Conditional zoning; replaces cash proffer system with system of impact fees. (SB768)

Introduced By

Sen. John Watkins (R-Midlothian) with support from co-patrons Del. Frank Hall (D-Richmond), and Del. Bob Hull (D-Falls Church)


Passed Committee
Passed House
Passed Senate
Signed by Governor
Became Law


Conditional zoning; impact fees. Replaces the current cash proffer system with a system of impact fees. Read the Bill »


Bill Has Failed


01/18/2008Presented and ordered printed 082043348
01/18/2008Referred to Committee on Local Government
01/29/2008Reported from Local Government (10-Y 3-N 2-A)
01/29/2008Reported from Local Government with substitute (10-Y 3-N 2-A) (see vote tally)
01/29/2008Rereferred to Finance
01/30/2008Committee substitute printed 083032348-S1
02/06/2008Reported from Finance (12-Y 2-N 2-A) (see vote tally)
02/07/2008Constitutional reading dispensed (38-Y 0-N) (see vote tally)
02/08/2008Read second time
02/08/2008Passed by for the day
02/11/2008Read second time
02/11/2008Committee substitute rejected 083032348-S1
02/11/2008Floor substitute printed 082069348-S2 (Watkins)
02/11/2008Reading of substitute waived
02/11/2008Substitute by Senator Watkins agreed to 082069348-S2
02/11/2008Passed by for the day
02/12/2008Read second time
02/12/2008Amendment #1 by Senator Herring withdrawn
02/12/2008Reading of amendment waived
02/12/2008Amendment #2 by Senator Herring rejected
02/12/2008Passed by temporarily
02/12/2008Reading of amendments waived
02/12/2008Amendments by Senator Whipple agreed to
02/12/2008Engrossed by Senate - floor substitute with amendments SB768ES2
02/12/2008Printed as engrossed 082069348-ES2
02/12/2008Constitutional reading dispensed (40-Y 0-N) (see vote tally)
02/12/2008Motion to recommit to committee rejected
02/12/2008Passed Senate (21-Y 19-N) (see vote tally)
02/12/2008Communicated to House
02/14/2008Placed on Calendar
02/14/2008Read first time
02/14/2008Referred to Committee on Rules
02/28/2008Continued to 2009 in Rules
02/29/2008Committee substitute printed 082076348-H1


Eileen Levandoski writes:

Senate Bill 768 is a taxpayer subsidy for developers. According to the League of Conservation Voters, "[d]eveloper and homebuilder lobbyists in Richmond are pushing a bill that would pass even more costs of new development onto existing taxpayers." SB 768 would replace the current "proffer" system with very low "impact fees."

Charlie Armstrong writes:

The current proffer system is little more than legalized bribery. The whole system is broken. Developers proffer money, but then the localities don't use the funds to improve the roads and infrastructure the funds were intended for. Instead of a system where developers pay more or less depending on how friendly they are with their County Supervisors we need a system where new development and construction pays for new infrastructure through fixed fees that are DEDICATED to infrastructure and community needs. It seems like the Watkins bill will accomplish this.

Chesterfield Forum writes:

On Friday January 18, 2008 Virginia State Senators John Watkins and Frank Hall declared war on the home owners of Virginia.
The Senators placed for consideration Senate Bill 768. The bill concerns the further definition of impact fees in the state of Virginia.
The bill in its’ present form would do away with cash proffers and shift some of the cost of new development from the developer to the existing home seller.This is nothing more then another attack on the home owners of Virginia by the Home Builders association, and Developers

Lonnie Murray writes:

This is a terrible bill, and a shameless attempt to appease the Home Builders Association, Real Estate interests, and Developers.

Look around at the housing crisis these folks already conspired to create, and that should be proof enough that localities deserve the ability to request proffers from developers to offset the infrastructure impact they have on local communities. It's time for them to pay their fair share, without using Richmond to allow them to weasel our of it.

Larry Gross writes:

Well.. if you wanted the perfect way to get localities to refuse future rezones - this is the way.

