Let’s Talk Money

Let’s talk about the money behind large developments like the one Bob Arnette is proposing on Lake Kilby Road. Now before anyone gets all up in arms about me giving developers and builders a hard time for making money, this is NOT what this about. Developers and builders are necessary, and they are business people trying to make a living. However, if they are asking to rezone to build a large development, the city and its citizens should understand what the big-picture economics of the situation really are.

The developer’s lawyer, Grady Palmer, had a lot to say at the Planning Commission on March 21, 2023. He stated that, “Growth is coming to Suffolk, one way or the other, it’s coming.” (Suffolk Planning Commission Meeting: mark 3:07:00 – 3:07:07). Sure, growth is coming and that isn’t necessarily a bad thing. But just because a city wants to grow, doesn’t mean it needs to rezone every time a developer shows up with a plan. There are other ways to grow besides rezoning farmland to higher density residential; this just happens to be the easiest and fastest way for developers to make money. Our city needs to make sure we are getting a good deal when rezoning because there are costs for us as well. 

Palmer stated, “These applicants, this developer, is making a significant, substantial financial commitment to the city of Suffolk, and this is how you advance capacity. Particularly in the school, is developers funding the advancement of capacity to the tune of $2.6 million and I hope this sets a new standard.” (mark 2:37:57-2:38:19) 

Let’s break this down. The developer would be selling the 204 lots to a large builder at the approximate cost of $120,000 each. The developer will be making about $24,480,000. Let’s take a look at his expenses. He proffered $2.6 million for the schools. He will have to buy the land for about $1 million and build the infrastructure for another $2 million. Let’s give a generous estimate of $800,000 for administrative, legal, and miscellaneous costs. In the end, the developer will end up making about $18 million. With this in mind, the $2.6 million doesn’t seem as significant, nor substantial. It is just part of the cost of doing business. 

Additionally, the builder will make an approximate 7% net profit. With 204 houses at $500,000 each (according to the fiscal impact analysis), that would equal just over $7 million. The developer and builder will be making around $25 million combined. 

Based on the city planner’s staff report, the developer will be paying $13,055.59/house x 204 houses for a total of $2,663,319.96. Proffers are added to rezoning requests to make them more attractive to cities. This looks like a lot of money to you and me and we do have a lot of schools that are desperately over-crowded and in very poor condition. But will this money really alleviate these current problems? The answer is no. Most developments don’t start right away, take years to finish, and the city only gets the money once a certificate of occupancy has been granted. The money won’t be realized for years and, with inflation, the $2.6 million won’t go as far. 

The schools that this development would affect are ALREADY over-crowded. King’s Fork High School is at 104% capacity and Elephant’s Fork Elementary School is over 115% capacity. Both are already beyond what the Facilities Master Plan projected for the year 2024. There are at least 6 nearby developments being built out right now that will feed an additional 260+ students to these already overcrowded schools in the very near future. This proposed Lake Kilby development will add an additional 31 elementary and 23 high school students. That will bring Elephant’s Fork Elementary School capacity to 144%.

The City of Suffolk’s 2024-2033 Capital Improvements Program and Plan (CIP), lists the Elephant’s Fork Elementary School replacement cost at nearly $50 million, with this scheduled to happen between 2029-2033, maybe. Suffolk has a tendency to kick these projects down the road and many of them stay in that 6-10 year plan for a decade or more. There are currently 6 schools on the list for replacement and 2 for expansion. If you consider 6 schools at about $50 million each, that is $300 million to fix this urgent problem. So $2.6 million paid out over several years isn’t even a drop in the bucket. 

The developer isn’t donating this money out of the goodness of his heart to help fund schools. He is proffering the bare minimum he has to– the money the city has estimated it would need to properly provide an education to each new student. We have to ask ourselves if accepting this $2.6 million dollars is worth the devastating impact of adding more students to these schools without a plan in place to expand capacity. 

Bob Arnette is also proffering to widen Lake Kilby Road. I go into this issue here, but to sum it up: he isn’t even willing to improve the road to meet the minimum requirements of the UDO or design standards set by Virginia. His lawyer said this about it: [This developer is making a] “very large commitment to widen Lake Kilby to 20’ wide pavement. We understand, that’s not standard. We wish we could do standard, but we can’t do standard. But 20 feet, and the way I think about this as a lawyer, can two school buses pass each other safely on 20 feet of pavement. I think the answer to that question is yes.”  (mark 2:39:34-2:39:55) Not only is Mr. Arnette’s plan NOT to make the lanes wide enough, but he is also not addressing the needed clear zone, which is an area for cars to safely maneuver to if something enters their lane (like a truck that is wider than its own lane).

Surely he could make the improvements fit the minimum standard, but that would eat into his $18 million profit. But if the city is willing to accept less, why would he bother? Why is the city accepting subpar improvements? It is our duty to hold our city accountable, and our city representatives’ duty to act in OUR best interest. 

Palmer also stated that, “Individual developments have to struggle with issues, and this development is solving as many issues as it can, and more than it should, but that’s the business of development.” (mark 3:07:46  – 3:07:56) The lawyer acknowledges this: developers would prefer not to offer anything and let the citizens pay all the costs their development bring to the city. They don’t really care about the schools or safety of the roads; they are in the business of making money by flipping real estate from lower to higher density residential and then selling to builders, whose kids don’t go to these schools and who don’t have to commute on these roads everyday. We are the ones that have to deal with the aftermath of these large developments. 

CARE4Suffolk is a grassroots organization, made up of regular citizens. Until we came along to shed light on all these problems, the city just kept approving these rezoning applications. We have a housing pipeline of 7,400 approved units waiting to be built. Growth is good, but unchecked irresponsible growth can be devastating. This is why we have overcrowded schools, unsafe roads, and increasing traffic woes. 

Palmer said, “I think Suffolk should be, should be grateful that you’re seeing the growth, seeing the investment, and you’re seeing positive change that these projects like Lake Kilby brings to the community.” (mark 2:34:28 – 2:34:38) This is a laughable statement. He didn’t even mention what the actual positive change would be. He and Bob Arnette should be thanking the City of Suffolk for all the profits their speculative rezoning has raked in over the years at the citizens’ expense.

We shouldn’t be thankful – we should be furious that this situation has been allowed to get this far. Development in Suffolk is happening too quickly and the infrastructure can’t keep up. We are the ones who suffer. 

We need to let City Council (email: council@suffolkva.us) know that we want them to vote NO when the Lake Kilby Road rezoning comes before them on April 19th. It is time to put citizens first!