Proffers vs. Impact Fees...and Wegmans

A bill to replace Virginia's proffer system, by which developers negotiate what they will give to localities in exchange for the right to build homes, offices and malls, with an impact fee system, by which developers would pay localities a fixed fee for each item built, was defeated in the Assembly this year.

Here is a short observation on the benefits of the proffer system to Leesburg and Loudoun.


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(The intersection of Rt 7 and River Creek Parkway.)

Most folks commuting through and east of Leesburg have seen the overpass that is being built at River Creek Parkway. That overpass and the entire interchange is part of a development proffer from KSI to Leesburg and Loudoun. In exchange for eliminating the River Creek traffic snarl on 7, KSI will have the approval to build The Village at Leesburg, a development that will include the promised "Wegmans in Leesburg."

Development of The Village at Leesburg will include construction of a new highway interchange and overpass at the intersection of Market Street East/Route 7 and River Creek Parkway, which eliminate two traffic lights and greatly facilitate commuter access.

The developer will build this interchange and overpass at no cost to the Town’s taxpayers, and it will be built prior to the opening of The Village at Leesburg employment center. As set forth in the Leesburg Town Plan, major portions of Crosstrail Boulevard and Russell Branch Parkway will also be built at no cost to the Town. The Village at Leesburg will generate significant tax revenues to the Town of Leesburg that can be used to fund other town services and public improvements. - The Village at Leesburg website

This is perhaps the best example of the proffer system at work. People want Wegmans (the only question asked of our Mayor at an event this weekend was "when is Wegmans coming?), and the Town wants the interchange. The proffer and approvals from the town mandate that the interchange is built before Wegmans. KSI will not make any money on its development until the office and retail space is built. Thus, there is a strong profit motive to get the interchange built quickly, so that KSI can build the revenue-generating buildings and start making money.

In an impact-fee system, the profit motive for completion of public works is eliminated. The interchange would not be built as quickly, or at such a low cost (zero!) for the Town. Wegmans, the offices and the condominiums would still come, but they would certainly add to the traffic problems, because KSI would simply pay an impact fee, and the interchange would not be built.

Just something to consider when developers begin agitating for a new impact fee bill next year.