16.3 Conditional Zoning

• Library: Real Estate Transactions in Virginia (Virginia CLE) (2019 Ed.)

16.3 CONDITIONAL ZONING

16.301 In General. Among the land use powers granted to localities by the enabling legislation, perhaps none stands out so consequentially as conditional zoning. Indeed, Virginia's system of conditional zoning is unique in the United States, and it gives land use in the commonwealth its unique character.

Since 1987, every Virginia jurisdiction has been authorized to use some form of conditional zoning as part of its land use regulation. ⁸⁴ The concept goes back, however, to 1976, when such zoning powers were first granted to Fairfax County and other surrounding jurisdictions and to the counties of Virginia's eastern shore. ⁸⁵

Under whatever form of conditional zoning may be available to it, a locality may accept "proffered" conditions (when reduced to writing in advance of the public hearing before the governing body) that are in addition to the general, uniform regulations otherwise applicable in the same zoning

[Page 1551]

district. ⁸⁶ Conditions and restrictions proffered by the applicant, once accepted by the locality, become a part of the zoning of the property and are binding on it until it is "rezoned" or when the proffered conditions are themselves amended in the same manner as the original rezoning. ⁸⁷

16.302 Proffers. As noted below, proffers are meant to be voluntary. The use of proffers to address planning and zoning needs in a locality is, despite the contemporary controversies that surround them, actually a rather time-honored, if often questioned, process. As the court noted in Board of Cnty. Supervisors v. United States, ⁸⁸

[e]fforts by local governments to control land development blossomed in the 1920s when the idea of land use zoning, blessed by the federal government, spread rapidly across the country. Not long after, regulation of large scale residential (and later, non-residential) developments through planning and subdivision control ordinances followed. However euphemistically described, it has now become common practice for local government units with zoning and planning authority to exact from developers various concessions as a condition to granting the necessary zoning changes and planning code approvals for proposed developments. These exactions range from requiring the developer to install at the developer's own cost the roads and sewers needed to serve the development, to dedicating land for

[Page 1552]

public recreation facilities and other public needs, to making cash payments to local schools as recompense for the additional students generated by the development. ⁸⁹

Proffers are theoretically not exactions in the same sense that impact fees or involuntary conditions on special use permits are-assuming that proffers are indeed voluntary and that the landowner cannot demonstrate in some fashion that they have been forced upon it. ⁹⁰ However, they are used in Virginia in a similar manner to that described by the Federal Circuit.

The Virginia Supreme Court has never extensively discussed conditional zoning. The federal courts, however, have spent time on the question, and their discussion is useful. In Board of Cnty. Supervisors v. United States, ⁹¹ the Claims Court examined conditional zoning in a case arising out of the legislative taking of additional land for the Manassas National Battlefield Park. Against the county's claim that it was entitled to be compensated for lost proffers that were swept away in that taking, the court held that proffers alone are not property interests that are subject to being "taken" within the meaning of the Fifth Amendment, but rather constitute "only those legislative expectancies existing in the zoning amendment itself." Proffers are development restrictions, not property rights or restrictive covenants. As development restrictions, proffers are essentially identical to other provisions of a zoning ordinance, as they may be applicable to a particular property, except that proffers are restrictions crafted with the particular use of a particular property in mind. They are enforceable as such conditions are generally enforceable and differ only in that they must have been voluntarily offered to the locality through the conditional zoning process. Once accepted, they do not differ from setbacks, lot coverage requirements, and height limitations otherwise generally applicable. (The Circuit Court of Loudoun County has held on the same general theoretical grounds that "[a] violation of a proffer must be considered as equivalent to a violation of a zoning ordinance.") ⁹²

[Page 1553]

