What lies beneath the agenda to control growth

A permanent solution to a temporary non-problem

Conservationists, preservationists, agriculturalists and their supporters in local government have been pushing, successfully, for increased government intervention in the real estate market that will likely result in artifically-inflated rural land values and increased traffic congestion in government-designated Urban Areas.

The Conservation Easement Authority (CEA), for example, pushes for tax dollars to be spent locking up land in perpetuity under easements and PDRs (purchase of development rights) which will decrease supply of available land for development, effectively causing prices to rise. For years the CEA has been chock-full of folks who have only one thing in mind: locking up land and giving their agricultural companies special privileges. For example, until 2011, Jim Lawrence of the Valley Conservation Council served on the CEA. Other CEA members include Diane Kearns and John Marker of the Preservation of Rural Life in Frederick County, John Gavitt–a Potomac Conservancy donor and former board member of the Lost Rivers & Cacapon Land Trust, and Shenandoah Valley Battlefields Foundation member C. Robert Solenberger. The Frederick County farmers on the CEA take advantage of tax incentives and receive imaginary, yet sellable, housing development rights courtesy of the TDR program. And let’s not speak of the burden on County services courtesy of their migrant workers and the amount of subsidies these farmers receive from the USDA (courtesy of taxpayers). That is for tomorrow’s newsletter.

The scare tactic used by these special interest groups to justify permanent prevention of land development is that as human populations grow, land is lost forever: Say good-bye to farmland, forests and open spaces.

Except in catastrophic events like meteors hitting the earth or tectonic plates shifting or nuclear facilities exploding, land is not “lost.” Residential development does not permanently encumber land. As we have seen in Detroit, a quarter of the city is nothing more than vacant lots, and the government has spent millions of dollars demolishing tens of thousands of buildings over the years.

There is no rural land crisis in Frederick County. As of November 2009, 7600 acres of Frederick County land was in some form of preservation that prevents further subdivision. The Virginia Outdoors Foundation alone, as of May 2011, holds 23 easements in Frederick County for a total of 4,564.76 acres and two easements in the City of Winchester for a total of 115.27 acres. Also, in the last 15 years, the number of cattle has increased 13% and acreage dedicated to forage has increased 38%. Frederick County is still the number one apple producing and peach producing county in Virginia. 89% of the County is Rural.

The state of Virginia also has no land crisis. According to the Department of Conservation and Recreation’s Virginia Conservation Lands Database, as of August 2009 nearly 15% of Virginia’s land is “currently protected.” The former governor’s goal of preserving 400,000 acres of land was reached, and the current governor has set a new goal of preserving an additional 400,000 acres by 2014. Of the nearly 3.7 million acres preserved in Virginia, 95% is held by the government (federal, state, or local).

And if we look at this from a national level, there is no farmland crisis in the United States. As Randal O’Toole wrote in his November 18, 2009 policy analysis for the Cato Institute titled “The Myth of the Compact City,” less than 40% of the billion acres of America’s agricultural land is used to grow crops, and only about 100 million acres or so of America’s land is occupied by “urban areas.”

Samuel R. Staley, PhD, wrote a January 2000 policy brief published by Reason Public Policy Institute that exposed the fallacy of the argument that residential pressures are destroying agricultural lands. He pointed out that 74% of the decline in cropland had nothing to do with urbanization but rather from “structural changes in the agricultural industry.” In fact, he found that cropland acreage remained stable despite reductions in the amount of land in farms, and agricultural activity was at all-time highs. And most farmland conversion is not to residential development but rather to non-urban uses such as forests, pasture, range land and recreation.

Local government goals are “anti-family”

When I say, “anti-family,” I don’t mean the government is actively trying to hurt families, but rather local government is trying to make it less attractive for families with children to move into the area. Welcome to New Urbanism where children are expensive nuisances.

Take a look at the Comprehensive Plans for the City and the County. Who are they trying to help? Agriculturalists, preservationists, conservationists, retirees, and young professionals. There is nothing in there about helping families with school-aged children. Parents with school-aged children tend to prefer living outside of cities. Young professionals and some retirees may like to live, shop, work, and play in the same area, but parents of children aged 5 to 17 do not. Nearly 19% of Frederick County residents are school-aged whereas only 14% of Winchester City residents are between the ages of 5 and 17 years. If parents liked the city, they’d move there.

