In our first blog post on the 2019 Virginia proffer legislation, we told you what hasn’t changed with the new law. As promised, now we will address what has changed.
Myth: Under the
new law, localities have no liability exposure for unreasonable demands unless
the governing body requests one in writing, so planning staff can talk to
Reality: The new legislation says that developers and localities can talk, but the old legislation didn’t say they couldn’t. The reason why local government attorneys warned staff against talking to developers was the Koontz decision from the US Supreme Court, and specifically Justice Kagan’s dissent in that case which warned that “no local government official with a decent lawyer would have a conversation with a developer” because of the risk of liability. (That hasn’t changed.) There’s also the question of whether a local governing body authorizes or ratifies a written request from a staff member.
The bottom line is that the new law changes the liability exposure of localities, but localities should still exercise caution.
Myth: Under the
new law, localities can expect to receive proffers for facilities in addition
to the four enumerated facility types of transportation, schools, public
safety, and parks.
Reality: The new
legislation allows for proffers to be deemed reasonable if signed by the
applicant and property owner, even if they are for off-site proffers that
aren’t for the four kinds of public facility. However, beware that the new law
takes away with one hand what it hands out with the other. Right after the
language about the owner and applicant being able to make any offsite proffer
reasonable just by signing it, the General Assembly wrote the following:
2. Failure to submit proffers as
set forth in subdivision 1 shall not be a basis for the denial of any rezoning
or proffer condition amendment application.
This raises an interesting question if the locality relies upon impacts on facilities other than transportation, parks, schools and public safety to deny a rezoning.
Myth: Under the
new law, an applicant has to object in writing to a proffer request in order to
challenge it later.
Reality: Challenges based on violations of “this section” (Va. Code Section 15.2-2303.4) require a written objection to the governing body before the aggrieved applicant can file suit. This limits the availability of the legal remedies under that code section, but does not limit the remedies available for a constitutional challenge or a challenge based on another statute. It is also important to note that this section does not extend to conditions imposed pursuant to a special use permit.
Localities still need to do their own analysis on whether a proffer request is reasonable. Maybe not as much changed with the new law as some people are hoping.
Pictured above: VF&N land use and zoning attorney, Karen Cohen, with legendary engineer, Sid Dewberry, PE, LS, Chairman Emeritus, Dewberry, Kat Grimsley, Director of the MS Real Estate Development program at George Mason University, and the team of book contributors, celebrating the publication of the third in a series of land development books by industry-leading design firm, Dewberry.
the Built Environment: From Site Acquisition to Project Completion is a textbook that explores the entire development process from
an applied perspective to provide architects, civil engineers, and other team
members with an understanding of the context in which real estate development
occurs. Karen, fellow alumnae of the Mason Masters of Real Estate
Development (MRED) program, and others, were contributors and advisors.
The commercial real estate and property sector in Northern Virginia and Prince William County has experienced fluctuations in recent years which resulted in vacant buildings. For the owners of these properties, they’re left with a tough decision – let the property stay vacant or repurpose the property.
Repurposing property is
using a building differently than the original intent. As a property owner, you
are looking for cost-effective ways to keep your investment profitable. For example, If you turn an old factory into
loft apartments, or a barn into an event center, the building sees new life,
you continue to make money, and all without building on existing green space.
But it isn’t always that easy to change land use of an existing property.
Land use considerations
Land use laws regulate
how businesses can operate on certain lands. The most common form of land use
regulation is zoning. Cities use this legal process all across the country to
help regulate their local development. Zoning laws prevent you from coming home
to your well-established housing neighborhood and finding a big box store has
set up shop next door.
While it’s not likely for
a big box store to pop up next to houses, it is possible as in our earlier
example, for a factory to become loft apartments. The zoning for that land must
change to account for residents living on the property instead of people coming
to work. Without making this change, it puts both the business operator and
you, the property owner, in legal peril. It’s up to you to make sure the city
allows the land use modification.
Special use permit (SUP)
A special use permit
allows a local government to take a look at one particular development and to
impose conditions needed to mitigate any impacts on the community. It is
available only if the zoning ordinance provides for it.
