Public actors, private law: local governments' use of covenants to regulate land use.

• Author: Kazis, Noah M.

INTRODUCTION I. BEYOND INSTITUTIONAL DIFFERENCES: LOCAL GOVERNMENTS' USE OF RESTRICTIVE COVENANTS II. BEYOND SUBSTANTIVE DIFFERENCES: ZONING AND COVENANTS ALLOW EQUIVALENT CONTROL OVER LAND USE III. THE PROCEDURAL DIFFERENCE: GOVERNMENTS USE COVENANTS TO LIMIT CITIZEN ENFORCEMENT OF LAND USE CONTROLS A. Citizen Enforcement of Zoning; Custom Enforcement of Covenants B. A Case Study: Riverside South C. Using the Flexibility of Covenants To Improve Land Use Planning IV. OTHER LEGAL DIFFERENCES: PARTICIPATION AND PERMANENCE CONCLUSION INTRODUCTION

In the United States, two primary systems of land use control operate in parallel: zoning and restrictive covenants. (1) Zoning is the public sector's most important land use tool; it is a regulatory mechanism rooted in the state police power and entrusted to local governments by statute. (2) For private parties, covenants are the dominant method of controlling land use. (3) Covenants are creatures of the common law and available for use by all property owners. (4) While zoning is conventionally associated with public regulation and covenants with private regulation, this distinction is too neat. Local governments routinely use both tools, mixing and matching the two forms of land use control to suit their needs. Given that governments can impose both covenants and zoning, the difference between the tools does not merely stem from the party using them.

Rather, deep-seated legal differences between zoning and covenants remain significant. In particular, while state law generally allows citizens to enforce zoning codes in court, (5) local governments can customize covenants to limit--or eliminate--citizen enforcement. Many covenants between local governments and private parties include explicit provisions allowing only the local government, and not neighbors, to enforce the covenants' land use controls. (6) Covenants, in other words, are not simply tools of private parties. Covenants are tools of private law, and local governments harness their private law features, particularly their customizability, to better control land use regulation.

Because zoning and covenants are the dominant forms of land use control, (7) legal scholars have long sought to understand the differences between them. (8) In the early twentieth century, legal scholars emphasized that covenants provided a greater level of substantive control over development. (9) Given the weaker regulatory state of the time, covenants could impose more precise and intrusive restrictions than zoning ordinances could. (10) In recent years, though, those substantive differences have fallen away as zoning has developed into an extremely flexible tool of land use regulation. Both zoning and covenants are now commonly used to control every detail of what landowners may build on their property, from the size, shape, and use of a building to far more arcane restrictions. (11)

Accordingly, legal scholars have turned their attention to the institutional difference between covenants and zoning: they point out that private parties use covenants to regulate land use while governments rely on zoning, and that the differences between public and private regulators have significant practical effects. (12) Without diminishing the importance of that institutional difference, this Note reasserts the importance of legal differences between covenants and zoning. While private parties may not enact zoning ordinances, governments can and frequently do use covenants to regulate land use under certain circumstances. In these situations, the Note points out, governments choose which form of land use regulation to employ. Notably, local governments often choose to use covenants for the largest, highest-stakes developments in their jurisdictions. (13) By examining the government's choice between zoning and covenants, this Note holds the institutional variable constant, opening a window into the formal legal differences that still remain between zoning and covenants.

In particular, the Note shows that local governments use covenants to limit the parties who can enforce land use controls, usually to the covenants' signatories. In contrast, courts broadly allow citizen enforcement of zoning ordinances. Furthermore, there are likely several other important legal differences between zoning and covenants as used by local governments. For example, covenants allow governments to avoid the public participation built into the zoning process. Covenants and zoning also differ in their degree of permanence. Zoning can potentially last forever but is subject to unilateral amendment by the government--another legal factor that may drive a government's choice of land use control.