They'll live with their past "by-right" issues and just say no to rezones.

Congrats to the Homebuilders. This is the absolute best way to empower the "No Growth" folks.

Joseph L. Graham writes:


To: Rob Bell, Creigh Deeds

Via email: [email protected] [email protected] [email protected] [email protected]

Re: SB 768

Dear Sirs:

Much to my dismay, this bill seeks to undermine the entirety of our local effort to ensure adequate developmental proffers from Albemarle County developers who understood them to be necessary in order to achieve the most radical escalation of growth area rezonings ever seen in the history of the county. Without their understanding and approval of the need to provide adequate infrastructure, none of these gigantic rezonings could have occurred. For the legislature to unilaterally change the terms of legitimate land use agreements reached here is an exercise in intrusive state planning that severely erodes confidence in free market economics. If our agreements can be subrogated due to the pleadings of the real estate association, then we will have no choice except to revisit the terms of all growth area rezoning applications with these developers. They simply cannot be allowed to foist more development onto our rapidly decaying infrastructure at the radically discounted cost this bill proposes. SB 768 would slash by almost 70 percent the amount of infrastructure dollars we have ALL here agreed is appropriate. This bill only makes sense in its original revenue neutral form. Please let me know your thoughts on this issue.

With best regards,

Joseph L. Graham

Miller Eanes writes:

SB 768

A bill introduced by a "developer" for "developers". I'M SHOCKED.

But if it gives the counties the ammo they need to deny new residential growth then why should I be against this?

M. Eanes

John Hart writes:

I have read through the comments and see a lot of misleading statements.

I have one question to ask, "Who actually pays a proffer or an impact fee?"

The Answer: We all do. Every time a locality adds a proffer or an impact fee on to a house, the developer isn't going to just "suck it up" and take the loss. The developer will add it to the cost of building the house. Proffers in some jurisdictions have gotten so out of control, and due to the fact that they are paid at rezoning, by the time the developer adds the originial proffer costs and the costs of interest they have paid onto the house, some new homes have the costs artificially inflated by the locality to 60 to 80 thousand dollars over what the house would normally have been.

Why would the localities like this? Because the assesments on all of our homes are determined by "fair market value" which is determined by the sale prices of homes, new and existing. Therefore, as new home prices skyrocket, so does the "fair market value" and in turn the assessments which means higher taxes for us and more revenue for the localities on all of our backs.

If we truly are concerned taxpayers, we should get behind this bill that will put an end to the out of control proffer system (47K per lot in one locality) and replace it with a impact fee per house of a modest $5,000 to $12,000 per house depending on the type of home and the area. This fee would include ALL new development, not simply rezonings, so localities would actually receive MORE money than they do now, but it would be spread over a greater number of houses, keeping the housing prices down and keeping our assessments from rising so dramatically.

Just some thoughts to consider before you decide whether or not to support this bill. This is not spin, just the facts!

Waldo Jaquith writes:

I have one question to ask, "Who actually pays a proffer or an impact fee?"

The Answer: We all do.

A proffer achieves precisely precisely the opposite, John.

The purpose of a proffer is to cover the cost of a new structure. A locality may calculate that adding a new single family home requires a particular amount of increased police service, fire service, rescue service, road capacity, school capacity, water capacity, sewer capacity, etc., etc. And it's that price tag that's used to calculate the proffer. So who actually pays a proffer? The person building the new home or business that's requiring those services.

Now, there's the alternate model, the one that you're promoting, the one in which no proffer is paid (or an insufficient proffer is paid). So who pays for the cost of those extra services? We do, in the forms of the taxes that will be necessary to cover the costs of those new residents.

If you support not having everybody bear the fiscal burden of the actions of a single person -- that is, if you oppose the socialist model -- then you would support a proffer system. If, on the other hand, you believe that we must collectively bear the financial burden of the actions of a single private citizen, then you'd oppose a proffer system.

John Hart writes:

Waldo, I don't believe you fully understand the proffer system.