As the county government continues to discourage new development of cul-de-sac suburbs segregated from commercial and industrial uses, the style preferred by families with children due to increased privacy and protection from traffic and the general public, many middle class families will be forced to seek such housing elsewhere or settle for a neighborhood with a less desirable design. Also, suburban schools are less expensive per student, and parents typically consider them to be better than city schools.

Besides, most people who live in cities wish they didn’t. According to a 2009 Pew Research Center Study, more than half of all city residents in America would prefer to live in a place other than the city. Apparently mixed-use zoning and high density housing do not appeal to most people.

The City of Winchester is focusing on attracting retirees and young professionals (translation: people with no kids). Do you really think families with children want to live in Cottage Housing? Of course not, and so it is no surprise that Winchester’s Zoning & Inspections Administrator is excited about this style of residential development. Meanwhile, the County of Frederick is focusing on squeezing all future residential growth into 23,000 acres, much of which is adjacent to the City. The idea, they claim, is that educating kids packed in closer quarters will somehow save the County schools money. The County wants higher density housing (which means smaller housing) in the Urban Areas. But when you look at the percentages of children per type of housing (single family, townhouse, multifamily, etc.), townhomes and multifamily housing (ie apartments) are less likely to have children in them than single-family detached units.

It appears that the County of Frederick wants to encourage more squished housing and mixed-use zoning because the hope is that fewer people with school-aged children will find Frederick County as attractive as they did in the past.

On October 12, 2005, the Board of Supervisors voted to adopt the Development Impact Model (DIM) created by TischlerBise. The model effectively doubled the projected fiscal impact of residential development on County services. The DIM is used by the County when it considers land use planning policies and rezoning applications.

According to the Rural Areas Subcommittee and the Preservation of Rural Life in Frederick County, in 2008 (the year for coming up with permanent, costly solutions to temporary non-problems) the magic DIM number was $24,000. That was the projected financial burden of each single-family detached unit on County services. Recognizing that rural character, view sheds and tranquility probably would not be considered sufficient reasons by the general public to lock up land in perpetuity while restricting private property rights in general, the local government and preservationist groups pushed the DIM as the reason why residential development in Rural Areas must be managed (that’s Big-Government-speak for “controlled”).

In the Urban Areas, real estate developers of entire neighborhoods were often required to pay up to $24,000 in proffers to the County government per each new single family home constructed. $19,000 of it was for “school construction costs.”

In the Rural Areas, if Mr. Joe Schmoe builds a house on his 5-acre plot, he is supposedly creating a $24,000 burden on the local government that cannot be recovered through proffers. (But don’t worry, the local government is looking into Impact Fee requirements.)

With tighter restrictions on well and septic systems thanks to the Rural Areas Subcommittee and the Board of Supervisors, can you imagine what effect a $24,000 Impact Fee would have on new housing development in Rural Areas? Of course, this is exactly what the local government wants. The government and it’s cronies do not want Mr. Schmoe to be able to afford to live in the Rural Area unless it is in a specially-designated “Community Center” with clustered housing–tiny lots smashed together and surrounded by massive preservation tracts so as not to ruin the rural character for the special landowners who believe their view sheds and tranquility are more important than private property rights and free private markets.

Thank you, Mr. J.P. Carr and Mr. Stephen L. Pettler Jr.

On May 27, 2010, these two Development Impact Model Committee members wrote a letter to Planning Director Eric Lawrence pointing out what appeared to be a serious flaw in the DIM:

In a nutshell, every penny of the school proffer dollar paid to the county should go to capital improvements to schools, in other words “bricks and mortar.” Right now the amount collected by the County from proffers is insignificant, but in a few years it should cover a significant portion of budgeted school construction costs. For example, if proffers for 600 single-family homes in the amount of $18,494 are collected annually, the total revenues to the county would be over $11 million.

In the stated example, 600 homeowners ultimately pay the proffers through increased new home prices at the time they purchase their homes. Those homeowners are paying to compensate for the impact of moving into their new home in the County up-front and in full.