To obtain a special use permit, you must get approval from the governing body in your community. You need to file an application, submit the filing fee, provide documentation supporting your request, and submit to questioning at a public hearing. See the steps outlined below:
As attorneys and self-proclaimed Proffer Professors, we were concerned by what we were hearing from the industry on the recent proffer reform. Blanket statements like, “oh, it’s just a repeal of the 2016 law” or “proffer schedules are legal now”. In this post, we clear the air of misconceptions.
Myth: The 2019 law repealed the 2016 law
Fact: To debunk the
first myth, we’ll just note that the 2019 law leaves large parts of the 2016 law
intact. For example, the law still forbids a local government from denying a
rezoning application for residential development “where such denial is based in
whole or in part on an applicant’s failure or refusal to submit an unreasonable
proffer.” For another, the law still exempts qualified “small area
comprehensive plans.” There are some significant changes, though, and we will
comment on them in future blog posts.
schedules are now legally OK
Fact: As for the
second myth, the 2019 law doesn’t clear the constitutional hurdle for proffer
schedules. Under federal case law, a proffer first must be connected to the development impacts (that is, it has to have a
“nexus”) and second, there must be “rough proportionality,” which refers to the
degree of connection between the
proffer and the development’s projected impact.
So, just how “rough” can the degree of connection be and
still pass muster under the Fifth Amendment of the U.S. Constitution? The U.S. Supreme Court (in a case called Dolan) answered that question this
way: “No precise mathematical
calculation is required, but the [locality] must make some sort of
individualized determination that the required dedication is related both in
nature and extent to the proposed development.”
A locality can still provide information about how much it costs to build a school, police station, or park, but because a “one size fits all” proffer schedule lacks the required individualized determination, it is subject to attack on constitutional grounds.
Since its controversial passage in 2016, Virginia’s Proffer Reform Law has continued to stir debate. Despite the rift between homebuilders and local governments over the law, efforts are underway to find common ground.
Initially, opponents of the law sought either outright repeal or additional exemptions to make the law inapplicable to certain parts of the Commonwealth. However, recent efforts have instead focused on reforming the Proffer Reform law.
This published article, co-authored by VF&N Attorneys Michael R. Vanderpool and Karen L. Cohen, highlights some of the key concerns voiced by both opponents and supporters of the law, and evaluates what types of legislative changes may be appropriate in light of common law and constitutional limitations.
The Maryland General Assembly passed Senate Bill 853, which took effect on October 1, 2018, that added the following text to Section 3-507.2 of the Maryland Code, Labor & Employment:
In an action brought under subsection (a) of this section, a general contractor on a project for construction services is jointly and severally liable for a violation of this subtitle that is committed by a subcontractor, regardless of whether the subcontractor is in a direct contractual relationship with the general contractor.
If a court finds that a sub-contractor failed, under certain circumstances, to properly pay an employee, the general contractor may be liable for damages, counsel fees, and other costs.
The Act now permits an employee of a sub-contractor, who was not paid in accordance with applicable Maryland wage/hour laws, the right of action against the general contractor even though there is no direct contractual relationship between the general contractor and the subcontractor’s employee.
Risk mitigation strategies for Owners, General Contractors and Senior Sub-Contractors involved in Maryland based construction projects:
Inspection of Payroll Records – Include in your contracts a provision that requires subcontractors to provide certified and detailed payroll information with every pay application.
Audit Clauses – Include provisions in your contracts that permits you to conduct “spot audits” or “interviews” with sub-contractor employees.
Certifications – Require sub-contractors to certify or declare in their payment applications that they have checked/audited the payrolls of every sub-contractor at every tier to confirm the payment of employees.
Insurance/Bonding – Require subcontractors to furnish payment and/or performance bonds or wage-hour insurance. To cover the entire statutory period for wage claims, these bonds or insurance will have to be maintained for three years after final payment of wages on the project.
Broad Indemnity and Personal Guaranty Provisions – In addition to any existing general indemnification clause, include a specific clause or language addressing claims arising out of any violations of the Act. Require that the principals of all sub-contractors personally guaranty compliance with the Act and payment of employees.
Flow Down of Terms and Conditions – Require that all clauses in the sub-contract relating to the Act and subcontractor’s obligations thereunder flow down to each subcontract tier.
Obligation to Defend – In addition to indemnification obligations there should also be provisions all sub-contracts requiring the sub-contractor to defend the general/direct contractor for violations of the Act.
