The status of Florida law on contract zoning: practical drafting suggestions to avoid contract zoning claims in settlement agreements.

• Author: Rothenberg, Mark A.

Florida courts have generally looked unfavorably upon contract zoning. By definition, contract zoning occurs where a local government effectively bargains away its discretionary power to grant a development approval in exchange for a benefit or a concession given by a developer outside of a public hearing. (1) However, Florida courts are split as to whether a settlement agreement that requires a local government to act (e.g., rezone) would constitute contract zoning. The split among the districts has caused uncertainty among local governments and the development community and has impeded efforts to settle land use disputes. The purpose of this article is to provide a status report on the law of contract zoning, shed light on the dispute among the districts regarding settlement agreements, and to make practical suggestions as to how local governments and developers can enter into enforceable settlement agreements.

History and Origins

Fearing backroom deals, Florida courts acted early to discourage brokered arrangements between local governments and developers. The seminal case in Florida on the issue of contract zoning is the case of Hartnett v. Austin, 93 So. 2d 86 (Fla. 1956). In Hartnett, neighborhood objectors challenged a decision of the City of Coral Gables to rezone a parcel of property from residential to commercial. (2) The rezoning ordinance contained a number of conditions that included requirements for landscaping, lighting, police protection, the construction of a wall, street access, and the eventual submission of a site plan. (3) However, the rezoning ordinance further required that the property owner and the city enter into future contracts for the purpose of implementing the conditions. (4) The objectors (in pertinent part) challenged the rezoning ordinance because it required the City of Coral Gables to enter into a contract with private parties on unspecified terms to implement the development conditions set forth in the rezoning ordinance. (5)

The Florida Supreme Court ultimately agreed with the objectors and invalidated the city's ordinance for two fundamental reasons. First, the city's requirement for subsequent contracts rendered the rezoning ordinance unduly vague. (6) Second, the court held that the city had unlawfully contracted away its powers to rezone. (7) The Florida Supreme Court held:

A municipality has no authority to enter into a private contract with a property owner for the amendment of a zoning ordinance subject to various covenants and restrictions in a collateral deed or agreement to be executed between the city and the property owner. Such collateral agreements have been held void in all of the cases to which we have been referred.... Any contrary rule would condone a violation of the long established principle that a municipality cannot contract away the exercise of its police powers. When a zoning ordinance is amended by changing the classification of particular property, such amendment must be justified by a change in the use value of the property involved.

In exercising its zoning powers the municipality must deal with well-defined classes of uses. If each parcel of property were zoned on the basis of variables that could enter into private contracts then the whole scheme and objective of community planning and zoning would collapse. The residential owner would never know when he was protected against commercial encroachment. The commercial establishments on "Main Street" would never know when they had protection against inroads by smoke and noise producing industries. This is so because all genuine standards would have been eliminated from the zoning ordinance. The zoning classifications of each parcel would then be bottomed on individual agreements and private arrangements that would totally destroy uniformity. Both the benefits of and reasons for a well-ordered comprehensive zoning scheme would be eliminated. (8)

The Fine Line of Conditions Proffered by Applicants

In the aftermath of Hartnett, Florida law evolved to permit developers to make concessions to the local government at the public hearing. (9) However, for the development condition or concession to be effective, there must be some benefit to the public at large. (10) The concession cannot solely benefit the property owner. Virtually all development applications submitted for consideration by local governments are accompanied by proffers from the developer or property owner. These development conditions range from self-imposed restrictions on hours of operation to additional landscaping, maintenance, dedications of public lands, reductions in density, provisions for affordable housing, and construction of rights-of-way. Such self-imposed conditions or limitations are often proffered to mitigate potential adverse impacts associated with an application or to make a potentially unpopular application palatable to the neighbors, the local government's planning staff, and elected officials. The Third District Court of Appeal has held that such proffers do not automatically render the local government's decision void as being contract zoning.

In Wallberg v. Metropolitan Dade County, 296 So. 2d 509 (Fla. 3d DCA 1974), a property owner objected to a residential development being planned for construction on an adjacent property. (11) In response, Miami-Dade County (12) issued a building moratorium and the county's planning staff initiated a down-zoning of the subject property for consideration by the county commission. (13) The owner of the property subject to the down-zoning application agreed to a density reduction and to develop a greater degree of open space on its property. (14) On the basis of the property owner's proffers to the county, the county commission agreed to preserve the existing zoning on the parcel. (15) The Third District Court of Appeal upheld the county's decision against a challenge that the county's receipt of proffered conditions from the developer constituted contract zoning. (16) The Third District reasoned that self-imposed conditions or promises made by developers at the public hearing on the development application do not trigger the prohibition against contract zoning set forth in Hartnett so long as the local government's action is not unreasonable and does not ignore the public interest. (17) The Third District Court of Appeal stated:

The Hartnett case is not similar to the one now before the court inasmuch as it does not appear from this record that a private contract was made by the county with a property owner for a change or perpetuation of zoning. In the present instance, the most that can be said for appellants' position is that the commissioners may have been influenced by representations made by South Cutler. A rule which would forbid owners from announcing concessions to the public interest in any proceeding before a zoning authority would not be in the best interest of the public. (18)

Similarly, in the case of Hialeah Citizens Alliance v. City of Hialeah, 2 Fla. L. Weekly Supp. 44a (Fla. 11th Cir. Dec. 10, 1993), the Florida 11th Circuit Court upheld a rezoning against a challenge that the City of Hialeah engaged in contract zoning when it accepted a covenant during the city's rezoning hearing. (19) The...