Growing Smart Legislative Guidebook

Chapter 8 (part 5): Local Land Development Regulation

Commentary: Development Moratoria

A moratorium is "an authorized delay in the provision of government services or development approval."[620] Generally speaking, moratoria are imposed because some problem affecting the governmental unit's jurisdiction is perceived as being caused or exacerbated by the issuance of too many such permits or licenses or by excessive provision of such public services that outstrips available capacity. A moratorium on development can take the form of denying applications for development permits, including but not limited to building permits, or denying requests to connect newly-developed property to publicly owned utilities such as water and sewer lines. Depending on the purpose, some moratoria include exceptions for applications that demonstrate that the applicant will somehow avoid or mitigate the problem for which the moratorium was imposed.

Typically, development moratoria are imposed for one of two purposes:

The first purpose for moratoria is when a local government is preparing a comprehensive plan or extensive amendment of land development regulations. The local government wishes to avoid a "rush" of development permit applications under the existing plan or regulations in anticipation of presumably more restrictive provisions in the new enactments. Such a deluge not only presents the logistical problem of processing so many applications, but also creates the prospect that large amounts of development contrary to the proposed plan or regulations will be "grandfathered" under the old plan or regulations with the intent of avoiding the application of the new plan or regulations.

The second reason for imposing a moratorium is that there is an inadequacy or lack of capacity in public facilities needed to serve new development. Such facilities can include roads or highways, water supply, sewer and waste treatment, drainage, and other necessary systems. The purpose of the moratorium is to allow the local government to plan, finance, and construct the necessary infrastructure so that both new and existing development receive adequate levels of public services.

Both of these purposes strongly imply that, if the local government is acting in good faith, the moratorium will have a definite conclusion, even if the moratorium does not include an express duration or concluding date. A moratorium to allow time for a new local comprehensive plan or land development regulation to be adopted loses its purpose once the plan or regulation is adopted and takes effect. A moratorium to allow time for public facilities to be built to accommodate new development should no longer be necessary once adequate public facilities are constructed and in operation. However, moratoria are not always imposed for the reason officially stated in the ordinance. In these cases, a tool that is supposed to allow temporary "breathing space" for a particular purpose of public necessity is instead imposed as a tool to curb or prohibit growth for an indefinite period. A moratorium imposed for the (unstated) purpose of keeping growth out of the local government's jurisdiction raises issues under the takings provisions of the federal and state Constitutions.

Therefore, the key to a well-drafted statute authorizing and regulating moratoria is to clearly delineate the legitimate reasons or purposes for a moratorium and provide mechanisms that effectively require those reasons to actually exist if a moratorium is to be imposed. Another important matter for a moratorium statute is setting a clear duration or concluding date for moratoria, so that the period of restriction does not become indefinite and therefore, for practical purposes, permanent.

Statutes on Moratoria

Several states have statutes authorizing and regulating moratoria, and these may be part of statutes authorizing interim zoning ordinances. It may be necessary to have such enabling legislation, as moratoria may not be considered an inherent part of the zoning power in the absence of specific statutory reference to moratoria[621]. Arizona[622] requires a public hearing after notice before a moratorium ordinance may be adopted or extended, and the ordinance must be justified by findings that a shortage of essential public facilities (water, sewer, and street improvements) would otherwise occur on urban or urbanizable land, or if a "compelling need" exists for adequate public facilities other than essential facilities. The findings must also include evidence that the moratorium is sufficiently geographically limited, that alternative methods to achieve the same goal would be ineffective, and that the resources and plans exist to remedy the problem requiring the moratorium. Moratoria for non-essential public facilities on urban or urbanizable land cannot be in effect for more than 120 days, but may be renewed for additional 120-day periods if the problem still exists, progress has been made on the problem, and a date certain for resolution of the problem has been determined. Moratoria do not affect existing development agreements or vested rights to develop, and any landowner aggrieved by a moratorium may seek review of the moratorium in superior court.

