By Sandhya Somashekhar and Anita Kumar
Washington Post Staff Writers
Tuesday, February 12, 2008

RICHMOND, Feb. 11 -- The Virginia home-building industry offered a compromise Monday that would exempt Tysons Corner and the Reston Town Center from a Senate bill that would dramatically change the way developers contribute money for roads, schools and other services.

The bill would throw out the state's 30-year-old system in which local governments negotiate contributions for such things as roads, libraries and schools from builders to offset the cost of providing services to a housing development's new residents. If the bill passes, local governments would charge a flat fee for every new house.

The compromise plan surfaced as the House and Senate worked furiously Monday to pass bills before a Tuesday deadline that prevents each chamber from sending their bills to the other. The deadline comes midway through the General Assembly's 60-day legislative session.

The House also tentatively approved an immigration bill that would allow employers to fire workers for misconduct if they speak a language other than English at work. House members also tentatively agreed to increase penalties for some serious driving offenses after earlier voting to repeal the costly and unpopular fees on abusive drivers that passed last year as part of a landmark transportation package. In addition, the House passed a bill to further regulate payday lenders, while the Senate continued to work on its own proposal.

By exempting Tysons Corner and part of the Reston Town Center from the so-called impact fees, the development industry was trying to placate Fairfax County, which opposes the bill along with Loudoun and Prince William counties. Tysons and Reston, which are slated for urban-style redevelopment projects, would remain under the current system, which would allow county officials to negotiate contributions, called proffers, from developers.

But the change was not sufficient to win over Fairfax County Board of Supervisors Chairman Gerald E. Connolly (D), who called it a last-minute attempt to garner support before the Tuesday deadline.

"That still leaves huge swaths of land that wouldn't qualify," Connolly said Monday evening. "While it was a respectful attempt to try to mollify our concerns, it doesn't get there. Frankly, this underscores why this bill needs to be in a study for the next year while we take a breath and look at it more closely."

Under the compromise, Northern Virginia governments would be permitted to collect from developers up to $12,500 for every house built, about 50 percent more than the bill originally had proposed. Elsewhere in the state, each new house would be worth $7,500.

But local government groups say that taxpayers in the state's fastest-growing counties, such as Loudoun and Prince William, would lose out even with the higher fees. Loudoun typically receives a proffer of $47,000 for each new house under the current system, and Prince William receives more than $30,000. Even at those levels, county officials say, they struggle to build enough schools, libraries and parks for the added residents.

"The proffer system has worked for us," Connolly said last week.

The Home Builders Association of Virginia, which helped write the bill introduced by Sen. John C. Watkins (R-Chesterfield), argues that many communities would benefit under the new system because all new houses would be subject to the fee. Currently, governments can collect proffers only if a developer is seeking to change the zoning.

In addition, association officials said, it would stabilize the market and slow the double-digit percentage increases in housing values. Opponents argue that rising housing values have little or nothing to do with proffers.

The group had opposed the concept of impact fees for years because of fears that they would force builders to shoulder the cost of growth, which officials argued benefits everyone in a community by expanding the tax base and invigorating neighborhoods. The group reversed course recently because of rising proffer levels and a slump in the housing market.

The House's tentative decision to increase penalties for serious driving offenses came without debate. Lawmakers are expected to pass the bill Tuesday and send it to the Senate.

Among offenses included are driving under the influence, reckless driving that causes death, eluding police and hit-and-run incidents with injury.

Last year's transportation package was supported by Republicans and Democrats to avoid raising taxes to pay for millions of dollars in road and transit improvements. Both the House and Senate have passed bills repealing the abusive-driving fees, an effort supported by Gov. Timothy M. Kaine (D).

Del. David B. Albo (R-Fairfax), who introduced Monday's bill in the House, assured his colleagues that the new proposal "has nothing to do with abusive-driver fees" and merely increases the penalties for serious offenses.

The abusive-driver fees were supposed to raise $65 million each year for transportation. But the money raised from the new increases in penalties would be used for education, not transportation.

The House bill regulating the payday lending industry passed 91 to 7. It would limit the number of loans that borrowers can obtain each year, extend the amount of time they would have to repay loans and cap the annual interest rate lenders could charge at 36 percent, although it would allow them to charge other fees. The Senate will vote Tuesday on its own version of the bill.