Hiring Decisions – Include provisions giving the general contractor the power to approve or reject the hiring of sub-subcontractors of all tiers.
Site Security – Implement site security to confirm identification of all employees on the job site so no previously unidentified individuals can later appear seemingly out of nowhere and claim that an employer/subcontractor did not pay them.
Creation of Fiduciary Duty – “In-Trust” Requirements – Include a provision in all private works sub-contracts requiring sub-contractors to hold all payments received “in trust” for the benefit of the direct contractor and the benefit of the subcontractor’s employees, lower-tiered subcontractor employees, for the purpose of meeting the wage and benefit obligations owed not only to the subcontractor’s employees but the employees of any lower-tiered subcontractors.
Increased Retention – Increase retention percentages, withholding, and back-charges depending on the sub-contractor and size of job.
Identification of General Contractor – expressly note the identity of the general contractor in each contract. Project owners may want to include disclaimers that they are “not” acting as the general contractor.
Three Years Statute of Limitations – A general contractor should retain pertinent records from all subcontractors for at least that long following project completion and should make sure that all indemnification obligations survive the completion of the project for that length of time as well.
Please contact us at 703-369-4738 with any questions.
*The information contained in this website is provided for informational purposes only and should not be construed as legal advice. The material on this website may not reflect the most current legal developments. The content and interpretation of the law addressed herein is subject to revision. We disclaim all liability in respect to actions taken or not taken based on any or all the contents of this site. Do not act or refrain from acting upon this information without seeking professional legal counsel.
On Sept. 10th, 2018, Prince William County Circuit Court Judge Carroll Weimer, Jr. ruled in favor of a group of homeowners, voiding the grant of a Special Use Permit (SUP) for a cell phone tower.
Under the legal representation of Brett A. Callahan of Vanderpool, Frostick & Nishanian P.C. litigation team, the homeowners claimed that they were not properly notified of the Planning Commission hearing or the Board of Supervisors (BOS) public hearing on the SUP for a cell phone tower to be placed near their homes.
Meaning of the word “Current”
The homeowners bought into a new subdivision March through late May 2016, yet the SUP applicant and County used a February 3, 2016 Adjacent Property Owners (APO) list to send notices. This list was based on an earlier list generated by the County from the tax records. The applicant maintained that they had relied on the list provided by the County and the County’s policy was that an APO list up to six months old is “current.” The County likewise argued that it is their prerogative to apply an administrative interpretation that an APO list based on tax records up to six months old is “current” under the notice statute to avoid excessive burden on the County.
The judge determined:
A policy permitting APO lists based on six-month-old tax records is not in compliance with the law either under the plain meaning of the word “current” in the statute or legislative intent standard of statutory interpretation, especially in light of how quickly County tax assessment records are updated and the free and easy access to tax assessment records through the County’s website.
The SUP is void ab initio for lack of notice.
* NO GUARANTEE OF RESULTS: Our prior results, including successful judgments and settlements, do not guarantee a similar outcome. Each case we handle is different and therefore we cannot guarantee any specific result in your case
On Wednesday, representatives from the City of Manassas came together with Governor Terry McAuliffe and Buchanan Partners to announce the receipt of grants permitting the construction of a new brewery and restaurant in the commercial development of the Gateway Center, now known as The Landing at Cannon Branch. The attorneys at VF&N are pleased to have represented the City of Manassas Economic Development Authority regarding the legal work necessary for the development of The Landing at Cannon Branch and the proceedings moving forward.
The Landing at Cannon Branch is a 40 acre, $250 million-dollar mixed used development which will house, not only the brewery, but hotels, retail, offices, restaurants and over 270 new homes, aiding in the community’s economic growth and engagement. Governor Terry McAuliffe announced that 66 new jobs will be created in the City of Manassas due to the placement of the brewery.
The City of Manassas has been marketing the Gateway property for twenty years, waiting on the best project and development partners to collaborate and make it into a unique place that residents of the locality and businesses can benefit from.
Buchanan Partners is working as the master developer of the project, while Stanley Martin will be developing a component in the residential side of the property. The location will also feature hotels, restaurants, and other commercial developments. As the attorney’s overseeing the City of Manassas developments for this project, we look forward to seeing what’s in store for this site.