In authorizing interim land-development ordinances, California[623] provides that local governments can adopt ordinances "prohibiting any uses which may be in conflict with a contemplated general plan, specific plan, or zoning proposal which the legislative body, planning commission, or the planning department is considering or studying or intends to study within a reasonable time." Such an ordinance need not be enacted "following the procedures otherwise required prior to the adoption of a zoning ordinance," but must be approved by at least four-fifths of the legislative body and must be preceded by a finding that there is a "current and immediate threat to public health, safety, or welfare, and that approval of additional [development permits] would result in that threat to public health, safety, or welfare." The ordinance loses all force after 45 days from adoption, but may be renewed once for 10 months and 15 days, and again for one year, with no further extensions possible and with all extensions requiring the "current and immediate threat" finding and four-fifths approval. California law[624] also states that local ordinances that set numerical limits on residential building permits or on residential lots that may be developed, or that otherwise restrict residential development, lose the presumption of reasonableness, and the local government must demonstrate the necessity of the ordinance to protect the public health, safety, or welfare.

Maine[625] authorizes moratoria "on the processing or issuance of development permits or licenses," for one of two purposes: "to prevent a shortage or an overburden of public facilities" and "because the application of existing comprehensive plans [and] land use ordinances or regulations. . . is inadequate to prevent serious public harm from. . . development in the affected geographic area." The moratoria must be of a set term, which cannot exceed 180 days but which may be extended for an additional 180 days if the local government finds that the problem necessitating the moratorium still exists and "reasonable progress is being made to alleviate the problem."

Minnesota[626] allows local governments that are contemplating or drafting a comprehensive plan, or that have annexed territory that has no plan or zoning in place, to adopt interim zoning ordinances, which may "prohibit any use, development, or subdivision within the jurisdiction or a portion thereof." Such ordinances are effective for no more than a year, but may be extended by the local government for additional periods not to exceed a total of eighteen additional months. An interim ordinance cannot prevent the development of a subdivision that has received preliminary approval before the ordinance was adopted.

New Hampshire authorizes the adoption of "interim regulations upon development"[627] when "unusual circumstances requiring prompt attention" arise and "for the purpose of developing or altering a growth management process."[628] There must be at least one hearing on the interim zoning ordinance, and it expires on the date set in the ordinance, when repealed by the local legislative body, or after one year from adoption.[629] The statute specifies in minute detail the development permissible and impermissible under an interim zoning ordinance.[630] With some exceptions, only residential and agricultural uses are permitted,[631] and the interim zoning ordinance thus acts as a partial moratorium on commercial and industrial development.

New Jersey[632] expressly prohibits moratoria imposed to prepare a master plan or development regulations, and requires that any moratoria must be for the reason that, and preceded by the finding in writing by a "qualified health professional" that, "a clear imminent danger to the health of the inhabitants ... exists." No such moratorium may exceed six months.

An Oregon statute[633] authorizes moratoria only if "a shortage of public facilities ... would otherwise occur" for urban or urbanizable land or if some other "compelling need" exists.[634] Compelling need requires findings that applying existing land development regulations would be "inadequate to prevent irrevocable public harm from development," that the moratorium is sufficiently geographically limited, that alternative methods to achieve the same goal would be ineffective, and that the resources and plans exist to remedy the problem requiring the moratorium.[635] A public hearing must be held before a moratorium may be adopted, and the state Department of Land Conservation must be notified prior to any public hearing on a moratorium or extension thereof.[636] For moratoria imposed on urban or urbanizable land for a "compelling need," the moratoria may not last more than 120 days, which may be extended for up to six months if there are findings after a public hearing that the problem still exists, that progress has been made to alleviate the problem, and that the moratorium will no longer be necessary after a date certain.[637] For moratoria to correct inadequate public facilities, a corrective program must be adopted within 60 days of the effective date of the moratorium, and the moratorium cannot extend more than 60 days from the adoption of the program unless findings like those for "compelling need" extensions are made. No such extension can exceed 60 days, and no more than three extensions may be taken.[638] Moratoria may be reviewed by the Land Use Board of Appeals upon the petition of the local government, a state agency, or any substantially-affected person, but may not be reviewed independently by the courts.[639]

Washington[640] requires that ordinances adopting moratoria cannot be in effect for more than six months, or up to one year if a work plan is adopted. The appropriate findings must be made, and a public hearing must be held before the ordinance or extension is adopted or within 60 days thereafter.

Cases on Moratoria

Because a development moratorium involves denying development permits to all or most applicants, and because development cannot legally occur without such a permit, takings claims are a potential concern when a moratorium is imposed. Therefore, an examination of the relevant case law is both useful and necessary.

