Tuesday, December 20, 2005

Judicial Smackdown in Albemarle

Here's a timely case for Gov.-elect Tim Kaine's effort to expand local control over development. A judge in Albemarle County yesterday ruled in favor of a construction company that had its site plan for a new facility turned down by the county, which argued that the local roads couldn't handle the traffic. The judge said the county didn't have that authority. Here's the Daily Progress story.
'"While the decision is not a surprise, it is a huge blow to the protection of public health and safety," Brian Wheeler, president of the Ivy Community Association, said Monday. "This case says local government can't question the intensity of use on industrial land when it threatens property owners and schoolchildren next door."
Wheeler and other county officials had acknowledged that the case would be an uphill battle, mostly because the Dillon Rule doesn't allow local governments to make decisions not expressly granted to them by Richmond. Comments made by Gov.-elect Timothy M. Kaine suggest local governments might soon get more authority to reject plans based on lack of supporting infrastructure.
"Local government power is an issue that Kaine has given attention," Wheeler said. "Here we have an example right in Albemarle that demonstrates local government clearly lacks the power to say no to a development that will have a severe impact on roads and public safety."'


At 5:51 PM, Anonymous Anonymous said...

No other decision was possible under the law and precedents, and I suspect the county knew it all along and wasted taxpayer money just to get some headlines.

At 2:03 PM, Anonymous Anonymous said...

If you win, you lose. We will never have the kind of mixed use development that is proposed to reduce traffic if every local NIMBY Association claims that every development is a huge blow to existing property owners and their children. Never mind that some day those children may be looking for a place to work.

At 11:41 AM, Blogger Ray Hyde said...

Thanks to the Washington Times:

Economists increasingly are concluding that the shortage of affordable housing in Washington and other major U.S. cities on the East and West coasts is a result more of man-made restrictions on development than high construction costs or other market forces.
“It simply takes too long and is too expensive to move through the development process,” said Mark Vitner, senior economist at Wachovia Securities, pointing at “smart growth, slow growth and no growth” movements in many of the same areas where the population and demand for housing are growing the fastest.

The referenced study by the National Bureau of Economic Research remarks:

The key underlying reason for rising house prices, though, is supply, according to economists Edward Glaeser, Joseph Gyourko, and Raven Saks. Since 1970, homebuilders have faced increasing difficulty in obtaining regulatory approval for the construction of new homes. Local residents — more educated, more affluent — have had a greater ability to block new projects should they be deemed harmful to their own interests, for example to the value of their homes. As a result, cities have changed from “urban growth machines to homeowners’ cooperatives,” the authors write in Why Have Housing Prices Gone Up?

From the Central VA Real Estate Blog.

At 11:39 AM, Blogger Jim Wamsley said...

Ray Hyde has hidden a gem in his Political Train Wrecks comments on December 19th.

“We need to be able to recognize and sum over all the benefits and all the costs of land use and transportation to be able to determine the least cost and most equitable solution. Calls for ameliorating one kind of cost externality (cars don't pay their full way, scattered housing doesn't pay its full way, etc.) or another can only aggravate inequity and imbalance and inefficiency, unless we consider all the externalities we can identify simultaneously.”

What next, now that the judge has prevented consideration of roads. Since “Local residents — more educated, more affluent — have had a greater ability to block new projects should they be deemed harmful to their own interests, for example to the value of their homes.” We will get nimby laws preventing new construction.

One solution would be for new residents to pay the nimbys for the right to develop. This could be payment for new schools, roads and utilities. These payments would be added to the cost of a new home, increasing the relative value of the nimbys home. At present, developers have the ability to prevent this solution.

At 8:45 PM, Blogger Bob Burke said...

Yeah, I would love to see the issue of housing costs gain some traction in the debate about transportation and land use.
We really ought to start a separate thread on this topic. It is critical to the transportation issue. It would be interesting to see how a high-cost Virginia locality would change over time if the rules were changed and it were suddenly to allow higher densities, either in the appropriate transit-oriented design, or supported by sufficient road capacity.
A key reason localities charge eye-popping proffers from developers, or try to discourage them from building at all, is because they're trying to avoid the local costs those new residents will demand. Namely, schools.
What if localities had to pay for local transportation costs, and the state paid its fair share of public education?
Under the current rules, fast-growing and crowded localities are discouraged from adding new residential units because all those new residents will drive up their school costs, along with public safety, et al.
And, their strategy of choice to stem that growth is often unnecessarily demanding lower densities that producing sprawling development.

