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Economic Woes Render Growth Debate Moot

Economic Downturn Mutes Outer Suburbs' Slow-Growth Debate

Monday, April 7, 2008

Throughout the Washington suburbs, the economic downturn has accomplished what the slow-growth movement could not: It has slowed growth significantly.

Once the dominant topic in regional politics, taming residential development has largely been eclipsed by the fiscal woes created by the slowdown. Rising construction costs, plummeting property assessments, soaring foreclosures and high gas prices have local officials debating how to craft budgets with limited resources instead of arguing over new subdivisions.

Growth “was the most salient issue and politically sensitive issue between the late 1990s and up through as late as 2006,” said Corey A. Stewart (R-At Large), chairman of the Prince William Board of County Supervisors. Now, “people just aren’t concerned about it because there’s no residential development to be concerned about. We don’t hear about it much at all.”

Some elected officials said the downturn means they can turn their attention to issues that had taken a back seat to growth. In Prince William, that has meant a spotlight on such issues as illegal immigration, Stewart said. Several Loudoun officials, expecting an even tougher budget cycle next year, said they will focus on reforming fiscal policies.

“Prior boards have focused on land use, and in my opinion, it’s time to focus on finance and budgets,” said Loudoun Supervisor Susan Klimek Buckley (D-Sugarland Run), one of four Democrats who unseated Republicans in November with campaigns that decried excessive growth.

Photo: Sarah L. Voisin

New townhomes are built off Stone Springs Boulevard in Loudoun. This photo was taken in April 2005 as construction was booming in the county.

Slow-growth advocates say the downturn will allow localities to “take a breather” and focus on improving existing communities rather than trying to keep up with the impact of booming growth. But others say a stagnant economy prevents governments from playing catch-up, because the same economic slump that halted development plans is also ravaging revenue sources.

It’s a fiscal scenario affecting fast-growing areas across the country. In Collier County, Fla. (Naples), Sacramento County, Calif. (Sacramento), and Maricopa County, Ariz. (Phoenix), for example, strained income sources -- including impact fees for new construction and sales and property taxes -- means officials are debating a mix of deferring capital improvements, freezing hiring and scaling back services.

“Counties are getting hit right, left and sideways,” said Jacqueline Byers, director of research for the National Association of Counties. She said fast-growing counties have been especially affected because rapid, speculative construction has left a huge surplus of housing, which has brought down property values.

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In the Washington region, the slump has affected close-in counties such as Fairfax and Montgomery less than the outer counties, building industry analysts said, in part because high gas prices make long commutes less attractive to potential home buyers.

Residential growth has slowed dramatically in Loudoun, the nation’s third-fastest-growing county between 2003 and 2004; it fell to 35th place between 2006 and 2007, according to census data.

Two years ago, crowds at Loudoun County Planning Commission meetings overflowed into the hallways, and the boardroom was packed with developers, lawyers and planners sparring over building projects late into the night. But at a work session last month, there were no housing projects to be debated, and 10 or so onlookers instead listened to educational briefings, along with the hum of the ventilation system.

The Loudoun Board of Supervisors has voted on just one subdivision this year, and the number of residential building permits issued last year — the final authorization needed to build housing and an indicator of growth — dropped more than 40 percent from 2005, according to county estimates. From September through November, the county averaged 124 foreclosures a month, according to a county report.

In Prince William, where the county board is considering a 27 percent increase in the tax rate, 1,298 building permits were issued for single-family homes in 2007, about 40 percent of the number issued in 2005.

While difficult, the economy has been an impetus for reform, officials said.

In Loudoun, Buckley said she wants to spend the entire year, not just a few hurried months, looking at ways to cut costs and increase revenue. Ideas on the table include scaling back property tax breaks on such items as airplanes, expanding the county’s rainy day fund and cutting the size of government, she said.

However, capitalizing on the slow rate of growth to make gains on infrastructure will be difficult, some researchers said.

“It’s a ‘damned if you do, damned if you don’t’ ” situation, said Christopher Leinberger, a developer and visiting fellow at the Brookings Institution. “In good times, you’re flush with capital, but you’re running so fat you’re trying to keep up with sprawling demand, and then in bad times, you don’t have the wherewithal financially to put in infrastructure.”

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The housing slowdown is probably cyclical, and the suburbs will eventually bounce back — but possibly in an altered form, analysts said.

The market is trending toward smaller, attached homes, said Arthur C. Nelson, co-director of the Metropolitan Institute at Virginia Tech. He said surpluses of large-lot detached homes in such places as Loudoun and Prince William are just the “tip of the iceberg”; his research indicates that by 2025, there will be a surplus of 22 million such homes nationwide — about 40 percent of the stock that exists today.

If the suburbs want to revitalize their housing markets, “they’ll have to be reformed,” he said. “The smart suburbs will figure out where the market trends are and retool their zoning codes.”

But in an indication that the growth debate is likely to bounce back as well, some are unconvinced of that projection.

“Suburbia doesn’t necessarily want to turn to urban, and not everybody wants to live in a condo,” said Hobie Mitchell, a Loudoun developer who said the market has many developers in a holding pattern. “People still want to have a single-family house on a decent-sized lot where the kids can play in the back.”

Staff researcher Meg Smith contributed to this report.

Comments:

Note: LoudounExtra.com does not necessarily agree with comments posted below — responsibility lies with the relevant reader alone. Peruse our reader agreement and privacy policy

The Housing Industry knows that they are no longer welcome in Loudoun County and that they should take their recession-ending dollars to other counties in Virginia where housing for families is not seen by the local governing body as an undesirable good.