However, as you [Eric Lawrence] state in your letter, the County does not have a fixed source of tax revenue to fund capital improvements to schools, it merely utilizes a portion of on-going collected tax revenues to pay the capital costs of construction. A homeowner who buys a house with a school proffer incorporated in the price of the home immediately begins paying residential real estate taxes to the County. Those taxes, in part, go toward the funding of capital improvements to schools in addition to the up-front proffer money they’ve already paid to offset the impact to school capital costs. The specific amount paid by any given homeowner toward school capital costs through taxes may be hard to figure (and a reason for this exercise), but revenue from real estate taxes does get allocated to the capital construction costs of schools. As a result, a person buying a new home with a school proffer incorporated into the price is paying twice to mitigate impacts to the school system’s capital budget caused by occupancy of the new home.

According to your letter, the County does not specifically apply a fixed percentage of residential real estate tax revenue toward school capital costs. There is no mechanism to calculate the tax dollars a property owner pays toward capital improvements, there can be no way the DIM can calculate a “credit” for the taxes paid by the property owner to off-set the “debit” paid by way of the proffer on the property. Persons purchasing a new house with a school proffer are paying the proffer without an offset to account for their ongoing payment of real estate taxes.

This situation creates an imbalance where a new homeowner pays the impact cost up front, but still gets an annual bill for the principal and interest cost of school construction via taxes. There has to be an offset in the model or in the taxes that person pays. Otherwise, the DIM does not accurately account for impacted to the County’s capital budget, which is the point of the model to begin with.

Additionally, we note that the scenario regarding school proffers can be applied to any capital costs for which the DIM calculates an “impact” that is off-set by a proffer and for which a portion of taxes collected by the homeowner also funds on an on-going basis.

As we understand the function of the DIM Oversight Committee, it is to determine whether the inputs used in the model are accurate and appropriate. It is our belief that unless the inputs include credits for real estate tax revenues the inputs are faulty.

Well, well, well…

And just so you know, that $24,000 behemoth projection (which is from 2008’s DIM) is over a 20-year-span. If a homeowner with school-aged children pays $1,200 in real estate taxes every year, he would cover the fiscal impact of his new home. Last year, beneath the DIM Oversight Committee’s chart of projected impacts per dwelling unit was this note:

The projected capital expenditures depicted above do not include a credit for future real estate taxes.

This year’s DIM is $17,134 per single-family detached unit. So, any advocates of increased land-use controls still touting the $24,000 number are a good $7,000 too high in scare value. And this new number STILL does not incorporate a “credit” for real estate tax revenue.

Children = suburban sprawl = bad

By pushing the flawed DIM as the reason for curbing growth in the County, the government is exposing what they truly believe the problem is: children. Children are a “fiscal negative” because they cost so much to educate and don’t produce anything of monetary value…and supposedly their parents’ tax payments aren’t enough to offset the costs.

Interestingly enough, with area private schools costing families anywhere between $6,300 – $7500 a year to educate each child (oftentimes less with each additional child enrolled), it would be cheaper for the City of Winchester and the Frederick County government to give a family $7500 each year rather than educate their child in a local public school. Yes, that’s right–the government would save money if it paid families to send their children to a local private school…anywhere from $3,000 to $6,000 a year per child in savings!

But see, if the local government were to provide vouchers, the demand for alternative education would grow. Private schools would have to expand. New private schools would open up to meet the growing demand. And the local governments’ fingers would be out of the pot. Previous public school system employees would apply for employment at private schools, the federal government’s No Child Left Behind monstrosity would be out of the loop, and the governments’ school boards wouldn’t have big piles of cash to play with anymore. (And wouldn’t that be a total bummer for the Winchester School Board members who would like to see term-limits for board members abolished?)

Obviously this idea is radical, so radical that it will likely be relegated to the dustbin of radical ideas, but it is not a new idea. In fact, Milton Friedman, a 1976 Nobel winner for economics, suggested such a thing in 1995. People around the country still suggest it. But government-funded-and-dictated education is too important for Big Government lovers to let go of… It is all about control: like controlling what you do with your land, they want to control how your child is educated. And now the government is lying to you by claiming that children are too damn expensive for the County which is why they need to increase government control over land. When will people say, “Enough is enough?”