Op/Ed: Cash proffer repeal shows a reverse in thinking

Posted on Thursday, January 31, 2013 at 10:58 am

By Bill Callahan

I have attended several community meetings in the last two weeks concerning the school budgets for the next few fiscal years in Hanover County.  As a father, teacher, and resident of this county I am extremely interested in how the funds are levied, collected and allocated in the county.

Many people have shared testimony about why the school budgets should not be touched and teacher workloads should not be increased by 20 percent in the coming years.  At the Jan. 23 Board of Supervisors’ meeting, two residents expressed fears of tax increases to accommodate the increased revenue expressed by teachers, students and faculties in multiple schools.  Based upon these speeches, and my own concerns, my inquiries have moved me in a different but congruent direction.

When I first heard of the complete removal of proffers by the Hanover Board of Supervisors this December, I was dumbstruck. One of the greatest ironies about the proffer removal is the fact that the original bill in the Virginia General Assembly, which passed in 1989 allowing localities to issue proffers, was shepherded through the legislature by Hanover’s Del. Frank Hargrove Sr. The logic of a cash proffer is very sound.  As a developer adds to the infrastructural stress of a community through necessary water, sewer, road, and school needs to accommodate a new dwelling, then said developer should help offset the costs for these improvements which come from existing taxpayers’ monies.

Clearly the decision to remove these proffers is a reversal in thinking. It seems the current board would favor taxing residents and increasing the profits for developers.  According to the reports from Hanover’s own proffer committee, which met through the autumn of 2012, the lost funds from the proffers must be made up for in other ways.  The committee recommended “reducing” the proffers but keeping the proffers for both schools and roads and finding several new sources of taxation including a cigarette tax, motor vehicle registration fees, and grantor’s tax. Previous recommendations included a meals tax, admissions tax, and several other fee increases for county services – none of these were listed in the final proposal.  As far as I can see the Board removed the proffers and advanced no provisions for new revenues beyond the motor vehicle fees. A shortfall of this size cannot be made up for by the county with a $10 car fee.

A grantor’s tax and impact tax would both require action by the General Assembly.  Currently HB1404 giving rural areas the chance to file impact fees (a necessity for Hanover County) has been tabled in committee which would signal that this bill is unlikely to pass this year.  A grantor’s tax bill is thankfully not under consideration.  A grantor’s tax is a tax assessed at the sale of a property and calculated into closing costs for the seller.

This tax would be an outrageous burden for elderly residents.

I live in Beechwood Farms, a subdivision built out when I was a child in the 1970s. Many of my neighbors are retired and live on fixed incomes. For many of them the single most valuable investment they own is their homes. Members of the Board of Supervisors have callously voiced the opinion that the lowered assessments are an effective tax break for residents. While this is true in that our tax burden has decreased perhaps a few hundred dollars, our cash value has decreased by thousands along with it.  This is the equivalent of giving an employee a pay cut and telling him he now has a lower tax burden so he is better off.

To add insult to injury, my elderly neighbors would potentially sell their homes that are now worth less and get slapped with a grantor’s closing cost tax further reducing their profit by thousands of dollars.  The Board is effectively saying that buyers in new neighborhoods like Rutland and Hickory Hill (requiring huge outlays of community funds) are more desirable than residents in existing neighborhoods like Totopotomoy and Beechwood Farms, which have a minimal impact upon county infrastructure.

In my estimation, the proffers were a logical and reasonable tax to offset costs.  To show an example, in 2000 Hanover county paid $10 million in cash to build Pole Green Elementary School; 40 percent of the costs of this project came from proffers.  In comparison, five years later, citizens overwhelmingly voted for a $100 million bond for construction of various infrastructure improvements including Laurel Meadow Elementary School and the Hanover trades school. The final bill for Laurel Meadow came to $21 million – more than twice the cost of Pole Green just five years earlier!  When we borrow money we almost certainly overpay.  I refuse to believe construction, staffing, and technology costs doubled in five years.  Removing the proffers almost certainly will require further borrowing to pay for future infrastructure needs. Hanover County proudly has a AAA bond rating and we are known for our fiscal responsibility.  Are we willing to go the way of Congress with rising debt ceilings and unfunded projects?

As a final point, I believe the actions of the Board of Supervisors are explained by insider Republican politics.  Attorney General Ken Cuccinelli has signaled that he is not in favor of proffers.  His actions are certainly setting up court battles to come between big developers and localities with proffers.  It seems reasonable to guess that he will move on this policy if he is elected governor in the fall.

If this is the case, I applaud the Board for getting out in front of potentially costly and frustrating lawsuits, but I question removing proffers without having reasonable new sources in place to offset these losses.  If the Board truly wants to replace proffers with impact fees then they should be lobbying for HB 1404 like demons instead of having the bill die quietly in committee.

As a shortfall measure, a rise in property taxes, admissions taxes and meal taxes seems very reasonable to me.  Other localities are considering a meals tax and anyone who dines in Richmond already pays one.  It seems like the Board of Supervisors is pitting outside business interests ahead of citizen’s interests at every turn. Admission taxes and meals taxes are probably very unpopular with King’s Dominion along with when the school year begins – but that is a whole different argument for a different day.

 

About the Writer:

The writer is a Mechanicsville resident and teaches social studies at Patrick Henry High School.

 

 

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