Resolving Conflicts Through Collaborative Land Use Easements

• Publication year: 2019
• Author: Geoffrey C. Etnire

Resolving Conflicts Through Collaborative Land Use Easements

Geoffrey C. Etnire

Geoff Etnire is Counsel at Venable LLP and is based in the San Francisco and Washington, DC offices. Geoff has over 30 years of experience working within the regulatory overlay on real estate in California and across the country in his representation of developers, landowners, investors, lenders, and mining companies. Geoff focuses on those matters where regulatory approvals and clearances are needed for development, infrastructure, environmental matters, economic development, and changes in use. Geoff regularly performs regulatory due diligence for investors, capital partners and lenders.

With the severe shortage of housing in California's urban and suburban areas, communities are seeking to expand the supply of housing by allowing residential development closer to existing industrial, mining, rail, and other existing non-residential uses. The existing users often strongly oppose nearby residential development and frequently defeat or severely limit the proposals. New housing that does get built near existing uses often produces years of intractable conflict, resulting in costly and time-consuming political and legal battles.

The challenge for California real estate lawyers is to help parties find strategies that allow more housing, while protecting the existing uses. Practitioners understand that, contrary to the trope that the three most important things in real estate are "location, location, location,"¹ the three most important things in real estate are "location, entitlements, and timing." All three of these factors are at play when a new housing proposal potentially conflicts with existing uses.

Existing users often feel that approaching residential uses are a serious threat to their very existence and mount well-financed and powerful challenges to the proposals, basing their arguments primarily on the local economy, jobs, vested rights, and regulatory takings (and the likelihood of costly litigation). In the face of such opposition, local governments often deny or severely restrict the new housing proposals. The offer of traditional solutions, such as conditions of approval and disclosures, usually is not sufficient to convince existing users to abandon their opposition. On the other hand, the creative and collaborative use of simple easements can allow existing uses to be protected, new residential development to be approved, and written rules of future engagement to be established. This article uses the term "Collaborative Easements" to refer to this collaborative use of easements to meet the shared goals of the parties.

The strategies described in this article have been used in these California situations:

• Noise, dust, and vibrations from an operating gravel quarry had not impacted the surrounding ranches, but a housing developer sought land use entitlements to build single family houses up to the edge of the quarry.
• Noise, dust, and illumination from a port off-loading facility had not been a problem for the surrounding industries, but a developer filed an application to convert an adjacent building to high-end residential lofts.
• Fish odors, lights, and nighttime traffic at a large 24/7 seafood processing plant had not caused problems for the surrounding golf course, but a developer proposed replacing the golf course with a large rental apartment complex.
• Evening traffic, noise, and lights at a sports park were not a problem for the neighboring strip retail center, but a developer sought entitlements replace the center with a condo development.

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In all of these examples, the existing uses were fully-permitted and had never been deemed nuisances, but the approach of residents ("receptors" and "sensitive receptors"²) created the risk that these existing uses may later be re-characterized as nuisances. Residential developers usually argue that there would be no future conflict because the new owners and tenants would have full advance knowledge of the existing uses. However, the new residents, eventually and inevitably, complain loudly to the existing users, to news outlets, and to the local government, resulting in significant political turmoil and litigation, with heavy costs to the local government, the developer, the existing user, and the residents. Whatever the outcome, usually everyone is unhappy.

How can communities expand the housing envelope and, at the same time, protect the existing, vested users? How can real estate and land use attorneys steer their respective clients to the proverbial win-win and provide written rules of future engagement?

I. TRADITIONAL RESPONSE TO POTENTIAL CONFLICTS

The lengthy entitlement approval process in California, with multiple noticed public hearings, environmental analyses, and detailed staff reports is very effective at promoting public involvement and identifying issues, but is not very effective at crafting workable solutions for conflicting uses. The opposing parties often are entrenched in their positions and the local government then faces a hotly-contested binary decision of whether to approve or deny the application. Further, when residential projects do get approved, the traditional measures provide little protection and assistance to the parties, as described below.

A. Conditions of Approval

Development approvals, when granted, are made subject to both generic and specifically-crafted Conditions of Approval ("COA").³ Staff reports usually recommend specific COA to deal with the conflict, sometimes with the negotiated agreement of one or more of the parties and sometimes over the objections of one or more parties. For example, specific COA may include disclosures to future buyers and tenants about the existing neighboring land use and the anticipated impacts on the residences and residents. The COA may also include mitigation measures, such as soundproofing standards for the residences and other protections crafted for the specific situation.

Disadvantages: COA can be very helpful, but often are not drafted with precision, both because of the preceding messy approval process and because the conflict may be a matter of first impression for the local government staff. Further, COA are limited in effectiveness because (a) the conditions are buried in local government documentation and not widely publicized, (b) the COA are not recorded against the land to be developed and, therefore, not flagged in future title reports, (c) modification of the COA in the future is not practical, and (d) the remedy for a violation of a COA is unclear and enforcement is difficult, particularly with regard to owners down the chain of title.

B. Deed Restrictions and Covenants, Conditions, and Restrictions

Development approvals, when granted, are sometimes made subject to a COA that disclosures of the conflicting land use must be stated in a recorded document, such as a Deed Restriction or Declaration of Covenants, Conditions, and Restrictions.⁴ The statements in these recorded documents could go beyond mere disclosures and may include mitigation measures and a variety of terms and restrictions, even including easement language.

Disadvantages: Almost inevitably, the disclosure language in...