Virginia Real Estate, Land Use & Construction Law : Virginia Construction Lawyers & Attorneys : Bean Kinney & Korman Law Firm : VA Real Estate, Land Use & Zoning

If you are an owner or operator of affordable rental housing (property with four or more units), it might be worth noting that the General Assembly has just restricted your local real estate tax assessor's discretion to value your property to one method.   Senator Whipple, apparently at the request of the Virginia Housing Commission, patroned a bill passed by both houses this session to amend Section 58.1-3295, requiring localities to assess real property being operated as affordable rental housing solely via the income valuation approach.  Presumably, the reason for this was that local assessors have been trying to tax committed affordable rental housing (i.e. housing that is legally bound to remain and operate as affordable housing at limited rents), at rates that do not reflect these income stream restrictions, by using methods to determine fair market value other than the income approach.

In a nutshell, before this amendment, a local assessor could assess real property three different ways:

1. The Sales Comparison Method, or "Market Approach;"
2. The Replacement Cost Less Depreciation Method, or "Cost Approach;" and
3. The Capitalization of Income Method, or "Income Approach."

Additionally, when dealing specifically with affordable housing, after application made by the owner, assessors were required to consider:

1. The impact of any legally imposed rent restrictions;
2. Any additional operating expenses associated with affordable housing compliance requirements; and
3. Any legally imposed restrictions on the transfer of title or other restraints on alienation.

Assessors were also expressly prohibited from attributing the value of affordable housing tax credits to affordable housing sites.

So, basically, assessors will still be required to take into account the special affordable housing valuation factors listed above, but will now be required to only use the Income Approach in determining fair market value.  Well, the policies involved being fairly apparent, we just have to wait and see whether local assessors will decide whether they think they need to obey this new valuation as prescribed by this amendment, or whether they may disregard it.  In any event, it may be worth looking into how your local assessor is currently determining the value of your affordable housing inventory.

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Typically, Virginia courts will simply review and apply the terms of contracts.  This is great if you have a good contract, horrible if the contract tilts towards your opponent.  In contrast to the general rule, Virginia courts are quite hostile to non-compete agreements and are more than willing to throw them completely out when the clauses go overly broad.

Another recent example was highlighted yesterday in The VLW Blog.  The case, Specialty Marketing v. Brunson, involved Specialty, a wholesale distributor of electronics.  Brunson was a sales representative.  When he became a director and purchased stock in the company, Brunson signed a non-compete.  Brunson left Specialty's employment and was hired six months later to act as an account representative for a competitor in his old territory. 

The non-compete stated in pertinent part:

A. BRUNSON shall not own, manage, operate, control, be employed by, participate in, or be connected in any manner with the ownership, management, operation, or control, whether directly or indirectly, as an individual on his own account or as a partner, member, joint venturer, sole proprietor, officer, director or shareholder of a corporation, firm, association or other entity, of any business competitive until SPECIALTY in areas where SPECIAL]'Y has a market for its business.

 The court looked at this clause and quite easily threw it out.  The clause violated Virginia law by prohibiting the former employee from performing functions unrelated to the functions performed for the previous employer.  The court also found the geographic limitations contained elsewhere in the contract to be unreasonable in scope.

We see non-compete and non-solicitation agreements used with some regularity in the construction industry although not with the same frequency as some other industries.  If you are going to go this route as an owner, a reasonable scope is critical or the clause will get thrown out.  Ironically, for employees this is an arena where you may actually be rooting for the employer to overreach and go too far.

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As reported yesterday by Virginia Lawyer's Weekly, a Virginia federal judge has ruled that a builder who remediated 70 homes constructed with Chinese drywall was not entitled to insurance recovery of the remediation costs.  This case is a painful reminder of how even positive, proactive business decisions can translate to tremendous liability risks, particular where interpretation of contracts and insurance occurs under Virginia law.

Judge Rebecca Beach Smith of the US District Court for the Eastern District of Virginia (Norfolk Division) issued the opinion.  Dragas Management Corp. had multiple liability and umbrella policies with Builders Mutual Insurance Company and Firemen's Insurance Company of Washington, D.C.  The underlying liability policies all contained language which obligated the insurers to pay damages which the builder became legally obligated to pay because of bodily injury or property damage.

