Staff Report & Attachment 37
PREPARED BY: JOEL PAULSON
Community Development Director
Reviewed by: Town Manager, Assistant Town Manager, Town Attorney, and Finance Director
110 E. Main Street Los Gatos, CA 95030 ● 408-354-6832
www.losgatosca.gov
TOWN OF LOS GATOS
COUNCIL AGENDA REPORT
MEETING DATE: 8/7/2018
ITEM NO: 12
DATE: JULY 31, 2018
TO: MAYOR AND TOWN COUNCIL
FROM: LAUREL PREVETTI, TOWN MANAGER
SUBJECT: CONSIDER POTENTIAL AMENDMENTS TO THE NORTH 40 SPECIFIC PLAN.
APN 424-07-009, 010, 024 THROUGH 027, 031 THROUGH 037, 052
THROUGH 054, 060, 063 THROUGH 065, 070, 081 THROUGH 086, 090, 094
THROUGH 096, 099, 100, 102 THROUGH 112, 424-06-115, 116, AND 129.
PROPERTY OWNERS: YUKI FARMS, ETPH LP, GROSVENOR USA LIMITED,
SUMMERHILL N40 LLC, DODSON, HIRSCHMAN, MATTES, VENTURA
TRUSTEE, MOISENCO, LOS GATOS MEDICAL OFFICE CENTER LLC, LOS
GATOS GATEWAY LLC, MBK ENTERPRISE, CONNELL, GIN, JOHN & ALLISON
DIEP LLC, BERNAL, LG BOULEVARD HOLDINGS LLC, POLARIS NAVIGATION,
EW REAL ESTATE LLC, LAZAAR ENTERPRISES LLC, KOTHARY, AND
SWENSON TRUSTEE. APPLICANT: TOWN OF LOS GATOS
RECOMMENDATION:
Consider potential amendments to the North 40 Specific Plan.
BACKGROUND:
On June 5, 2018, the Town Council held a continued public hearing to consider amendments to
the North 40 Specific Plan, received public testimony, and continued the matter to the August
7, 2018 Town Council meeting with direction to staff to:
• Identify a process for the Town Council to work through the issues associated with a
concept proposed during public testimony by Grosvenor Americas;
• Provide potential Specific Plan amendments that are necessary for the proposed
concept; and
• Provide information on the Development Agreement process.
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BACKGROUND (Continued):
The direction and requested information from the June 5, 2018 meeting is outlined below and
is followed by staff responses.
DISCUSSION:
• Process to work through the issues associated with the proposed concept and potential
Specific Plan amendments that are necessary for the proposed concept.
During public testimony at the June 5, 2018 Town Council meeting Grosvenor Americas
presented a conceptual site plan for approximately 15.5 acres of the northern portion of the
Specific Plan area (Exhibit A of Attachment 37). Grosvenor Americas has also submitted
additional information regarding the Specific Plan amendments that they would like to be
considered (Attachment 37).
Staff has reviewed the conceptual site plan and additional information submitted by
Grosvenor Americas and identified the issues below that would need to be discussed and
addressed by the Town Council. The Town Council may choose to discuss these issues from
a general perspective or the Town Council may wish to discuss the specific amendments
that would be needed to the Specific Plan to enable the conceptual proposal as outlined
below:
o Number of residential units would need to be increased :
- Increase the maximum number of residential units from 270 to 455.
o Square footage for residential units would need to be modified:
- Increase the total maximum square footage from 700,000 to 875,000 and
- Increase the Multi-Family, Apartments, and Affordable products category from
300,000 square feet to 475,000 square feet.
o Maximum height for hotel would need to be increased:
- Increase the maximum height for hotel uses from 45 feet to 55 feet.
o Maximum height in the Perimeter Overlay Zone for hotel would need to be
increased:
- Increase the maximum height in the Perimeter Overlay Zone from 25 feet to 55
feet for hotel uses more than 25 feet from Los Gatos Boulevard.
o Maximum height for residential would need to be increased :
- Increase the maximum height for residential from 35 feet to 55 feet.
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DISCUSSION (Continued):
o Require additional open space when increased height is allowed:
- Increase the required Green Open Space requirement from 20 to 25 percent for
allowed height increases.
o Height would need to be measured from finished grade:
- Change the height definition to allow height to be measured from fini shed grade
rather than natural or finished grade, whichever is lower.
o Allow additional residential types in the Transition and Northern Districts:
- Modify Table 2-1 Permitted Land Uses to include Cottage Cluster
Townhomes/Garden Cluster, and Rowhouses as permitted uses.
o Guest parking would need to be reduced:
- Reduce required guest parking from 0.5 per unit to 0.25 per unit.
o The common open space requirement for multi-family residential would need to be
eliminated:
- Eliminate the 200-square foot common open space requirement for multi-family
residential other than condominiums.
o Other clean up amendments associated with the items listed above.
Staff recommends that the Town Council discuss the items outlined above and provide staff
specific direction for potential amendments that are agreed upon by a majority of the Town
Council.
• Development Agreement process.
A development agreement is an agreement negotiated between a city, town, or county and
a developer with regard to a particular development. Development agreements allow a
developer to lock into the rules, regulations, and policies governing permitted uses, density,
design, improvements, and construction that are in effect at the time the agreement is
executed. As such, development agreements are a tool developers may use to gain some
certainty regarding the requirements that may be imposed on a proposed development.
This affords a developer the ability to better estimate the scope and cost of a project.
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DISCUSSION (Continued):
Cities, towns, and counties also benefit from development agreements by negotiating
development terms that are beneficial to the goals of the public agency. Because the courts
have determined that development agreements are “contracts,” a city, town, or county can
exact “public benefits” that the United States Constitution prevents them from requiring
through the permit process.
In 1979 the California Legislature enacted legislation setting forth the procedures by which
cities, towns, and counties may enter into development agreements with developers. The
legislation is codified in the Government Code commencing at Section 65864. The
legislation prescribes the following elements and requirements:
(a) Prior to approval of a development agreement, a public hearing must be held by the
planning agency of the city or county;
(b) Notice of the hearing must be given to the public;
(c) A development agreement must be adopted by a city or county by way of ordinance; and
(d) The development agreement must be consistent with the general plan and any
applicable specific plan.
For a more detailed discussion of Development Agreements, Attachment 38 is a white
paper prepared by the Institute for Local Self Government entitled Development Agreement
Manual.
CONCLUSION:
This meeting will provide another opportunity for the Town Council to consider potential
amendments and the additional information that has been provided by Grosvenor Americas,
receive additional public testimony, and discuss potential amendments to the North 40 Specific
Plan.
The proposed amendments that have been considered by the Town Council at previous
meetings are provided in Exhibit A of Attachment 27. The potential amendments are shown in
red underlined font and all deletions are shown in red strikethrough font. The amendments
submitted by Grosvenor Americas to make the conceptual site plan viable are included in
Attachment 37. If the Town Council determines that any of the amendments submitted by
Grosvenor Americas are appropriate then modifications would need to be made to Attachment
27 and Exhibit A of Attachment 27, and brought back to the Town Council for adoption.
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CONCLUSION (Continued):
Staff recommends that the Town Council:
1. Discuss the amendments outlined above and provide staff specific direction for potential
amendments;
2. Direct staff to prepare a revised resolution with potential amendments;
3. Continue the matter to a date certain.
ALTERNATIVES:
Alternatively, the Council may:
1. Continue this item to a date certain with specific direction to staff; or
2. Determine that modifications to the North 40 Specific Plan are not necessary.
CEQA DETERMINATION:
The Town Council certified an Environmental Impact Report (EIR) and Mitigation Monitoring
and Reporting Program for the North 40 Specific Plan on January 20, 2015 (Resolution 2015 -
002) and no additional environmental review is necessary for the proposed amendments.
Attachments previously received with October 3, 2017 Study Session Report:
1. Town Council Suggestions for Potential Amendments to the adopted North 40 Specific Plan
2. December 15, 2016 Planning Commission Staff Report (with Exhibits 1-8)
3. December 15, 2016 Planning Commission Addendum Report (with Exhibit 9)
4. December 15, 2016 Planning Commission Desk Item Report (with Exhibit 10)
5. December 15, 2016 Planning Commission Verbatim Minutes (131 pages)
6. January 26, 2017 Planning Commission Staff Report (with Exhibit 11)
7. January 26, 2017 Planning Commission Addendum Report (with Exhibit 12)
8. January 26, 2017 Planning Commission Desk Item Report (with Exhibit 13)
9. January 26, 2017 Planning Commission Verbatim Minutes (115 pages)
10. Public Comments received 11:01 a.m. Wednesday, May 10, 2017 to 11:00 a.m., Thursday,
September 28, 2017
11. Potential amendments based on GPC and PC discussions (including Exhibit A)
Attachments previously received with October 3, 2017 Desk Item Report:
12. Public Comments received 11:01 a.m. Thursday, September 28, 2017 to 11:00 a.m.,
Tuesday, October 3, 2017
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Attachments previously received with November 14, 2017 Special Meeting Report:
13. North 40 Hotel Site Assessment
14. Public Comments received 11:01 a.m. Tuesday, October 3, 2017 to 11:00 a.m., Friday,
November 10, 2017
Attachments previously received with the January 16, 2018 Staff Report:
15. Required Findings
16. Resolution (including Exhibit A)
17. North 40 Traffic Scenarios
18. November 14, 2017 Town Council Meeting Minutes
19. Public Comments received 11:01 a.m., Friday, November 10, 2017 to 11:00 a.m., Thursday,
January 10, 2018
Attachments previously received with the Addendum Report:
20. Public Comments received 11:01 a.m., Thursday, January 11, 2018 to 11:00 a.m., Friday,
January 12, 2018
Attachments previously received with the Desk Item Report:
21. Public Comments received 11:01 a.m., Friday, January 12, 2018 to 11:00 a.m., Tuesday
January 16, 2018
Attachments previously received with the February 6, 2018 Staff Report:
22. Public Comments received 11:01 a.m., Tuesday, January 16, 2018 to 11:00 a.m., Thursday
February 1, 2018
Attachments previously received with the Addendum Report:
23. Public Comments received 11:01 a.m., Thursday, February 1, 2018 to 11:00 a.m., Monday,
February 5, 2018
Attachments previously received with the February 6, 2018 Desk Item Report:
24. Public Comments received 11:01 a.m., Monday, February 5, 2018 to 11:00 a.m., Tuesday,
February 6, 2018
Attachments previously received with the March 6, 2018 Desk Item Report:
25. Required Findings (Previously received as Attachment 15 with the January 16, 2018 Staff
Report)
26. Resolution with Exhibit A (Previously received as Attachment 16 with the January 16, 2018
Staff Report)
Attachments previously received with the June 5, 2018 Staff Report:
27. Revised Resolution (including revised Exhibit A)
28. City of Los Altos - Exceptions for Public Benefit Excerpt (one page)
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29. City of Mountain View - San Antonio Precise Plan Excerpt (seven pages)
30. City of Mountain View - North Bayshore Precise Plan Excerpt (three pages)
31. City of Mountain View - El Camino Real Precise Plan Excerpt (four pages)
32. City of Mountain View - Resolution for Public Benefits Minimum Value for El Camino Precise
Plan (two pages)
33. Culver City - Resolution Establishing the Community Benefit Incentive Program
(seven pages)
34. City of Glendale - Incentives and Bonuses Chapter of Downtown Specific Plan (six pages)
35. Greenbelt Alliance – Public Benefit Bonus Policy Brief (15 pages)
36. Public Comments received between 11:01 a.m., Tuesday, February 6, 2018 to 11:00 a.m.
Thursday, May 31, 2018
Attachments received with this Staff Report:
37. Letter from Grosvenor Americas regarding requested Specific Plan amendments with the
conceptual site plan, received July 31, 2018 (17 pages)
38. White paper prepared by the Institute for Local Self Government entitled Development
Agreement Manual
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40NORTH
SPECIFIC PLAN
TOWN OF LOS GATOS
JUNE 17, 2015
NORTH 40 SPECIFIC PLAN
2-4 North 40 | June 17, 2015
Land Use and Development Standards2
2.3.2 Transition District
Located in the central portion of the Specific Plan Area, the
Transition District provides a transition and buffer between the
lower intensity, primarily residential, character of the Lark District
and the active retail and entertainment emphasis of the Northern
District. The Transition District will accommodate a range of uses
including neighborhood-serving stores, specialty market and mixed-
use housing with residential units above commercial. A hotel or
hospitality use could also be part of the land use mix. Envisioned land
use categories include:
• Hotel
• Market hall/specialty market
• Office
• Open space (pocket parks, courtyards, paseos, plazas, and planting
strips)
• Personal service
• Residential – including condominium, live-work flats, multi-family
flats, multiplexes, rowhouses and townhomes
• Restaurants
• Retail (primarily neighborhood serving)
2.3.3 Northern District
The Northern District is bordered on two sides by State Route 17
and 85 (Highway 17 and 85) with Los Gatos Boulevard located on
the east side. This condition makes it best suited for a day-to-evening
entertainment area that offers shopping and restaurants for nearby
residents as well as employment centers. The Northern District
focuses on walkability, public spaces and amenities. Envisioned land
use categories include:
• Recreation/entertainment (live theater, health clubs)
• Hotel
• Market hall/specialty market
• Office
• Open space (plazas, courtyards, paseos, and planting strips)
• Residential (above commercial) - including condominium, live-
work flats, multi-family flats, multiplexes, and rowhouses
• Restaurants
• Retail
2-6 North 40 | June 17, 2015
Land Use and Development Standards2
2.4.1 Permitted and Conditionally Permitted Uses
Primary uses for each of the three Districts are generally described
in Section 2.3, while Table 2-1, below, provides specific direction
on permitted (P) and conditionally permitted uses (CUP) for each
district. Uses not listed in Table 2-1 are prohibited (refer to the
Glossary for definition of uses.)
