There Is a Limit After All

For a while, there seemed no limit to the proffers that some developers were willing to make in order to gain rezonings and increased densities from for their projects. Now, it seems, the slow-down in the Northern Virginia real estate sector is changing the calculus of development. Reports Sandhya Somashekhar with the Washington Post:

Centex Homes of Dallas, one of the nation’s largest developers, said it can no longer afford to offer Warrenton $22 million — almost half the town’s annual budget — to approve 300 luxury homes for seniors within its borders in Fauquier County. The developer notified Warrenton officials in a letter received Thursday.

“It was possible to consider such [an offer] as remotely feasible only in a rising market, where Centex could hope to make a reasonable return on its very substantial investment,” wrote Robert K. Davis, the company’s division president. “[We] would not have made that agreement had it been possible to predict the timing of the current residential downturn.”

The deal would have been the most generous cash donation of its kind in state history, industry officials said. Warrenton would have collected nearly $74,000 a home, more than double what Fauquier usually receives from a developer.

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6 responses to “There Is a Limit After All”

  1. Anonymous Avatar

    So, are they still going to build the homes?

    Also, the final paragraph of the article states, “But demand for “active-adult housing” for older people is growing”… a complete joke.

    I can drive you to a development in Fauquier County right now and show you several properties in 55+ communities that have been for sale for over a year – there is NO demand.

  2. Ray Hyde Avatar

    And remember, that $74,000 was only the tip of the iceberg. In addition Centex would have repaired the towns leaking sewage system, been allowed to use only 25% of the land, been required to build the homes so that they look the way the town fathers wish them to, and in spite of that, they would be required to hide the homes behind a knoll or berm.

    So, instead of getting something reasonable, the town and county got just what they want in that spot: nothing.

    Meanwhile the aging landowner is left twisting in the wind, and now she gets to start a five year project all over again.

  3. Toomanytaxes Avatar

    I suspect that, with the cooling of the real estate market, rising interest rates and quite a few people in way over their heads (ARMs and interest-only mortgages), this project might well have not taken off with proffers at half the amount. If the proffers were excessive in the market, so might be the price offered for the land.

    I still submit that most everyone would be better served by ending the proffer games (which can be excessive — Fauquier County — or laughable for their inadequacy — Fairfax County), replacing them with cost-based impact fees. I know that not all real estate professionals like them, but a good friend of mine, who has been a developer for years, strongly prefers them. He views impact fees as a cost of doing business. Sometimes, he pays them and tries to recover their cost in his prices. On other occasions, he makes a lower offer to the landowner or walks away from the potential project. He’s told me that impact fees are much above board and certain.

  4. Ray Hyde Avatar

    As long as the means of figuring the impact fees are fair and open, it is a much better system than what we have now, which consists of forty five minutes of begging.

    As you say, then you can make your choice and pay your money, or not.

    Based on the costs of getting anything done, I’d say the level of proffers between Fairfax and Fauquier should be reversed.

  5. Toomanytaxes Avatar

    Another Fairfax County “proffer joke” has been the practice of accepting land for schools. On the surface, this is not a bad practice. Indeed, Prince William County recently rejected cash proffers because it needed the developer to find and donate land for a school.

    However, if one looks below the surface, one can find that FCPS has a large number of proffered parcels that either have never been needed for schools, are too small or even unbuildable. A few years ago, FCPS was looking to build what is now Colvin Run Elementary School in Vienna. There was a huge citizen debate as to whether the school should be located in Vienna or Great Falls. (Some GF parents did not like the idea of a mere Vienna address on their kids’ school.) To make a long story short, most of the school board-owned sites in Great Falls were simply too small or unbuildable.

    The County has these sites all over and, to its credit, has inventoried them and is looking for alternative uses. But the facts remain, FCPS has been and continues to be short of capital for school construction and reconstruction. Thus, we see trailers for classrooms and obscene increases in real estate taxes. Both Fairfax County taxpayers and students alike would have been better off had the BoS obtained cash, rather than land donations.

  6. Ray Hyde Avatar

    The Fauquier Democrat (A joke in itself, Is there such a thing?) described this situation in their headline, “Centex Reneges on Deal”.

    There is no mention anywhere, that maybe, just maybe, the county was asking too much. To read the article, you would think the company willingly went to five meetings and willingly raised their offer five times, before they finally backed out.

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