Dragas received reports of health symptoms and property damage from various owners.  It filed claims on its various insurance policies.  It also indicated in writing it was planning on beginning a remediation plan and tendered the same to the insurers.  Soon after, BMIC flat denied coverage and rapidly filed a declaratory judgment action.  FIC rapidly denied coverage as well.  In June 2009, BMIC sent a new letter agreeing to defend Dragas against drywall related lawsuits subject to a reservation of rights. 

Four home owner complaints were filed against Dragas.  These claims were later voluntarily dismissed because of the Dragas voluntary remediation plan.  Dragas conceded there were no other drywall related cases pending.

The court agreed with the insurance carriers that based on the allegations, Dragas' remediation plan was voluntary and undertaken without legal obligation.  Dragas may have a glimmer of hope in that leave to amend was granted and the opinion emphasized that it failed to allege even specific threats of lawsuits by individual owners or specific demands made by owners prior to remediation.

There are a host of policy and business reasons to encourage parties to proactively respond to complaints and voluntarily remediate problems.  This case stands as a cautionary tale that such plans may run seriously awry when placed into the context of tightly written insurance policies.

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Back in November 2009, I highlighted five cases in which the Virginia Supreme Court granted appeals in Case Watch:  Upcoming Virginia Supreme Court Opinions.  The Virginia Supreme Court has recently published the opinion in the first of those cases, W&W Partnership v. Prince William County Board of Zoning Appeals, et al, Record No. 090328.

In this case, the Woodsides owned a piece of property that was over 46 acres. In 1940, they conveyed 1.44 acres to the Commonwealth of Virginia to extend Route 234, a public road, through their property. Route 234 bisected the property, leaving just over 5 acres to the north and about 40 acres to the south. The deed conveying the 1.44 acres contained a metes and bounds description of only the strip of land conveyed to the Commonwealth.

In 2000, the Woodsides conveyed their property to a church, which in turn conveyed the property to W&W Partnership. W&W subdivided and conveyed a portion of the 40 acres to the south of Route 234, leaving W&W with 15.3 acres total – 10.3 acres to the south, and 5.17 acres to the north. W&W sought a separate address and GPIN from Prince William County, claiming that the 5.17 acres of land constituted a separate, legally nonconforming lot created in 1940 by the Woodsides’ conveyance to the Commonwealth. The County denied this request, claiming that the Woodsides’ remaining property continued as one parcel with two noncontiguous pieces. Both the BZA and the Circuit Court sided with the County.

The Virginia Supreme Court followed the law set out in Chesterfield County v. Stigall, 262 Va. 697, 554 S.E.2d 49 (2001), which held that creation of a new lot

is a legal separation of property because it results from an action by the owner and involves, at a minimum, a change in the legal description of the property, either by a meets and bounds or by plat, which is duly recorded in the appropriate land records.

Stigall’s facts were very similar to the Woodsides’ situation, with a public road that bisected a lot and created two unequal sections. However, the Commonwealth acquired a portion of the property by way of eminent domain instead of voluntary conveyance in Stigall. The Court rejected W&W’s argument that this made any difference, holding that

the mere act of conveying property to the Commonwealth did not legally separate the noncontiguous portions of the Woodsides’ remaining property. Such legal separation of property must be shown by proof that the owner, at a minimum, duly recorded a change in the legal description of the property either by metes and bounds or by plat.

As I stressed in Details, Details, Details:  What it Takes to Convey an Easement in Virginia, this case yet again highlights that it’s all in the details. As with any real estate transactions, be sure to: (1) explain the parties’ intent precisely and specifically; (2) give details right in the deed – in this case by specific metes and bounds or by plat – and if you are relying on a separate document such as a plat, be sure to specify the plat in the deed itself and incorporate the plat by reference right in the deed; and (3) record all pertinent documents and attachments in the land records as soon as possible.
 

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In 2008, the United States Green Building Council (USGBC) announced it was planning to shift its internally run certification of buildings to independent certifiers administered by a sister non-profit, the Greeen Building Certification Institute (GBCI).  A speaker at an USGBC - National Capital Region event declared last Wednesday that USGBC was taking steps to reverse this direction and bring the LEED certification process back in house to USGBC.

