THE VIRGINIAN-PILOT
Copyright (c) 1996, Landmark Communications, Inc.
DATE: Monday, October 14, 1996 TAG: 9610140038
SECTION: LOCAL PAGE: B2 EDITION: FINAL
SOURCE: BY TERRI WILLIAMS, STAFF WRITER
DATELINE: SUFFOLK LENGTH: 116 lines
As residential development booms here, the question city officials and legislators are increasingly asking is who should pay for the bulk of growth's demands: developers, newcomers or current residents?
The City Council will grapple with some of these issues during its work session Wednesday when it begins ironing out a legislative wish list for the 1997 General Assembly.
Among the tools for managing growth to be considered are:
Impact fees: A charge tacked on to the price of every new home to offset the pressures those houses have on schools, roads and utility lines.
Voluntary cash proffers. Localities ask developers to voluntarily provide financial contributions that offset development costs.
Retaining the rights to set water and sewer connection fees that can offset development costs.
Impact Fees.
The state code allows counties having a population of 500,000 or more - or any county or city nearby - to impose impact fees on new development to pay all or part of the costs of road improvements.
That means most Northern Virginia counties and cities qualify, said Suzette Denslow, deputy director of the Virginia Municipal League. Most cities in Loudoun, Prince William and Fairfax counties have the authority to impose impact fees.
Localities in southeastern Virginia, none of which meet the population criteria, are trying to follow suit.
About two dozen localities in and around Hampton Roads have requested impact fees in their legislative packages, said Denslow. But they have a fight.
In 1995, a bill that would have allowed Chesapeake officials to charge an additional $3,000 on every new home died in the House Committee on Counties, Cities and Towns. Last year, three other bills requesting impact fees also died in committee.
Developers, who largely oppose the fees, are a powerful lobby at the General Assembly, and many legislators have long opposed the fees as unfair, placing an undue economic burden on new homeowners as well as builders.
State Sen. Richard J. Holland, who represents some parts of Suffolk, said passing impact fee legislation for the Hampton Roads area would create a ``helter-skelter'' throughout the Assembly. Houses would no longer be affordable for elderly and younger citizens, Holland said.
``I don't think it's a matter of who has the strongest lobby,'' said Holland. ``I just think it's a matter of using sound judgment.''
Holland said cities instead need to assess whether they want to raise taxes to generate revenue as well as find ways to stimulate commercial development.
``The solution is economic development. If you can get a business to come in, then that industry is taxed and it relieves the tax burden on homeowners,'' said Holland.
Voluntary cash proffers
Voluntary cash proffers have not worked, said C. Flippo Hicks, general counsel for the Virginia Association of Counties.
``That's the greatest legal fix in Virginia history,'' quipped Hicks of the proffer system. ``It's called voluntary, but everyone knows they're not.''
But when they do work, it pays off, said Suffolk City Manager Myles E. Standish. New residential development necessitates new school construction that can cost between $5 million and 15 million per school, said Standish. A proffer is one tool to get developers to share in that burden.
Yet some question whether developers are being strong-armed into volunteering by localities.
Sen. Holland said some cities ``blackmail'' builders by threatening to not give rezoning requests if they don't agree to proffers.
Ultimately, said Hicks, developers realize they must work together with localities.
``Developers are realizing they can't continue to develop if the infrastructure is not there,'' said Hicks.
Utility hookup fees:
The Assembly is already considering two pieces of legislation that affect development: House Bills 1517 and 1513.
One, HB 1517, would place restrictions on voluntary cash proffers, requiring cities to establish that the development would actually cause a demand on city facilities.
The other, HB 1513, would prohibit cities from charging developers more than the actual costs of hooking up to water and sewer lines.
On Tuesday, a subcommittee of the House Committee on Cities, Counties and Towns will consider HB 1513.
It is legislation that Suffolk as well as most growing localities are watching closely.
``It's a never ending battle to have the tools to manage growth properly,'' said Christopher J. Layton, Suffolk's legislative liaison.
Land management also means having the authority to set water and sewer connection fees, said Suffolk's Utility Director Albert S. Moor.
Last week, Suffolk proposed hiking its water and sewer connection fees for next year to offset the costs of growth. But Moor said that bill being considered could restrict Suffolk's ability to do so.
The bill requires localities to prove that such rates ``bear a reasonable relationship to the system and its cost.''
``Each community or water authority has the ability to set their rates,'' said Moor. Restricting Suffolk's rate-setting authority could ultimately affect its bond ratings and lead to lawsuits.
Transfer fees
If it were up to builders and developers, transfer fees would be at the top of their legislative list, said Albie E. Viola, president of the Tidewater Builders Association.
Transfer fees are generated by computing a charge that is assessed at the closing of every real estate transaction.
Unlike impact fees that primarily tax new homeowners, Viola said, the transfer fee would be spread across a broader base of consumers. Viola and other developers insist that it is the most equitable approach to generating revenue, one that doesn't put new construction at an economic disadvantage to existing homes.
``You can't tell me that a school or new road only benefits a new development,'' said Viola. ``It benefits existing neighborhoods too.''
However, Standish said such fees add an undue tax burden on existing taxpayers. The manager said proffers and impact fees allow localities to recover costs upfront, whereas transfer fees may not generate enough revenue to immediately cover capital expenditures. MEMO: The Suffolk City Council will consider its legislative package on
Wednesday at 3:30 p.m. at council chambers at 441 Market Street. They're
planning a public hearing, possibly on Nov. 6.
KEYWORDS: DEVELOPMENT SUFFOLK CITY COUNCIL by CNB