Conditional Use Permits shall meet the intent of the North 40 Goals,
Policies, Vision Statement, and Guiding Principles.
2.4.2 Commercial Uses
Projects proposing new commercial square footage must present the
proposal to the Conceptual Development Advisory Committee. The
application submittal must include an Economic Impact Study to
assess economic competitiveness.
2.4 PERMITTED LAND USES
The Specific Plan land uses help to create a pedestrian-oriented and interactive
environment that is compatible with surrounding neighborhoods as well as
provides for on-site uses that are compatible with each other. The Specific
Plan specifies the desired mix, as well as the location of land uses. In general,
lower intensity shops, offices, and residential land uses are envisioned in the
southern portion of the Specific Plan Area. Moving northward, potential
land uses transition to mixed-use residential and potential hospitality uses to
provide a buffer between primarily residential uses in the southern portion of
the Specific Plan Area and the entertainment, restaurant, and shopping uses
envisioned in the northern portion of the Specific Plan Area. The Specific
Plan establishes two primary land use categories to guide development within
the Specific Plan Area. These land uses categories are: (1) non-residential
– including retail, office, recreation, community services, restaurants,
entertainment, and hotel, and (2) residential – including condominium,
cottage cluster/garden cluster housing, live-work flats, multi-family flats,
multiplexes, rowhouses and townhomes. Residential development is focused
on multi-family housing types and shall be designed to attract the unmet
housing needs of the community. Within the Transition District, the Specific
Plan encourages the development of residential units over commercial
development. It is important to provide an appropriate amount of residential
development in the Specific Plan Area to create a sustainable and pedestrian-
oriented mixed-use environment. Although residential uses will be an
important component to the success of the Specific Plan Area, it will support
the predominantly retail and neighborhood serving focus of the Transition
and Northern Districts.
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Land Use and Development Standards 2
Table 2-1 Permitted Land Uses
Lark District Transition District Northern District
Commercial (continued)
f.Drive-up
window for
any business,
excluding
restaurants
----CUP
g.Super
drugstore ----P
h.Supermarket ----P
i.Restaurant P P P
j.Personal
service P P P
k.Office 1 P P P
l.Hotel --P P
m.Financial
institution P P P
Residential
a.Cottage
cluster CUP ----
b.Townhomes/
Garden cluster P P --
c.Rowhouses P P --
d.Multi-family P P P2
e.Condominiums P P P2
f.Live/work lofts --P P2
Table 2-1 Permitted Land Uses
Lark District Transition District Northern District
Commercial
a.Retail P P P
b.Formula retail
business --P P
c.Market hall/
Specialty
market
--P P
d.Establishment
selling
alcoholic
beverages for
consumption
off-premises
CUP CUP CUP
e.Establishment selling alcoholic beverages for
consumption on premises
•Inconjunctionwith arestaurant
P P P
•Without
food service
(bar)
--CUP CUP
Note:
1. Medical Office is only permitted on Assessor Parcel Numbers 424-07-102 through
-112, 424-07-099, and 424-06-129.
2.Residential only allowed in Northern District when located above commercial.
2-10 North 40 | June 17, 2015
Land Use and Development Standards2
2.5 AREA-WIDE DEVELOPMENT REGULATIONS
An important objective of this Specific Plan is to set the parameters for
development within the Specific Plan Area. The goal is to offer a compatible
mix of land uses in a pedestrian-friendly environment. The following
development standards tailor the existing Town standards to shape the desired
built form and ensure compatibility with the surrounding neighborhoods and
Los Gatos’ small town character. This section initially addresses development
regulations that apply throughout the Specific Plan Area, followed by
development regulations that are specifically designed for non-residential and
residential land uses.
2.5.1 Maximum Development Capacity
A maximum development capacity of 501,000 square feet (sf) has
been provided to limit the overall build-out of the Specific Plan Area
and provide an appropriate balance of land uses that meet the goals
and objectives of the Specific Plan.
Table 2-2 defines maximums of 250,000 sf of new office/hotel,
400,000 sf of other new commercial (includes: restaurants, retail,
specialty market, health club, personal services and entertainment),
and 270 residential units. More restrictive than the Town’s General
Plan, the Specific Plan has a maximum capacity of 501,000 sf which
includes 435,000 sf of new non-residential square footage and 66,000
sf of existing commercial uses.
Development Capacity Submittal Requirement:
Every application for Architecture and Site Review shall include a
table that identifies the following:
•Proposed project building floor area categorized by land use.
•New total developed building floor area categorized by land use.
•Balance of allowed land use square footage shown in Table 2-2.
Table 2-2 Maximum Development Capacity
Land Use Units Square Feet
Residential 270*Refer to section 2.7.3
Office/Hotel 250,000
Commercial
(Excluding office/
Hotel)
•Restaurants
•Retail
•Specialty market
•Health club
•Personal service
(beauty supply,
nail salon, etc.)
•Entertainment
400,000
Note: The new non-residential portion of the project shall include a
mixture of commercial (shopping center), and/or hotel, and/or stand-
alone general office that does not create a significant unavoidable
impact as a result of the development. The total new square footage
shall not exceed 435,000 square feet (sf). With the exception of Assessor
Parcel Numbers 424-07-102 through -112, 424-07-099, and 424-06-129,
no new Medical Office will be permitted. If destroyed, the existing
buildings on the parcels referenced above are allowed to rebuild in
substantially the same manner as they existed before their destruction.
The existing 66,000 sf of recently constructed buildings on the parcels
referenced above is in addition to the 435,000 sf of new non-residential
square footage. Each project shall provide a current traffic analysis
demonstrating compliance with this requirement.
Projects cannot exceed the maximum traffic capacity evaluated in the
EIR
*Total number of units, includes existing units and Town required Below
Market Price units. Action HOU-1.3 General Plan Density Bonus does
not apply to the Specific Plan Area.
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Last Modified: June 17, 2015North 40 Specific Plan
Land Use and Development Standards 2
•New total percentage of building footprint square footage
located within the Lark District that satisfies the 15%
requirement (for height) following application submittal.
b.The maximum height is 45 feet for a hotel and/or a
mixed-use and/or mixed-income development including a
minimum of 40% extremely low, very low, or low income
affordable housing units.
2.5.3 Open Space Goals and Policies
The Specific Plan Area shall encourage outdoor activity by
integrating a variety of open spaces such as pocket parks, parks and
plazas, common gathering areas, courtyards, pedestrian paseos,
clubhouse and barbecue areas, walkable streets lined with large
shade trees and active streetscape, landscaped buffers, and ample
sitting areas. This neighborhood will be designed to serve the
unmet needs of Los Gatos, providing an environment where people
live and walk or bicycle to a nearby coffee shop, wine bar, and
restaurants.
Goal: To integrate an interconnected system of open spaces, parks
and plazas within the Specific Plan Area.
Open Space Policies:
Policy O1: View Preservation
Promote and protect views of hillsides and scenic resources.
Policy O2: Landscape Buffer
Establish a landscaped buffer along the North 40 perimeter.
Policy O3: Neighborhood Open Space Network
2.5.2 Building Height
a.The maximum height of any building, excluding affordable
housing and hotel uses, is 35 feet with the following criteria:
i.Maximum building height shall be determined by the plumb
vertical distance from the natural or finished grade, whichever is
lower and creates a lower profile, to the uppermost point of the
roof edge, wall, parapet, mansard, or other point directly above
that grade. For portions of a structure located directly above a
cellar, the height measurement for that portion of the structure
shall be measured as the plumb vertical distance from the existing
natural grade to the uppermost point of the structure directly
over that point in the existing natural grade. No point of the
roof or other structural element within the exterior perimeter
of the structure shall extend beyond the plane established by
the maximum height plane. Maximum building height includes
all elements and height exceptions are not permitted within the
Specific Plan Area.
ii.Lark District - 15% of the overall development provided
(building footprint) within the Lark District shall be structures
of a maximum of two-stories with a 25 foot maximum height.
The majority of this requirement may be provided within the
Perimeter Overlay Zone (refer to Section 2.5.7). Every application
for Architecture and Site Review shall include a table that
identifies the following:
•Total building footprint square footage within the Lark
District existing at the time of the application submittal.
•Percent of total building footprint square footage located
within the Lark District currently satisfying the 15% height
requirement at the time of submittal.
2-12 North 40 | June 17, 2015
Land Use and Development Standards2
Provide an open space network of neighborhood parks, passive open
space, plazas, pedestrian paseos, landscape buffers and/or common
open space per Specific Plan Open Space Standards.
Policy O4: Common Space
Provide a space for small gatherings and social activities that
minimize conflicts with adjacent uses and competition with
Downtown.
Policy O5: Pedestrian Amenities
Provide adequate pedestrian amenities such as street trees, benches,
pedestrian-level street lighting and other street furnishings.
Policy O6: Orchard Planting
Integrate orchard style planting within the Specific Plan Area as a
gesture towards the site’s historic agricultural use.
2.5.4 Open Space Standards
To ensure that adequate open space is integrated into future
development in the Specific Plan Area, a minimum of 30% of open
space is required (Table 2-3). This 30% requirement should be a
variety of green-spaces and plaza spaces dispersed throughout the
different districts. By specifying minimum open space requirements/
standards, the Specific Plan provides incentives for the consolidation
of parking into podium parking and parking structures, minimizing
at-grade parking, minimizing road widths, and increasing pedestrian
spaces.
a.Open space means a ground plane open and generally
unobstructed from the ground plane to the sky. Balconies,
shade structures, and roof eaves may extend over a portion of
the open space. Open space includes both “green open space”
and “hardscape” (plazas, courtyards, pathways, sidewalks, and
pedestrian paseos). Plazas, courtyards, and planters over podium
parking or on roof decks also qualify as open space.
b.To ensure the open space is distributed throughout the Specific
Plan Area, a minimum of 30% open space shall be provided
across the entire Specific Plan Area. The 30% requirement shall be
calculated for each application or group of applications.
c.The 30% open space requirement shall include a variety of green
and plaza spaces with a minimum of 20% being green space.
i.Green Space/Green Open Space: for purposes of this Specific
Plan and calculating open space requirements green space
and green open space is grass or landscaped areas. These can
include but are not limited to parks, bioretention, common
and private residential green space, planters larger than 50
square feet, landscaped planting strips, drivable turf-block, and
parking lot landscaping. Trees planted in tree wells shall not
be calculated as part of the green space requirement.
ii.Hardscape: for purposes of this Specific Plan and calculating
open space requirements, hardscape refers to private or
common paved areas for the use of pedestrians including
plazas, courtyards, pathways, sidewalks, and pedestrian
paseos. Roads and parking areas shall not be calculated as part
of the open space or hardscape requirement.
d. 20% of the 30% open space requirement shall be publicly
accessible.
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Last Modified: June 17, 2015North 40 Specific Plan
Land Use and Development Standards 2
2.5.5 Types of Open Space
a.Plazas/Paseos/Pathways
Plazas, paseos, and pathways create vibrant pedestrian-oriented
spaces linking the residential and commercial neighborhoods
with adjacent uses, parks, and streets. Throughout the Specific
Plan Area, plazas, paseos, and pathways will be incorporated to
accommodate different types of activities. These neighborhood
gathering spaces shall serve to establish a sense of place and
identity.
