When the economy, including home building, slowed in 2007 and continued, its business model dug deeper until last year when a crack, however narrow, began to open and new homes began to sprout here and there. But within the last year, builders have been pushing back on the amount that the Chesterfield County Board of Supervisors (BOS) policy requests for new homes built on rezoned property.
A panel discussion last week, facilitated by the Chesterfield Business Council and the Chesterfield Chamber of Commerce, was held to discuss the cash proffer issue. The current county policy forces builders to pay a $18,966 cash proffer. While a cash proffer is voluntary, typically a rezoning request in not approved without the cash proffer, which county officials say helps cover the impact on public facilities such as schools, transportation, public safety, libraries and utilities.
Most builders say they want cash proffers eliminated to allow them to be competitive with other localities. An attendance of 100 persons including builders, real estate professionals, real estate attorneys, bankers and non-builders gathered and five panelists presented their opinion on the affect of cash proffers on builders, home prices and the county economy.
“This topic means a lot of things that are dear to the people in the room,” said Allan Carmody, director of budget and management for Chesterfield. “And, frankly it’s a very important decision for our Board of Supervisors as they go forward; a decision that’s going to have a very lasting [affect] on whatever decision they do make.”
In 1989, the board implemented cash proffers and have made proffers applicable to any rezoning since that time. According to Carmody, there are still properties within the County that were zoned before that time that do not have a cash proffer attached to them.
Carmody said that a perfect case study of housing affordability is a comparison between Chesterfield with proffers and Henrico without. The statistics show that in the various price ranges a house in Chesterfield is either at or below that of Henrico. And, he said, the volume of sales is also comparable, and housing starts have also outpaced that of Henrico.
The first of five panelists to speak was Craig Toalson, Chief Executive Officer of HBAR.
“Cash proffers, first off, are a tax.” Toalson said. “They’re not called a tax; it’s income to local government and it is paid for by the homebuyer. It’s a direct cost of the builder passed on to the homebuyer.” He said 99 percent of the time; the homebuyers do not know they are paying this tax.
Toalson also said that using an 800 homes built-per-year calculation (Chesterfield permits in 2012) that the direct impact on the county in construction wages and salaries is $81,848,900 and it supports 1,681 jobs. The indirect impact or ripple effect, money spent by these workers is $5,051,800, which equates to 889 jobs.
“If there were 2,570 jobs created in one year in this county, there would be a ribbon cutting ceremony,” Toalson said.
Panelist and former Bermuda District Supervisor Jack McHale offered a disclaimer, saying he did not speak for the Board of Supervisors and much of what he read, just as those in attendance, was from the county.
“Why do families choose to live in Chesterfield County?” Mr. McHale asked. “Homes are available across a broad spectrum of pricing so people in various income groups can afford to buy a home in Chesterfield.”
He continued that, “We have schools that have an excellent reputation; we have first rate fire and EMS and police services and parks, libraries and other services that produce a quality of life that I think is excellent.”
McHale said that to remain competitive, Chesterfield must invest in capital improvements that are required to maintain our quality of life – especially in newly developing areas. How do we do that now? Cash proffers, he answered.
“I’m not excited about cash proffers and I’m not excited about property taxes either, but without funding, Chesterfield cannot sustain the services that the County delivers and residents expect,” McHale said.
The Chesterfield Education Association was represented by Frank Cardella, it president since 2009.
Mr. Cardella said he had never heard of proffers until he moved to Chesterfield. “I’m from New York and we have taxes. Call it what you want to call it, but you pay for what you want,” Cardella said. He said he was the swing vote on the panel. He was not pro or anti-proffer, but said he was pro-school funding. “Whatever the community thinks is best, I would be supportive of it.”
Village Bank Vice President of Special Assets, Ted Balsamo presented the bank making a point, that a $18,966 cash proffer amortized (mortgaged) over 30 years at 4.5 percent would cost a home owner $96 per month or $1,152 per year.
Builder and developer George Emerson said that when he first started building in 1978 he would draw his own house plans; he sold a house for $32,000 and had a road plan that was only four sheets.
“The proffers we have put on these homes has killed the value of homes in Chesterfield County,” Mr. Emerson said. “If you are a parent, your kids are ultimately going to pay for this. We’re taking that whole group and putting them in apartments or sending them to the City of Richmond.”