Development Agreements: Bargained-For Zoning that is Neither Illegal Contract nor Conditional Zoning

Abstract

This Article explores the new model of land use decision-making that is based upon bargaining with the landowner. The fact of a bargain raises the issue of whether such bargaining amounts to "contract zoning" based upon a bilateral contract between the municipality and the landowner, which is largely held to be illegal, or a related form of bargaining, not involving an exchange of promises in the context of a bilateral agreement - "conditional zoning." Part II of this Article discusses the emergence of the development agreement, which involves a contract with a municipality and the developer under which the developer is assured that new zoning ordinances adopted after the date of the agreement will not apply to the development. Part III considers the effect of the reserved powers doctrine on the ability of governments to contract and the issue of transparency in making zoning decisions. It further offers an in-depth consideration of the murky concepts of contract and conditional rezoning and reviews why the courts look at these concepts with such suspicion. This section analyzes significant rulings from the courts in the jurisdictions that most often considered the question. Part IV considers contract zoning compared to conditional zoning. Part V shows how conditional zoning, once maligned, has gained acceptance by the courts. Part VI discusses the conditional use zoning device in North Carolina. Part VII briefly mentions the use of concomitant agreements employed in a few jurisdictions, under which a municipality has the power to enter into an agreement with a developer as to zoning in exchange for the developer's promise to develop in a certain way. Part VIII then returns to some theoretical questions posed earlier. Part IX considers whether development agreements can be upheld against a challenge that they amount to contract or conditional zoning and explains why development agreements can and should be encouraged. Finally, Part X offers some conclusions about the future of land use planning.