Chapter 11 Contract Zoning

• Library: The Zoning and Land Use Handbook (ABA) (2016 Ed.)

Chapter 11 Contract Zoning

A. Definition

Contract zoning generally refers to an agreement or contract entered into between authorities and the property owners whereby the zoning authority agrees to alter a zoning ordinance in exchange for the property owner performing certain acts. A typical situation exists where a zoning amendment authorizes a particular use only if the landowner enters into a covenant to restrict the use in certain ways, or where a zoning amendment is adopted only after the owner of the affected land executes and files a covenant restricting the use of such land.

B. Arguments against Contract Zoning

Contract zoning has generally been prohibited by the courts.¹ There does not appear to be any single basis for the rule against such zoning practices, but generally it is contended that the zoning authority might use the zoning power to further private interests in violation of public policy; that such zoning is a deviation from basic zoning plan concepts; and that zoning laws are rendered vague when the actual zoning requirements in force are determined by reference to extrinsic matters.² In Cederberg v. Rockford³ an ordinance rezoning property from residential to local business was adopted because the owners executed a restrictive covenant limiting otherwise permissible uses under the local business classification. The Appellate Court of Illinois held the restrictive covenant void and then proceeded to determine the validity of the ordinance. The court held that the ordinance was also void and in so doing recited the following rationale:

The cases cited support the conclusion that, under these circumstances, the restrictive covenant is void. In addition, although the exact problem presented by this case seems never to have been decided in Illinois, a somewhat similar case has established the rule that 'zoning ordinances should not be subject to bargaining or contract.' (Hedrich v. Village of Niles, 112 Ill. App. 2d 68, 77, 250 N.E.2d 791 (1969)) It was there noted that when zoning is conditioned upon collateral agreements or other incentives supplied by a property owner, the zoning officials are placed 'in the questionable position of bartering their legislative discretion for emoluments that had no bearing on the merits of the requested amendment.' (Hedrich, supra, at 78, 250 N.E.2d at 796.) This reasoning is clearly applicable to the instant case. There is no indication in the record that the rezoning was necessary or that it was granted only after a consideration of the appropriate use of the land within the total zoning scheme of the community.⁴

C. Conditional Zoning Distinguished from Contract Zoning

1t is important to make some distinction between what constitutes contract zoning and what constitutes conditional zoning. Not all conditions that may be imposed upon a property owner with respect to a change in zoning will make the rezoning invalid, particularly in the case of the PUD. To the contrary, where there is a hearing to determine...