The outsourcing to GBCI and third party certifications was initially described as adding greater independence.  Commenters also discussed the potential for removal of conflicts of interest, first with the initial transfer of testing and accreditation from USGBC to GBCI a year prior to the transfer of certifications.  Last year, USGBC faced reports of significant delays in the certification process.  Most notably, our friend Vandana Sinha of the Washington Business Journal reported in May 2009 on, "a backlog of hundreds of LEED certification requests that has stretched processing periods from what should be five weeks to closer to five months."  USGBC touted the new shift to GBCI, coupled with extensive additional managed third party reviewers, would wipe out the backlog by June 26.  As detailed in our article for ABC-Metro, "Green Overgrowth", review times were still estimated by USGBC staff at twelve weeks in August 2009.

We have not heard much anecdotal grumbling over review times in the last few months.  GBCI staff indicated last week that review times generally are within the estimtaes of 25 business days for preliminary construction phase reviews and 15 business days for final construction reviews.  Assuming this is true, it appears that the backlog as been worked off.  How much is due to efficient adminstration as opposed to an evaporating construction pipeline due to the tanking construction economy is a valid question. 

It is against this historic backdrop that we must view the casual bombshell dropped by Stuart Kaplow during the USGBC - NCR event last week.  Mr. Kaplow is the Chair of USGBC Maryland.  Mr. Kaplow also described some specific struggles and frustrations with the certification process in the wake of GBCI administration where credits were misinterpreted by reviewers and historic positions were ignored during the process.

This is admittedly preliminary information I have heard and digging around on line produced nothing.  There certainly is no official announcement or position expressed by either USGBC or GBCI.  This raises some questions for our readers:

• What have your experiences been with USGBC versus GBCI administered certifications?
• Have the review times in fact come back down to the promised time frames?  If so, is this a function of more reviewers or the economy?
• Assuming the information is correct, is this a transfer of just administration of the program, or is the outside third party certification piece in question as well?

A special thinks to ABC for permission to reprint our piece from Building Washington, Volume 24, No. 3.

Update (2:00 pm est, 3/22/2010):  In our comments, the GBCI has provided an official response to our blog post.  For the benefit of our readers who follow the blog post by RSS feed, here is the first paragraph of that reply (please click through to the post to see the complete comment):

There has been some misunderstanding about recent process changes at GBCI, the third party that provides certification for LEED projects. GBCI is bringing the technical review of project documentation in house over the next two years rather than continuing to manage the process exclusively through other certification bodies. This move will allow us to have closer technical oversight of reviews and more direct communication with our customers to ensure consistency and clarity throughout the process. This doesn't change anything project teams are doing now.

We appreciate the comment and clarification, as well as the delicious nuance this adds to the discussion.  It appears that:

1. The plan is not to transfer control back to USGBC from GBCI for the LEED certifications as initially indicated during the presentation discussed above; however,
2. It appears there are in fact substantive and substantial changes anticipated to the current certification regime;
3. GBCI in fact is taking at least some level of technical review back "in house";
4. I am struck in particular by the "ensure consistency and clarity throughout the process" language ... that suggests that process changes were needed to reign in and create consistency amongst the various third party outside bodies.  While the detail is shifted a bit, that clearly fits with Mr. Kaplow's description of process and credit review issues.

Thanks to USGBC and GBCI for responding so promptly and providing an update on this important topic!!

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In what appears to be an effort to allow localities to provide additional incentives to redevelop certain areas or sites, both houses of the General Assembly have voted to modify Section 15.2-2316.2 of the Code of Virginia, better known as the "TDR Statute" (inclusive of Section 15.2-2316.1 as well).  Previously, transferable development rights ("TDRs") severed from a "sending" site or area could only be equal to the TDRs permitted to be attached to the "receiving" site.  The modification now allows TDRs transferred to receiving sites to be greater than those severed from the sending sites. 

