New condos and townhouses under construction at Coalfield Station, off Woolridge Road in Midlothian (Photo by Scott Bass)
When Tom Jacobson made the cross-country trek from Sioux Falls, South Dakota, to take a job as director of Chesterfield County’s Planning Department in 1988, he discovered that Virginia law was anathema to good planning principles.
“We planned where we wanted development to occur, and then we zoned it. That’s what I was used to,” Jacobson recalls of Sioux Falls, which he describes as a “growing, beautiful town.” “Then I came here and quickly learned you can’t do it that way.”
Blame the proffers. Virginia is the only state in the country that utilizes what’s known as “conditional zoning” to extract voluntary, legally binding commitments from developers to offset the impact of new development.
It started in the early 1970s in fast-growing Fairfax County. To win government approval for new commercial or residential projects, applicants submit proffers from developers or builders to make road improvements, put in landscaping buffers, or build new schools, fire stations or any number of on-site improvements intended to mitigate the impact on surrounding property owners.
In the late 1980s, shortly after Jacobson arrived in Chesterfield, the General Assembly expanded the law to allow the state’s fastest-growing localities to accept “cash proffers” for off-site improvements, such as schools and roadway enhancements, that aren’t physically connected to the new development. The proffer system affords counties and cities tremendous leverage in negotiating with landowners over future development, becoming the primary tool that local governments use to control and manage growth.
“If there’s not a mechanism within your state for the developer to share in the cost associated with their development, and that’s expanded infrastructure, water, sewer, roads, bridges, public safety, and the big-ticket item is schools,” explains Eldon James, a Richmond-based planning and government policy consultant, “then you’ve created an impediment to the governing body in any jurisdiction. … It means that the existing taxpayer is either footing the bill or, at least, sharing in a significant way the bill of the cost associated with that growth.”
But there’s a problem. The proffer system is laborious, time-consuming and often beholden to neighborhood interests — so it drives up the cost of new housing.
The Old Dominion isn’t alone. Most states impose something akin to proffers, usually “impact fees,” to help offset the increased costs for public services and infrastructure thanks to new development. But in Virginia, there’s a caveat: Proffers can only be accepted during the rezoning process, which involves clearing multiple layers of government approvals and public meetings with elected officials, attorneys, neighboring property owners and anyone else who wants to weigh in.
With impact fees, developers skip all of that. The fees are assessed independent of zoning, which leads to standardization and predictability — features coveted by homebuilders and developers.
Proffers essentially turn “good planning on its head,” James says, by disincentivizing zoning for its primary purpose — to guide where development should occur ahead of time. Consider, say, Chesterfield County’s current comprehensive plan update: “If everything that’s in your new comp plan is allowed by right, you have no access to the mechanism that helps pay for the cost associated with that growth,” he says.
While all jurisdictions in Virginia can accept noncash proffers, cash proffers are limited to localities that recorded at least 5% population growth, per the most recent census. In the Richmond region, for example, Chesterfield and Hanover counties both utilize cash proffers; the city of Richmond and Henrico County do not.
Most cities in Virginia don’t rely on cash proffers, in part because there’s less available land for new development and most have seen population declines. In fiscal year 2025, just four cities collected a total of $878,103 in cash proffers; Virginia counties and towns collected more than $121 million.
While most of the state’s fastest-growing counties accept cash proffers — including Fairfax, Loudoun, New Kent and Chesterfield, for example — Henrico “has never had a cash proffer policy,” says Joe Emerson, Henrico’s planning director. The county prefers that developers put more money into their developments; it also sees cash proffers as difficult to administer equitably, as many of the county’s undeveloped lots are already zoned.
Chesterfield, meanwhile, has established a $9,400-per-dwelling-unit cash proffer, with all proceeds going to transportation improvements. In a statement to Richmond magazine, county spokeswoman Teresa Bonifas writes, “If the program ended, the county would lose a dedicated revenue stream that supports capacity-expanding transportation improvements and alternative funding sources would need to be identified.”
James and Jacobson both argue for wider use of more predictable, less onerous impact fees. Currently, Virginia law only allows such fees for transportation improvements.
By unhitching development fees from rezoning, the process becomes more efficient and equitable, James says. It also saves time and money — significantly so. For a major project, rezoning can take a couple of years.
“It would be a major step forward in speeding the get-the-project-built process,” James says of switching to impact fees, especially at a time when state policymakers are searching for solutions to the affordable housing shortage.
Jacobson agrees. In counties like Chesterfield, where Jacobson served as planning director for 17 years, the arrival of cash proffers in the late 1980s gave county leaders the ability to better control and manage new development. But it’s holding back new construction in a region that’s struggling with rising home prices and shrinking inventory.
“I understand why elected officials sometimes like it, because they know what’s happening in their area and they have essential control,” Jacobson says, “but in the long run it does raise costs and therefore is a negative on maintaining affordable housing.”
Danna Markland, chief executive of the Home Building Association of Richmond, says proffers place an unfair burden on new home construction, and are contributing to the dwindling number of new housing starts in the region.
Using proffers to finance the expansion of public services and infrastructure, Markland says, is inequitable and inefficient. New development, she argues, will eventually offset costs through real estate tax collections.
She points to the fact that Chesterfield recorded more than 4,200 resale home transactions and fewer than 1,700 new home closings in 2025. Proffers, which in Chesterfield are used to fund road improvements, are only collected on new homes.
“You may have an older couple moving into the new home, and they don’t drive much. Whereas in the resale home, you might have a family with three teenagers moving in who are going to be driving,” Markland says. “If every infrastructure challenge is solved by increasing the cost of new housing, then no one should be surprised when housing affordability continues to worsen.”
