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

• Author: Shelby D. Green
• Position: Associate Professor of Law, Pace University School of Law. J.D.
• Pages: 383-497

Page 383

Introduction

Historically, land development in North America meant the subdividing of vast tracts of land into individual building lots that formed cities and towns.¹ The two principal characteristics of this kind of development were the grid layout of streets and "the dominance of the house-the individual abode"-as the central architectural element of the city or town.² The grid layout facilitated future sale, since rectangular lots were easy to build on and could accommodate different uses.³ This scheme contrasts with that "in European cities where churches, palaces and government buildings dominate the urban landscape," and cities are "designed around these symbols of belief and power."⁴

The North American developer is no longer free to decide alone what development there should be. A developer must comply with a myriad of both state and federal land use regulations and standards. As more regulatory steps are required and as standards evolve, the process of development has become more lengthy and encumbered. A development may well involve obtaining scores of permits from almost as many agencies.⁵ Still, in large measure, the role of the developer remains dominant, beginning with the original concept and involving the assemblage of the materials, professionals, and other participants, such as lenders, investors, and community leaders, necessary for making the concept a reality.⁶ The developer may be the one to locate the site, determine its suitability, articulate the development, negotiate with governmental officials, and oversee implementation.⁷

Environmental laws, both federal and state, requiring either protective or remedial measures in the case of sites contaminated with or exposed toPage 384 hazardous wastes, may render a development project either prohibitively expensive or illegal.⁸ Property that once was an industrial site, a defense installation, or even a farm may present such risks.

Most essentially, development must be in accord with existing land use rules.⁹ Local governments use four basic mechanisms for land use control.¹⁰ First, zoning ordinances "impose limits on size and location of structures, the size and shape of lots and the use of land and structures."¹¹ Second, "general plans" specify the goals of future development, including a consideration of population density, infrastructure, transportation, and housing.¹² Third, there are subdivision controls for residential developments, in particular single-family developments, that establish standards for the location and design of streets, major utility lines, and other public infrastructure, and often dedication of land or payments for off-site improvements such as roads, parks, and schools.¹³ Finally, "building codes" specify "building materials, structural elements, minimum habitability standards and in some cases aesthetic elements of new buildings."¹⁴

Zoning is an exercise of the police power-the power of the government to protect health, safety, welfare, and morals.¹⁵ Generally, the police powers are said to reside originally in the state and are delegated to local governments through enabling legislation.¹⁶ The adoption of a zoning ordinance pursuant to an enabling act is accomplished by an elected body, and the result is a legislative act generally entitled to a presumptionPage 385 of validity.¹⁷ Many of the early zoning enabling acts were modeled after the Standard Zoning Enabling Act, drafted and distributed by the United States Department of Commerce in the 1920s.¹⁸ While the goal of the enabling acts was to allow for the enactment of ordinances aimed at exercising the police powers,¹⁹ the acts were process-oriented, providing the authority for planning and specifying the role local agencies were to play in the process of zoning.²⁰ The standard act did not include substantive planning policies, leaving these to be developed in the process.²¹ However, the standard act did contemplate the establishment of districts within the community by reference to "number, shape and area, as may be deemed best suited to carry out the purposes of [a zoning] act, and within such districts to regulate and restrict the erection, construction, reconstruction, alteration, repair, or use of buildings, structures, or land."²² It prescribed that regulations governing uses of land be made with reasonable consideration, among other things, to the character of the district and its peculiar suitability for particular uses, and "with a view to conserving the value of buildings and encouraging the most appropriate use of land" throughout the municipality.²³

Although zoning in the United States is commonly thought to have begun with the enactment of New York City's comprehensive zoning ordinance in 1916, it was the 1926 Supreme Court decision in Village of Euclid v. Ambler Realty Co.,²⁴ where the Court upheld the constitutionality of municipal zoning regulations as incident to the police power when enacted pursuant to validly implemented land use plans that advance the legitimate public interest,²⁵ that prompted other states to adopt zoning legislation. Since then, every state has enacted laws enabling or requiring²⁶ municipalities to regulate land use via comprehensive plans.²⁷ The result is that a landowner cannot simply choose to use land as hePage 386 desires, but must obtain permission for a particular use from the local government to ensure that the desired use is consistent with the comprehensive plan and the health, safety, and welfare of the community. Thus, a landowner may be required to obtain subdivision approval before dividing a given parcel for development or a building permit before initiating new construction.

The traditional zoning process consists of the adoption of a comprehensive plan and the issuance of local zoning ordinances pursuant to the plan.²⁸ The adoption of local zoning ordinances is accomplished by a hearing and public participation.²⁹ Zoning ordinances are adopted for the long-term, and amendments are typically allowed only where mistake is shown in the original zoning or significant, unanticipated changes have been made since the enactment of the last comprehensive rezoning plan in a relatively well-defined area surrounding the property.³⁰

"[S]tandard zoning enabling acts require that zoning ordinances apply uniformly to all property within a district . . . ."³¹ Thus, characteristic of the Euclidean model of zoning is the seemingly rigid division of the land into discrete areas, each assigned a particular use-residential, heavy industrial, or agricultural. ³² The idea was that through mandatoryPage 387 separation of uses, each class of land would be protected from the negative impacts of other types of uses.³³ Euclidean zoning was also designed to achieve stability and evenhandedness in land use planning on the assumption that development would proceed in appropriate zones, and minor adjustments would be made only as necessary in unanticipated cases of hardship in which a variance³⁴ might be granted or a special use permit or exception issued.³⁵ Although land could be rezoned, this was not aPage 388 practical way of addressing changing uses and needs of landowners and the community because of the cumbersome legislative process involved. Later, floating zones³⁶ and planned unit developments,³⁷ which are specialPage 389 and more flexible zoning devices, developed.

This rigidity of Euclidean zoning came at the expense of flexibility, allowing for little modification or adoption of regulations to particular uses within zones. Moreover, the assumptions underlying Euclidean zoning were incorrect. Euclidean zoning underestimated the effects of the dynamism of a growing economy and rapidly changing technologies in private preferences and municipal needs, and it overestimated the ability of officials to anticipate market demand for new uses. Euclidean zoning was also naive as to the vulnerability of zoning and government regulations to market demand and political pressure. These changes in the economy and urban and suburban demographics forced local governments to regularly adjust the zoning scheme, raising the question of whether "changes in zoning would be the product of rational, comprehensive planning or the result of ad hoc bargaining."³⁸ It seems that nearly a century of zoning experience shows a very different practice than first contemplated by the standard act,³⁹ such...