I have to admit, you can read this modification to mean a number of things.  If localities are smart, they could really use this modification to their advantage.  Read one way, this could allow localities an additional method to encourage owners of transferable development rights to transfer their density to sites that are less favorable from a business standpoint but more favorable from a planning standpoint.  It arguably provides localities with the ability to prioritize which sites should receive density through what amounts to a receiving site bonus density program.   It also could potentially allow the regulation and/or balancing of the TDR market because the locality now has what appears to be the additional ability to control market demand of TDRs (i.e. if the market has 15,000 SF of density available for sale, and only 8,000 SF worth of receiving site density permitted, market price for TDRs will be lower than if the ratio is reversed). Localities arguably now have more ability to control the supply and demand for TDRs.

As anyone in the land use racket can see, this is a significant amendment to the TDR Statute, and, as always, the political nuances of who will eventually benefit in any given locality will be interesting to follow.  It is certainly another tool in the planning toolbox localities should not ignore, and of which owners and developers should be aware.   If you want to read more about TDRs, click here.

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The Virginia General Assembly passed a statute, HB 797, that expressly permits architects and engineers to enter into contractual limitation of liability clauses.  The ACEC, VSPE, and VSAIA actively pushed to change the statute in the wake of several cases which ruled that previous language in the corporate enabling statute barred limitation of liability clauses for design professionals.  As can be sen from the bill tracking, the measure passed fairly easily in both the House and the Senate.

In Virginia, most assuredly a freedom of contract state, why did courts feel compelled to toss these frequently used contract provisions?  The friction came from the statute which permitted architecture and engineering firms to practice as corporations.  The current statutory language provided:

No such organization shall limit the liability of any licensee or certificate holder for damages arising from his acts or limit such corporation, partnership, sole proprietorship, limited liability company, or other entity from liability for acts of its employees or agents.

In 2007, an order from the Arlington County Circuit Court used this language in the corporation statute to hold that contractual limitations of liability were unenforceable.  In 2008, the Rockingham County Circuit Court reached the same conclusion. 

Critics of the decision pointed out that the statute in question was dealing with corporate formation, not contractual allocation of risk.  The logic of these decisions is brought into serious question by the Supreme Court of Virginia's 1996 decision in Gerald R. Moore & Sons v. Drewry.  That case held that an individual engineer could not be liable in negligence based on a contract with the engineer's corporate employer (previously discussed in our economic loss series).  Thus, in the very context of corporate versus individual liability that the statute was written for, the Supreme Court of Virginia ignored the statute.  Nevertheless, the courts above used the statute language to wipe out contractually negotiated and agreed to allocations of risk.

There is no retroactivity provision in the statute and the statute involves an amendment and re-enactment of the corporate statute.  Thus, it looks to me like this will only apply prospectively.  Whether that will mean to contracts entered into after the effective date, litigation filed after the date, or motions heard after the date will likely be a matter of some discussion.  We will have to see what happens with contracts and cases in the interim, but this is certainly a very welcome development for those in the design professional community.

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Waldo Jaquith

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In the last several months, both Haiti and Chile have been rocked by significant earthquakes.  The difference between the tremendous devastation and loss of life in Haiti and the far lower impact in Chile, despite a much more serious earthquake, is at least in part the direct result of building codes and construction practices.

The earthquake in Haiti registered magnitude 7.0 and resulted in an estimated 200,000 people killed.  The Chilean earthquake registered magnitude 8.8, translating to 500 to 900 times more energy released than the earthquake in Haiti.  The death toll estimates in Chile are still preliminary and changing both up and down, but the current estimate appears to be 528 although it has fluctuated up and down from as high as 800.

Why the dramatic discrepancy?  Read more below the break ...

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The next wave of the EPA's lead paint regulations take effect on April 22.  These regulations will impose new training, certification, work practice and record keeping requirements on contractors performing renovations on structures built prior to 1978.

Reports that we are hearing indicate that the EPA's roll-out of the program has been less than clear.  Some people have struggled to find sufficient openings or available training classes.  Our friend Sean Lintow (@slsconstruction on twitter) reports that in some states, the state governments are taking over the certification process with EPA's blessing, throwing the validity of currently issued certifications into question.

