The discussion has started, but what’s it about and where does the money go?

Show me the money. If you bought a new home within the last several years, in fact going back to 1990, approximately one-third of new homes permitted paid a cash proffer. A proffer is a sort of promise, more directly: proffers involve making an offer prior to any formal negotiations or before a rezoning case is considered by Chesterfield’s Planning Commission and Board of Supervisors.

Proffers can be anything from a developer planting trees and shrubs on the property, building a turning lane for transportation or transferring property for a park. The cash piece of the proffer, currently $18,966 in Chesterfield pays for part of county’s infrastructure. The cash proffer contained in the Capital Improvement Program (CIP or let’s say bricks and mortar projects) pays only for about 25 percent of what the county needs to pay for a developer’s impact on public facilities such as schools, transportation, libraries, parks and fire houses. The county’s budget and management office has indicated the county needs $23,747 for each dwelling, overall, to offset a developer’s impact on infrastructure.

But where does that funding go? What is it used for exactly? It can’t be used for general operational funds such as payroll, insurance for employees or even county vehicles. Can the county pay for interest on bonds that paid for your new library or fire station? No. Cash proffers can only pay for Capital Improvement Projects (CIP). The money is distributed through what is called a shed system; Areas that are delineated by boundaries on a map or sheds. The funds are used specifically in that area. Say you live in the Bermuda District; there are approximately six sheds, and a part of a couple others, which developers pay into if they build homes in one of the sheds.

When cash proffers are collected for a home, when that home is closed, the money is allotted to the particular shed in which that home was built. Now depending on when a proffer was put into place, that amount of cash could vary. If the proffer was established in 1990 it would be greater than $5,000 and a builder/developer would pay his or her cash proffers based on that established amount. If your home was built on a parcel that was rezoned, say, 25 years ago, the proffer would be $0. The average of all proffers collected today is nearly $11,000.

Since the birth of proffers in 1990 the county has collected about $65.5 million in all categories (roads, schools, libraries etc.) and $28.5 million in cash proffers for transportation, which has funded projects like turning lanes on Treely Road, the realignment of a Chalkley Road dangerous curve, or the turning lane on Chester Road. The big projects such as the widening of Route 10 or the interchange at Meadowville Technology Park used some proffer money to help build them, but most of the funding for those projects were paid for by state and Federal funds.

So when a portion of the money you pay to buy you house is paid out in cash proffers, it is allocated to one of these 19 transportation sheds across the county depending on where you have purchased your home. In addition, the money can be shifted around to neighboring sheds. If shed 15 needs additional lanes on a highway, which will benefit the folks in shed 14 and 19, the transportation department will ask the Board of Supervisors to allow the transportation department to shift funds from one shed to help pay for the improvements in another because it helps folks in all three sheds.

Schools have similar sheds, though only three of them. They are designated by the boundaries of high schools. Thomas Dale, L.C. Bird and Meadowbrook high schools share one shed, while Matoaca, Cosby, Manchester and Clover Hill high schools share another and so on. Similar to transportation sheds, these areas receive all the cash proffer funding collected in that shed. And, if one shed can’t afford a particular improvement, such as extra classrooms and it will help reduce class size in another shed, shed one will help shed two pay for that improvement, if approved if approved in the budget.

Who would pay for infrastructure or CIP improvements if proffers were to be voted out of existence? How would the county pay for the impact of new development? – Taxes.
Chesterfield would have to make up the difference somewhere. Lay off employees, cut back on road and school improvements, new parks or fire stations. If the proffers were to go away tomorrow it would leave a shortfall in the county budget of about $6 million just this year. If you equate that to property taxes, that would be 2 cents per $100 on a property owners tax bill. If your home was assessed at $200,000 then your property taxes would increase by $40 per year; if your home was assessed at $400,000 that would double to $80 a year and so one.

Supervisors here have made a pledge to not raise taxes, but there is currently a movement in this county, as well as other municipalities such as Chesapeake, Prince William and Loudoun counties among others, who are looking at other fund raising options to replace the current proffer system.    

Facts and figures courtesy of Chesterfield County Budget and Management

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