Development Agreement

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How it Works
Implementation
Where It’s Been Done
Advantages and Key Talking Points
Challenges

A development agreement is a legally binding contract between a property owner or developer and a local government, often including terms not otherwise required through existing regulations. These agreements can specify various elements of the development process ranging from phasing of a larger master-planned community, to tax-sharing for retail development, to critical infrastructure responsibilities. Development agreements are sometimes used in combination with a planned unit development (PUD) in the form of a binding PUD agreement that specifies the negotiated terms of the development, but the two tools may also be used independently.

Implementation

To establish a development agreement, the developer and the local government both work with legal counsel to develop and execute a contract that binds all parties. During the negotiation of such an agreement, planning staff should work closely with their land use attorney, appointed and elected officials, and the public to determine the following:

What is the purpose of the development agreement? Crafting the purpose and goals will solidify the reasons why a development agreement is necessary and helps facilitate a process where the expectations for both parties are clearly articulated. This step should also act as a screening process for whether the purpose of the development agreement is consistent with a comprehensive plan or other policies generated by the jurisdiction.
Are the benefits to the community balanced with those to the developer? Along with the general purpose of the agreement, a justification of the benefits of the agreement to health, safety, and welfare of the community should be considered.
Will these requirements be consistent for similar developments? In addition to site-specific development agreement requirements, jurisdictions may choose to require the same standards for planned developments with similar conditions. Examples include offering incentives for developers to maintain vegetation in riparian buffers or requiring major subdivision developments in wildland-urban interfaces to counter the costs of firefighting.
Who will be involved in the development agreement process? Opportunities for public input and stakeholder feedback are often important components of an agreement, which can help limit any negative response from the community.
How will the agreement be maintained throughout the life of the agreement? Local governments should describe the long-term costs and maintenance requirements for both the jurisdiction and the developer, as well as monitoring procedures and processes for amending agreement terms in the future.

Where It’s Been Done

Historic Electra Sporting Club Building La Plata County entered into an agreement with the Electra Sporting Club in 2012 for expansion of their existing facilities. The club was seeking to expand its uses to include new driveways and new cabin sites. The county and the club chose to enter into an agreement for the future development of the site. Although there are many provisions of the agreement, one of them is a Wildfire Mitigation and Evacuation Plan (WMEP). The article states that on an annual basis, Electra will notify all of its members of the WMEP and make available to each member appropriate hazard mitigation resources and materials. It also requires new cabins and replacement cabins to use fire-resistant materials, reduce fuel load on the site surrounding the structure, and to maintain vegetation consistent with the WMEP. The WMEP is included as an appendix to the agreement. It includes extensive rules for private owners within the club grounds dealing with, for example, techniques for maintaining defensible space around individual cabins.

A development agreement between Eagle County and the Fox Follow Planned Unit Development created in 2017 communicated a number of conditions for the PUD, including one for rockfall hazard mitigation along the southern border of the proposed development. The agreement was amended in 2018, but the hazard mitigation provision remained. The document stated that Fox Hollow would be required to follow specific recommendations provided by the Colorado Geological Survey to install a rockfall fence, an open space parcel, or a combination of mitigation interventions to address the hazard. Additionally, the plat was required to be updated with an advisory note that the land may be susceptible to subsidence and sinkholes in the future.

Advantages and Key Talking Points

Development agreements allow communities a degree of flexibility not otherwise available per existing regulations. Advantages include:

Creation of a separate contract from the zoning code and other ordinances allows all parties to negotiate any aspects of the development. However, this can be just as much of a challenge as a benefit.
Ability to tailor specific mitigation actions and tie them to conditions of approval, thereby securing the commitment.
The agreement can prescribe periodic reviews for compliance. This is especially helpful for site development standards such as landscaping or parking.
Allows developer to obtain “vested rights” protected from any changes to existing zoning or land use laws during the term of the agreement.

Challenges

Critics of development agreements claim that they circumvent traditional development review processes. Other challenges include:

Requires trained land use or real-estate attorney to draft and implement.
The public can perceive these as “back-door deals” with little to no opportunity for input.
Difficult for planners to track over time.
Amendments to development agreements can be time-intensive. Once both parties enter into the agreement, they are locked into those provisions unless they both agree to an amendment.