Section 15.2-2296 of the Code of Virginia generally authorizes local governing bodies to accept proffers through conditional zoning. A proffer, as implied by § 15.2-2296 of the Code of Virginia, is a voluntary offer from a property owner and can be an act, donation of money, a product, or services(*1) that limit or qualify how the property will be used or developed. These proffered conditions are in addition to the general, uniform regulations otherwise applicable to land within the same zoning district. Upon approval by the local governing body, the proffered conditions become part of the rezoning and pass with the ownership of the property.(*2) Cash proffers are a form of conditional zoning where cash payments are offered to offset the impacts of a particular development by providing funding for new roads, schools, or other public facilities and services. Cash proffers can be used to fund onsite or offsite improvements to offset impacts from a new commercial or residential development.(*3)

In 2016, the Virginia General Assembly passed new legislation addressing residential developments and cash proffers; stipulating that onsite or offsite cash proffers must be specifically attributable to a proposed new residential development and must directly address an impact to an offsite facility. A voluntary cash proffer is considered unreasonable unless the residential development created a need for one or more public facility improvements and the new development would receive a direct benefit from those improvements. Localities are only allowed to accept cash proffers for roads, schools, public safety or parks and recreation that would need improvements or a brand new facility as a direct impact of a new residential development. This limits how cash proffers can be used for residential developments in the future, however; localities can still expend cash proffers for commercial developments for 11 different types of uses as listed under §15.2-2303.2 Code of Virginia if the proffers were collected prior to 2016.(*4)

Although the Code of Virginia has authorized every jurisdiction to use some form of conditional zoning since 1987, only localities meeting specific criteria may accept cash proffers. The basic rule is stated in § 15.2-2297 of the Code of Virginia, which stipulates that a zoning ordinance may include and provide for the voluntary proffering in writing, by the owner, of reasonable conditions, prior to a public hearing before the governing body, in addition to regulations provided for in the zoning district or zone by the ordinance, as part of a rezoning or amendment to a zoning map. However, among other restrictions, the conditions shall not include a cash contribution to the locality. Sections 15.2-2298, 15.2-2303, and 15.2-2303.1 create exemptions to the general rule that allow voluntary cash proffers in high-growth localities, localities in certain geographic regions, and New Kent County respectively.

Section 15.2-2303.2 of the Code of Virginia directs the Commission on Local Government to annually collect data concerning local government revenues and expenditures resulting from the acceptance of voluntarily cash proffers. These cash proffers comprise either (1) the aggregate dollar amount of cash payments collected by the locality; (2) the estimated aggregate dollar amount of proffered cash proffers that have been pledged to the locality and which pledges are not conditioned on any event other than time; and (3) the total dollar amount of proffered cash payments expended by the locality in each of the following categories: schools, roads and other transportation improvements, fire and rescue/public safety, libraries, parks, recreation, and open space, water and sewer service extension, community centers, stormwater management, special needs housing, affordable housing, and miscellaneous.

The table on the fourth page of the report shows the statutory authority for and categories of localities eligible to accept cash proffers. On the basis of these criteria and decennial census data from the United States Bureau of the Census, a total of 162 Virginia localities (49 counties, 27 cities, and 86 towns) were eligible to accept cash proffers during FY2024.5 Appendix B provides a list of localities eligible by statute to accept cash proffers.
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(*1) Kamptner, Greg, The Albemarle County Land Use Law Handbook. (June 2017) Chapter 11, Page 11-1
(*2) Virginia Citizens Planning Association and the Virginia Department of Housing and Community Development, The Language of Planning, Community Planning Series, V (June, 1986), p. 10.
(*3) John H. Foote, “Planning and Zoning," Handbook of Virginia Local Government Law, ed. by Susan Warriner Custer, 2001 Edition, pp. 1-11 – 1-14.
(*4) Appendix A