The U.S. Supreme Court, in the 1987 First English case[641], considered an interim ordinance that prohibited all construction or reconstruction on a parcel of property (in the particular case, a parcel in a flood protection area) for an indefinite period. The Court did not directly address whether the ordinance in question constituted a compensable taking, nor did it consider whether a prohibition of development for a specifically-defined period would run afoul of the Constitution. The Court also stated that the decision does "not deal with the quite different questions that would arise in the case of normal delays in obtaining building permits, changes in zoning ordinances, variances, and the like which are not before us."[642]

In its famous Lucas decision (1992),[643] the Supreme Court declared that a government regulation that has the effect of denying all reasonable use of private property constitutes a taking unless the use or development prohibited by the regulation constitutes a nuisance under the common law, or the regulation states a "background principle" of that particular state's law that went into force before the present owner took title. "Where the State seeks to sustain regulation that deprives land of all economically beneficial use, we think it may resist compensation only if the logically antecedent inquiry into the nature of the owner's estate shows that the proscribed use interests were not part of his title to begin with."[644] The Court added: "Any limitation so severe cannot be newly legislated or decreed (without compensation), but must inhere in the title itself, in the restrictions that background principles of the State's law of property and nuisance already place upon land ownership."[645]

Giving these two cases the broadest and most pro-landowner interpretation possible, they might appear to limit the ability to adopt and enforce a development moratorium (without payment of compensation) to two circumstances: where the public health and/or safety are endangered by a problem that constitutes a nuisance, and where the policy underlying the moratorium is a principle of state law that was in effect when the takings claimant took title to the land.

However, the subsequent case law has not supported such an interpretation. An eight-year sewer moratorium was upheld in Maryland,[646] and a one-year water moratorium was upheld by the federal Ninth Circuit.[647] The Minnesota Court of Appeals has affirmed a two-year moratorium on rezoning, subdivision approval, and site plan review imposed to preserve a transportation corridor, stating that "We interpret [deprivation of] 'all economically viable use for two years' as significantly different from 'all economically viable use' as applied in Lucas."[648] A moratorium on mobile-home permits imposed until a comprehensive plan, including provisions on mobile homes, could be adopted was found not to constitute a taking by the Eleventh Circuit.[649] A moratorium to study the extent and effects of growth was upheld in Colorado, where the court stated that "an interim regulation prohibiting construction or development is not a temporary taking even if such restrictions would be held too onerous to survive scrutiny had they been permanently imposed."[650]

And in a 2000 decision on this point, the Ninth Circuit reversed[651] a federal District Court decision[652] that found a planning moratorium of 32 months effected a taking. In its decision, the Circuit Court declared that the very concept of a temporary taking involves a division of property rights into time periods that is inconsistent with the Supreme Court's refusal in takings cases to divide property physically[653] or by the legal elements of ownership.[654] The Ninth Circuit stated that a taking can be "temporary" only in the sense that a permanent or indefinite prohibition of development is at some point invalidated by a court, and the loss in value or use during that time is the measure of compensation for the property owner. The court further stated, however, that a moratorium "designed to be in force so long as to eliminate all present value of a property's further use" may constitute a taking, and considered the duration of the moratorium and the diligence of the local government in remedying the underlying problem as reasonable factors in determining whether a moratorium was in fact intended to be temporary.

Provisions of the Model Statute

Section 8-604 below establishes three options for the purpose of moratoria: a narrow alternative with only moratoria to address shortfalls in public facilities and other compelling needs, defined in terms of threats to public health and safety; a moderate option that adds limited planning moratoria and includes the general welfare in compelling needs; and a broad option that authorizes moratoria for planning on a wider basis as well as the full range of compelling needs.

The Legislative Guidebook requires periodic review of the local comprehensive plan and of the land development regulations in light of the comprehensive plan in Section 7-406. Therefore, if moratoria could be imposed every time a routine revision to the comprehensive plan or land development regulations was contemplated, there could be moratoria in place a significant portion of the time. On the other hand, the adoption or amendment of a plan in response to a previously-uncontemplated change in conditions may require more fact-finding and deliberation than the routine or periodic amendment of a comprehensive plan. Similarly, the preparation and adoption of an initial comprehensive plan under Chapter 7 of the Guidebook is a unique event in shaping the character and development patterns of the community, and many local governments will need to prepare a new plan essentially from scratch.

