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Development Agreements Between Municipalities and Private Parties - - PowerPoint PPT Presentation

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Presenting a live 90-minute webinar with interactive Q&A Development Agreements Between Municipalities and Private Parties Leveraging Agreements to Attract Private Funding for Long-Term Development Projects and Address Land Use and

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Development Agreements Between Municipalities and Private Parties

Leveraging Agreements to Attract Private Funding for Long-Term Development Projects and Address Land Use and Infrastructure Issues

Today’s faculty features:

1pm Eastern | 12pm Central | 11am Mountain | 10am Pacific

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have any questions, please contact Customer Service at 1-800-926-7926 ext. 10.

WEDNESDAY, SEPTEMBER 18, 2013

Presenting a live 90-minute webinar with interactive Q&A

Rob Killen, Shareholder, Kaufman & Killen, San Antonio Brent O. Denzin, Attorney, Ancel Glink Diamond Bush Dicianni & Krafthefer, Chicago Shelby D. Green, Professor, Pace Law School, White Plains, N.Y .

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Development Agreements between Municipalities and Private Parties: Value of Development Agreement

Presented by Rob Killen

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Why Enter into a Development Agreement?

 Value for Municipality

 Certainty in the development process  Generation of incremental real property tax and

sales tax

 Incentivize certain types of development  Job creation  Protection of environmental features (e.g.

endangered species habitat, trees, water resources)

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Why Enter into a Development Agreement

 Value for Developer:

 Certainty in the development process  Creation of necessary public infrastructure  Offset development costs

7

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Why enter into a Development Agreement?

Value for Municipality

  • Certainty in the

development process

  • Generation of incremental

real property tax and sales tax

  • Incentivize certain types of

development

  • Job creation
  • Protection of environmental

features (e.g. endangered species habitat, trees, water resources) Value for Developer

  • Certainty in the

development process

  • Creation of necessary

public infrastructure

  • Offset development costs

8

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Potential Development Agreement Incentives

 Direct Municipal Assistance  Applicability of Current or Future

Ordinances

 Tax Abatement or Reinvestment  Annexation  Special Districts

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Direct Municipal Assistance

 Grants  Fee Waivers  Construction of pubic improvements  Participation in costs of public

improvements

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Applicability of Current or Future Ordinances

 Permitted land uses upon annexation  Grandfathering/Vested rights  Special zoning districts

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Tax Abatement or Reinvestment

 Tax Abatement  Tax Rebate  Tax Increment Reinvestment Zone

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Annexation

 Non-Annexation Agreement  Delayed Annexation

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Special Districts

 Districts with Land Use Controls  Districts that use existing tax revenues  Districts that can collect taxes and assessments

Examples in Texas

 Municipal Utility District (MUD)  Water Control & Improvement District (WCID)  Public Improvement District (PID)  Special Improvement District  Road District  Municipal Management District (MMD)  Municipal Development District  County Development District

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SunEdison Solar Farm

 Project: Solar farm in south

San Antonio

 Incentive: Non-Annexation

Agreement, Tax Abatement

 Value to developer: No City

taxes

 Value to Municipality:

Additional renewable energy

Example 1

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Cibolo Canyons & JW Marriott Resort

 Project: Residential development, 1000+

room hotel and 2 TPC golf courses

 Incentive: Special district, non-annexation

agreement

 Value to developer: District collects

property, sales, and hotel occupancy taxes

 Value to Municipality: Aquifer recharge

zone protection and destination resort

Example 2

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PETCO Headquarters

 Project: Creation of

corporate headquarters

 Incentive: Tax abatement

and grant

 Value to developer: Cash

and no taxes

 Value to Municipality:

Over 400 high paying jobs

Example 3

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City Base West Shopping Center

 Project: Retail shopping center  Incentive: Purchase of real

property and drainage improvements

 Value to developer: Equivalent

  • f grant for public improvement

 Value to County: Job creation,

public infrastructure, new retail in underserved area Example 4

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Broadway Apartments

 Project: Apartment complex

in central San Antonio

 Incentive: Tax abatements and

fee waivers

 Value to developer: Reduced

city taxes and significant fee reduction

 Value to Municipality:

Creation of housing near downtown

Example 5

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Development Agreements between Municipalities and Private Parties: Community Benefit Agreements

Presented by Rob Killen

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What is a Community Benefit Agreement?