A builder or developer does not simply "eat" the extra cost. It is added on to the cost of the house, which raises the market rate and in turn raises our assessments, so in the end, we all end up paying for it. Not just the builder.

I seem to remember a time when being a conservative meant believing in the free market system and allowing the free market to control prices, not letting the government add fees that artificially increase the prices on new homes and thereby raising everyone's taxes.

Where have the reall conservatives gone? Many of our so-called Republicans/Conservatives in the General Assembly need to go back and read the Virginia Republican Creed--it states pretty clearly what it means to be a conservative, and at one time, a Republican.

Waldo Jaquith writes:

Waldo, I don't believe you fully understand the proffer system. A builder or developer does not simply "eat" the extra cost.

I understand the proffer system just fine. I quite explicitly referred to the individual who is having the house built, rather than the corporation doing the building.

It is added on to the cost of the house, which raises the market rate and in turn raises our assessments, so in the end, we all end up paying for it. Not just the builder.

Why, John, I don't believe you fully understand the proffer system.

Let's compare the two models, shall we?

Under the current proffer system, a locality can do the math, figure out that a new development will require $10M in new public services, and require that the developer pay the $10M for those new services. The developer will spread that cost over all of the structures, charging (let's pretend) an extra $10,000 per house. As you point out, that has the effect of raising some property values in the vicinity. (Not "all," as you claim. Just some of us.) So dozens, maybe hundreds of households end up having their taxes raised by perhaps $100/year, depending on current assessments, proximity to the development, local tax rates, etc. The public is on the hook for $0 of the development cost, though $2,000-$5,500 annually in increased assessments.

Then there's this proposed proffer system, in which the locality simply has to pay the $10,000,000. Of course, the locality doesn't have the money, so taxpayers pay for it. How much does that cost taxpayers? Why, $10,000,000, of course.

So these are the two models. We have one that costs a few thousand dollars, and one that costs ten million dollars. Your claim is that the one that costs a few thousand dollars is the one that "we all end up paying for." But if your interest is, in fact, reducing the tax liability of Joe Citizen, then you would support the existing model, in which the free market -- that is, people who can afford the $10k proffers -- ensures that those who pay that impact fee are a) those who choose to do so b) those who can afford it and c) those who are benefiting from those services.

Chesterfield Forum writes:

Well put Waldo! It is very interesting how the argument by Mr. Hart is the same “Smoke Screen" that the developers use. They are so concerned about affordable housing, yet they don't build any because it is not profitable enough for them. I call the proposed change for what it is "The Watkins Tax Bill”, we all realize that the cost will be borne by the home owner. But, I didn't want the new development to be there any way. If the home owner wants to bear the increased cost, so be it. That’s called a free market.
My sources in the GA say that this was put in at the last minute by the Home Builders Water Boy, because of the beating they took in the last GA over transportation impact fees that passed last year. They wanted to slip it under the radar to get a free ride on the back of the existing home owner. If this bill was to pass in it's present form it would cost every existing homeowner a 10-15 % increase in their present real estate tax rate to cover the loss of funds to the counties.
This is nothing more then a subside for the developers plain and simple

Steve Bowman writes:

The proponents of this bill suggest that enactment will allow developers to reduce the prices of the homes they build and sell. This requires a great leap of faith, in my opinion.

However, let's suspend disbelief for a moment and assume they are being truthful and that reduced new home prices actually come to pass. What happens to those who bought their homes in recent years under the old proffer system? The cost of past proffers is embedded into their home values. If you accept the developer party line, the sellers of these lower-priced "impact fee" homes will have an unfair advantage versus the sellers of existing "proffer" homes, potentially forcing existing homeowners to reduce their asking prices (even more than current market forces require) in order to be competitive.

Of course, I don't for a second believe that developers and builders would reduce their prices below current market rates in order to reflect their improved cost structure under the proposed plan.

On a more macro level, has anyone actually presented a reasonable explanation for why the state needs to intrude into what is clearly a local issue? If so, I haven't heard it.