In the Transition and Northern Districts, plazas, paseos, and
pathways can provide space for private outdoor dining, events,
and street side entertainment. They should be well-designed,
providing ongoing opportunities for human activities that create
an interactive environment, build a sense of community, and create
opportunities for social interaction. Paseos shall be provided to
link public parking and the street environment and residential
projects with adjacent streets and plazas/parks. Amenities in
plazas and paseos may include:
•Flexible spaces for outdoor dining and gathering
•Well-lit spaces, pedestrian oriented lighting, bollards, and wall-
mounted lights
•Articulated edges that create interesting nodes and gathering
spaces
•Sitting areas
•Water feature(s)
•Landscaping
•Safe and convenient connections to adjacent uses
e. Every application for Architecture and Site Review shall include an
exhibit(s) that shows the open space and pedestrian network.
f. Remodels of existing structures along Los Gatos Boulevard that
do not change more than 50% of the existing footprint are exempt
from the 30% open space requirement.
The following table provides the requirements for open space in
the Specific Plan Area:
Table 2-3 Minimum Open Space
Requirements
Open Space Designation (Excluding Parking and Roadways)
Percent of Specific Plan Area
Green Open Space 20% Minimum
Hardscape (Plazas/
courtyards/pathways/
sidewalks and pedestrian
paseos) and/or additional
green open space
Remainder of Required Open
Space
Total Open Space 30% Minimum
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Land Use and Development Standards 2
2.5.7 Perimeter Overlay Zone
The following standards apply within the Perimeter Overlay Zone:
a.Buildings or portions of buildings located within 50 feet of Lark
Avenue shall be restricted to a maximum building height of 25 feet.
b.Buildings or portions of buildings located within 50 feet of Los
Gatos Boulevard shall be restricted to a maximum building height
of 25 feet.
c.Additional setback requirements are provided in Table 2-5 of this
chapter.
d.No building shall be located within 30 feet of a property line
adjacent to the freeway.
2.5.8 Parking Requirements
Parking provided within the Specific Plan Area shall adhere to the
standards provided in Division 4 of the Zoning Ordinance.
Number of Off-Street Spaces Required:
a.Non-Residential Use: The number of off-street parking spaces
shall be consistent with parking required in Downtown as required
within Division 4 of the Zoning Ordinance.
b.Residential Use: Parking provided within the Specific Plan Area
shall be as follows:
Table 2-4 Residential Off-Street
Parking Space Requirement
Unit Type Spaces Required
Senior/Affordable Housing Unit
Note: Director of Community Development shall
approve this requirement given that the applicant
presents findings that the product type parking
demand warrants .5 spaces per unit and surrounding
neighborhoods will not be negatively impacted.
.5 space + .5 guest
1 Bedroom Unit 1 space + .5 guest
2+ Bedroom Unit 2 spaces + .5 guest
Mixed-Use Parking:
When a project contains a vertical mix of uses composed of
commercial uses with residential, hotel, and/or office use above in the
same building, the non-residential portion of the mixed-use building
may be eligible to receive a reduction in the parking requirements
established by this Specific Plan of up to 25%, subject to Architecture
and Site Review and approval.
Shared Parking Reduction:
Shared (alternating use) parking agreements may be developed if two
or more land uses or businesses have different hours of operation or
hours that do not substantially overlap with each other (e.g., office).
When the above criteria are met, such uses may develop shared
parking agreements to satisfy the parking requirements of this
Specific Plan, with review and approval by Director of Community
Development and in accordance with the following:
2-22 North 40 | June 17, 2015
Land Use and Development Standards2
2.5.10 Mixed-Use Projects
Intent
Mixed-use projects combine retail, office and/or residential uses into
one single development. The uses can be combined within the same
building or in separate buildings on the site. Both types of mixed-use
development are encouraged.
Design Criteria
Mixed-use projects can create unique design issues, such as the
need to balance the requirements of residential uses with the needs
of commercial uses. When designing mixed-use developments,
it is important that commercial and office uses are sensitive to
the residential uses of the project and adhere to the following
requirements:
a.Commercial portions of a mixed-use project shall adhere to
standards pertaining to commercial uses within this Specific Plan.
b.Residential portions of a mixed-use project shall adhere to
standards pertaining to residential development within this
Specific Plan.
c.In the Northern District, residential uses are not permitted on
the ground floor; however, a central lobby may be located on the
ground floor.
d.Dedicated parking spaces shall be provided for residents and shall
be clearly distinguished from spaces provided for commercial and/
or office uses. Residential guest parking, commercial and office
parking may be shared. Residential parking must be provided
on-site.
e.Buildings shall be designed and sited to reduce odor, noise, light
and glare, as well as visual or other conflicts between commercial
and residential uses.
f.Lighting for the commercial uses shall be appropriately shielded
so as not to spill over into the residential area or negatively impact
the residential units.
g.Loading areas and trash and recycling enclosures for commercial
uses shall be located away from residential units when feasible and
screened properly.
h.Commercial uses with residential units either above or attached
shall provide ventilation systems to prevent odors from adversely
affecting residential units.
2.5.11 Signage Requirements
General Requirements
Signage shall conform to the guidelines established in Section 3.5,
Signage, of Chapter 3 within this document.
a.Each application shall provide a comprehensive sign program
to define the neighborhood identity as described in Section 3.4,
Neighborhood Identity, of Chapter 3 within this document.
b.The quantity and location of North 40 Neighborhood
identification signage (entry features) is subject to determination
by the Architecture and Site Review deciding body.
c.Neighborhood identity features are intended to encourage
creativity, artful and illustrative design features. They may contain
graphics and Neighborhood/Project Name and shall not be
defined as a sign within the Specific Plan Area.
2-25
Last Modified: June 17, 2015North 40 Specific Plan
Land Use and Development Standards 2
2.6.8 Fencing
Fencing is not permitted in required front setbacks or required
setbacks abutting a street in any non-residential use, except walls
or fences not over three feet high may be erected to screen on-site
parking spaces from the street or to separate outdoor dining areas
from the sidewalk.
2.6.9 Outdoor Storage
When a Conditional Use Permit is granted for outdoor storage, the
area for storage must be suitably screened from adjoining property
by a wall, dense evergreen hedge of trees or other screening planting,
or by a solid fence not less than six feet high. Materials shall not be
stored in such a manner as to project above the wall, planting or
fence.
2.6.10 Recycling Collection Facilities and Vending
Machines.
Small recycling collection facilities and vending machines may
be permitted outdoors subject to the approval of the Director of
Community Development and shall be subject to the following
conditions:
a.The facilities cannot be located in any manner so as to decrease the
number of required on-site parking spaces.
b.Vending machines and reverse vending machines are to be
located indoors whenever possible and not more than two of these
machines are permitted outdoors unless grouped together within a
common enclosure.
c.A trash receptacle is to be located within five feet of any recycling
facility.
d.The machines and facilities must be maintained on a scheduled
basis so as to ensure their general upkeep and cleanliness.
e.If a facility is proposed for a vacant lot, the lot must provide proper
traffic circulation consisting of an all-weather surface, including
one on-site employee parking space and an adequate drop-off area.
f.The facility must provide for pedestrian circulation.
2.7 RESIDENTIAL DEVELOPMENT STANDARDS
2.7.1 Intent
The following development standards supplement the previous
Area-wide Standards and apply to any development that is a 100%
residential use.
2.7.2 Residential Open Space
Common Open Space - Consistent with the Zoning Ordinance, 100
square feet/unit of Common Open Space is required for residential
condominiums. 200 square feet/unit of Common Open Space is
required for multi-family residential other than condominiums.
2.7.3 Residential Units
The Specific Plan Area should accommodate a mix of residential
product types and sizes to create the character of an authentic
neighborhood rather than a typical development project. The
following standards set parameters to guide future residential
development. Also refer to the Residential Design Guidelines in
Chapter 3 of this Specific Plan.
2-26 North 40 | June 17, 2015
Land Use and Development Standards2
a. Residential units shall range in size. Refer to Residential Unit Size
Mix in Glossary (Chapter 6).
b. There shall be a maximum of 270 residential units. This is a
maximum, not a goal, and includes the affordable housing units
required and the existing units.
c. Affordable housing (Below Market Price housing) requirements
shall be met pursuant to Town Code.
d. New residential shall be a maximum of:
• 400,000 gross square feet for Cottage Cluster, Garden
Cluster, Townhome and Rowhouse products
• 300,000 net square feet for Condominium, Multi-Family,
Apartments and Affordable products
• These are maximums, not a goal
e. Single family detached units shall be a maximum of 1,200 square
feet and be designed as a cottage cluster product type as defined in
Glossary (Chapter 6).
2.7.4 Setbacks (Residential)
a. All setbacks interior to the Specific Plan Area are measured from
the face of curb. Lark Avenue and Los Gatos Boulevard setbacks
are measured from property line.
b. Residential setbacks along primary streets (Lark Avenue, Los
Gatos Boulevard, South ‘A’ Street, North ‘A’ Street, Neighborhood
Street, Noddin Avenue, and Burton Road) follow setback
standards on Table 2-5. Residential setbacks on all other interior
streets shall be determined at Architecture and Site Review.
Setback examples are illustrated in Table 2-7, 2-8 and 2-9 to show
desired character.
c. Setback diagrams containing an asterisk (*) are permitted a five
foot encroachment for up to 50% of linear building facade length
to allow for porches, balconies, and other building elements
(including livable space) that will add visual interest and minimize
the appearance of a solid wall plane.
d. All landscaped areas and planting strips shall be planted with trees
identified within the Landscape Palette provided in Chapter 3 of
this document.
e. Cornices, belt courses, sills, canopies, cantilevered bay windows,
chimneys or other similar architectural features may extend or
project into a required setback not more than 30 inches. Eaves may
encroach up to 36 inches.
3-24
Design Guidelines3RESIDENTIAL
North 40 | June 17, 2015
q.Where there are adjacent garages, provide a landscaped area to
separate them and reduce the amount of driveway paving.
r.Detached garages and accessory structures should incorporate
roof slopes and materials similar to the principal structures of a
development. Flat roofs are discouraged.
3.3.3 Common Open Space
a.Residents of housing developments should have safe, efficient, and
convenient access to usable open space, whether public or private,
for recreation and social activities.
b.Convenient access to common open space and adjacent mixed-
use development should be incorporated into the project by way
of pedestrian pathways and bicycle access.
c.Open space should focus on areas that are usable to the residents
and not merely remainder parcels with marginal utility.
d.Locate common open spaces so that they can be viewed from
individual units.
e.Provide energy-efficient lighting.
3.3.4 Private Open Space
a.Provide each household with some form of useful private open
space, such as a patio, porch, deck, balcony, yard, or shared entry
porches or balconies.
b.Private open space should be easily accessible – physically and
visually – from individual units.
Patio and porch provides private open space for individual units.
Units have direct views of common open space.
5-14
Infrastructure and Public Facilities5
North 40 | June 17, 2015
5.8.2 Public Schools
There are no schools located within the boundaries of the Specific
Plan, however the Specific Plan Area will be serviced by the Los Gatos
Union School District, Campbell Union School District, Los Gatos
– Saratoga Union High School District, and Campbell Union High
School District.
The following is a summary of two studies that were conducted to
determine student generation for the Specific Plan Area.
a. Student Projections
The following summarizes two separate processes that the Town,
the Los Gatos School Districts, and Campbell School Districts
used to derive student population projections for the Town,
including the Specific Plan Area.
Town 2020 General Plan EIR Student Generation Rates: The
first set of data is from the Town’s adopted 2020 General Plan EIR.
This data was developed in 2010, using both Los Gatos Union
School District (LGUSD) and Los Gatos-Saratoga Joint Union
High School District (LGSJUHSD) actual enrollment and some
data from another high performing school district. The General
Plan EIR data is based on housing types, including single-family
detached, attached (condominiums and townhomes), apartments,
below market rate apartments, or integrated mixed-use. Since the
Town did not have any large developments that were exclusively
below market rate apartments or integrated mixed-use to survey,
this data was derived from the Irvine School District, which has a
similar Academic Performance Index.
Based on the previous proposal of a maximum 364 residential
units, if the units were a combination of attached product types
(Townhouse and Condominium), the development would
generate 67 children in grades K through 12 at any given time
once all residential product types were built and occupied, which
would be in a timeframe of 2015 to 2020. This same number of
single-family units (364) would generate 205 children in grades
K through 12. However, the maximum allowed number of
residential units is limited to 270 units which would yield a lower
number of new students.
LGUSD draft Student Population Projections for 2012/13 to
2021/22: In July 2012, the LGUSD released a recently prepared
Student Population Projections for 2012/13 to 2021/22. This
report assumes four different projection assumptions, including
Projection A (no future development), Projection B (only
development that has been approved), C (all development in B
+ development in early planning stages, including the Specific
Plan Area, but a 50% of maximum build-out), and D (all of
Projection C, but at 100% build-out). The study further used
existing development to define the generation rates. This included
Bella Vista on Bersano Lane to represent single-family, Creekside
Village off of Woodland Avenue to represent an attached product
and Riviera Apartments on Riviera Terrace for an apartment
housing type. The report categorizes the Specific Plan Area
in the Creekside Village product category, and based on this
classification indicates that the Specific Plan Area would generate
53 K-12 children by 2022 for Projection C and 106 K-12 children
by 2022 for Projection D. It is important to note that these
LUGSD projections are based on 400 residential units, and the
Town Council reduced this number to a maximum of 270 units at
the April 14, 2015 meeting.