Moratoria are not permitted in smart growth areas designated pursuant to Section 4-401 except where development would present a significant threat to public health or safety. This paragraph is in brackets, and may be included or deleted at the option of an adopting legislature. In designating a smart growth area, a major policy decision has been made that the area in question will be developed at urban densities and intensities, while a moratorium are often imposed to provide time to determine whether further urban development of a given area should occur. It should be noted that exempting such areas from moratoria does not in any way affect the application of Section 8-603 regarding concurrency and adequate public facilities for individual developments.[655]

Under the model Section below, a moratorium must be adopted as a land development regulation. Therefore, the moratorium must be adopted by the local legislative body through an ordinance, after a public hearing with due notice, and must be consistent with the comprehensive plan. The ordinance must include findings supporting the claim of an underlying problem, and the findings must be supported by the written report of a health, environmental, engineering, or other professional.

A moratorium ordinance must also include a corrective program to alleviate the problem in a timely manner, and may exempt permit applications that will not significantly contribute to the problem so long as the exemption is not applicable solely to single-family houses. The geographic scope of the moratorium and the development permits subject to the moratorium must be identified in the ordinance. A moratorium ordinance must state a duration for the moratoria not in excess of 180 days, but a moratorium may be extended by ordinance if it is found in writing, supported by the written report of the appropriate professional, that the shortage or overburden still exists and that there has been "reasonable progress" on the corrective program. An extension may not last over 180 days, and the Section provides for either only one extension or up to two at the adopting legislature's option. If the option of up to two extensions is chosen, then each extension must be made separately: the local government cannot adopt two extensions simultaneously.

The Section does not limit the power of the state or state agencies to impose moratoria, nor does it restrict the authority of local governments to adopt and enforce policies temporarily prohibiting zoning map amendments, or limiting or prohibiting extensions or hookups to local-government-owned utilities outside the corporate limits. Such local policies are discretionary and legislative, and therefore the need to provide procedural safeguards against these policies is not as great as for moratoria on permits that otherwise would be granted as of right.


8-604 Moratorium on Issuance of Development Permits for a Definite Term

(1) The legislative body of a local government may adopt and amend in the manner for land development regulations pursuant to Section [8-103 or cite to some other provisions, such as a municipal charter or state statute governing the adoption of ordinances] an ordinance establishing a moratorium on the issuance of development permits for a definite term.

(2) For the purposes of this Section and of any ordinance adopted pursuant to this Section, "Qualified Professional" means:

(a) a qualified health professional, such as a registered sanitarian or a licensed physician;

(b) the director of the [state] department of health;

(c) the director of the [state] environmental protection agency;

(d) a registered professional engineer; or

(e) a member of the American Institute of Certified Planners.

(3) A moratorium on the issuance of development permits may be adopted:

Alternative 1

(a) for any significant threat to the public health or safety or general welfare presented by proposed or anticipated development; or

(b) for the preparation and adoption of a local comprehensive plan, or amendment thereto, and for the preparation and adoption or amendment of land development regulations implementing the new or amended local comprehensive plan.

Alternative 2

(a) to prevent a shortage or overburden of public facilities that would otherwise occur during the effective term of the moratorium or that is reasonably foreseeable as a result of any proposed or anticipated development;

(b) within two years of the effective date of this Act, for the preparation and adoption of the first local comprehensive plan pursuant to Sections [7-201] et seq. and for the preparation and adoption or amendment of land development regulations implementing the new local comprehensive plan;

(c) for the preparation and adoption of a local comprehensive plan, or amendment thereto, in response to a substantial change in conditions not contemplated at the time the present local comprehensive plan was adopted or most recently amended, and for the preparation and adoption or amendment of land development regulations implementing the new or amended local comprehensive plan; or

(d) for some other compelling need. A compelling need is a significant threat to the public health or safety or the general welfare presented by proposed or anticipated development.

Alternative 3

(a) to prevent a shortage or overburden of public facilities that would otherwise occur during the effective term of the moratorium or that is reasonably foreseeable as a result of any proposed or anticipated development; or

(b) for some other compelling need. A compelling need is a significant threat to the public health or safety presented by proposed or anticipated development.

[(4) A moratorium on the issuance of development permits may not be adopted for or applied to smart growth areas pursuant to Section [4-401], except when proposed or anticipated development presents a significant threat to the public health or safety. Nothing in this paragraph affects in any way the application of Section [8-603] within smart growth areas.]