A number of people have asked me specific, important questions which I would like to give my take on, which can be viewed below the break: 

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It looks like “Punt” is the name of the game with Virginia tax reform. In a January 5, 2010 blog post and a January 20, 2010 blog post, I discussed four tax reform proposals – all of which the General Assembly has managed to put off until a later date.

Apparently, HB 57 got the most traction. This was the bill proposing to prohibit any locality that had not already imposed a BPOL tax from doing so and prohibiting any increase in BPOL tax rates. The House passed that bill with a resounding 88 to 8 vote, but the Senate referred the bill to the Committee on Finance and continued a vote on the bill until 2011.

The other three votes never even made it to a vote by the House. HB 2 recommended a tax credit for small business taxpayers equal to 10% of eligible investments in personal property and real estate improvements. HB 47 proposed tax credits for companies with telecommuting employees. HB 110 would have allowed localities to decide whether to impose BPOL taxes on a taxpayer’s business’s gross receipts or on its Virginia taxable income. All three of these bills got stuck in the House Committee on Finance and were continued to 2011 by voice vote.

I have to admit that, of the four bills, I had the highest hopes for HB 110. I'm sorry to see the General Assembly has put off voting on what would have been a welcome amendment to the BPOL tax statute. Hopefully the General Assembly will agree in 2011!

Here is a piece of good news for Virginia taxpayers and Delegate Mark Cole, who sponsored both HB 57 and HB 110.  Delegate Cole also sponsored HB 17, which proposed to reduce the limitation period for collection of state taxes from 20 years to 10 years. HB17 passed in both the House and the Senate, and was just approved by the Governor last week. This law will take effect on July 1, 2010.
 

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Modular home construction presents significant potential improvements to home construction: significantly reduced construction time; less material waste; and reduced expense.  If not handled appropriately in terms of contracts and risk, modular homes can translate to a gigantic headache for both the designers, contractors, and the owner.

Last Thursday, Lisa Rein of the Washington Post wrote an article on mansions turning to modular construction to reduce time and costs.  The article caught my eye - while I have noticed this trend over the last 5 years or so, it was the first time I saw local mainstream press pick up on this.  My friend Jamie Baker Roskie at the always interesting Land Use Prof Blog picked up on the article and connected the thread towards local codes discouraging use of shipping containers as building materials. 

Adaptive reuse of discarded materials is one of the best ways to improve our economy's sustainability, and using shipping containers for modular construction is really an interesting approach.  Don't believe shipping containers make good construction materials?  Browse through a search of the articles at the highly informative Jetson Green blog that address containers and you will see some remarkable uses of containers, from emergency shelters for recovery in Haiti to very sweet, upscale small footprint breach structures.

Turning from containers to wood based modular construction, count me as a believer that we will see industry move towards more pre-fabricated assemblies to reduce cost and time of construction.  Despite my views on the future, I have particiated in some pretty ugly cases involving modular construction.  Based on the repetitive nature of these problems, I draw some conclusions about risks involving modular home construction that may help put the Washington Post's article into a legal context:

1. Prefabricated assemblies are sales of goods governed by Uniform Commercial Code not construction
2. Sales of goods involve different potential warranty theories and defenses than construction implied warranties
3. Sales of goods potentially have different statutes of limitations
4. While the install time may be shorter, manufacturing and delivery time may be a very different story
5. Most owner/contractor agreements involving modular construction are very weak on defining the remote manufacturer's role and responsibilities
6. Similarly, most owner/contractor agreements poorly define timing expectations until the modular unit is delivered and set on the building pad
7. Simple units seem to do pretty well; however, quality control seems to vary wildly amongst manufacturers and even within specific manufacturers depending on the specifics of a projects and the design complexity
8. As with other manufacturer's warranties, if there are problems, owners and contractors may struggly mightily to get manufacturers to respond appropriately to warranty complaints

This may be coming from the skewed perspective of seeing these projects in litigation, what do you think?  What have you seen?  Finally, how has the economic downturn improved or worsened working with modular manufacturers?