Residential and commercial developments within the Specific
Plan Area would be required to pay school impact fees to reduce
impacts to the schools system.
DrvnroPMENT AcnmvrnNr MA.NUAL :
Collaboration in Pursuit of Community Interests
ATTACHMENT 38
q s
TM x
INSTITUTE _for LOCAL
SF,I.F (;OVF.RNMIiNT
Asour urn lxsururE ron LocLl Snlr GovnnxunNr
This publication is a special project of the Institute for Local Self Government, which is the nonprofit
research arm of the League of Califomia Cities. The Institute was founded in 1955 as an educational
organization to promote and strengthen the processes of local self government. The Institute's mission is to
serye as a source of independent research and information that supports and improves the development of
public policy on behalf of Califomia's communities and cities.
The Institute's work is concentrated in three areas
o Land Use
o Fiscal Issues
o Public Confidence in Local Govemment
For more infonrntion about the Institute and its programs, please visit the Institute's website at
www.ilse.ore.
Anour THE COMMUNITY LAXN USB PNO.TNCT
The Institute's work in the land use area is known as the Community Land Use Project. The goal of this
effort is to assist local agencies in finding solutions to land and resource issues that appropriately balance
private and public interests in community and property. The project focuses primarily on an area of the law
known as "regulatory takings," but the project also addresses other issues that pose significant challenges
for public agencies.
The Community Land Use Project is developing a number of resources-such as this publication-that are
designed to help local officials implement their land use proglams. The project is grateful for the generous
support of the David and Lucile Packard Foundation and the League of California Cities.
q s
6F=6)
illllll
INSTITUTE -for LOCAL
S11l.F (;OVhRNMIINT
DnvnLOPMENT ACNNEMENT MANUAL:
CorresoRATIoN nq Punsutr
or Cotwrulnrv INrBRrsrs
Prepared by David J. Larsen, City Attomey, Loomis; Berding & Weil, LLP
With Special Thanles to the Following Individuals
lVho Contributed Their Time and Expertise to
This Manual:
William Curley
Attorney
Richards, Watson & Gershon
Steven P. Rudolph
City Attorney
City of Folsom
Peter Brown
City Attorney
City of Carpinteria
Craig Ewing
Director of Community Development
City of Belmont
Janet Ruggierq
Director of Community Development
City of Citrus Heights
Tom Sullivan
Director of Community Development
City of Saratoga
Vince Bertoni
Planning Manager
City of Santa Clarita
Linda Guillis
Community and Economic
Development Director
City of Moreno Valley
Debra E. Corbett
City Attorney
City of Tracy
PRODUCTION & EDITING
lll JoAnne Speers 11 Kara Ueda ll1 Charles Summerell l!1 Meghan Sokol lll Jude Hudson Il Ioland6 V. Argdnt ll
All final decisions about the contenl and formatting of this rePort were
made by the Institutefor Local Self Government.
DrvELopunNr Acnenl'4rNr MANUAL: Cor-LesoRAttoN IN PURSUIT oF CouuuNIrv IITERESTS
@ 2002 by the lNsrnureforl-octt Srlr GovpnNrrlrut
1400 K SrnrEr, Surrp400
Sacnerr,rcNro, CA 95814
(916) 6s8-8208
www.ilsg.org
This publication provides an overview ofdevelopment agreement practices and at times provides
summaries of the law. Readers should note that attomeys can, and do, disagree about many of the
issues addressed in this Development Agreement Manual. Moreover, proposals to change the land use
regulatory process are frequently introduced in the state Legislature and new court decisions can alter
the practices a public agency should follow. Accordingly:
r Public officials should always consult with agency counsel when confronted with
specific situations related to land use laws;
o Agency counsel using this publication as a resource should always read and update
the authorities cited to ensure that their advice ret'lects a full examination of the
current and relevant authorities; and
. Members of the public and poject proponetrts reading this publication should
consult with an attomey knowledgeable in the fields of land use and real property
development law.
f rus Pt,et-lt'.\Tto\ ls Ntl St ss'l'l'l't t't' FoR l,[.(;.\l. Al)\ l('I
CONTENTS
1. INTRODUCTION 9
2. Tnr AnvnNucEs AI\D DtslovlNTAGES oF DEvELoPMENT
AcnrnvrnNTs.., ..........................................................1
I
Advancing Land Use Policies...... .......11
Potential Advantages: The Ability to Better Implement Planning Policies........12
PotentialDisadvantages:MayPromoteBadPlanning.............. .......13
Imposing Conditions ..-.-.-..14
Potential Advantages: More Encompassing Developer Requirements May be
Enforced... ....................15
Statutory and Constitutional Restrictions................ .............."""'15
Avoiding Constraints and Uncertainties..... .................17
Potential Disadvantages: Unrealistic Expectations May Make Project
Infeasible .....................18
Assuring Project Can Be 9
Potential Advantages: Fewer Surprises After Proiect ApprovaI........................20
Potential Disadvantages: Rules of Engagement Are Locked In........................20
aa.Summary
3. AcnmvING L.LNn Usn PULNNING OnmcrrvEs THRoUGH
DBvnr,opMENT AcnrBvmNTs......... ...........25
The Importance of Comprehensive Planning
The Role of Planning Policies in the Negotiation Process
Planning Policies as a Mechanism for Defining Project Proponent Expectations .
Uses of Development Agreements................ """28
Summary """"'28
4. TTTB NUTS AND BOLTS OF PROCNSSTNG DEVELOPMENT ACNNPTVTNNTS3O
.A
28
Purpose/Findings 1 I
Application Process.....1
Public Hearings and Notice
Development Agreements and Public Input......... ............32
Public Input on Consideration of the Proposed Agreement ..............34
Notice Issues ...............35
Decisionmaker Input on Development Agreements and Findings ..........................36
Involving the Planning Commission Early On............. .....36
Planning Commission Recommendation and Input on Findings 7
Governing Body Hearing and Decision on the Development Agreement..........38
Action on the Agreement ..............39
Recordation and Other Post-Approval Steps..
Amending the Development Agreement......... ......................40
Development Agreements and Accountability............ ..........40
Summary I
5. TUn Anr Or NTCOTnTING DTVBIOpMENT ACnrnUfNTS................43
Who is Going to Negotiate?...............
Reaching Consensus """"44
Knowing Who is Across the
Setting Expectations
The Utitity of Ground Ru1es......... ..""""""""'45
Setting Priorities... """'46
Have a Strategy.... """'46
Interest-Based Bargaining Techniques........... """"""""'47
Summary.. """'48
6. Tnn Sunsr.q.NCE oF A DEvELoPMENT AcnnrvrnNT..........................49
Who Will do the Drafting?..
When Should the Drafting Begin? ""'50
Common Provisions In Development Agreements
The Parties to the Agreement """'50
Use of Recitals .51
I
Required Contents """52
E2Public Benelits
Addressing a Potential Police Power Challenge <1
"Milestone" Requirements EA
Default, Remedies and Termination56
Non-Performance
<oAssignment
Validity of Portions of the Agreement Severability
Attorneys Fees
Good Faith and Fair Dea1ing................ ...........60
Signatures and Subordination........ .................60
Summary
7. CoNcLUsIoN ..........69
FnBnn.lcK FoRM ........71
PunlrcarloN Onnnn Fonu ...................--73
q *
Ti[r
,,{fgr
lliSTITt:Tri Jirr I OCAL
SEI,F GOVERNMENT
Spring,2002
Dear Reader:
On behalf of the lnstitute's board of directors, we are pleased to be able to offer this resource
to assist you in understanding issues relating to development agreements.
A key Institute goal is to make a difference for local agencies and the communities they serve.
Your Mback and input is a vital part of our efforts to assess the Institute's value and impact:
Did ttris publication help you? How? Did it make a difference in how you approached a
local issue or policy relating to development agreernants?
How can the publication be improved? Did we leave anything out? Do you disagree with
something we said?
Do you have examples of the kinds of issues we discuss that we might be able to include in
future updates of this publication? Are you interested in confributing to the Institute's
programs in general?
To assist you in providing feedbach we have provided a feedback form at the back of this
publication. Your feedback is also welcome ttrough our website at www.ilsg.org.
Thank you in advance for your assistance.
Very tuly yours,
o
o
a
frl <.,
JoAnne Speers
Executive Director
Jerry Patterson
President, Board of Directors
INTRODUCTION
Wnar ARE Drvnr,opMENT AcnnnprnNrs ?
Development agreements are contracts negotiated between project
proponents and public agencies that govem the land uses that may be
allowed in a particular project.' Although subject to negotiation, allowable
land uses must be consistent with the local planning policies formulated by
the legislative body through its general plan, and consistent with any
applicable specific plan. 2
Neither the applicant nor the public agency is required to enter into a
development agreement. When they do, the allowable land uses and other
terms and conditions of approval are negotiated bet'ween the parties, subject
to the public agencies' ultimate approval. While a development agreement
must advance the agencies' local planning policies, it may also contain
provisions that vary from otherwise applicable zoning standards and land
use requirements.
The development agreement is essentially a planning tool that allows public
agencies greater latitude to advance local planning policies, sometimes in
new and creative ways. While a development agreement may be viewed as
an altemative to the traditional development approval process, in practice it
is commonly used in conjunction with it. It is not uncomnon, for example, to
see a project proponent apply for approval ofa conditional use permit, zone
change and development agreement for the same project.
Ix TIus Maxu^lr,
As discussed in Chapter 2, both parties to the agreement receive benefits.
In addition to the greater latitude afforded by the development agreement to
advance local planning policies, the public agency has greater flexibility in
imposing conditions and requirements on proposed projects,' while the
applicant is afforded greater assurance that once the project is
I See Cal. Gov't Code $ 65864 and following.
2 See Cal. Gov't Code $ 65867.5.
3 See Cal. Gov't Code $ 66000(b).
What Are Development
Agreements?. ..........9
In This Manua!..............................9
l0 | onvelopMENT AcRtpvrnNr MANUAL
approved, it can be built.o There may be disadvantages associated with
development agreements as well (see Chapter 2).
Because development agreements afford greater latitude, local agencies
may want to take steps to ensure that local land use objectives are not
diminished through the use of development agreements (see Chapter 3).
Giving adequate thought to how the parties conduct negotiations can
improve an agency's chances of accomplishing its objectives, as well as
ensuring that reasonable expectations of both parties are achieved (see
Chapter 4). Finally, understanding the "nuts and bolts" of processing
development agreements, and the terms and provisions that are typically
included, will ensure that procedural requirements are met and legal
interests protected (Chapter 5).
In short, this manual provides a practical overview of the development
agreement process, including:
The advantages and disadvantages of using
development agreements;
The role development agreements can play in
achieving local agency land use planning objectives;
Procedural issues related to development agreements;
Substantive provisions in development agreements;
and
o The art of negotiating development agreements.
This manual reflects the variety of experiences that Califomia public
agencies and project proponents have had with development
agreements, and builds upon the groundbreaking work of the original
ievelopment Agreement Manual written by Daniel Curtin and
published in 1980 (supplemented in 1985) by the League of califomia
Cities.
a
a
a
a
a See Cal. Gov't Code $ 65865.4
TUE AuvANTAGES AND
DTSA,DvANTAGES OF
DEvELOPMENT
AcnrEMENTS
Development agreements have three defining characteristics:
They allow greater latitude than other methods of
approval to advance local land use policies in
sometimes new and creative ways;
They allow public agencies greater flexibility in
imposing conditions and requirements on proposed
projects; and
They afford project proponents greater assurance that
once approved, their projects can be built.
Although these characteristics can be advantageous, they can also present
challenges. The purpose of this chapter is to discuss potential advartages
and disadvantages of development agreements, from the perspective of
both the public agency and project proponent.
Anva.NCING La.No Usn Por,rcrns
Because development agreements are themselves ordinances, they may
supersede existing land use regulations as long as they are consistent with
the general plan and any applicable specific plan.' As a result, they can
afford the public agency and project proponent greater latitude concerning
allowable land uses in a particular instance. However, there are potential
advantages and disadvantages associated with having this flexibility.
a
a
a
C HAPTER
Advancing Land Use Policies,.... l1
Imposing Conditions..................14
Assuring Project Will Be Built l9
Summary,....................................23
s See Cal. Gov't Code $ 65867.5
12 | onveloPMENT AcRrBuBNr MANUAL
PorrNrrll, Anv,q.NrA,crs: TIrn Anu,Irv ro BETTER
Iupr,BumNr Pr,lNNrNc Por,rcrrs
From a planning perspective, development agreements have been
instrumental in allowing creative and awardwinning land use projects
because the agreements can facilitate projects that would not have been
allowed under otherwise applicable zoning regulations. The approval of
creative land use concepts - and the construction ofresulting projects -have advanced the state of urban planning, and allowed public agencies to
beffer combat the visual and aesthetic impacts of "cookie-cutter"
development.