In an important further aspect of its opinion, the Claims Court also rejected the United States' contention that the Virginia conditional zoning system is simply ultra vires. Although the court thought that "[t]he express arrangement-proffers in exchange for rezoning-presents a strong argument for characterizing this relationship as a contract[ ]," because proffers do not give rise to contractual obligations on the part of the locality and because the locality retains its ultimate legislative authority over land use, the General Assembly had properly granted localities power to employ this form of conditional zoning. Indeed, in rejecting this argument, the court expressly, if with express reluctance, "recognize[d the county's] need to be able to tailor land use requirements closely to the characteristics of particular parcels of land." As long as the county undertakes no affirmative obligations through conditional zoning and proffers remain development conditions and restrictions applicable to the proposed use, then it is probable that the courts will not find that the locality has engaged in impermissible "contract" zoning.

In a separate but related proceeding arising out of the Battlefield taking, the Court of Federal Claims held that the county was not entitled to just compensation for the asserted taking of public street rights-of-way that had been dedicated to the county through the zoning and subdivision processes. It found that the rights-of-way possessed no compensable value because they were "irrevocably dedicated to non-profitable uses at the time of the taking." ⁹³

On appeal, however, the Federal Circuit affirmed in part and reversed in part, agreeing with the lower court as to the fundamental nature of proffers. ⁹⁴ The court rejected the notion advanced by the county that proffers are "contractually created" rights.

The fact that, in some cases, the process by which proffers become incorporated into the zoning system may involve a degree of negotiation does not convert an exercise of the police power into an exercise in contract. It is basic law that when local governments engage in land use planning and control, they do so by exercising the sovereign's police power delegated to them by the state, typically through general enabling legislation.

[Page 1554]

* * *

The object of the proffers was not to give the County something of intrinsic value with which it could go into the market place and trade, or which it could use and possess for county purposes. The purpose of the proffers was to commit the developer to undertake his project with a specified degree of concern for and responsibility toward surrounds and the people who in future years would live and work there. Buffer zones, preservation of trees, even tennis courts and ball parks, were not assets for the general benefit of the county, but were amenities and facilities that the developer agreed to include, both for his own economic interest and for that of the citizens who would be directly affected by the development. . . . There is nothing in the document of proffers that suggests these were to be County property. ⁹⁵

The court also rejected a claim that the county had a sufficiently enforceable right, in the nature of a security interest or materialman's lien, that constituted a valid grant of property that could be taken.

The court did agree with the county, however, that it was entitled to compensation for the taking of 16.05 acres of land that had been dedicated to the public through deeds and plat dedications as street and related rights-of-way. The court engaged in an extended analysis of the nature of the title that is passed through such actions and concluded that the county obtains an unrestricted fee simple absolute thereby, not an ownership interest so burdened by their original purpose as to have rendered them essentially valueless, as the Claims Court had earlier concluded. ⁹⁶ "The interests held by the County in these five parcels, constituting the 16.05 acres, are no different from the fee simple estates held by other owners of property within the [condemned Battlefield] tract." ⁹⁷ The compensation, however, could not include the amount spent on improvements to the property as that would constitute compensation for investment, which was not a proper assessment of the fair market value. ⁹⁸ The Court of Claims on remand was to determine

[Page 1555]

the fair market value of the "odd pieces" of land, taking into account their potential uses, current condition and improvements thereon, and considering the most profitable uses to which the land could probably be put in the reasonably near future. The court valued the land at $1.2 million. ⁹⁹

16.303 Types of Conditional Zoning. There are three distinct types of conditional zoning authorized by the General Assembly.

A. "Old" Conditional Zoning.¹⁰⁰ "Old" conditional zoning, authorized by section 15.2-2303 of the Virginia Code, is available in Arlington, Alexandria, Fairfax, Prince William, and Loudoun Counties, their included cities and towns, and certain other eastern shore localities. Under old conditional zoning, there are no apparent constraints on what may be proffered and accepted, and landowners and local government have used this device to address many development-related problems as well as other social concerns of the community that are not related to the project in issue.

B. "New" Conditional Zoning.¹...