At 10:29 PM, Blogger Ray Hyde said...

All I have been trying to say is that it is a total system. It's like a balloon: squeeze here and it pops out there.

What we have now is a cacophony of special interests, each claiming foul on the next guy while protecting their own turf. This has resulted in myriad laws, supposedly to protect us from some inequity or another. Some economists claim that in highly regulated areas thes laws account for more than 30% of the cost of a new home. If the laws create the kind of communities we want to live in, then maybe the laws contribute 30% to the value of the home as well. If so, fine; if not then where is the public benefit that is required to support zoning regulations?

How can we tell, objectively?

"Under the current rules, fast-growing and crowded localities are discouraged from adding new residential units because all those new residents will drive up their school costs, along with public safety, et al." - Bob Burke

I'm sure TooManyTaxes would agree with you, but EMR would say crowded localities are the ones with the most infrastructure already and we should preferentially go there over new greenfields.

What good does it do us to keep taxes low by prohibiting new houses if the end result is that we can't afford to live here?

Fauquier county is arguably not only a local but a national leader in the slow growth movement. They have argued for twenty years that not building keeps your taxes low (and improves the quality of life). EMR would say the quality of life is better in more urban areas.

Objectively, how would we know?

In the last four years assessments went up 122%. Even if they cut the tax rate in half to $0.50 it will still be a 22% tax increase. A more likely tax rate is probably $0.75. So it appears that a nationally acclaimed 20-year experiment in slow growth is going to culminate in sharply higher taxes AND more expensive housing.

Evidently, slowing growth is not the answer. Is the Fauquier situation better or worse than the Loudoun example? I don't know, but I suspect that if you sum over all the property assessments in Loudoun the sum is a far higher number than in Fauquier, adjusted for area.

Take the total property assessment in Loudoun and divide it by the number of people, then do the same for Fauquier. Then tell me if the Loudoun model of growth or the Fauquier model of growth provides the greater average personal wealth.

I actually have never done this, so somebody fill me in. Then compare the Loudoun lifestyle with the Fauquier lifestyle and apply the appropriate factor. (?????).

So, who can support the new load of population more easily, the fast growing crowded areas with infrastructure that is old and overburdened, or the greenfields with no infrastructure?

It stikes me that if we start thinking this way, it's a rats nest. But, how can we tell objectively?

Anyway, slowing growth doesn't mean slowing growth: we know we are going to have 2 million more people. The question is, Where? And if local government has the power to say no, Where Then?

If local government pays for transportation and state government pays for schools, then we still pay. It only becomes a question of swapping the order of precedence for special interests standing in line at the public trough.

I think Bacon is right, we need less government regulation, not more. Unfortunately, the likely result of that is more (pick your favorite term) (sprawl, scattered development, densification of the countryside, property rights, freedom for farmers) not less.

Yet, I agree that the strategy of choice to stem growth is often unnecessarily demanding lower densities that produce sprawling development. It may be that where we disagree is not in the end result, but in the timing.

There may be countrvailing forces at work. Tens of thousands now in townhomes might want an SFH. Thousands in SFH might want larger lots or even farmettes. Absent the current patchwork of local government restrictions we might see a more uniform density gradient evolve. Hopefully, with a more uniform jobs density as well.

If that happened we could both be right: more density closer in AND more homes on large lots farther out. Springfield could move to Clifton, and Clifton to The Plains.

Absent restriction, my neighborhood of small homes on large lots in Alexandria might become townhomes. Five acre lots in Clifton might become one acre lots: current homeowners would be developers. With the money they make they could afford to buy a small farm - and preserve it for a while.

We might use some land more efficiently and also use more land. One thing I can say from bitter personal experience is that having the government label prime home land as prime farm land doesn't change the economics.

Wishing for less scattered use won't make it so. It is going to take money, force, or inequity. Til Hazel has fabulous farmland property in Fauquier, but it is paid for and supported by development. My farm is no different, although I'm in a different business from Hazel. I happen to think that paradoxically, sprawl makes it possible for more people to support more farms. Lord knows agriculture won't support them.