In a similar vein, there are instances in which literal compliance with zonlng
ordinance provisions can thwart promotion of general plan policies. For
example, the general plan may encourage the existence of open space,
whereas the applicable zoning district does not allow sufficient density to
accommodate the clustering of residential units necessary to accommodate
an open space component.
There may also be instances in which the legislative body wishes to
promote unwritten policies, such as those involving growth management. As
long as the project is consistent with the local planning policies formulated
by the legislative body through its general plan, the development agreement
can provide greater latitude to incorporate land use concepts and
components that are tailored specifically to address particular commtrnity
concerns.
In each of these cases, the ability to vary from strict adherence to
otherwise applicable zoning provisions can help ensure that the public
agency's land use policies are being advanced, in sometimes new and
innovative ways. These advantages are shared by the public agency and
project proponent alike.
The following example shows how using a development agreement allows
the parties to develop a unique land use project to advance the public
agency's land use policies creatively and responsibly through the give-and-
take of negotiations, as both parties address their respective needs and
desires.
INsrrrurt for Locar Srr,r GovBnNnaENT. CouuuNrrv LeNo UsB Pnorscr I tg
While few things in life go as smoothly as the hypothefical approval of
Sports World (above), the process of negotiating development agreements
can allow the development of new and creative concepts, address
associated issues and concems unique to a particular project, and ensure
adherence to local land use policies in conformance with the general plan.
Mr. Dee, a developer, wishes to construct a project that will attract people traveling through Grassland on the
way to Yosemite. Mr. Dee's "Sports World" will have a combination ofattractive components, including a virtual
sports center with a simulated ski slope, fairway and rock climb; a gas station; restaurant; hotel; and air strip. If
the project succeeds, it will generate substantial profits. Mr. Dee wishes to have his project approved in a
manner that will allow him flexibility with respect to both land use and design, so that he can select from a variety
of tenants and react to changing market conditions without having to obtain further city approvals. Although
the general plan recites the need to attract tourists destined for Yosemite, the zoning ordinance does not allow
the particular combination of uses Mr. Dee is proposing.
Cautiously optimistic, the Grassland city council understands that Grassland will benefit from the added sales
tax. But the council's concerns are numerous, and include the concern that Mr. Dee may not have the experience
to complete the project; that the project may not "pencil out" financially; and that it may not attract the
anticipated number of tourists. Finally, the council doesn't know what the project is- what it will look like, what
uses will be allowed, and what design standards and architectural controls will govern it. The city council is also
concerned about the potential impact ofadditional traffic on the adjacent freeway overpass.
Given that the zoning ordinance does not allow the proposed project, and the fact that there are a number of
council concerns, the parties decide to negotiate a development agreement. As negotiations begin, Mr. Dee
initially advocates conceptual development and design standards, while Grassland insists on elevations showing
the exact location and type ofuse for every project component. As the negotiations proceed, the parties approve
four alternative plans, each of which will allow Mr. Dee to react to a different market, while also allowing city
council to understand what the project is.
In addition, the parties agree that some of the allowable uses for portions of the project will be more generically
defined (for example, office/commercial), so that Mr. Dee can select from a number of tenants without first having
to obtain additional city approvals. Once a tenant is selected, however, plans and elevations for the site must be
submitted to Grassland for architectural review.
In the end, the parties reach agreement on all ofthe outstanding issues. Planning staffconfirms that the hnal
agreement is consistent with and advances the aims of the general plan and associated land use policies, and the
project is approved and constructed.
Il.r-t slR,\r'lo\ - St,olrt's \\'oRt.t)
14 | Onvrr,oPMENr AcRrBuBNr MANUAL
PorrNrr.q.r Drs^l,ovANTAGES : Mav Pnovrorn Bau
PtaxNrNc
The latitude afforded the parties through use of a development agreement
may also have potential disadvantages. For example, the agency's staffand
legislative body may become convinced that, in exchange for the significant
sales tax revenue the agency is likely to receive from a particular project, or
in consideration of the fact that the project proponent is willing to construct
a new city park or other significant public amenity, the agency should agree
to compromise its planning standards in a manner that could reduce the
quallty of life in the community. The pressure to compromise may be
especially great in the case of a "friendly developer" who has a popular
presence in the community.
From the project proponent's perspective, it is possible that the legislative
body may decide to disallow uses that would otherwise be allowed, and
which are appropriate from a conventional planning perspective.
The suggestions that appear in this manual are intended to help avoid
misusing development agreements. They are based on the premise that
from the outset, the planning policies and objectives that have been
embraced by the community through adoption of the general plan, and those
included in any applicable specific plan, should be an integral part of the
discussions and negotiations between the parties to a development
agreement.
By identifying applicable planning policies early on, and continuing to use
them as yardsticks in determining what land uses are appropriate, the
parties should be able to avoid unacceptable compromises when negotiating
development agreements.
IvrposING CoNDITIoNS
Development agreements provide public agencies greater flexibility in
imposing requirements on proposed development, such as development
.orditiorrr, eiactions and fees, because constraints and uncertainties that
affect a local agency's ability to unilaterally impose such requirements do
not apply to mutually agreed upon development agreement provisions.u
6 See Cal. Gov't Code $ 66000(b) (excluding "fees collected under development agreements"
from the type offee covered under the Mitigation Fee Act)'
INsrrrurnfor Loc.rr, SBlr Govrnx*rENr . CovvuNtrv LeNp Usn Pnorncr I tS
PornNrrl.l AovlNrAcEs : Monn ENcoprpl,sslNc
Dnvrlopnn RBeUTREMENTS MAy nr ENroncru
Public agencies face the following t)?es of legal constraints and
uncertainties that directly affect their ability to regulate development. Such
constraints and uncertainties may be overcome, however, through the use
of development agreements.
Voter Initiatives. During the past several decades, public agencies have
been subjected o a number of fiscal setbacks that have impeded their
ability to meet the service and infrastructure needs of their communities. A
number of voter initiatives have limited public agencies' revenue raising
authority, and questions associated with these initiatives have created legal
uncertainties.
ERAF Shift. In 1992, in reaction to a serious deficit, the state enacted
legislation that annually shifu some of the financial responsibilrty for funding
education, pursuant to Proposition 98, to local public agencies. Through the
intervening the years, the Educational Revenue Augmentation Fund
(ERAF) has deprived local agencies of more than $30 billion.
Since the ERAF shift and passage of initiative measures limiting public
agencies' general revenue sources, agencies have increasingly required
project proponents to bear the costs to the community associated with
development of their projects. Many agencies have adopted development
impact fees, for example, that are designed to require project proponents to
pay the costs of infrastructure, facilities and public services required to
service their projects.
Srn ruroRy AND CoNsrrrurIoNAL RnsrnrcuoNs
Mitigation Fee Act. Commonly referred to as Assembly Bill (AB) 1600,
the Mitigation Fee Act was enacted in 1987.' It dosely regulates the
adoption, levy and collection of development fees, including project-specific
fees, imposed by local agencies. The act requires the agency to identiff the
purpose and use of the fee, and to explain why there is a reasonable
relationship between the fee and the development.E Fees may not exceed
the estimated reasonable cost of providing the service for which the fee is
collected.' These requirements, among other things, have restricted the
reach of development impact fees.
1 See Cal. Gov't Code $ 66000 and following.
I See CaL Gov't Code $ 66001.
s See Cal. Gov't Code $ 66005.
16 I orvor,oPMENT AcRBrurNT MANUAL
School Facility Fees. Local public agencies historically have been
responsible for financing schools. ln 1998, however, Senate Bill (SB) 50
sigrificantly changed the extent to which agencies can require developers
to contribute to the cost of building new schools.'o SB 50 sets maximum
amounts on such fees." It also prohibits agencies from imposing other
conditions on development to ensure the existence of adequate school
facilities.''
Each of these constraints and uncertainties limits a local agency's ability to
adequately condition new development in a manner that lyill cover the cost
of associated infrastructure, facilities and public services.
Regulatory Takings. The term "regulatory takings" derives from the
Takings Clause of the Fifth Amendment to the United States Constitution,
which states: "... nor shall private property be taken for public use, without
just compensation."''
A "taking" is any confiscation of private property by a public agency. A
"regulatory taking" is an indirect confiscation of private property through
govemment regulation. If a court finds that a challenged regulation
constitutes a taking, the public agency must compensate the owner of the
property.
In recent years, takings litigation (and the th'reat of such litigation) has
become a significarf factor in land use decision-making. Increasingly,
project proponents have invoked the Takings Clause in an effort to
persuade public agencies to reduce their efforts to require developers to
pay various costs associated with infrastructure and public services.
Moreover, the courts have displayed a greater inclination to second-guess
public officials' decisions-a departure from the traditional deference the
courts have afforded decisions of local officials in the past.
The expanding scope of what constitutes a compensable taking is of
concern to local agencies because ofthe potential for being assessed large
monetary judgments in connection with the imposition of development
requirements.
ro,See Cal. Gov't Code $ 65995(a).
rr See Cal. Gov't Code $ 659950).
t2 See Cal. Gov't Code $ 65996(b).
r3 An overview ofSB 50 is available from the League ofCalifornia Cities. To obtain a copy,
League members may contact the League and request "Strauss Opinion on SB 50, January
1999."
ra To the same effect is article l, section l9 ofthe California Constitution: "Private property
may be taken or damaged for public use only when just compensation, ascertained by a jury
unless waived, has first been paid. . .."
INsrrrurt for Locar SBr,r GovTRNuENT . CovuuNtrv LeNo Usn Pnorecr I tl
AvorurNc CoNsrnLINTs AND UxcrnrlINTIEs
A public agency can avoid the q/pes of constraints and uncertainties
described above by entering into development agreements, since the
project proponents agree to fees and requirements. Once the agreement
is executed, the project proponent has generally waived his or her right to
challenge the faimess or appropriateness of a particular requirement.
For example, the local agency can ask that the project proponent agree to
finarrce public facilities and improvements without the specter of a
regulatory takings claim. Similarly, the local agency may ask the project
proponent to construct a new school without fear that school facility-fee
limitations will be invoked. The project proponent must agree to such
requirements, of course, before they may become enforceable.
The local agency may also bargain for completion of facilities and
improvements at an earlier stage in the development process. This can
result in needed infrastructure ard facilities being put in place prior to or
concurrently with the development, reducing the development's impact on
existing facilities or services. Similarly, the project proponent may agree
to pay additional fees to protect the agency and existing residents from
any budgetary impacts associated with the development.
For facilities and infrastructure that are funded by multiple projects, the
development agreement process can provide a mechanism to ensure that
each project proponent pays its fair share in a timely manner.
The project-specificity of the development agreement process offers the
public agency the opportunity to design more tailored implementation
programs for its planning policies and objectives as they relate to the
proposed project. The pocess of negotiating the agreement can help the
agency identiff and address issues relating to the project before the
agency provides final approval. The agency may also require that the
agreement include provisions dealing with identifiable contingencies
related to the proposed project.
Finally, the fact that the development agreement is recorded provides a
convenient mechanism for binding future owners to the requirements and
obligations created by the agreement.''
t5 See Cal. Gov't Code $ 65868.5 C' ... the burdens ofthe agreement shall be binding upon, and
the benefits ofthe agreement shall inure to, all successors in interest to the parties to the
agreement").
The Development Agreement Law
was enacted in 1979, in response to
the Avco Community Developers,
Inc. v. South Coast Regional
Commission decision. SeelT CaL
3d78s (1e76).
The Avco case involved a large
development in Orange County,
some of which was in the coastal
zone. Under the newly enacted
Coastal Act, the developer had to
obtain a permit from the Coastal
Commission unless it had obtained
a building permit. The developer
had secured a frnal subdivision map
and a grading permit, but did not
have a building permit. The
developer had already spent a great
deal of money on the site.
The court ruled that the developer's
project was indeed subject to the
Coastal Act's additional
requirements and restrictions,
reaffirming the rule that property
owners acquire a vested right to
complete construction only after
they have performed substantial
work and incurred substantial
liabilities in good faith reliance on a
permit issued by regulatory
authorities. Only at that point can a
project be completed free ofnew
restrictions.
The result in Avco created great
constemation in the development
community, which lobbied the
Legislanrre to create a mechanism
that would allow develoPers to
know earlier on in the process what
requirements would apply to their
projects. The development
agreement law is a result of this
effort.