Images by Terretta

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Can you imagine going to your local zoning office, asking for a formal determination from the Zoning Administrator as to whether you are permitted to build a building on your property, receiving a formal written determination that you may do so legally, providing the written opinion to your bank who then provides the financing, then paying for and constructing the building, only to be notified thereafter by the locality that they have either changed their mind or have decided to rezone your property without your consent in the interim?  You complain that you were told by the locality that you could build the building, but all you get is "Sorry, we've decided you can't do that after all."

Does that stick in your craw?  It should, and local officials flopping or waffling over their prior decisions happens, to some degree or another, more frequently than some might think in localities all over our Commonwealth.  Well, you can stop clearing your throat and loosening your tie because the General Assembly voted this past Monday (House 92 to 4, Senate 40 to 0) to make Zoning Administrators more accountable for the decisions they make - decisions on which private citizens must rely.  HB 1250 passed, and it modifies Section 15.2-2307 of the Code of Virginia to provide that formal determinations made by Zoning Administrators, after the requisite appeal or modification period has run, shall be considered "significant affirmative government acts" (aka "SAGAs") if a private party has relied upon a SAGA to the requisite extent.

Our colleagues at Sands Anderson down in Richmond and Beth Wellington blogged earlier this week that allowing private citizens to rely on a formal opinion by the Zoning Administrator (that person holding the statutorily designated office to make such determinations), might somehow allow private property owners to rezone their property "in the dark," or gain some other advantage outside of the public eye.  Yes, it is true that a Zoning Administrator has the sole authority to make a formal, binding determination of what a parcel of land's current zoning classification allows; however, that is in fact the total extent of that authority.  A Zoning Administrator may not grant, through a formal determination, additional rights to use land beyond what is permitted by its current zoning classification. 

The other concerns raised about the bill seem to relate to lack of public notice to other potentially interested parties that such a SAGA is being made (i.e. a Zoning Administrator may issue a formal determination to a property owner without giving other potentially interested parties any notice).  What if you are a co-owner not reflected in any public record, a lender, or an adjoining property owner that would be affected detrimentally by an incorrect determination?  You would have no way of knowing that a determination had been made and that the clock on your appeal window is ticking away.   In fact, realistically, it is very unlikely you would know anything until your appeal period had lapsed (typically only 30 to 60 days, depending on the facts).

Some of the other statutorily listed SAGAs require some kind of legally advertised public review process; however, these are only those SAGAs that are the culmination of processes that allow property owners to do things beyond what they may do by-right, such as variances, special exceptions, etc.  Other by-right SAGAs do not require public review, such as subdivision approvals, plans of development, etc.  Clearly, a zoning determination may not permit something illegal, but who would know until it was too late?  Are we heading toward publishing legal notices that a zoning determination has been made?  How would this jibe with the "A Thing Decided Doctrine" relating to oral determinations made by Zoning Administrators?

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I am very pleased to report that I will be speaking on April 27, 2010 at the Green Legal Matters Conference in New Orleans, Louisiana.  The event includes a large number of talented folks, including good friends of ours from twitter and blogs such as Christopher Hill, Shari Shapiro, and Scott Wolfe.  A number of general counsel of very significant entities are scheduled to participate as well, including:

• Susan Dorn, General Counsel USGBC
• Roberta Lang, General Counsel, Whole Foods
• Steve Harmon, Sr. Dir. Legal Services, Cisco
• Elaine Reilly, Corporate Counsel, DuPont
• Ted Banks, Former Chief Counsel, Kraft Foods
• Kurt Stepaniak, Sr. VP, Law and Acquisitions, Kone, Inc.
• Allyson Willoughby, General Counsel, Method Home

This looks to be a fantastic event.  Last, but not least, the event takes place in the middle of New Orleans' Jazz Fest, a particular favorite of mine.  More information regarding the event is available from the press release issued by the conference organizers.  You can register for the event and see more information on schedule and attendees at the conference website.

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I don't know how many people out there tracked the events at the sustainability forum out in Portland a few weeks ago, but one of the notable take-aways from the event was that HUD Secretary Donovan used the event as an opportunity to announce that HUD was launching it's new Office of Sustainable Housing and Communities (OSHC) under Deputy Secretary Ron Sims.  OSHC is funded in HUD's 2010 budget.  This follows on the heels of the announcement to create the Inter-agency Partnership for Sustainable Communities between DOT, HUD and EPA last June.

