Wednesday, August 10, 2005

Realtors in James City County Fight Proffers

If James City County adopts cash proffers on new homes when a rezoning is required it will effectively be a tax on every homeowner, not just the new arrivals, say Realtors in this Virginia Gazette story.

Proffers tend to increase home values across the board, thus driving up real estate tax bills, not to mention housing costs, opponents told county supervisors.

“Why are only certain people required to pay,” Susan Gaston, a government lobbyist hired by the Realtors, told the board. “This does not meet the bright line test of fairness.”

Real estate taxes don't meet the bright line test either, of course, but no matter. The money from the proffers is supposed to be set aside for school costs. The Realtors support as an alternative setting aside one cent of the real estate tax revenue for schools.

Hmm... It's always about tax policy and the local cost for public education. Maybe if the state actually paid its fair share for public schooling, and localities did the same for local road construction and maintenance, then.... Oh, nevermind. I'm talking crazy.


At 8:42 PM, Blogger Ray Hyde said...

"Maybe if the state actually paid its fair share for public schooling, and localities did the same for local road construction and maintenance, then.... Oh, nevermind. I'm talking crazy."

Thank you Bob, that made my day.

As for the article, it sounds like someone has been reading this Blog.

At 9:21 PM, Anonymous Anonymous said...

The challenge on the local level for schools is one of capital needs more so than operational needs. That said, proffers are bad..

At 2:15 AM, Blogger subpatre said...

The headline of "Realtors object to proffers’ fast track" makes you wonder where the reporter was February 19 when the same paper reported the Board was studying proffers.

The answer is this piece is PR from Williamsburg Area Association of Realtors (WAAR). If you thought party politics was sleazy, look what a little money-grubbing can generate.

Though the writer calls it 'freewheeling discussion', every viewpoint and every quote in the article is a realtor or their lobbyist:
- Susan Gaston, WAAR Legislative Consultant (lobbyist)
- Angela Dougherty, WAAR President-elect
- John Wilson, treasurer Virginia Association of Realtors
- Linda Kinsman, WAAR CEO and executive VP
- Charlotte Hubbard-Jones, WAAR President
- The misrepresentation of Supervisor Harrison's position is WAAR's also.
- Cutest was WAAR's push poll labeled as "sharing opposing sides"!

With enrollments increasing at 5% a year (20% per assessment period), new schools and additions are needed.

That's a need for more classroom space, a need not created by existing residents, a need created solely by incoming residents --via the realtors.

Without proffers, everyone pays the same toward that space. Existing residents have already paid for the original schools, and now --thanks to realtor lobbying-- they'll pay for 80% of the additions too.

At 7:44 PM, Blogger Ray Hyde said...

How old are the existing schools and what is the current tenure of existing residents?

Has not everyone taken advantage of infrastructure that was paid for, in part, by our predecessors?

We've been around on this before, but I'm still convinced that proffers wind up costing existing residents more than they coat new residents.

If you want new residents to pay the cost, capital is easy to come by, just borrow it, and you can spread the cost not only to new residents but future residents.

At 9:40 PM, Blogger subpatre said...

Trying to claim proffers are bad because they aren't perfect is being obtuse, a miserable defense of the failing status quo. Cash proffers fund upfront capital expenses only, not recurring costs and services that regular taxes support. Proffers are better than the alternative; which is the unavoidable, inherent, unfairness to existing taxpayers.

The statement that “proffers wind up costing existing residents more than they cost new residents” is absolutely ridiculous and unsupported. Even the most critical studies on proffers never suggest anything close to that.

Proffers are a necessary evil to mitigate the predation on stable communities by large-scale immigration. It’s not surprising realtors attack the idea. What’s surprising is such a blatantly biased article.

BTW: In case you aren’t aware, proffers may be non-cash. Developers of housing that adds enough students to make new schools necessary can build the school themselves. Added turning lanes and signals for development entrances is another common proffer.

At 12:04 AM, Blogger Ray Hyde said...

We talked about this before, and in theory, I agree.

If proffers are used to offset capital expenses, if the budget does not go up for other reasons, If the tax rate is adjusted downward to reflect the additional tax base value of the new homes, and if the increased sale price of homes with proffers are not reflected in existing homes, then you are right.

I don't think that is what happens in practice.

I don't even think proffers are bad, necessarily. I just think that before voters sign up to them they do so with their eyes open so they can make their own decision.

This argument might be unproven, even thought there are studies to support it.

I don't think it is ridiculous to ask the question, "How old are the existing schools and infrastructure, and what is the current tenure of existing residents? If a new home with proffers costs $20,000 more than an existing home, then why wouldn't the seller of an existing home demand a price that represents a $20,000 capital gain to himself? When elected officials see all that new "value" in home sales, what is going to keep them from sticking their hand in the till?

Well, you are right again: an informed voting populace can go to the polls an TIO.

I don't think that's what happens. and by the time it does, you have already had your pocket picked for four years.

At 1:06 AM, Blogger Ray Hyde said...

Here are a few quotes with references on proffers....

"Economists only support impact fees if new development does not generate sufficient revenues to cover public costs. If, however, revenues associated with new development exceed public costs, impact fees should not be imposed. "

"Present Value of Costs Associated with New Development
Present Value of Revenues Associated with New Development $9,251.34"

Collier County Florida

"The results show that an additional $1.00 of
fees increases the price of both new and existing housing by about $1.60 and reduces the
price of land by about $1.00." (Note that land is owned by existing residents)

" metropolitan area’s existing
residents can effectively control the total amount of population growth their region will experience in
the future, no matter what policies they adopt."

"Development fees are often seen as a
way to shift the burden of new infrastructure
onto the new residents that
require it. This view is only partially

"The review of the literature suggests that impact fees contribute to housing price infation in communities where there are no reasonable housing substitutes and that tax burden and infrastructure enhancements are capitalized into the price of home and land. "

"...previous residents can refuse to raise the taxes needed for new facilities serving new
people, or if the costs are charged to new users, previous residents can enjoy the benefits
from the construction of new public facilities without paying for them."


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