Saying What You Mean and Meaning What You Say: Collecting Cash Proffers for Residential Development

Saying What You Mean and Meaning What You Say: Collecting Cash Proffers for Residential Development

Jan 22, 2014

During the course of rezoning a property, it is common for landowners to offer incentives to a locality to grant the rezoning. Such incentives often take the form of proffers, which are voluntary conditions the landowner agrees to follow as part of obtaining the rezoning. A landowner might proffer that they will construct improvements, such as a local road or a park. Just as commonly, a landowner could proffer cash in lieu of constructing the improvement.

Given this back and forth, the General Assembly has enacted laws that serve as ground rules for the timing and types of proffers a locality can accept. One such rule enacted in 2011, is that, in a residential rezoning, a locality may only collect or accept cash proffers after the locality completes a final inspection and before it issues a certificate of occupancy.

But what happens if the landowner made a residential cash proffer before 2011? More practically, what if the landowner proffered (and the locality agreed) that the landowner would make a cash payment sometime before a final inspection?

Board of Supervisors v. Windmill Meadows, LLC

As the Virginia Supreme Court held in Board of Supervisors v. Windmill Meadows, LLC, the General Assembly said what it meant and meant what it said about collecting residential cash proffers. In this case, James City County could not collect or accept cash proffers from residential developers before a final inspection, even though the developers made the proffers before 2011.

While new laws generally do not apply retroactively, the court reiterated that the General Assembly may retrospectively change a locality’s zoning powers. This stems from the fact Virginia is a Dillon Rule state, meaning localities have only those powers expressly granted by the General Assembly or necessarily implied from express powers. Here, the General Assembly clearly limited localities’ authority to collect or accept residential cash proffers before a final inspection when it said the law applied “[n]otwithstanding the provisions of any cash proffer requested, offered, or accepted.”

What This Means for Virginia Landowners

Windmill Meadows provides two good reminders for landowners and land use practitioners.

  1. First, in Virginia, the General Assembly dictates the extent of localities’ zoning powers.
  2. Second, and related, the Virginia Supreme Court will usually take the General Assembly at its word when interpreting laws.

Thus, when planning a land development project, always remember to consult the Virginia Code after checking the local zoning ordinance.