We hear a lot about the Dillon rule, but we don't hear much about the alternative. It seems to me that the Dillon rule says localities cannot do anything that is not expressly allowed by the state. Non-Dillon localities are allowed to do anything that is not expressly forbidden, with the result that a long list of things is forbidden. It's not necessarily a better system, but it does allow for more ingenuity and originality in skirting the rules, at least until we legislate ourselves into totalitarianism.

At 10:47 PM, Blogger Ray Hyde said...

"One solution would be for new residents to pay the nimbys for the right to develop. This could be payment for new schools, roads and utilities. These payments would be added to the cost of a new home, increasing the relative value of the nimbys home. At present, developers have the ability to prevent this solution. "

Careful, Jim Walmsley. I tried making the argument that these payments increase the relative value of existing homes (and then the taxes), and got roundly roasted.

Since proffers already exist, how is it that developers have the ability to prevent this solution?

The other problem with this is, what happens if the developers are willing to pay, and pay in full? Don't you lose the ability to control how your community grows?

I'm not sure that if I'm a NIMBY, that I'm going to be mollified for loss of value to my home if a developer slaps up townhouses or apartments next to me and pays the county for new schools and roads. I don't care if the county gets paid, I want to be paid for my losses.

But if I own the lot next door to the NIMBY and I'm required to keep it as a single family home, even though I have the purchase or rental agreements in hand, then I'm going to feel as if NIMBY has me doing what he wants, at no cost to him. I'd want to be compensated for the demonstrable loss in rent.

If the NIMBY homeowners association doesn't want it developed, they can buy the lot and not develop it. On the other hand, if the lot is developed and NIMBY tries to collect for the alleged loss in value of his property, he might have a tough argument unless the apartment building next door is actually worth less than his SFH.

It's a rats nest.

At 11:12 AM, Blogger Toomanytaxes said...

Seasons greetings to all!

A couple of interesting facts: a few days ago, the Post reported that 38%+ of all new mortgages in 2005 for Metro Washington were interest only. The national average was 23%. It's quite possible that this form of financing has contributed to the out-of-control rise in housing prices and the great level of profits for the real estate industry in this market. A reduction in the number of those mortgages, which is favored by some federal regulators might well push hard in the other direction.

Also, Fairfax County Public Schools has released its Capital Improvement Plan. Included in that large document is the impact of inflation on construction costs. Building and remodelling costs for schools have risen to the range of $155-to-$175 per square foot. The local building boom has had a significant impact on the schools. At $155 per square foot, Fairfax County's target cash proffer for school of $7500 will buy only about 48 square feet of new or remodeled classroom space. Even the Fairfax County Board of Supervisors would have trouble retaining the low proffer target.

At 9:42 PM, Blogger Ray Hyde said...

I don't know what to say about interest only mortgages. It seems like an utterly stupid idea to me. I don't know why the banks would offer them or homeowners would accept them: unless they are near 100% sure home prices will continue to rise.

I've said before the real estate industry is out of control. After all, you can go buy a $120,000 Mercedes and be off the lot in a half hour, title in hand, why should homes be any different? If it weren't so difficult and expensive to swap homes, maybe more people would live near where they work.

I don't think proffers and impact fees are the way to go, but given that is what we have, $7500 seems too low.

I recently had two water heaters replaced. the one in Fairfax set me back over $1000. The one in Fauquier was $600. If other construction costs vary in a similar manner, then who can afford to live or do business there?

At 8:51 AM, Blogger Ray Hyde said...

Here is an example of trading one kind of transportation cost for another. Washington city paper reports a 2240 sq ft, 4 bedroom, row house for sale near 13th St NW - for $1,795,000.

As reported by Brian Beutler-

"You’ll have to make one or two sacrifices, though, such as accustoming yourself to the worn-out wood floors that give way to rot as they inch toward the tile in the kitchen. And the cabinets near the downstairs bathroom have come unhinged. But don’t forget the perks: The Metro is nearby, the street is quiet, and the low-end carpeting upstairs is as easy on the eyes as the faux-antique sink unit in the master bathroom is."


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