• A moratorium is a decision that development not be permitted in a given area while some underlying problem is addressed. However, in designating a smart growth area, the local government has designated an area as a site where more intense development is not only permitted but encouraged. In principle, a smart growth area is designated because it has sufficient public facilities and infrastructure in place and the local government wants development to occur there rather than in areas without adequate infrastructure. In such a location, the only reasonable basis for a suspension of development is when it presents a significant threat to public health or safety.

(5) An ordinance adopting a moratorium on the issuance of development permits shall contain:

(a) a statement of the problem giving rise to the need for the moratorium;

(b) findings on which subparagraph (a) above is based, including the written report required by paragraph (6) below where applicable, which shall be included as an appendix to the ordinance;

(c) the term of the moratorium, which, except as otherwise provided herein, shall not be more than [180] days;

(d) a list of the types or categories of development permits that will not be issued during the term of the moratorium;

(e) a description of the area of the local government to which the moratorium applies; and

(f) a statement of the specific and prompt plan of corrective action that the local government intends to take during the term of the moratorium to alleviate the problems giving rise to the need for the moratorium.

(6) [Except for a moratorium for the purpose of preparing and adopting a local comprehensive plan or amendment thereto and related land development regulations, pursuant to paragraphs [(3)(b) or (3)(c)],] [A/a]n ordinance establishing a moratorium on the issuance of development permits shall be based on a written report by a qualified professional:

(a) concluding that a significant threat to the public health or safety or the general welfare exists and that the threat is sufficient to justify a moratorium, and

(b) recommending a course of action to correct or alleviate the danger.

(7) An ordinance establishing a moratorium on the issuance of development permits may provide for the exemption from the moratorium of those development permits that have minimal or no impact on the problems giving rise to the moratorium, except that the ordinance shall not permit an exemption for the construction of single-family detached dwelling units while applying the moratorium to other types or categories of dwelling units.

(8) A local government may, by ordinance, extend an ordinance establishing a moratorium on the issuance of development permits for [only one or up to two] additional [180]-day period[s]. The local legislative body shall not extend a moratorium:

(a) for more than one [180]-day period at a time; and

(b) unless it finds in writing, for each extension at the time of the extension, that the problems giving rise to the need for the moratorium still exist and that reasonable progress is being made in carrying out the specific and prompt plan of corrective action as required by subparagraph (5)(f) above.

In extending the ordinance, the legislative body shall refer in its findings to a revised written report made pursuant to paragraph (6) above, where applicable.

• Local governments may wish to employ an expedited procedure for the adoption of an extension ordinance, but, as provided in Section 8-103 for interim ordinances, the requirement of notice and a public hearing still applies.

[(9) For purposes of this Section, a "development permit" includes, for lots or parcels within the corporate limits of the local government, a connection to, or right to connect to, a local government-owned utility.]

• The purpose of this paragraph is to preclude evasion of this Section's requirements by, instead of placing a permanent or unreasonable moratorium on development permits, granting such permits but then restricting or prohibiting the owners from hooking up to the local government's utility. In other words, the local government cannot do in its role as utility owner what it cannot do through regulatory means. Note that it only applies to hookups within the corporate limits; the local government is under no obligation to extend services outside its borders and may refuse to do so for any reason or no reason.

(10) This Section does not restrict or limit the power of:

(a) the state or state agencies to impose temporary moratoria upon permits issued pursuant to state law;

(b) local governments to adopt and enforce temporary policies against approving, or reviewing petitions for, zoning map amendments; or

(c) local governments that own utilities to restrict or prohibit extensions of or hookups to that utility in areas outside the corporate limits of the local government, whether for business, economic, policy, or other reasons.

(11) A moratorium pursuant to this Section shall be deemed a final land-use decision for purposes of judicial review pursuant to Chapter 10 of this Act.

• This paragraph makes a moratorium appealable in the same manner as a land-use decision. The word "final" clarifies that any review of a moratorium shall proceed directly to court.


Commentary: Development Agreements

[656]

A development agreement is "a statutorily authorized, negotiated agreement between a local government and a private developer that establishes the respective rights and obligations of each party with respect to certain planning issues or problems related to a specific proposed development or redevelopment project."[657] There are times when a local government and a developer may both wish to vary in some way from the development and land use choices possible under the existing land development regulations and have those variations be fully enforceable. A development agreement allows both flexibility and certainty. It permits flexibility by allowing terms and conditions that are different from and more detailed than the requirements of land development regulations and the statutes authorizing them. It brings certainty by making all elements of the agreement enforceable, against the local government as well as the developer. Thus, it is superior to informal agreements that are only worth as much as the good faith of the parties.