“A Community Benefits Agreement … is a contract signed by community groups and a real estate developer that requires the developer to provide specific amenities and/or mitigations to the local community or neighborhood.” (Source – Wikipedia)

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What is a Community Benefit Agreement?

“In exchange, the community groups agree to publicly support the project, or at least not

  • ppose it. Often, negotiating a CBA relies

heavily upon the formation of a multi-issue, broad based community coalition including community, environmental, faith-based and labor organizations.” (Source – Wikipedia)

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Why Enter into a Community Benefit Agreement

  • Reduce risk by establishing

community support

Value to Developer

  • Enforceable agreement to provide

benefit

Value to community group

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Difference Between CBA & Development Agreement

Developer City Community Group

Development Agreement CBA

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Examples of CBAs and Benefits

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Atlanta Beltline

Benefits

 Affordable Housing  Historic preservation  Art (Light rail loop)

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Denver Gates-Cherokee

Benefits

 Affordable housing  Living wage  Ban on big box

(retail/residential)

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Hollywood & Vine

Benefits

 Living wage  20% of units are affordable  Job training grant  Arts grant  Employee healthcare

(hotel, housing, retail)

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Staples

Benefits

 Park and rec facilities  Parking permit

program, living wage

 Job training  20% affordable housing  Interest free loans to

non-profits

(LA Lakers arena, housing, retail)

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Similar Agreements

Even if your jurisdiction has not adopted a formalized CBA process, there may be similar types of agreements:

 Example:  Deed restrictions with zoning – usually negotiated

with neighborhood association, community group, park conservancy, etc.

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San Antonio

San Antonio does not have a formal CBA

  • process. However, there is a provision in the

development code that encourages such dialogue between developers and neighborhood groups, called the “Citizen Participation Plan”.

31

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Acknowledgments

Thank you to The Public Law Center at Tulane University Law School for all of their material

  • n Community Benefit Agreements.

www.law.tulane.edu/tlscenters/PublicLawCenter

32

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Rob Killen rob@kk-lawfirm.com

100 West Houston Street, Suite 1250 San Antonio, Texas 78205 (210) 227-2000 www.kk-lawfirm.com

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Shelby D. Green Pace Law School sgreen@law.pace.edu September 2013

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  • Pursuant to police powers
  • Regulations to serve the public health, safety, morals and

general welfare

  • What land use regulation entails
  • Adoption of comprehensive plan
  • Enactment of ordinances pursuant to the plan
  • Ordinances
  • Use districts or zones
  • Lot sizes
  • Height
  • Activities
  • Historical Model for zoning
  • Euclidean
  • Legislative acts
  • Rigid segregation of uses

Shelby D. Green Development Agreements September 2013 35

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  • Bargaining
  • Early Forms
  • 1. Variances
  • authority to use property in a manner prohibited by the zoning
  • rdinance
  • Requiring some showing of undue hardship or practical difficulties
  • But, must be consistent with the public interest.
  • 2. Special exceptions or conditional use permits
  • allows a different use than is expressly permitted as of right by the
  • rdinance.
  • allows additional uses, which are conditionally compatible within

each zone, but which should not be allowed unless specific statutory standards assuring compatibility are met by the landowner.

