Cape Charles Proposes Policy to Shift Outside Development Review Costs to Applicants

CAPE CHARLES, Va. — The Town of Cape Charles is considering a new policy that would require developers and other applicants to pay the cost of outside professional consultants when their projects require expertise beyond the capability or capacity of town staff.

The Professional Review, Consultant Cost Recovery & Escrow Policy is designed to establish a consistent process for recovering expenses associated with technical and professional reviews of complex development applications.

Under the town’s current practice, Cape Charles may have to use public funds when an application requires specialized expertise that town staff cannot provide. The proposed policy would instead place those costs on the applicant whose project creates the need for the additional review.

Town officials say the change is intended to prevent taxpayers from subsidizing professional services required for private development projects.

Specialized reviews could include engineering, environmental and wetlands analysis, stormwater and floodplain evaluations, traffic impact studies, legal review of development agreements, historic preservation consultation, architectural or structural analysis, and survey and appraisal reviews.

Other specialized professional services could also be covered when determined necessary by the town.

Escrow accounts would cover consultant costs

Under the policy, Cape Charles could retain qualified outside professionals to assist with an application and require the applicant to reimburse the town for “reasonable and necessary” consultant expenses directly related to the project.

The town could require applicants to place money into an escrow account before consultant work begins.

The proposed initial escrow schedule is:

• Minor review: $500
• Moderate review: $1,500
• Major development: $5,000
• Engineering review: Actual cost
• Environmental review: Actual cost
• Legal review: Actual cost

If consultant expenses begin to exhaust an escrow account, the applicant could be required to replenish it. Money remaining after the review is completed would be refunded.

The escrow schedule could be amended administratively without changing the underlying policy.

Perhaps most significantly for applicants, the town could suspend processing of a development application if required escrow deposits or consultant reimbursements are not paid.

Applicants would receive written notification when the town determines that outside professional review is necessary.

The policy also establishes an administrative appeal process for disputes involving consultant costs.

Payment for an outside review would not guarantee approval of the underlying project.

Editor’s Note: Who decides that an outside consultant is necessary and what controls exist over the consultant’s scope and cost. The policy also raises useful questions about how “minor,” “moderate” and “major” reviews are defined, whether applicants receive estimates before work begins, who selects the consultant, what the administrative appeal entails, and whether there are caps on reimbursable expenses. Those details could materially affect how burdensome the policy is in practice.

Town says policy is about cost recovery, not revenue

According to the proposal, the policy is not intended to become a new source of revenue for Cape Charles. Rather, the town would recover its actual costs for professional services associated with reviewing complex applications.

Town officials contend the approach would protect public resources while giving staff access to specialized expertise needed to evaluate increasingly complicated development proposals.

The town also says outside technical assistance could improve the quality and defensibility of development decisions while creating a more consistent and transparent process for determining who pays for specialized reviews.

The policy would represent a significant procedural change for applicants whose projects require outside expertise. Instead of those expenses being absorbed through the town budget, the financial responsibility would follow the application that generated the need for the additional work.

Town staff also characterize consultant cost recovery as a practice already used by many other Virginia localities.

The practical impact will depend on how frequently Cape Charles determines outside review is necessary, how projects are classified as minor, moderate or major, and how much professional review ultimately costs. The policy gives the town a mechanism to recover those expenses while placing the cost of specialized development review on applicants rather than the general taxpayer.

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Wayne Creed

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