Such agreements are not absolutely necessary, since the Legislative Guidebook contains a vesting statute (Section 8-501), which automatically creates enforceable rights for developers, and the flexible development tools provided in Chapter 10 such as conditional uses and variances (Sections 10-502 and 10-503 respectively). Nevertheless, they are useful and efficient instruments of land use policy and are thus included in the Guidebook.

Statutes on Development Agreements

A number of states have statutes expressly authorizing development agreements. These statutes differ somewhat in their structure and level of detail. Arizona[658] provides that such agreements can be formed "by resolution or ordinance" to govern development of property both within and outside the municipal boundaries, but that agreements regarding property outside the corporate limits do not take effect until the property is annexed. The agreement has to be consistent with the general plan and may be amended or canceled by consent of all the parties. The benefits and burdens of the agreement "run with the land" (apply to future owners of the property), and therefore the agreement must be recorded. The agreement must provide its duration in its terms and conditions, and may provide for municipal enforcement of traffic safety laws on private roads with the developer paying for necessary signage.

California's statute on development agreements[659] authorizes cities and counties to enter into development agreements with the owners of property both inside and outside the corporate limits. However, as in Arizona, agreements regarding land in the unincorporated areas do not take effect until the area is annexed.[660] Development agreements must be approved by ordinance or referendum after public hearings by the planning agency and the legislative body, and they may be amended or canceled by mutual consent of the parties.[661] Since the agreement runs with the land, it must be recorded once approved.[662] The agreement is governed by the land-development regulations in place when the agreement was executed, but amendments that are not contrary to the regulations at time of execution may be applied.[663] If an agreement is contrary to subsequent state or federal laws, it may be amended to be placed into compliance with those laws.[664] Development agreements are enforceable by all parties thereto.[665] There must be periodic review, at least annually, of the developer's performance under the agreement. Failure of the developer to comply in good faith can result in termination or modification of the agreement.[666]

Florida's authorizing statute on development agreements[667] is similar to California's. Local governments may enter into development agreements, which must be consistent with a state-approved comprehensive plan and the land development regulations thereunder.[668] Approval or revocation of an agreement must be preceded by two public hearings, at least one of which must be held by the local legislative body.[669] The agreement may not last for more than ten years, and may be rescinded or amended by consent of the parties or when the agreement is inconsistent with a subsequent state or federal law.[670] A development agreement is governed by the land development regulations in place at its execution. Subsequent regulations and amendments may be applied only if they are: (1) not contrary to the regulations at the time of execution, (2) are "essential to the public health, safety, or welfare" and specifically state their applicability to development agreements, (3) are provided for in the agreement, or (4) the agreement "is based on substantially inaccurate information provided by the developer."[671] The agreement may be enforced by any party in civil court by injunction, and, since the agreement runs with the land, must be recorded.[672] Periodic review, at least annually, of the developer's performance under the agreement is required, a report of the review must be made to the state land planning agency for reviews conducted after the fifth year of the agreement, and a finding of noncompliance by the developer can result in modification or termination of the agreement.[673]

Hawaii has a development agreement statute[674] that is also similar to that of California. Counties may enact an ordinance authorizing the county executive to enter into agreements with developers concerning the development of their land. Other governmental units including federal agencies may also be parties.[675] Such agreements must be consistent with the county's general plan and other applicable development plans,[676] and will not take effect until approved by the county legislative body after a public hearing.[677] They must identify the land that is the subject of the agreement and set a termination date, which may be extended by mutual agreement.[678] The agreement is subject to the land use laws and regulations in place when the agreement was executed, except that amendments to laws and regulations of general application may be applied if "failure to do so would place the residents ... in a condition perilous to the residents' health or safety."[679] Development agreements are enforceable by the parties and their successors in interest, and thus must be recorded.[680] Periodic review of the developer's performance under the agreement is mandated, and the agreement may be terminated for a material breach, but only after the developer has been notified of the breach and provided a reasonable period to cure the breach.[681]

Idaho has a relatively simple law on development agreements.[682] Local governments may enact ordinances requiring developers to "make a written commitment concerning the use or development of the subject parcel" and prescribing procedures and criteria for such commitments. The commitment must be approved by ordinance amending the zoning ordinance, and must be recorded; it is enforceable on the signatories to the agreement whether recorded or not, but may bind subsequent owners only if recorded or if that owner has actual notice of the commitment. A commitment may be amended only by ordinance after notice and hearing, but may be terminated if the local government finds that the developer has not complied with the commitment.

