Introduction

• Author: David L. Callies/Daniel J. Curtin Jr./Julie A. Tappendorf
• Pages: 3-5

I. Introduction

Formal agreements between landowners and local government respecting

the use of land have increased substantially in number over the past 25

years. Such agreements change the relationship between landowner and gov-

ernment in the land development process from confrontation to some measure

of cooperation. While there are several kinds of such agreements (cooperative

and housing agreements, for example), only two link vesting land development

rights with the dedication and funding of public facilities: the annexation agree-

ment and the development agreement. The principal difference between the

two (which is implied in their names) is that the annexation agreement applies

to land about to be annexed to a village, town, city,or other general purpose mu-

nicipal corporation, as opposed to a development agreement where the land

subject to the agreement is already a part of the municipal corporation.1Other-

wise, both the theory and the principal reasons for negotiating such agreements

are, with one exception, the same. The landowner generally wishes to guaran-

tee that local government’s land use regulations, conditions, and exactions re-

main fixed during the life of a prospective land development on the subject par-

cel. The local government, on the other hand, seeks as many concessions and

land development conditions as possible beyond what it could reasonably re-

quire through subdivision exactions, impact fees, and other conditions under

the normal exercise of its regulatory authority or police power.

The principal difference between the two types of agreement is the benefit/burden

of annexing the subject property to the local government’s territory under an

annexation agreement. The landowner generally obtains a variety of services

and protections as a part of the local government’s territorial jurisdiction but

must subject itself to that local government’s land use regulations, as well as

property and other taxes. The local government obtains additional tax revenues

together with a larger tax base for general obligation borrowing but must pro-

vide police, fire, and often utility services to its newly annexed territory.Which

side is the most advantaged or disadvantaged depends, of course, on the cir-

cumstances of the annexation. A new shopping center, for example, may be

more attractive to a local government than a sprawling single-family residential

project. Both will require a level of municipal services, but the former will, in

all likelihood, generate more revenue (particularly if the local government col-

lects a sales or business tax) and require fewer services than the latter.

The purpose of the development agreement, on the other hand, is to vest cer-

tain development rights in the landowner/developer in exchange for construc-

tion and dedication of public improvements:

[D]evelopmentagreements...between a developer and a local government limit

the power of that government to apply newly enacted ordinances to ongoing de-

velopments. Unless otherwise provided in the agreement, the rules, regulations,

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I. INTRODUCTION

1. Except in California, which permits development agreements before annexation

(Cal. Gov’t Code §65865(b)) although it cannot be effective until annexation

is complete.