Posted by Jill4x (anonymous) on April 7, 2008 at 1:19 p.m. (Suggest removal)

And Jill4x and when the residential stops so does the business community stop doing business.

See it takes residents to support the business community. Maybe we don't want it like before but we do need urban style housing designed for singles and married couples without children. So business will still want to be here. It was not the residential that killed the golden goose it was way too many kids per family more then almost any other area in the country. I love kids and have two myself. But when you get the children population dominating the population you get lopsided demographics hence a huge school budget to support it all . And when you can't grow the business community then you get super high taxes 19% this year and might even get worse as years go by. Loudoun is suffering from way too much of a good thing. Way too many kids for the population. So the demographics have become lopsided and potentially overcrowded schools and shortfalls in the school budget even with high taxes. We must get this county back in sync and build more housing that will appeal to singles and the married without children then we will be able to grow business and keep taxes low.

Posted by lbuividas (anonymous) on April 7, 2008 at 4:03 p.m. (Suggest removal)

Amen, to the too many kids in one county comments. What's in the water in Loudoun County and why do so many couples feel compelled to have more than one or two children? For such an educated county, you would think parents here would be a little more aware of what over population is doing to their communities, let alone the planet. Loudoun is truly out of balance. Way out.

Posted by mjc8075 (anonymous) on April 7, 2008 at 9:30 p.m. (Suggest removal)

Jill, much as many here think that development will bail us out...it's quite the opposite. Even when they were building, the county saw no revenue from taxes on these outside mega-builders (Toll Bros, etc.)
The money from building permits was miniscule to the amount of infrastructure costs that the filled houses brought us.
Now, in terms of Commercial growth, we could definitely use that here. And not retail, either. Full Commercial.
It recieves roughly $.60 cents back in services for every dollar it pays in, leaving $.40 cents per dollar in the county coffers. Oddly, the last Board majority saw Commercial development fall by 18% under their watch.In fact, the case can be made and documented that they actually converted Commercial property to Residential zoning.It was a bad idea at the time, and it was even a worse idea if they'd thought about the near future slowdown, and how it was going to hit the current budget battle.

Posted by honchonumberone (anonymous) on April 7, 2008 at 10:22 p.m. (Suggest removal)

If the tax rate stays high you are not going to see much class A commercial if any over the next four years or roads. And you need people to make the commercial work. We are already seeing see thru brand new buildings. And retail either moving or going out of business.

It is all about the tax rate and the roads. and keeping the industrial in the coral.

Posted by lbuividas (anonymous) on April 7, 2008 at 10:47 p.m. (Suggest removal)

What do you mean by keeping industrial in the corral? I favor more industrial, because it usually provides jobs in the immediate area that it builds in. It also affords the county the same winning situation on it's tax monies ($.60 recieved in services for every dollar it pays in) as other Commercial.
We disagree on two points. I think that fuel costs and commute distances to the DC Metro area will keep companies away from far-flung counties for a good while.It does not make sense for many with DC ties to come out this far. That is industry-specific, however. If they do not depend on anything in the DC Metro area, they do not consider the distance from DC in any decisions to come here. Secondly, of the Commercial businesses that come here, many are world and country wide, and do not depend on a local customerbase. If they manufacture, they may indeed depend on a local workforce. But the most of the businesses that depend on local people are retailers. And what we're seeing out there now is the survival of the fittest...the best business plans. Loudoun County was retailed to death a year ago. If some of the competition has killed off weaker competitors, so be it.

Posted by honchonumberone (anonymous) on April 8, 2008 at 10:23 p.m. (Suggest removal)

Can we blame any more of the county's problems on the children of the county? I am fairly certain the children of the county never approved the thousands of permits for new construction in the early part of this decade. How terrible it is to have a county with such a great school system that parents choose to live here so their kids can go to school here. Stop blaming the budget problems on the kids who just want to go to school and the parents who want the best for their kids.

Posted by stingo (anonymous) on April 9, 2008 at 8:54 a.m. (Suggest removal)

"What's in the water in Loudoun County and why do so many couples feel compelled to have more than one or two children? For such an educated county, you would think parents here would be a little more aware of what over population is doing to their communities, let alone the planet."

It's called freedom. You might want to familiarize yourself with the concept.

Here's an exit question, mjc: Are you pro-choice? Think carefully before answering.

Posted by blarf (anonymous) on April 9, 2008 at 9:44 a.m. (Suggest removal)

People need to stop blaming each other. It's everyones fault. Builders built for the money and because there was a demand. The board approved so to bring in more people and tax base. People came for cheaper housing. And the ones who were already here loved the fact that their property values increase a ridiculous and very inflated amount.

Posted by mazman128 (anonymous) on April 9, 2008 at 11:59 a.m. (Suggest removal)

Stingo, stick to whatever it is that you do in the daytime, okay? Kids who just want to go to school and the parents who want the best for their kids ARE THE VERY REASONS FOR THE INCREASE. When I went to school, 30 children in a classroom worked just fine. And when you have hordes of parents moving here for the schools, and the school-aged population swells, that's EXACTLY WHERE THE HEAVILY MULTIPLIED COST FOR THOSE STUDENTS COMES FROM. It's really very simple. Now add the fact that if they moved here from somewhere else, they also have paid taxes in the County for maybe one year, and that many of them move out of the county within a year of the time their children finish schools in Loudoun, so they never really become vested in paying for what they received. We won't even get into the referendums for county debt that they voted for, and that they move out of the county before they help retire that debt.

Posted by honchonumberone (anonymous) on April 9, 2008 at 11:32 p.m. (Suggest removal)

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