I Sr..\'t t vtr HI s'l'() tt\
DEVIt.()PNt-\1
It l. E \t l- \ r' L ,\ \\
18 I orvrcloPMENT AcnnrurNr MlNu.rr,
Effective January I ,2002, many development projects that involve loans, grants or other forms of assistance
from local agencies are classified as "public works" projects.l6 As such, they fall under state requirements
for payment of"prevailing wages."" These requirements establish minimum wage levels for public works
projects that vary by location.l8 Application of prevailing wage requirements may lead to higher labor costs
for development projects that receive certain forms of financial support or incentives from local agencies.
Prevailing wages now may apply to otherwise private projects, where a public agency:
o Pays money or its equivalent to or on behalfofa developerre'
o Performs construction work in execution ofthe projectfo
o Transfers assets at less then fair market value;2r
o Waives or forgives fees, costs, rents, insurance or bond premiums, loans, or interest ratesf2
r Makes available money to be repaid on a contingent basisf 3 or
o Grants credits applied against repayment obligations.2a
Reimbursing a developer for costs that would normally be borne by the public does not trigger the prevailing
wage requirement, nor does a subsidy that is de minimis in the context of the project.'zs
Pornxrr.ql DTSADvANTAGES : Uxnn.lr,rsrrc
ExpncrnrroNs Mav Mnrn PRo.rncr lNrna.srnr,n
From the project proponent's viewpoint, local agencies may expect more
encompassing project requirements than are financially feasible. The
myriad of issues developers face, including land availability, fnancing,
market considerations and federal, state and local regulatory requirements
can make it diffrcult to propose financially feasible development projects.
Against this back drop, some developers have abandoned development
agreements altogether. This avoids the risk of dscovering after months of
negotiations that the local agency expects the developer to construct an
'u cal. Lab. code g l72o(b).
'7 cal. Lab. code gg t77o; l7'tl
'* cal. Lab. code g 1771.
re cal. Lab. code g 1720(b).
'o Id.
" Id.
" Id.
" ld.
'o Id.
" cal. Lab. code g t72o(c).
FIl,rn-cIAL INcu\TIvEs M,tv TRIGGIrR PnnvrILING WAGE RueurRENIENt'
INsrrrurnfor Loc,rr, Sur GovrRxuENr . CouuuNrrv Lalro Usp PRorEcr I tq
expensive public amenity, such as a school or park, in consideration of the
benefits the developer will receive from a development agreement.
As further discussed in Chapter 4, one way of avoiding this tlpe of problem
is to discuss the parties' expectations at the outset, as a prelude to
beginning negotiations. That allows each party to assess early on whether a
development agreement will meet each party's needs.
AssunrNc PRoJECT Cax Bn Buu,r
One of the challenges project proponents face in the usual regulatory
process is that the project must meet the regulatory standards in effect at
each stage of the development process. This can result in a proposed
project being subject to new regulations even after it has received final
approval, and even ifthe new regulations preclude or prohibit construction
of some or all of the project.
As a result, it can be difficult for a project proponent to know at the outset
what criteria the project must meet. It is not until the proponent's right to
complete the project has "vested," that he or she has the right to build the
project without concem that new regulations may apply.
Unforeseen regulatory changes (including those adopted by the voters
through the initiative process) can add time and expense to a proposed
project. Moreover, a proponent of a large project must typically invest
substantial amounts of time and money in the project before he or she
receives "vested rights" to complete the project as approved.
26 Ciry of San Jose v. State of Califurnia,45 Cal. App. 4th 1802, 53 Cal. Rptr. 2d 521 (6th Dist.
1996) rev. denied (1996).
Ordinarily, a project proponent acquires a vested right to complete construction when the proponent has:
o Obtained all permits necessary for the proposed structure;
r Performed substantial work in good faith reliance upon those approvals; and
r Incurred substantial liabilities in good faith reliance upon those approvals. The proponent must, of
course, complete the work in accordance with the terms of the permit.26
A project proponent cannot acquire a vested right under an invalid building permit, even ifsubstantial
expenditures have been made in good faith.26 The rights that vest through reliance on the building or other
permit cannot be greater than those specifically granted by the permit itself.26 For example, perfection of a
vested right for one phase ofa multiphase project does not create a vested right to build subsequent phases
WHan Dops Otrls AcQUIRE A "VES'I'ED" RIGHT 1'o PRocEED wlrH
DEvELoPMENT, FREt: FRONT Aonl'[toNAL REGUI,AToRY
Rr:QUtRENIEN'I's?
20 I onvrloPMENT AcnnerrnNr MANUAL
On the dher hand, a project proponent who is a party to a development
agreement receives "vested rights" to complete the project as approved.
This occurs immediately upon execution of the agreement, by virtue of the
fact that a development agreement "freezes" applicable local land use
regulations with respect to the proposed project."
PorrNTrIL ADvAIITAGES : FbWN,N SUNTNTSBS AT.TER
Pnorncr Arpnovu,
From a project proponent's perspective, the added certainty associated with
receiving "vested rights" to construct a proposed project without concem
that new regulations may apply can be invaluable. It may be especially
important to a project proponent worried about a potential ballot measure or
a change in the governing body majority that could adversely affect the
project. While development agreements are subject to voter referenda," an
opponent would have to file his or her submittal within 30 days after final
approval of the development agreement in order to preserve the right to put
the approval of the agreement on the ballot." Once the 30-day period is
over, the project proponent can safely assume that the project will not be
affected by future ballot measures.
There are limits to the degree of assurance that a public agency can offer.
For example, additional conditions may be imposed on the project if further
environmental analysis is needed under the Califomia Environmental
Quality Act (CEQA). Also, a development agreement cannot prevent the
application of state or federal regulations, as further discussed below.'o
Another advantage from the project proponent's perspective is limiting the
potential for regulatory change. This can be helpful when the proponent
seeks financing. It can also be reassuring with respect to large projects that
have significant upfront costs.
PorBNrr.LL DIsADvANTAGES: RULES oF ENGAGEMENT
Ann LoCKED IN
A development agreement can limit the public agency's abilrty to respond to
a changing regulatory environment, precisely because it locks in the
27 See Cal. Gov't Code $ 65865.4.
28 See Cal. Gov't Code $ 65867.5.
2e See Cal. Elect Code $ 9237.
to See Cal. Gov't Code $ 65869.5.
Ixsrrrurn for Loclr, Snlr GovrnNvrENT . CouuuNrry LAND Usp Pnorpcr I Zt
regulatory requirements in effect at the time the agreement is approved. If
the agency's planning regulations are in need of review or updating, the
agency may be subject to criticism if the conditions imposed by the
agreement do not suffrciently protect the community's interests. In the
absence of a development agreement, and should the need arise, the
agency retains the prerogative to change the rules relating to the project,
even if that change makes the intended use unlawful.
A development agreement also places a premium on an agency being able
at the outset to identiff all of the issues presented by a project. Since
changes to the agreement require mutual assent, it may be diffrcult to add
conditions or requirements later, should the agency identifu the need to do
so after the agreement is entered into.
From the proponent's perspective, the project's obligations are also locked
in by the agreement. Some elements of market changes-including changes
in the project's economics-may not be reflected in the agreement. This
can put a premium on a project proponent's ability to anticipate areas of
potential change and then negotiate the flexibility to respond to those
changes (for example, by negotiating a range of future uses, based on what
the market will bear at the time of build out).
Another possible disadvantage is the degree of protection from regulatory
change, which is limited to local regulations. The development agreement
law specifically provides that a development agreement must be modified if
necessary to comply with subsequently enacted state cr federal law.'' The
new state or federal law may prevent or preclude compliance with the
provisions of the development agreement. The issue for the project
proponent is whether some protection from regulatory change is better than
none at all.
31 See Cal. Gov't Code 0 65869.5
22 I orvrloPMENT AcRnBurNr MANUAL
Development agreements are one planning tool. This chart provides a side-by-sidecomparisonof howdevelopmentagreements
comDare with tentative subdivision maps and vesting tentative maps.
Develooment AsreementsTentative Maps Vesting Tentative Maps
A legislatively-approved contract
between a jurisdiction and a person
having legal or equitable interest in
real property within the
jurisdiction (California
Govemment Code Section 65865
and following) that typically
"freezes" certain rules, regulations,
and policies applicable to a project
for a specified period oftime,
usually in exchange for certain
concessions by the project
proponent.
Tentative Subdivision Map
(or Tentative Map) - The
project proponent's initial
proposal for subdividing land,
which is the local agency's
main opportunity to set
conditions on the proposed
subdivision.
The point in time when a
project proponent has the
right to proceed without being
subject to changes in land use
regulations, typically when
the last permit necessary for
construction of a project
(usually a building permit) has
been issued and substantial
expenditures have been
incurred in reliance on the
permit. The concept of
vested rights is one ofthe
reasons it is important that
concerned citizens make their
views known as early as
possible in the land use
decision making process.
Description
Depends on language in agreement
Only ifnecessary to prevent
situation dangerous to health
and safety
Application of Conflicting
Local Rules in Future Yes
At execution ofagreement, unless
agreement provides otherwiseWhen application is
"complete"
When Requirements Are
Locked In/I.{ot Subject to
Change
No vested right even at the
final map stage
Police power requirements can
be changed at each stage of
the permitting process
Vested right conferred when
building permits issued and
substantial work completed in
reliance on those permits
Subject to mutual agreementSubject to statutory and
constitutional restrictions
Fees and Dedications Subject to statutory and
constitutional restrictions
AllowedAllowedAllowedPhasing
Does not limitDoes not limitDoes not limitEffect on Other Agencies'
Resulatory Prerogatives
Local agencies must adopt
procedures upon request of
aoolicant
Local agencies may adopt
procedures; otherwise, MaP
Act govems
Agency must adoptLocal Agency Procedures
Discretionary - Local agencies
may chose to use or not
Mandatory - Local agencies
must accept application and
process it within statutory
time frames
Mandatory - Local agencies
must accept application and
process it within statutory
time frames
Processing
Annual review required. CountY
development agreements are time-
limited if land is annexed or
incorporated (Government Code
section 65865.3)
Specified by statute, which
includes both automatic and
discretionary extensions
Duration Specified by statute, which
includes both automatic and
discretionary extensions
No - approval is an
adjudicatory act not subject to
referenda
Yes - approval is a legislative act
subject to referenda
No - approval is an
adjudicatory act not subject to
referenda
Voter Review
90 day statute of limitations 90 day statute of limitations90 day statute of limitationsTime Limit for
Government Code sections 65864
to 65869.5
Government Code sections
66498.1 to 66498.9
Government Code sections
66410 to 66499.37
Governing Statutes
ContprRlso\- oF TENT'At'tvE MAps, VEs't'tNG TUNT'At'IyF
A N D D T] \'F] I- O P \I I] N'I' A G R E E Nt E N'I-S
INsrrrurnfor Loc,lI, Srlr GovrRxuENT . CotuvuNttv LRNo Uss PRorpcr lZl
Suurvrlnv
This chapter has examined the advantages of the three defining
characteristics of development agteements-greater regulatory latitude,
flexibility and assurance for project proponents. But these characteristics
can also present obstacles for the parties negotiating a development
agreement.
Some developers may continue avoiding the use of development
agreements because of the potential for expensive project requirements.
Some local agency staff may avoid development agreements because of
the limitations that development agreements impose on an agency's ability
to respond to a changing regulatory environment. Neverthebss, the latitude
afforded by development agreements to advance local agencies' planning
objectives--in sometimes new and innovative ways--makes the development
agreement a useful and viable tool in service to the community in a number
of different applications.
For both parties, a development agreement can involve a great deal of time
and energy to negotiate and implement. Accordingly, it is important at the
outset to carefully evaluate the advantages and disadvantages of using a
development agreement in each specific instance.
24 I nrvuoPMENr AcRrnunxr MANUAL
AcurEvrNcL.rND UsE
Pr,txNING OT"TECTIvES
THROUGH DEvELoPMENT
AcngEMENTS
Development agreements can be used for a wide range of projects, from
large mixe&use developments to smaller projects. Moreover, the scope of a
development agreement can vary according to the needs of the project in
question. Although a development agreenrcnt can be comprehensive,
detailing every aspect ofthe project, it can also focus on particular aspects
of a project.
This chapter discusses the role that development agreements can play in a
local agency's overall planning process. Fundamentally, development
agreements are one tool in the local agency's toolbox for achieving the
community's long-term planning and development goals.
Tnn IvrponrANCE oF CoMpREHENSIvE
Pr,nNurNc
In authorizing the use of development agreements, the Legislature
emphasized that &velopment agreements are intended to serve as a tool to
strengthen a community's commitment to comprehensive land use
planning." The concept behind the use of development agreements is to
encourage communities to think ahead, in a comprehensive manner, about
the impacts of development within their jurisdiction and the steps necessary
to make that development a win-win proposition for both the project
proponents and the community.