Maryland[683] grants local governments the power to enter into "development rights and responsibilities agreements" with developers of land within their jurisdiction. Other governmental units may also be parties to such an agreement. The agreement must be consistent with the comprehensive plan, and cannot be adopted without first holding a public hearing. The agreement must state the legal description of the property in question, the names of all owners of the property, and the duration of the agreement, and may include a schedule for the commencement and completion of development. No agreement may last for more than five years. Agreements may be amended by mutual consent after a public hearing and approval of the legislative body, and may be terminated either by consent or by the local government alone if it finds that "suspension or termination is essential to ensure the public health, safety, or welfare." The agreement is governed by the land use laws and regulations in place at the time of its execution, except that subsequent amendments to generally applicable laws necessary to protect health or safety may be applied. An agreement is void unless recorded, and recordation renders the benefits and burdens of the agreement applicable to successors in interest.

Like many development agreement statutes, Nevada's law[684] also provides that development agreements are governed by the land development regulations in place at the time of execution of the agreement, except for amendments that are not contrary to the terms of the agreement.[685] The agreement must be approved by ordinance of the local legislative body, a copy of which must be recorded at the state capital, but only if the agreement is consistent with the master plan.[686] The agreement itself must be recorded within a reasonable time after approval, and recordation binds the parties and their successors in interest.[687] The agreement may be amended or canceled, after public notice of the intent to amend or cancel, by mutual consent (with approval of the legislative body) or if a periodic review of performance under the agreement, conducted at least once every two years, shows that the agreement is not being complied with.[688]

Elements of the Model Statute

Section 8-701 below presents a statute authorizing development agreements. One of the most important characteristics of the Section is that a development agreement constitutes a land development regulation. As such, it must be consistent with the local comprehensive plan, cannot be adopted without a public hearing after due notice, and must be reviewed at least every five years. Additionally, the Section requires that a local comprehensive plan be adopted before a development agreement may be formed. This is necessary because another provision of the Section (paragraph (4)) allows development agreements to vary from otherwise-applicable land development regulations, so that flexibility and innovation are possible. Therefore, the only guidance or limitation on a development agreement are the goals and policies of the comprehensive plan (and the model Section, of course).

Under Section 8-701, a development agreement is also a development permit to the extent that it is self-executing; that is, when the agreement directly authorizes development, without a need for a separate development permit to be issued. Therefore, a development agreement creates a vested right in the development it expressly authorizes, and the agreement is governed by the land development regulations in effect at the time the land owner formally applied to the local government to form a development agreement. Furthermore, the agreement is fully enforceable by both the governmental parties and the owners or developers of the land. A development agreement that is also a development permit "runs with the land" to the benefit and burden of future owners of the subject property, and as such must be recorded.

The proper procedure for enforcement by governmental parties is through the procedures of Chapter 11, which may include an administrative enforcement action, while private parties may seek compliance through a civil action. However, if either procedure has already been commenced and is still pending, all further enforcement action or legal challenges have to proceed in that forum regardless of who commences it. For example, if there is a pending administrative enforcement action, legal challenges by private parties to the agreement have to be brought there and not in civil court. The Section also authorizes mediation or arbitration clauses in development agreements but preserves full judicial review once such procedure is exhausted.

Under this model, a development agreement may be terminated in advance of its agreed-upon duration by one of two methods: (1) the parties may all consent in writing to rescind the agreement, effective when the local legislature approves the recission by ordinance; or (2) the local government may unilaterally terminate the development agreement if it finds in a hearing, after due notice, that public health or safety would be endangered by development under the agreement. However, the local government may not apply this public health and safety provision if it knew of the danger at the time the agreement was approved.


8-701 Development Agreements

(1) A local government may enter into and adopt agreements concerning the development and use of real property within the local government's jurisdiction with the owners of such property, and with other governmental units with jurisdiction, pursuant to this Section.