The purpose of OSHC is to work with DOT, EPA and other federal agencies to ensure coordination between housing and other departments involved with sustainable community public policies that effect transportation, utility infrastructure, jobs and environmental planning.  It will also "...strengthen HUD's Energy Efficient Mortgage product and other retrofit financing options - both for single family homes and multi-family rental housing - through a $50 million Energy Innovation Fund... and will also make available an Affordability Index that measures the costs of where a home is located in relation to jobs, schools and transportation."  Additionally, $100 million will be available for integrated metropolitan regional planning initiatives per the Sustainable Communities Planning Grant Program, and HUD expects to award grants to between 10 and 15 regions around the country.

HUD and OSHC are also seeking input from stakeholders related to creation of regional plans for sustainable development, execution plans and programs, implementation incentives and entities eligible for funding.  You can make recommendations via HUD Wiki, is pretty easy to do.  Also, Builder Magazine interviewed OSHC's Director, Shelley Poticha, last week, where she shed some light on her thoughts on how the federal government fits into regional land use planning.

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The Commonwealth of Virginia has been slow to apply for, award and perform contracts funded by the federal American Recovery and Reinvestment Act (ARRA, better known as the Stimulus bill).  As the construction industry has suffered through plummeting bidding numbers and 25% national unemployment, Virginia has lagged in even qualifying its projects for funding, let alone getting the money to work.  The bad news is this has slowed down much needed funding.  The good news is it looks like there is a lot more money coming down the pike into the economy in Virginia.

A recent report by Peter Bacque of the Richmond Times Dispatch indicated that federal legislation provided $694.5 million in federal transportation stimulus funding and that less than half that has even been awarded in contracts.  Mr. Bacque indicates the money spent to date has produced 454.4 full time jobs.  This contrasts with the reported job creation in Virginia for US Department of Transportation which sets jobs created or saved at 1,335.54.  Thus, the confusion over job creation and funding that we have previously discussed continues.  Based on the funding numbers, the USDOT funding is clearly not the only agency source of transportation funding for Virginia as there is a minimum of another $100 million in funding.

The more important story is that while half the projects may be under contract, most of the projects have not even begun yet.   The Virginia website reporting on stimulus projects indicates that the total figure for both direct and indirect transportation funding administered through VDOT is $812 million.  VDOT has its own separate site with an ARRA project tracking sheet updated on February 24, 2010.  Call me a glutton for punishment, but I translated that project tracking sheet into a Microsoft Excel document available here.  The tracking sheet describes the percentage complete and I did a calculation of spending of ARRA funds by percentage of project completion.  If that percentage tracks with dollars actually spent, the VDOT site documents only roughly $66 million spent. 

There is an additional $175 million in projects that are either managed by other agencies or do not include a percentage allocation from VDOT.  The roughly $57 million allocated to the Fairfax County Parkway appears allocated and contracted, but the construction appears in its early phases.  Another $52 million is associated with projects in Washington and Roanoke County which are described as having anticipated contracts in May and June 2010.  Finally, it appears that VDOT got a late certification for ARRA funds totalling $70 million for I-66 Pavement Rehabilitation and Reconstruction which clearly has not started yet.  Thus, it appears that little of the $175 million that was not classified by project completion percentage has been spent yet either.  For those in Fairfax, $120 million in future funding is obviously a boon to our transportation woes as well.

It may be that my rough estimate of funds spent based on project completion is not accurate; however, I think we can still draw some reasonable conclusions regarding stimulus transportation funding in Virginia:

• While Virginia was late to the table in applying and certifying its projects, it appears that it got its work done on deadline to qualify for the ARRA funding;
• Many projects have not started yet;
• The bulk of funding has not streamed into many projects yet, meaning the bulk of the stimulus funding impact may be felt over the next twelve months;
• Based on timing of payment applications, payment flow contractors, subcontractors, suppliers and manufacturers will lag even further behind;
• Based on the foregoing, we should view estimates of jobs created or saved by stimulus funding as pure estimates until the funds actually hit the street.

Image by Sarah Rifaat

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