32 See Cal. Gov't Code $ 6586a(a) ("The Legislature finds and declares that: (a) The lack of
certainty in the approval ofdevelopment projects can result in a waste ofresources, escalate
the cost ofhousing and other development to the consumer,and discourage investment in and
commitment to comprehensive planning which would make maximum efficient utilization of
resources at the least economic cost to the public.") (emphasis added).
C HAPTER
The Importance of
Comprehensive Planning ........... 25
Uses of Development
Agreements... ........28
26 I orvuoPMENT AcRpnurpNr MlNuar,
A development agreement generally allows a project proponent to proceed
with a project that meets the "policies, rules and regulations" in effect at the
time the development agreement is approved." A development agreement
may also supercede an agency's existing policies, rules and regulations, as
long as the project is consistent with the general plan and any applicable
specific plan.'o
Trrr Ror,E oF.PLANNING POr.rCrNS IN THE
NncorrarroN Pnocnss
A helpful starting point is having well-understood planning regulations that
reflect the community's current and anticipated needs. Such policies, when
adhered to, facilitate the negotiation process, ensuring that a proposed
development agreement reflects the local goveming body's policies. This
approach can also address a source of decisionmaker discomfort with the
development agreement process, because even though the goveming body
ultimately approves a development agreement, it also needs a mechanism to
provide direction to the negotiation process. Planning policies meet this
need.
Typically in a negotiation process, decisionmakers provide their negotiators
with parameters on key bargaining issues. It is important that the
parameters remain confidential, so the other side does not know how much
leeway the negotiators have.
Confidentiality is difficult in the context of development agreement
negotiations because the state's open meeting laws" do not generally allow
an exception for public agency negotiators on development agreements to
receive direction from the governing body. There may be aspects of a
development agreement-for example, the price and terms of payment for
acquisition of property-that can be discussed in closed session. However,
only those issues may be discussed in closed session-not the development
agreement in general.
The agency's planning policies, therefore, may serve as the negotiators'
key source of direction in this circumstance. ln addition, a local agency may
want to consider directing its staff to adopt a different type of negotiating
style, where identification of "interests" replaces the need to establish outer
33 See Cal. Gov't Code $ 65864(b) ("The Legislature finds and declares that: ... (b) Assurance to
the applicant for a development project that upon approval ofthe project, the applicant may
proceed with the project in accordance with existing policies, rules and regulations, and subject
to conditions of approval, will strengthen the public planning process, encourage private
participation in comprehensive planning, and reduce the economic costs ofdevelopment.")
(emphasis added). See also Cal. Gov't Code $ 65866.
3a See Cal. Gov't Code $ 65s67.5.
35 See generally Cal. Gov't Code $ 54950 and following (The Ralph M. Brown Act).
Permitted uses of the
property;
Density or intensity
ofuse;
Maximum height and
size ofproposed
buildings;
Provisions for
reservation or
dedication of land for
public purposes;
Terms and
conditions relating to
frnancing of
necessary public
improvements, as
well as provisions for
subsequent
reimbursement for
that financing, as
appropriate;
Timeframes for
commencement and
completion of
construction, or any
phases of
construction;
Subsequent
discretionary
approval provisions,
as long as those
approvals do not
prevent development
ofthe project as
described in the
agreement; and
The duration ofthe
agreement.
a
a
a
a
a
WHI'r' Docs .\
DevgLoP\IENT
A GREE}I E\..7
Covr:n?
a
INsrrrurnfor Local Snlr GovrRNvrENr. CouuuNIrv LaNo UsE PRoJECT lZl
"positions" or parameters (see discussion in Chapter 4). If an agency uses
an interest-based negotiating sfrategy, there are fewer shategic
disadvantages associated with a goveming body's trying to provide
direction in open session.
Well-conceived and upto-date planning policies can also assist local
agencies to avoid having to ask the staffto negotiate in a vacu.rm, with little
or no immediate direction or feedback from decisionmakers. When the
agreement is before the legislative body for final approval, it may be
difficult for the body to modify aspects of the agreement without, in effect,
renegotiating the agreement from the dais to change the terms that the staff
negotiated.
The development agreement law provides that cities generally inherit development agreements negotiated by
counties for newly incorporated or newly annexed areas. ,See Cal. Gov't Code $ 65865.3(a) (for incorporations,
the effective date of the incorporation must be after January I , 1987). The development agreement must meet
the following requirements, however:
o The application for the agreement must have been submitted before the first signafure was placed on
the petition for annexation or incorporation (or resolution initiating such proceedings);
. The agreement must have been entered into prior to the incorporation/annexation election (or prior to
the date on which the conducting authority ordered the annexation); and
o The annexation is initiated by the city (or, ifinitiated by someone else, the city does not adopt
written findings that the development agreement is injurious to the health, safety or welfare of city
residents. See Cal. Gov't Code $ 65865.3(c) and (d).
The duration of such inherited development agreements is the duration of the agreement or eight years,
whichever is shorter. SeeCal. Gov't Code $ 65865.3(a).
The city may modi$ or suspend the development agreement's provisions if the city determines that failure
to do so would place the residents ofthe territory subject to the development agreement (or the residents of
the city in general - or both) in a condition dangerous to their health or safety (or both). See Cal. Gov't Code
$ 65865.3(a).
However, the development agreement law also authorizes cities to enter into development agteements for
unincorporated territory within their sphere of influence. ,See Cal. Gov't Code $ 65865(b). The agreement
does not become operative until the annexation occurs. See Cal. Gov't Code $ 65865(b). The timeframe for
the annexation must be specified in the agreement and the annexation must occur within that timeframe. See
Cal. Gov'tCode $ 65865(b). Extensions are possible, however. SeeCal. Gov't Code $ 65865(b).
De vl:l-opNtE\T AGRI.. l..uENTS A,r*t)
A x r l. x,\ t' r o lr s / l n c' o rr po r{A'r' I () \ s
28 I nrveloPMENT AcRrrrrrNrr MANUAL
Pr,^lrvNrNG PolrcrEs AS A MECHANISM FoR DEFTNING
Pnorncr PnopoNrNr ExpncrATIoNs
An agency's planning documents, including its local development agreement
procedures, can provide an important source of guidance for project
proponents going into negotiations. By stating in the procedures that the
local agency is committed to using development agreements as a tool to
promote the community's needs, the agency makes clear that it expects to
receive greater community benefits than it could otherwise achieve through
the land use regulatory process. This level of understanding can be helpful
in setting the proper tone, so both parties have realistic expectations going
into ttre negotiations.
Such an approach also may be helpful in responding to community concerns
that the community has not received adequate benefits in the past from
development agreements. These concems may arise, especially when the
project proponent has an ongoing relationship with the public agency.
USBS OF DEVELOPMENT AGREEMENTS
Local government agencies have successfully used development
agreements to facilitate:
o School, park and other facility funding;
o Affordable housing projects;
. Large-scale mixed use projects; and
o Multi-phase colnmercial projects.
Development agreements can also be a vehicle for addressing concems
among developers about perceived adverse impacts of neighboring projects.
Suuruanv
Used judiciously, development agreements are a useful tool for achieving an
agency's land use planning objectives. Well-articulated planning policies
36 Cal. Gov't Code g 14045.
37 Cal. Gov't Code $$ 65460.10, 65460.2.
r8 Cal. Gov't Code $ 65913.5
Development agreements
may be used to implement
demonstration programs
that test the effectiveness of
increasing the density of
residential development in
close proximity to mass
transit stations.'u Local
agencies may also require
developers to enter into
development agreements to
implement density-bonus
programs in transit village
plans3' or within a half-mile
radius of mass transit
stations.38
DEVELOPNIE,}iT
AcREEMEN.I.S ANT)
Tnnnsrr'
INsrrrurt for Locar, Srlr GovrRN*rENT . CotuuuNtrv LRNu Usp PRorBcr lZg
may also provide important policy direction to staff in negotiating such
agreements.
Trrn NurS AND BOITS OF
PnoCESSING
DTvELOPMENT
AcnTEMENTS
From a local agency standpoint, the development agreement process begins
with the local agency's procedures for development agreements. The
development agreement law contemplates the adoption of such procedures
by local govemment agencies." If there are none, some must be adopted
upon the request of an applicant.no Sample procedures are available online
at www.ilss.ors/devtaqmt and typically include the following:
A statement of purpose/findings conceming the public
benefits of development agreements;
Applicationrequirementsi purpose/Findings ........................31
a
a
a
a
Notice and hearing
procedures;
Planning commission and
goveming body review;
o Recordation;
Application Process...................... 3 I
Public Ilearings and Notice ........32
Decisionmaker Input on
Development Agreement and
Findings........ ........36
Recordation and Other Post-
Approval Steps...................-......... 39
a
Amendment.. ........40o Periodic review.
Development Agreements and
Accountability .............................. 40
3e .See Cal. Gov't Code $ 65865(b) ("Every city, county, or city and county, shall, upon request
ofan applicant, by resolution or ordinance, establish procedures and requirements for the
consideration of development agreements ...").
ao See Cal. Gov't Code g 65865(b).
Amendment
termination; and
and
INsrtrurt for Loclr, Srr,r GovnRx*rENT . CouvuNrrv LeNn Usp Pnorecr I g t
Such procedures may be adopted by ordinance or
resolution.o' The development agreement law
allows local agencies to recover the direct costs
associated with adopting procedures for the
agencies' consideration of development
agreements.12
This chapter discusses procedures and issues an
agency may include in its development agreement
procedures resolution or ordinance, as well as the
general steps in the process of approving a
development agreement.
The agency's development agreement procedures provide an opportunity
for the local agency to state its goal for considering development agreement
requests, which is "...to promote the community's needs and receive
greater community benefits than otherwise can be achieved through the
land use regulatory process." A goal statement similar to this example can
be helpful in setting the tone for negotiations, so that both parties have
realistic expectations going into the negotiations.
It is also helpful to refer to the development agreement statute, California
Govemment Code section 65864 and following.
Appr,IcATIoN Pnocrcss
An application form speciffig the type of
information an agency needs to process the
development agreement request is an efficient
way of ensuring that the agency receives all of
the information it needs in a timely manner. Some
development procedures authorize the agency's
planning director to develop a form application for
development agreements. A sample form is also
available online at www. ils g.ors/de\tasmt.
It can also be helpful for an agency's
development agreement procedures to authorize the local agency's attorney
to develop a form agreement. Having a readily available form agreement
saves staff time in reviewing development agreements; it also provides
at See Cal. Gov't Code g 65865(b).
a2 See Cal. Gov't Code $ 65865(d).
An owner (with legal or
equitable title) must apply in
accordance with the local
agency's procedures. See Cal.
Gov't Code $ 65865(b).
See also National Parks and
Consertalion Assn v. County
of Riverside, 42 CaL App. 4th
l50s (le6).
\\'rro Nl,rr I \trl,\Tl.'l'ltl- DE\ [] l-ol,]ili].'t'
A(;RI.rt.r\tE\t'
Pn<lcl.ss?
Development agreements are
authorized both ways: by
ordinance and resolution. Some
public agency attorneys
recommend resolutions as the
more flexible form of
authorization.
Onut\,\\('l.r on
llIsor.t't'to\?
PunposB/FrNorNGS
32 I orvnloPMENT AcnpBurxr MANUAL
greater assurance that the agreement will cover all of the agency's needs.
Chapter 6 discusses the content of development agreements. Sample
forms are available online at www.ilsg.org/devtagmt.
Some public agencies charge fees to process
applications. A local agency's development
agreement procedures can speci$ those fees or
cross reference a fee schedule that includes this
particular type of fee.al
The local agency will also need to ensure that the
environmental analysis requirements under the
California Environmental Quality Act (CEQA)
have been satisfied.oo
Purl,rc HrcanrNGS AND
Norrcr
Another important aspect of development
agreements is the role of public input. The
development agreement law requires a noticed public hearing by both the
planning agency and by the local agency's governing body before a
development agreement is approved. o'
DnvBlopMENT AcnmunNTs AND Punlrc lNpur
Both the project proponent and the local agency have an interest in
satisffing community concems with respect to a development agreement,
insofar as development agreements are subject to repeal by voter
referendum.'u In fact, a development agreement cannot legally take effect
until after the 30-day period for such a referendum expires.o'
There is also a 90-day statute of limiations to challenge the adoption or
amendments of any development agreement approved after January l,
1996.0'
a3 See generally Cal. Gov't Code $ 66000(b) (excluding "fees collected under development
agreements" from the type of fee covered under the Mitigation Fee Act) and following.
aa See generally Cal. Pub. Res. Code $ 21000 and following.
a5 .See Cal. Gov't Code $ 65867.
a6 See Cal. Gov't Code $ 65867.5.
a7 See Cal. Elect. Code $ 9l4l; Referendum Committee v. City of Hermosa Beach, 184 Cal.
