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Residential Rezonings as a Means for Building Infrastructure: Catching Up or Falling Further Behind?

 

Since taking office on January 1, 2004, the current Board of Supervisors has approved seven rezoning requests involving 4423 new residential units. Attachment 1 is a summary of each residential project approved by the Board. The data in Attachment 1 was taken from the staff report for each project. An examination of the Attachment reveals the following key points with respect to Capital Facilities and Transportation infrastructure:

Capital Facilities

The county cannot require the developers to contribute 100 percent of the Capital Facilities costs for which their projects will generate the need. On numerous occasions I have testified before the General Assembly on behalf of the county requesting permission to impose these higher contributions (known as Impact Fees), only to be denied every time. Since the county cannot impose a 100 percent contribution policy, the Board must decide how much of the burden for new facilities will be borne by the current residents as opposed to the new residents who generate the need for the new facilities. Ideally, a County Board would undertake the following steps to arrive at this policy decision:

  1. Establish a set of Service Plans that identify the levels of service citizens can expect from their local government. For example, the Parks and Recreation Service Plan may call for one Recreation Center for every 75,000 population and one large soccer field for every 3500 people, while the Library Service Plan may call for one Regional Library for every 50,000 population. From these Service Plans staff derive the cost of providing the future Capital Facilities (e.g., schools, libraries, ball fields, jails, Mental Health Group Homes) necessary to provide the agreed upon levels of service as the county grows.

  2. Establish a proffer policy for the percentage of the cost of future Capital Facilities that developers would be expected to contribute if their proposed rezoning projects were approved. Of course, current residents must make up the difference between that percentage and the total cost.

The previous Board of Supervisors spent eighteen months developing and approving a series of Service Plans that became the basis for calculating the costs of future Capital Facilities and establishing the level of proffer contributions that developers would be expected to contribute to help pay for those new facilities. Without reviewing those Service Plans or developing its own standards, the current Board decided that the proffer contributions by developers under the policy of the previous Board were too high and would unfairly increase the cost of new houses. Thus, the current Board adopted an interim proffer policy in June (pending adoption of its own standards later this fall) that lowers the expected proffer contributions from approved rezonings. Clearly the current Board believes that the existing taxpayers should pay a greater share of the burden of providing new Capital Facilities than the previous Board felt was fair. Using the seven rezoning applications approved by the Board this year, Chart 1 illustrates the expected difference between the two policy decisions: a $19 million decrease in expected proffers and approved levels of County services to citizens; an immediate $3 million increase in the burden placed on the taxpayer despite the lowered level of service.

CHART 1

chart1


The Capital Intensity Factor set by Board policy is only a starting point for negotiations with developers. Thus, as Chart 2 illustrates actual proffers for the seven rezonings were actually $1 million less than expected proffers.

CHART 2

 chart2


Several members of the current Board believe, or claim to believe, that since by-right developments do not include proffers, the cost to current taxpayers for capital facilities is greater than if the properties were rezoned to higher densities with accompanying proffers. Unfortunately for that argument, as Chart 2 also illustrates, the cost to taxpayers of this year’s rezonings remains higher than the cost to taxpayers had the seven properties been developed by-right.

Note that if the seven projects were to develop at their by-right densities with no proffer contributions, a total of 1220 units would be built generating the need for new Capital Facilities that would cost the current taxpayer approximately $40 million (using the current Board’s relaxed standards). This is some $4 million less than the tax burden on existing residents generated by the seven rezonings – equivalent to almost an entire penny on the tax rate. Clearly the rezonings are not a good deal for the current taxpayers from a Capital Facilities standpoint. In addition, the annual operational cost to provide teachers, sheriff deputies, firefighters, social workers, and the public services needed to support 4423 new homes will be greater than the cost to provide the same services to the by-right 1220 new homes.

For example, the current standard for field operations used by the Sheriff’s Office is 0.8 Deputy per every thousand residents. As the following table illustrates the seven rezonings at build-out will increase the Sheriff’s annual operating budget (assuming no increase in costs in future years) $451,655 more per year than if the parcels had been developed by-right.  