(2) The purpose of this Section is to:

(a) provide a mechanism for local governments and owners and developers of land to form agreements, binding on all parties, regarding development and land use;

(b) promote innovation in land development regulation by allowing local governments to form agreements with owners and developers of land that include terms, conditions, and other provisions that may not otherwise be authorized under this Act;

(c) promote stability and certainty in land development regulation by providing for the full enforceability of such agreements by both the local government and the owners and developers of land; and

(d) provide a procedure for the adoption of such agreements that ensures the participation and comment of the public and elected officials.

(3) As used in this Section, and in all other Sections of this Act where "development agreements" are referred to, "Development Agreement" means an agreement between a local government, alone or with other governmental units with jurisdiction, and the owners of property within the local government's jurisdiction regarding the development and use of said property.

(4) A development agreement may be entered into and adopted only pursuant to this Section and shall have the force and effect of a land development regulation.

(a) Except as provided expressly to the contrary in a development agreement, development and use of the property that is the subject of a development agreement shall occur according to the terms, conditions, and other provisions of the agreement, notwithstanding any land development regulations and amendments thereto to the contrary.

(b) Where the development agreement does not include any term, condition, or other provision concerning a matter that is regulated by one or more land development regulations as amended, then those land development regulations shall apply.

(5) To the extent that a development agreement, by itself and without further hearing or approval, authorizes development, it constitutes a development permit. A development agreement that constitutes a development permit shall be:

(a) binding upon and enforceable by the local government and all subsequent owners of the property that is the subject of the agreement, for the duration of the agreement; and

(b) recorded, by the owner or owners that are party to the development agreement, with the county [recorder of deeds] within [30] days of its adoption.

(6) A development agreement shall:

(a) be entered into and adopted only after the local government has adopted a local comprehensive plan that includes the elements required by Section [7-202(2)];

(b) be consistent with the local comprehensive plan, pursuant to Section [8-104];

(c) be adopted only by an ordinance of the legislative body after notice and hearing as required for the adoption of land development regulations pursuant to Section [8-103];

(d) be enforceable by the local government and other governmental units that are party to the development agreement in the same manner as a land development regulation pursuant to Chapter 11 of this Act, except that if a civil action pursuant to subparagraph (6)(e) below has previously been commenced and is still pending, any and all enforcement or disputes shall be determined in the civil action;

(e) be enforceable by the owners of land who are party to the development agreement and their successors in interest by civil action against the local government or other parties as may be necessary, except that if an enforcement action upon the development agreement pursuant to Chapter 11 of this Act has previously been commenced and is still pending, any and all enforcement or disputes shall be determined in the enforcement action;

(f) be in writing and include the following terms:

1. the names of all parties to the development agreement;

2. a description of the property that is the subject of the development agreement;

3. a statement detailing how the development agreement is consistent with the local comprehensive plan;

4. the date upon which the owner applied to the local government to form a development agreement;

• The date when the owner applied to form a development agreement would be the date of application for vested rights purposes, if the agreement constitutes a development permit.

  1. 5. the effective date of the development agreement;
  2. 6. the duration of the development agreement, which shall not exceed [5] years except where the development agreement authorizes phased development, when the duration of the agreement shall not exceed [10] years;
  3. 7. a reiteration in full of the provisions of paragraph (7) below;
  4. 8. a reiteration in full of the provisions of subparagraphs (6)(d) and (e) above, and any other agreed terms concerning enforcement, including any agreement to submit disputes to arbitration or mediation before resorting to commencement of an enforcement action or civil action;

(7) A development agreement may be canceled at any time:

(a) by the mutual written consent of all parties thereto, with the consent of the legislative body by ordinance; or

(b) by the local government if it finds in writing, after a hearing with proper notice, that a hazard, unknown to the local government at the time the development agreement was adopted, exists on or near the property that is the subject of the development agreement that would endanger the public health or safety if development were to commence or proceed pursuant to the development agreement.

(8) A development agreement may contain a mediation or arbitration procedure by which disputes concerning the development agreement may be decided. The decisions reached under such procedure shall be considered land-use decisions for purposes of Chapter 10, and any provision in a development agreement precluding or limiting judicial review pursuant to Section [10-601] et seq., once a mediation or arbitration procedure has been exhausted, is void.

• A broad arbitration clause, restricting judicial review, is typical in contracts but not desirable in development agreements. Development agreements arise out of a regulatory relationship unlike the typical contractual relationship and can directly affect persons and groups beyond the parties to the agreement.

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