  • More recently,

Development Agreements

Shelby D. Green Development Agreements September 2013 36

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  • Land use is multifaceted
  • Dynamism in growing economy
  • New land use philosophies

Preservation Sustainability

Shelby D. Green Development Agreements September 2013 37

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Agreements between Developer and Municipality

  • Allowing development
  • With the assurance that the zoning in place at time of agreement will govern

the project

  • Benefits
  • To developer
  • Certainty of governing rules
  • Ability to coordinate approvals
  • Ease of obtaining financing
  • To municipality
  • Fulfillment of comprehensive plan
  • Opportunity for exactions
  • Avoidance of litigation

Shelby D. Green Development Agreements September 2013 38

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A form of contract zoning

  • Illegal because it portends:
  • Bargaining away police powers

By

  • Bilateral agreement

That

  • Binds municipality
  • Without public hearing
  • Without regard for the public interest
  • Prohibited by Reserve Powers Doctrine

Shelby D. Green Development Agreements September 2013 39

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Four Camps:

  • 1. Per se illegal as contract zoning

2. Case by case approach; invalid if: public interest not served extraneous consideration is involved unreasonable process lacks transparency destructive of zoning uniformity

  • 3. Finding conditional zoning
  • Unilateral promise from developer
  • No promises made by municipality
  • Rezoning with conditions
  • Promotes general welfare, not merely private interests
  • Not spot zoning

>>> Are contract zoning and conditional zoning distinguishable?

  • 4. Upholding the Agreements

Shelby D. Green Development Agreements September 2013 40

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  • Negotiated Deals
  • Creating rights different from vested rights
  • Public welfare is furthered
  • Subject to public review process
  • Subject to abrogation if the public interest demands

Shelby D. Green Development Agreements September 2013 41

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  • Development Agreement Acts
  • By state enabling acts

Arizona, California, Colorado, Florida, Hawaii, Idaho, Louisiana, Maryland, Maine, Nevada, New Jersey, New Mexico, North Carolina, Oregon, South Carolina, Virginia, Washington, Utah, and Texas

  • Common Provisions
  • 1. goals
  • 2. minimum terms specified
  • 3. conformance with comprehensive plans
  • 4. limits on duration
  • 5. mechanisms for amendments, cancellations, exceptions
  • 6. approval and adoption
  • Resolution
  • Referendum
  • Administrative
  • General Effect
  • Rules, regulations, official policies governing are those in force at the time of the

agreement

Shelby D. Green Development Agreements September 2013 42

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  • Sierra-Nevada, SW Enter. v. Douglas County, 2011 U.S. Dist. LEXIS

40296 (D. Nev. March 30, 2011) (because authority retains the ability to rezone in the public interest require in the future, the contract "entails neither a formal nor a practical surrender of the police power.“).

  • Toll Brothers v. Board Of Chosen Freeholders (N.J.

2008)(recognizing the value and limits of “developers agreements”)

  • 2800 La Frontera No. 1A, Ltd. v. City Of Round Rock (Texas Ct.
  • App. 2010)(reaffirming the validity of development agreements)
  • Neighbors For Responsible Development v. City Of Yakima

(Wash. Ct. App. 2006)(rejecting contract zoning challenge)

  • Neighbors In Support Of Appropriate Land Use v. County Of

Tuolumne (Cal. Ct. App. 2007)(challenge that development agreement purported an ad hoc exception to existing zoning)

Shelby D. Green Development Agreements September 2013 43

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Shelby D. Green Pace Law School sgreen@law.pace.edu September 2013

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Strengthening the Foundation: Passing Effective Development Agreement Statutes

Strafford Webinar: “Development Agreements between Municipalities and Private Parties” September 18, 2012

Presented By: Brent O. Denzin

Attorney Ancel, Glink, Diamond, Bush, DiCianni & Krafthefer P.C.

www.ancelglink.com

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Overview

  • Basic Components
  • Common Limits on Development

Agreements

  • Key Provisions to Enable Public-Private

Agreements

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Why is Statutory Authority Necessary?

  • Development Agreements include limits on future

zoning power; courts question the authority

  • Municipal police powers are delegated by the

state and can be limited by the state.

  • Therefore, a state statute supporting development

agreements removes a major legal concern.