Standard*

Cost

Current Standard

Rezoning

By-right

Cost per Deputy**

Rezoning

By-right

Sheriff’s Office Field Operations

0.8 deputies : 1000 residents

10.62

2.93

$58,747

$623,610

$171,954

*Assumes 3 residents / dwelling

**Derived from Sheriff’s Office – Field Operations personnel costs for FY 2004

A second and more telling example deals with the annual cost to educate the number of school-aged children generated by each development. The 1220 by-right development houses will produce approximately 1012 students (0.83 students per single family detached house). The current annual operating cost per student is approximately $10,000. Thus, the expected annual school cost for the by-right development is $10.12 million. The 4423 rezoned houses will generate approximately 2433 new students (0.55 per unit for a mixture of single family detached, townhouses, and condominiums) resulting in an annual school operating cost of $24.33 million.

Clearly current taxpayers will see their annual tax bills continue to rise as a result of these seven rezoning approvals. Some have said, and continue to say, that the high price of the new homes, as it translates to property tax assessments, will cover the increased operating costs. Historically, this has not proven true. Rather, the reverse has proven true as the tax bills of existing residents increase to pay for the additional teachers, public safety officers and other staff necessary to provide expected services demanded by the new residents.

Transportation

The County Transportation Plan identifies the road network necessary to support the development pattern and densities permitted by the Comprehensive Plan and Zoning Ordinance. The Plan was revised in 2001 to identify the major road network (arterials and major and minor collector roads, but not the local road network that feeds the arterials and collector roads) necessary to support the county population permitted by the newly revised Comprehensive Plan (approximately 460,000 people by the year 2025). The Plan calls for 2128 lane-miles of arterials, major and minor collectors to be in place to support the projected population of 460,000.

The overwhelming majority of these new roads are planned for central and eastern Loudoun. The County Office of Transportation Services currently estimates that approximately one-half of the road network identified in the County Transportation Plan exists today. Thus, at least 1000 lane-miles of arterials and major and minor collector roads plus untold miles of local feeder roads remain to be built. This is a conservative estimate since the Transportation Office is currently developing a list to determine how much of the planned road network still needs to be built.

In a perfect world, new roads would be constructed as they were needed to prevent congestion as the county’s population grew. But we do not live in a perfect world. While the local Board of Supervisors exercises some control over how fast the county population grows by controlling zoning and approving new residential developments, road building is a state function. Unfortunately the state has not provided the funds necessary to expand Loudoun’s road network to match the population growth that has occurred in the past several years.

Where Does the Money Come From?

State Funding

Secondary Roads: Loudoun receives approximately $5 million per year from the state in gas tax revenue to fund transportation projects on Secondary Roads (route numbers 600 or higher such as Rt. 606, Rt. 659, Rt. 719, etc.). This funding must cover new construction, the paving of rural dirt roads, new traffic signals and signs, pavement markings -- everything needed to expand the capacity and maintain the safety of Loudoun’s local roads.

The current VDOT cost to construct a section of four lanes for Rt. 659 in eastern Loudoun is $2.4 million per lane-mile. This cost covers right-of-way purchase, design, utility relocation, site work, construction, bonding and management fee and is typical of most other projects. With this cost as a benchmark, it is clear that the $5 million annual Secondary Road budget is insufficient as a source of funds to expand the local road network to keep up with population growth.

Primary Roads: State funding for Primary Roads (route numbers lower than 600, such as Rt. 7, Rt. 50, Rt. 28, etc.) is included in VDOT’s annual budget. In this budget Loudoun’s projects compete directly with the projects of other jurisdictions, projects such as the Springfield Mixing Bowl and the Woodrow Wilson Bridge. In other words, there is no specific annual budget allocation for Loudoun Primary Road projects as there is for Secondary Road projects. As a result of stiff competition with Fairfax, Arlington, Alexandria, and Hampton Roads, Loudoun cannot expect, let alone plan for, adequate state funding to expand its Primary Road capacity to handle its exploding population. Considering the state’s budget problems, this situation is not likely to improve in the foreseeable future.

Given the inadequacy and unpredictability of state funding, what other funding options are available?

