We've talked here before about proffers.  Perhaps the largest proffer ever was recently offered and then rescinded by Centex Homes as part of a development in Warrenton.

Word is out today that the proposed development has been cancelled. The handwriting was on the wall for this one for some time in my opinion.  This was a deal that made no sense even in a hot real estate market, never mind the cooler one we're currently in.

The development would have featured homes for individuals and couples who were at least 55 years of age.  The prices of these homes was to start at somewhere around $850K-$900K.  In return for the rights to proceed with this development, Centex offered to pay Warrenton $23 million dollars!

First of all, ask yourselves how many retirees, or people approaching retirement are looking for $900K homes? And, $900K homes in Warrenton, Virginia???  As nice as Warrenton is, I believe that price for this community would have always been unsustainable. And to offer $23 million to have the chance to build this money-losing development seemed truly foolhardy!

The only question remains, what in heavens name made them think this was ever a good idea in the first place! And maybe the other question is does this person still have a job at Centex?!

A proffer is an offer of a fixed amount of money from a builder to a county or community, intended to offset the cost of increasing infrastructure to handle the expanding population associated with a new residential development. The amount of proffers varies by county here in Virginia, but here is a sampling:

*For single-family detached dwellings

In theory, proffers are voluntary. In practice it's easy enough for a county to find another reason to turn down a request from a builder for a new subdivision if they don't like the proffer.

Proffers have been in the news here lately because of the largest proffer ever by a builder to a county. Fauquier County briefly thought they'd won the lottery with a $22 million proffer. But that was subsequently withdrawn and negotiations are ongoing.

Proffers are a mixed blessing. Someone does, indeed have to pay for the infrastructure to support all the additional people that move into the new subdivision. There will need to be more schools, hospitals, sewers, firefighters and improved roads. But the builders are businesspeople, not charities, and will likely pass most of that cost on to the ultimate consumer, the purchaser of the home. This drives up the costs of homeownership and hurts affordability. But if not proffers, how do we propose to pay for the infrastructure? I'm not seeing anyone lined up to ask for increases in property taxes!

I'd love to hear your thoughts on this. It's a hot issue in Virginia and here locally. Who pays for the costs of development and how? Let me know your opinions!