So developers used proffers as a tool to buy the interstate I 495. This allows them to build yet more office buildings in Tysons without building anywhere near enough residential nearby to make their new development traffic neutral. Thus, perversely, proffers can be used by developers and public officials to promote bad planning that results in highly adverse negative affects throughout a region.

        I suspect one reason for this awful result may be that Fairfax has no other way to get the money for mass transit, other then by “cutting a deal with the devil.” Thus the legislators in Richmond have a hand in the game. Too bad that the 2 billion dollars that might be spent on the North South Connector could not have been spent on Tyson’s and other northern Virginia close in mass transit projects. This money then could be used to gain the leverage to insure that responsible development is built in Tyson’s Corner. Instead the proffer systems reversed the leverage, giving it to private developers. S0 proffers gave the developers the advantage, not the reverse.

        • Also From https://www.baconsrebellion.com/wp/the-evil-these-proffers-do/

          reed fawell III | April 14, 2013 at 1:38 pm | Reply

          This is an interesting discussion. We are coming to understand that some types of development impose a continuing deficit cost on society. Who pays for the deficit? When and how do they pay for it? Or what happens if they can’t compensate the losers who can’t drive an interstate road that’s been taken away from them by development knowingly built along the right of way to co-opt the interstate for its own use, taking it away from those it was built to serve?

          We are also learning that some development creates great wealth. Should we not strive for that result? And, as to the excess public revenues generated by that development, who get’s the benefit of it. Should the revenue generated by development that is built the right way (so as to generate revenue surpluses) be spread around to other areas operating at a deficit? Why should people living in revenue positive communities support those who chose to live in revenue negative communities? Why should not those making that choice pay for their operating loses themselves?

          Does the Virginia proffer system even begin to address these issues? Or does it by in large create bad habits and bad policies? Habits that corrupt the system rather than solve its problems. We dealt with some of these issues in this website’s article titled: Smart Growth for Everyone.

          reed fawell III | April 14, 2013 at 6:00 pm | Reply

          Perhaps these question are so difficult because State and local governments are finding it ever harder to fund public infrastructure (roads, bridges, schools, parks, etc) that new communities coming on line demand. And often the problem compounds because some of these new communities are hollowing out the older communities left in their wake.

          How do we fix this? How do we dig the problem out by its roots, instead of using short term solutions that dig our deficit hole ever deeper by allowing us to build more communities that don’t work long term?

          One way is to build (or rebuilt communities) into engines of wealth. A suburban county thus works to capture within its borders ever more land that is built into efficient highly productive engines of wealth communities that benefit the whole county. Like the 11.5% of Arlington County land that was built to and now generates more than 50+% of its wealth.

          When this sort of development happens, you don’t need proffers, impact fees, taxing districts, and other “tricks” that far two often cover up the weaknesses of how you are building your community. Or that twist your market out of shape. Nor are you taking the easy way out – the one that makes a fast buck for a few now but piles future costs on the backs of future residents. No, doing things this way, your communities will pay for themselves naturally, and keep on generating future wealth. Property taxes then grow exponentially for ever growing array of public facilities. Such things then can be paid for the old fashioned way because their is plenty or money to go around.

          Of course nothing is free or easy. Developers need now to built financially healthy communities. Local government must require it. And then it must be the developers’ best helper in their efforts to achieve that goal.

  3. important to note that proffers do not pay for operating expenses only infrastructure/capital costs.

    The other thing to be aware of is that impact fees are assessed on all development whereas proffers are targeted and in the eyes of developers arbitrarily so and thus fair game for gaming locally and getting gutted at the GA.

    The two biggies are schools and roads with libraries, fire and rescue and parks and rec close behind.

    No matter how you cut it – most new homes generate some level of school demand and as sure as there is night and day – vehicle trips per day that translates into traffic on the roads no matter whether it is urban or suburban.

    Down our way – our Conservative BOS considers proffers and impact fees as “bribes” and that increased growth will “pay for itself”in increased tax revenues.. Of course the same guys say that RoVa is stealing state tax revenues for schools and roads so it’s RoVa that is causing our crowded schools and traffic congestion…

    so the developers LOVE how we view rezonings!

    I’m forever amazed how newly elected citizen types govern… locally and at the General Assembly -and what can I say – the folks who elect them get what they deserve… shut my mouth!

    We don’t need no stinking taxes, tolls or proffers – it all pays for itself !

  4. What is needed is for community groups to review land use applications, including draft proffers. Organizations like the Great Falls Citizens Association and the McLean Citizens Association have done this for years. It’s a useful effort that pushes local supervisors to get fair and reasonable proffers or to explain why not. Over the years, I’ve seen many applicants put reasonable proffers on the table that they may well not have done if local activists had not been involved in the process. And when a developer has a good argument against a specific proffer, it’s often accepted by the community organizations.

    • Yes, the problem can vary greatly from place to place, even endure wild swings from decade to decade, and depend on developer skills and resident reasonableness, or lack thereof, with proffers. Indeed, some few developers have made handsome livings untangling knots of local resistance that no else would attempt and/or gave up trying long ago. But the problem is horrendous in many places. Like, for instance, the DC Metro subway stops that still today have no sustaining urban density around them 40 years after the subway opened, while homeowners of .25 acre lots nearby fight to keep it that way.

  5. Part of the problem – especially in areas like NoVa is that there is far more potential for higher density land use – than there are roads to support the increased traffic.

    And even if you get proffers to mitigate impacts to the local – adding more traffic to the major traffic arteries that are not easily nor cheaply expanded – you get what NoVa has right now which is a seemingly untenable traffic problem.

    We’re seeing this also down our way -where we do get mitigation of traffic impacts in the immediate area of the new development – but then that development adds traffic to our existing major arteries that do not have plans nor money to expand – and here is the important part – no money is coming from developers to go into a fund that ultimately be used to expand the major arteries.

    It all falls back on VDOT and they simply don’t have the money and have gone to a triage ranking system they call SmartScale where the few projects that do get funded have to show high bang for the buck which does not score well for projects to expand capacity.

    I travel about 20 miles from my home to a library where I do volunteer taxes. Half of that trip is on major arteries and 3 miles of it on I-95.

    It’s a major and awful trip some days.. The sheer volume of traffic is very heavy … and navigating the traffic requires alert and careful attention as the traffic is dense and moving at high speed.

    We check Google Maps before we get on I-95.. if it shows Red on traffic – we go “around” which adds time and distance to that trip.

    This is just one little place in the Fredericksburg to NoVa region – there are many, many others like this.

    We’re adding two new bridges over the river – C/D lanes but these lanes will only serve to move traffic further north until it runs into backups there during the morning commute.

    I do not see how you fix this – at all. You can discourage some traffic that is discretionary and time shift others with dynamic tolls but other than that, I do not see how you’d fix it.

    So I’m asking you guys that live up NoVa. Do you see a fix and if so – what?

  6. “So I’m asking you guys that live up NoVa. Do you see a fix and if so – what?”

    We been talking about those fixes for forty years, Larry, and even built a big one in Arlington to show others what to do, and also took up talking about it on this blog more than a decade ago, but nobody’s been listening, including you until recently, thank goodness.

  7. couldn’t have been THAT “big”- still got the traffic, right? 😉

    I understand that ya’ll are, in fact going to see some “toll” type fixes though.

  8. Proffers are legalized extortion and too conducive to political corruption. Impact fees, with the impact properly determined, would be more impartial, more meaningful, and in conformance with the new law that requires proffers to pertain only to the local impact. If the impact fee is too great for the developer to make a profit, the development should not proceed. It is not cost effective.

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