Local Tax Funding

The county could decide to fund road construction with local tax dollars, relieving the state of its obligation. Borrowing money by issuing bonds to pay for road construction is not an option. All of the county’s debt capacity for the foreseeable future is already committed to financing the new schools, firehouses, libraries, recreation centers and other public facilities required by residents and not paid for by proffers. In fact, in order to protect the county’s bond rating, the Board has had to place a cap on how much new debt can be issued each year for these facilities. That leaves cash as the only viable alternative for local funding.

As mentioned above, according to the County Transportation Office, VDOT’s current cost estimate for constructing a section of Rt. 659 in eastern Loudoun (planned for a major arterial road) is $2.4 million per lane-mile. Applying this cost per lane-mile to the conservative estimate of what needs to be built by 2025 yields a cost of $2.4 to $3.0 billion (yes, billion with a “b”) prior to factoring in inflation costs over the 21-year period. Since each penny on the local property tax rate generates approximately $5 million, the county would have to add approximately 25 cents to the tax rate each year for the next 20 years to fund this road-building program with cash. While this approach is technically feasible, I suspect that it is politically highly unrealistic to expect five consecutive Boards to maintain that commitment.

Proffer Contributions

The majority of the current Board believes that the quickest and best way to get roads built is to approve more residential rezonings that include proffer contributions for regional road projects. Normally, a new development will only contain proffers to build the internal road network within the boundaries of the project and improvements to the roads that provide access to the project. Occasionally, there will also be proffers for off-site road construction that helps mitigate the project’s impact on the regional network. These are the contributions that the Board majority believes will provide a viable solution to Loudoun’s congestion problems. Will they? Or will they add to the problem?

As shown on Attachment 1, the seven rezonings approved by the current Board since January generated $34.4 million in regional road proffer contributions. Half of this ($15.9 million) was from a single project to complete a 2.3-mile section of Loudoun County Parkway that was necessary to make the rezoning actually work. Mathematically, the $34.4 million contribution could finance the addition of a total of 14.35 lane-miles (equivalent to 3.59 miles of a four-lane road) to the regional road network. However, in truth, not all of this $34.4 million can be applied to road construction: some is proffered for traffic lights, for interchanges, and for transit (only if no transit service is developed in the area can that portion of the proffer be used for road construction).

In exchange for this $34.4 million in road proffer contributions, the seven rezonings will add 44,230 new vehicle trips per day to the already saturated road network of eastern Loudoun. (Transportation planners estimate 10 vehicle trips per day on average for every new residential unit.) These new vehicle trips will be to destinations all over eastern Loudoun and most likely to points east of Loudoun. In my opinion, these rezonings, while financing 3-1/2 miles or less of road improvements in the Dulles area will only pour more cars onto the already overburdened roads further east. They will, in fact, increase, not relieve, congestion in eastern Loudoun.

Using the seven projects already approved as a guide, if the proffer approach were used to build the entire 1000 lane-miles needed to finish implementing the County Transportation Plan, approximately 350,000 new houses would have to be approved through future rezonings to generate sufficient contributions. That many new houses would add over 1 million new people to Loudoun’s existing population of 230,000 and add 3.5 million new vehicle trips per day to the road network. To accommodate the 3.5 million new vehicle trips per day generated by the 1 million new people would require an additional 2,000 or more lane miles. (Adding 350,000 new houses more than doubles the number of houses permitted by the current Comprehensive Plan, thus the Transportation Plan would theoretically have to be doubled as well). These would be lane miles not included in the proffers, which were only meant to cover the originally planned 1000 lane-miles. Clearly, relying on rezonings to solve Loudoun’s congestion problems is not a viable solution; it will, in fact, make things worse, not better, leading ultimately to a transportation death spiral.

Conclusions

Considering all of the above, it appears that a prudent course of action at this time would be to not approve any more residential rezonings until the Board establishes its own set of Capital Facilities service standards and until a specific plan is in place for funding the needed road projects outlined in the current County Transportation Plan. In addition, the Board should not entertain any developer-initiated amendments to the Comprehensive Plan (or lawsuit settlement proposals) that would increase the currently permitted residential densities in the Suburban, Transition, or Rural Policy areas. Such proposals would only exacerbate the problem.

Jim Burton

Supervisor, Blue Ridge District