Community Development Authorities, Who Really Benefits?
I actually laughed out loud while reading this article in the 5/28/06 addition of the WAPO regarding a proposed Community Development Authority (CDA) for the Route 50 corridor in Loudoun County.
To summarize the article, a Community Development Authority is basically a relatively new tool that developers can use to pay for infrastructure improvements such as roads, schools, parks, etc.
But here’s the catch – developers really don’t pay anything at all. They issue tax-free government bonds to get the cash needed to build the infrastructure that will be needed to support the new development. In this case it’s 15,000 new homes.
So, who pays? Property owners who live within the CDA pay the bonds back. The WAPO states, “On top of their county real estate taxes, most property owners within the developments would pay an annual fee for 30 years -- as much as $1,900 for each home -- to pay off the bonds that would finance the improvements.”
Loudoun Supervisor Jim Burton sums it up best when he said, “The citizens who buy those homes will be burdened with an additional tax over and above the regular property tax…It's an unfair additional burden when other citizens and residents in the county will get to use the facilities that that tax district would fund." Right on, brother.
Greenvest, the company proposing to build the houses under the CDA says that folks opposed to growth can't have it both ways. In other words they can’t complain that developers don't pay their way -- and complain when they do. That’s not much of an argument if you ask me because the property owners are the ones who are paying.
CDA’s are only good for one entity in the equation; in this case it’s the developers. If there is any benefit to the taxpayer, I’d like to know what it is.
posted by RBV @ 2:55 PM
6 comments
6 Comments:
good points, interesting. i believe the basic logic behind CDA is that the individuals/homeowners who live in the region -which is often being developed at a high density - pay for the additional services as opposed to spreading this cost out over the whole county...make sense?
Sure, that part makes sense. But there are a ton of questions still associated with the whole concept.
For example, what's the incentive for someone to buy property in a CDA when they can get one up the road that's not part of a CDA?
Folks in a CDA will always be at a disadvantage because their property "costs" more, or so it will seem.
Also, you could have a situation where you never sell all the homes, or at least the number you thought you would sell. Or, god forbid, the developer could goes belly-up. Then what? Does each property owner simply kick in more $$$?
There are a few "developments" out where I live that never really "matured". Or, stated another way, they were never built-out and it forced landowners who jumped in early to kick in more money.
Needless to say, houses are hard to sell at the development and it will likely never be what was originally envisioned. And, it gets more expensive each year to maintain the infrastructure. The ONLY saving grace is that they are private developments. I’d hate to think what would happen if taxpayers had to foot the bill.
It doesn't matter at all who pays initially, in the end we all pay, because the developers certainly can't afford to do it. Whatever it looks like they pay just gets passed on. Those higher prices are reflected in your assessment, and eventually your taxes, even if you are not in the market.
The developers are right, the ant-growth, anti tax crowd, can't have it both ways. Don't be too surprised if this trend catches on and developers decide that if they are going to pay for infrastructure, then they might as well own it, and then get paid for maintenance and operation.
People complain that developers get their money and move on: just wait till they get their money and then stay to collect tolls. Or maybe they only collect tolls from outsiders and that means you have to drive around the area to avoid the tolls.
The curious thing is that the antigrowth crowd often claims that high density is less expensive. That view does not seem to be shared by anonymous 9:22 who correctly assesses the problems associated with high density.
It's fine to espouse a "user pays" approach, but we may well find out that if charges are actually fairly assessed, that the results are not what we expected. If we are all nickle and diming each other over each supposed "service" we may find out the transaction costs exceed the benefits.
This comment has been removed by a blog administrator.
Ray, thanks for the comment.
I'd add that there are already situations where developers own most of the infrastructure that make up developments and communities. However, in most cases they are private communities.
The development that I cited in my second post is a private, gated community. It basically bombed and the developers lost bundles of money - their own money. Not the taxpayer’s money.
My real rub with CDA's is the fact that most of the long-term risk is placed on the taxpayer, not the developer. I don’t see the benefit of having taxpayers shoulder the risk of a private developer who 15 years into a 30-year project decides that it’s not working out and then bails out.
Aah. That it seems to me is different, and a good perspective.
But private gated communities have their problems, too. In some places they have built and paid for infrastructure like parks etc. and later the outside community wanted access to something they previously refused to pay for. In other places kids on one side of the street have access to the pool and kids on the other side don't.
It is interesting to look back in time. You can find places where the county refused to allow homes because they felt that the homes represented a net tax loss. they felt that spreading this cost over the community was unfair.
A few year later you look back and find that homes in the area have doubled in value. Not only is the "tax loss" no longer as valid, but the owners lost out in millions on appreciation value. The rest of the community lost out on all the business opportunities those homes represented. If you spread that loss out over the community the loss that actually happened was greater than the supposed loss that prompted the denial of the homes, even assuming the original assumptions were correct.
Post a Comment
<< Home