Where covenants are used to eliminate citizen enforcement, as municipalities commonly do, covenants empower government officials and disempower neighbors--a group that often has the most at stake for any development proposal but just as often dominates local land use politics with its obstructionist, Not-In-My-Backyard (NIMBY) mentality. To counteract this tendency, I propose using the customizability of covenants not to eliminate but to recalibrate citizen enforcement of land use regulations. Municipalities should allow citizens to enforce particular provisions of covenants--or even allow only particular citizens to do so--and retain the sole power to enforce the remainder. This proposal would strike a balance between the anti-development system of complete citizen enforcement in zoning law (14) and the anti-accountability status quo of no citizen enforcement in covenants.

Part I of this Note establishes that governments use covenants for land use planning purposes, thereby challenging the scholarly consensus that covenants and zoning are primarily distinguished on institutional grounds. Part II demonstrates that municipalities do not choose to use covenants in order to impose different substantive restrictions on the use of property, since zoning can achieve functionally identical outcomes. Having shown that zoning and covenants can be identical in both content and institutional origin, this Note then turns to its central argument. Based on a review of covenants and case law concerning municipally imposed covenants, Part III identifies an important reason why local governments use covenants rather than zoning: to limit citizen enforcement. Part III also argues that while cities are right to limit land use litigation through the use of covenants, current practice goes too far, and recommends an alternative approach. Finally, Part IV notes additional legal reasons why a municipality might choose covenants over zoning. Specifically, Part IV explains that using covenants can enable governments to circumvent public participation requirements built into zoning law. Additionally, covenants and zoning are governed by different amendment and expiration procedures, thereby providing governments and developers with different types of certainty and permanence in the long term.

1. BEYOND INSTITUTIONAL DIFFERENCES: LOCAL GOVERNMENTS' USE OF RESTRICTIVE COVENANTS

   For most legal scholars, the primary difference between zoning and restrictive covenants is institutional: governments use zoning, while private parties use covenants. Scholars tend to "posit zoning and restrictive covenants as alternative and more or less interchangeable means of producing generally similar results." (15) Put differently, zoning and covenants are thought to differ in origin, not in legal effect. The legal consequences of regulation by a covenant or by zoning are seen as largely the same. As one scholar wrote, "There is really little difference between restrictive covenants imposed by a developer and zoning regulations relating to setback lines, lot size, house size and the like, except that one is a property right while the other is a municipal regulation." (16)

   Even those scholars who focus on differences between covenants and zoning emphasize institutional origins as the most important distinction between the two systems. Robert Ellickson, for example, argues that the private-sector nature of covenants imposes market discipline on their content and allows covenants to optimize resource allocation among landowners. (17) For Ellickson, it is the fact that private parties impose covenants, not the legal differences in how covenants and zoning operate, that makes covenants economically preferable to zoning. In the same law-and-economics tradition, William Fischel has argued that although "[s]ome observers regard zoning and private covenants as essentially the same thing," they are distinct because those establishing covenants own the land being regulated and therefore must bear the opportunity cost of not using the land for activities barred by the regulation. (18) Similarly, Richard Briffault distinguishes the two systems of land use control based on how much consensus is required to impose restrictions on landowners: zoning requires only a majority of politically engaged residents, while imposing covenants requires the unanimous consent of the affected property owners. (19) Like Ellickson, Briffault emphasizes the different origins of covenants and zoning regulations --in the consensual private sphere and the majoritarian public sphere, respectively--rather than the ways in which covenants and zoning might function differently from a legal perspective. Drawing from work by Richard Brooks, Valerie Jaffee has argued that the use of covenants allows private parties to send signals about the character of a neighborhood. (20) Even where zoning renders covenants legally superfluous, Jaffee showed, because they are privately drafted, covenants allow homeowners to express what kind of community they are; zoning, in contrast, can only send signals about the government's values. Each of these analyses shows a sophisticated understanding of how zoning and covenants differ, but each identifies institutional origin as...