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Elements of a Typical Enabling Statute

  • Protection of General Welfare
  • Permitted Scope of an Agreement
  • Enabling Ordinance
  • Requirements for Approval and Adoption
  • Conformance to Plans and Other Reviews
  • Binding State and Federal Agencies
  • Amendment or Cancellation of the

Agreement

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Protection of General Welfare

  • Outline the Connection: Development

Agreements Promote Public Welfare

  • Focus Advocates and Critics on the

Benefits

  • E.g. Big-Box Development Agreements
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Setting the Limits: Required and Permitted Scope

  • Required Scope: Statues should outline

provisions and information that must be addressed in each agreement.

  • Permitted Scope: Statues should identify any

and all limits on scope to prevent unconstitutional conduct

 E.g. Florida Statue

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Requirements for Approval

  • Require an Enabling Statute to Tie

Agreement to Local Authority

  • Agreement Must Be Approved by

Ordinance or Resolution

  • E.g., Hawaii, California, Washington
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Conformance to Plans and Other Reviews

  • Statutes often require compliance with

Comprehensive Plans

  • Comprehensive Plans seen as a symbol of

future zoning decisions

  • Useful to convince courts that such future

powers have not been sacrificed

  • E.g. Hawaii and California
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Binding on State and Federal Agencies

  • Allowing state agencies to join

Development Agreements expands

  • ptions
  • Large developments require agency

approvals that are often limit certainty

  • E.g., Hawaii (binding); California (non-

binding)

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Public Participation

  • Identify proven strategies for

incorporating public feedback before the hysteria

  • Avoid the “backroom deal” label
  • E.g. Wal-Mart Supercenter, Monona,

Wisconsin

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Overview

  • Use Nollan and Dolan as a Framework
  • Eliminate Potential Duress
  • Avoid Long-term, On-going Obligations
  • Define Terms and Benefits to Avoid Future

Conflicts

  • Retain Police Powers
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Armoring the Agreement: Tips for Strong, Successful Agreements

Strafford Webinar: “Development Agreements between Municipalities and Private Parties” August 9, 2012 Presented By: Brent O. Denzin Attorney Ancel, Glink, Diamond, Bush, DiCianni & Krafthefer P.C. www.ancelglink.com

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Nollan and Dolan: A Blueprint for Safe Negotiation

  • Refresh Legal Background

 Nollan v. California Coastal Comm’n, 483

U.S. 826, 833 (1987)

 Dolan v. City of Tigard, 114 S. Ct. 2309

(1994)

  • Voluntary Agreements Should Not be

Subject to Nollan and Dolan Limits

  • But….Why Enter the Fray?
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Eliminate Perceived Duress

  • As with any contract, economic duress is a

potential pitfall

  • Development Agreements have potential

for abuse of bargaining position

  • Frame agreement to reflect voluntary

nature

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Avoid Long-term, On-going Obligations

  • Future conflicts doom Development

Agreements

  • Long-term obligations loose favor when

leadership changes on both sides

  • Keep it limited; modify if necessary
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Retain Police Powers

  • Development Agreement should

expressly address key legal pitfalls (i.e. Retained Powers Doctrine)

  • In recitals and substantive provisions,

limit time period of vested rights

  • Retain future rights to promote public

health

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Focus on Speed, Not Detour

  • Should target developments that are

permitted under zoning code

  • Best used to provide certainty, not avoid

zoning laws.

  • Problem Development= Problem

Agreement

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Define Terms to Avoid Future Conflicts

  • Limit Long-term Commitments
  • Define and Limit Trouble Terms
  • I.e. Will relief from “impact fees” pose

problems for a future stormwater utility?

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Contact us…

Brent O. Denzin

bdenzin@ancelglink.com Ancel, Glink, Diamond, Bush, DiCianni & Krafthefer, P.C. www.ancelglink.com Chicago: (312) 782-7606 Vernon Hills: (847) 247-7400 Naperville: (630) 596-4610 Crystal Lake: (815) 477-8980 Bloomington: (309) 828-1990