VRE Extension – How Will Developers Pay Their Share? (Or Will They?)

Waaaay back in 2005, the Virginia Railway Express (VRE) asked the local business community to share in the cost of studying an extension of VRE.  Landowners whose properties would rise in value, based on the new transit services, expressed a willingness to share in the costs of extending VRE all the way to Haymarket. 

Now it’s 2010, and the home building industry is still hurting.  VRE got Norfolk Southern to contribute a third of the costs for the new $2.5 million study that will consider the environmental impacts of the extension.   Developers did not pony up any funds. 

However, the economy will recover.  Developers are already setting up for the next surge of construction in a county where supervisors support almost any development, anywhere, at any time. 

So what about those landowners with property near the proposed new VRE stations on the VRE extension to Gainesville/Haymarket?  Their property values would be increased dramatically by a publicly-funded, $200 million VRE extension.  Will those landowners share in the cost of constructing the VRE extension, or just get a free windfall? 

We’ll know for sure when the Board of County Supervisors approves new rezonings, increasing development potential near any new VRE stations. 

We may see developers propose big projects such as Brentswood again, complete with another offer to build a new VRE station as the transportation proffer.   More likely, we’ll see smaller projects with smaller proffers. 

Expect to see requests to exempt the projects from the standard proffer levels, based on claims that hard economic times require proffer waivers in order to finance a “center” as defined by the new Land Use Chapter.  Proffer waivers transfer costs from developers to taxpayers, maximizing private profit while shifting developer costs to the public. 

However it is funded, Federal officials will require a local match in order to qualify for a Federal grant to extend VRE.   Even the current Board of County Supervisors might find it hard to subsidize developers by funding the local match from just local tax revenue.  Rather than a proffer waiver, we are more likely to see proposals for special tax districts. 

The tax districts that funded Route 28 widening and extension of Metrorail in Fairfax/Loudoun were limited to commercial property.  Higher rents in office buildings will cover the costs of the special tax.  

However, look for the developers in Prince William to claim we can’t attract office buildings and generate local job centers in Prince William.  (Hmm, think spending $zillions to improve the commuting from Prince William to job centers in Fairfax/DC might be part of that pattern?)  Expect developers to propose lots of new houses near VRE stations – and to request county approval to create a Community Development Authority (CDA) as part of a new development. 

Prince William has three CDA’s now – Virginia Gateway and Heritage Hunt in Gainesville, and Cherry Hill in Woodbridge.  In a CDA, the residents pay extra taxes.  The developer contribution shrinks to zero, as houses are purchased.  Ultimately, all the homeowners pay the extra tax each year, covering the commitment of the developer for proffered new transportation infrastructure.

After the usual song-and-dance requesting county subsidies (proffer waivers) to trigger a new “center” along an extended VRE, developers will be asked to share in the cost of the rail project.  Look for the developers to accept… so long as the county allows creation of a CDA, and the developer ends up paying very little of the extra cost.

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