App. 3d I 52 ( I 986); Midway Orchards v. County of Butte,220 Cal. App. 3d 765 ( I 990).
a8 See Cal. Gov't Code $ 65009.
Development agreements
may be processed with
other land use approvals
for the same project, such
as a conditional use permit
or subdivision map, in
which case the parties
should consider whether it
is advantageous to seek
simultaneous approvals, or
have one approval follow
another.
Pnot'r.-ssr\(;
Dnr r.t.ot)NtE\t'
AG IrE E \t tr\'t's \\'t't'n
Olnr:n At,PROt',qt.s
INsrrrurnfor Loc.lI, Srlr GovnnNuENT . ColruuNtrv LeNo Usp PRorecr I ::
As a practical matter, though, it may be advisable to include stakeholders
(interested parties such as community groups, business leaders and others
interested in the community's development) in the development agreement
process. While it may not be practical to allow stakeholders to attend
negotiations, it may be possible to consult with them ahead of time, or
perhaps
ona
"meet
and
confer"
basis as
negotiatio
ns
proceed.
As the
following
example
illustates,
the
process
of
negotiatin
ga
developm
ent
agreemen
tis
susceptibl
eto
"commun
ity backlash" in instances when community members find out after the fact,
that public agency staff has agreed to recommend what they perceive as
controversial concessions.
Meeting with stakeholders ahead of time to discuss possible actions, such
as attracting a large retail outlet, allows legitimate issues to be aired before
serious negotiations begin. After some evaluation, stakeholders may decide
their issues can be resolved, or the agency may decide it should re-evaluate
its priorities. [n the case of the merchants in this illustration, had they been
given the opportunity to meet with the agency to leam about the
experiences of other cities, they might have concluded that attracting Taxco
would actually help business retention.
Destination City is looking for a way to increase its general fund. Taxco is a large retail outlet
that generates more than $500,000 worth ofsales tax revenue each year for other cities in
which it is located. Taxco plans to build a store in the vicinity.
Public agency senior staff meet with Taxco senior staff to discuss the benefits of locating in
Destination City. Aware that a neighboring city would also like a Taxco retail outlet, these
meetings are kept confidential. Senior staff suggest ways that Destination City may be able
to write down land costs, waive development fees and otherwise provide incentives for
Taxco to locate in their city. Eighteen months later, a deal is struck and the terms are
commemorated in a development agreement, which is to be reviewed by the planning
commission and approved by city council.
At this point, Bill Chamber, president of the Downtown Merchants Association, sees the
public hearing notice and leams for the first time that the city is considering agreeing to a
variety of incentives to entice Taxco to locate in Destination City. Mr. Chamber calls a
meeting of the merchants.
During the meeting, merchants express their concerns that the city should not entice Taxco
to locate in the city; it is not fair for the city to agree to monetary incentives not offered to
other businesses; the city ought to be concerned about the very real threat that Taxco will
run other merchants out of town; and the city should focus on business retention rather
than attracting new businesses. The group decides to formally oppose approval ofthe
development agreement. They also discuss initiating a recall of the entire city council, for
secretly acting against the business community's interests. Unlike the Sports World
illustration, these parties do not live happily ever after.
I Lt.t slR,\'r'to\ - T,\x('o
34 | OrvrloPMENT AcRrrurNr MANUAL
Meeting and conferring with stakeholders during the negotiation process
allows them to provide input on the specific terms and conditions that are
being negotiated. Many times, the same underlying goal can be
accomplished in a slightly different manner to accommodate stakeholders'
needs.
In the Taxco example, city staff needed to keep the
negotiations confidential, so that a neighboring city
would not undermine their efforts. While the need
for confidentiality makes it more difficult to include
stakeholders, including them in the process without
sharing every detail enables the local agency to be
on a firmer community relations footing when it
comes to approving the development agreement.
Punr,rc lNpur oN CoNSTDERATIoN or
THE PROPOSED ACRNNVTNNT
The development agreernent law specifies what kind
of public hearings and notice must be given when an
agency gets to the point of considering whether to
approve development agreements.oe Hearings must
be held by the local planning agency and its
governing body.'o Such hearings are subject to the
state's open meetings laws,'' which require that all
interested persons be allowed to attend these
meetings" and provide public comment before the
planning commission's or goveming body's
consideration of the development agreement. 53
Members of the public are also entitled to request
copies of all documents included in the agenda
packet.'o The state's Public Records Act also may entitle members of the
public to request other documents relating to the proposed agreement."
ae See Cal. Gov't Code $ 65867.
50 See Cal. Gov't Code $ 65867.
5t See Cal. Gov't Code $ 54950 and following.
52 See Cal. Gov't Code g 54953(a).
53 See Cal. Gov't Code $ 54954.3.
sa See Cal. Gov't Code $ 54954. I .
ss See Cal. Gov't Code g 6250 and following. An exception may be preliminary drafts of
development agreements ifthey are not kept in the ordinary course ofbusiness. ,See Cal. Gov't
Code $ 6254(a).
Depending on the nature of
the project, negotiating a
development agreement can
involve significant costs for
the public agency in the form
of stafftime and legal fees.
An agency may want to
provide for the recovery of
some or all of those costs
either in its local procedures,
as part ofthe cost of
processing a development
agreement or as a term of the
agreement itself.
The agency will want to
ensure that it does not
assess the project proponent
more than the agency's
actual costs. One way is to
establish an hourly rate and
regularly record staff time.
ON CENTRAT,
RrcovnRy or
Cosls
INsrrrurnfor Loc.c,L Snlr GovpRNurENT . CoulauNtrv LeNo Use PRorecr I lS
Noucn Issurs
The development agreement law provides notice requirements for hearings
related to the potential adoption of a development agreement.i6 The notice
is the same as that required under the planning and zoning law for:
Plans (publication in at least one newspaper of general
circulation or posting in three public places within the
jurisdiction if there is no newspaper of general
circulation, with special consideration given to drive-
through facilities);"
a
a Projects (10-day mailed notice to
the property owner, the project
proponent, affected local agency
service/facility providers ; and "
a Neighboring property owners
within 300 feet, as well as
published and posted notice, again
with special consideration given to
drive-through facilities)." The
agency must also give notice to
anyone who has requested it. uo
The notice must contain:
The date, time, and place of the hearing;
The identity of the hearing body;
A general explanation of the matter to be considered
(in other words, the developmerf agreement); and
56 See Cal. Gov't Code $ 65867.
s7 See Cal. Gov't Code $ 65090.
58 This includes each local agency expected to provide water, sewage, $reets, roads, schools, or
other essential facilities or services to the project, whose ability to provide those facilities and
services may be significantly affected. See Cal. Gov't Code $ 65091(aX2).
5e See Cal. Gov't Code $ 65091.
60 See Cal. Gov't Code $ 65092: "When a provision ofthis title requires notice ofa public
hearing to be given pursuant to Section 65090 or 65091, the notice shall also be mailed or
delivered at least I 0 days prior to the hearing to any person who has filed a written request for
notice with either the clerk ofthe goveming body or with any other person designated by the
goveming body to receive these requests. The local agency may charge a fee which is reasonably
related to the costs ofproviding this service and the local agency may require each request to be
annually renewed."
a
a
a
Local agencies in the coastal
zone may approve
development agreements
only ifthey have a certified
local coastal program or if
the California Coastal
Commission formally
approves the development
agreement. See Cal. Gov't
Code $ 65869.
A NorE o\-
Dnvul-oPNtENT'
AGRT]1]I\IE\Ts I\
t'Itu coAsl',\L zo\[.
36 | orvrr,opMENr AcRrnnrnNr MANUAL
A general description, in text or by diagram, of the
location of the property that is the subject of the
development agreement, and hence the hearing.u'
To facilitate informed public discussion of the matter, it may be helpful to
include a brief explanation of what development agreements are. A sample
of such a description is available online at www.ilss.ors/devtasmt.
DncrsroNMAKER INpur oN DBvELopMENT
AcnBnMENTS AND FrNorNcs
A local agency's development agreement
procedures present an opportunity for the
goveming body to ask the planning commission to
make a recommendation on whether to aprove
the agreement and weigh in on proposed findings.
Itwor,vnvc rHE P r,lNNrNc
CourprrssroN EARLY ON
When development agreements are negotiated by
staff, subject to planning commission review before final approval by the
legislative body, planning commissioners may feel they have been "left out
of the loop." This may be especially tue if the legislative body is the only
one receiving updates as negotiations proceed.
The consequerrces of the planning commission
feeling insufficiently involved may include:
Bad feelings on the part of
individual planning
commissioners;
A lack of planning commission
input dtring negotiations; and
a
a
a
Yes. See.' Citizens for
Responsible Governmenl v.
City of Albany,56 Cal. App.
4th lr99 (1997).
The development
agreement law is not
entirely clear. A good
practice is to secure on the
agreement the signature of
the person authorized to
execute agreements on
behalf of the local agency
shortly after the adoption
of the development
agreement ordinance by the
governing body.
Wrt,tr'
co\s't't't'U'l'Es
I.r N'l'trY I \'t'o 1'H t.l
DEYT-I,0PNIE\I'
AGrrEt.:ttcrr?
6r ,See Cal. Gov't Code g 65094.
C,r r ,r
l)1.\'lll.oPNtuNt'
.\(;REE\tt.\T I]I.
.\PPRO\',t..D l]\',
lrl'l l,r'l tVl:?
INsrrrurnfor Loca,r- Srr,r GovnnNrrENT . Covvur.ttrv LeNu Usp PRorecr lSl
a Less protection of elected offrcials' interests by
appointed commissioners.
One approach to informing the planning commission early on is to schedule
the project for discussion at a regular planning commission meeting at the
start of negotiations. This provides the planning commission with an
opportunity to prwide its input to the negotiating team on key policies and
objectives to be achieved on behalf of the community through the
development agreement.
Another approach is to convene a subcommittee of the planning
commission as an adjunct to the negotiation prrcess. If the subcommittee is
less than a of the commission, the discussion may occur without the
overlay of open meetings requirements.u' While the
subcommittee could be made part of the negotiating
team, it may be more practical, given the competing
demands on planning commissioners' time, for staffto
confer with the subcommittee outside of negotiations.
This approach allows the negotiating team to benefit
from at least some planning commissioners'
perspective, while the negotiating team remains
reasonably sized.
Pr.aNNrNc CotuprIssloN RrcopruENDATIoN AND
INpur oN FTNDTNGS
An agency's development agreement procedres can solicit the planning
commission's input both on whether the development agreement should be
approved, and on the findings accompanying any approval. Such findings
may include whether the agreement:
Is consistent with the objectives, policies, gerreral land
uses and programs specified in the agency's general
plan and any applicable specific plan;
Is consistent with the provisions of the agency's zoning
regulations;
62 SeeCal. Gov't Code $$ 5a952.2(a) ("As used in this chapter, 'meeting' includes any
congregation of a majority of the members of a legislative body at the same time and place to
hear, discuss, or deliberate upon any item that is within the subject matterjurisdiction ofthe
legislative body or the local agency to which it pertains.") 54952 ("As used in this chapter,
'legislative body' means: ... (b) A ... committee ... of a local agency, whether permanent or
temporary, decision-making or advisory, created by charter, ordinance, resolution, or formal
action of a legislative body. However, any advisory committee, composed solely of members of
the legislative body which are less than a quorum ofthe legislative body are not legislative
bodies .. .").
a
a
Some practitioners ask the
project proponent to sign
the proposed agreement
before the agreement is
introduced for approval.
Pn,rt'r l('E PolNT'En
38 I onvor,oPMENT AcRBBuTBNT MANUAL
Promotes the public health, safety, and general
welfare;
Is just, reasonable, fair ard equitable under the
circumstances facing the agency;63
Has a positive effect on the orderly development of
property or the preservation of neighboring property
values; and
Provides suffrcient benefit to the community to justify
entering into the agreement.
GovrcnNrNG BoDy llnlnrNc AND DECrsroN oN THE
Drvrr.opMENT AcnnnunNr
As discussed in Chapter 3, well-articulated planning policies and objectives
should increase the likelihood that the staffs and planning commission's
input to the development agreement negotiation process
produces a satisfactory agreement for the goveming
body. Adoption of an interest-based negotiation
approach may also allow the goveming body to
provide direction to negotiators early on in the
process in open session, consistent with the state's
open meeting laws.'o
Well-conceived and up-to-date planning policies also
avoid the prospect of asking staff to negotiate in a
vacuum, with little or no immediate dtection or
feedback from decisionmakers. This maximizes the
likelihood that the agreement presented for decision-
maker approval reflects their concerns and policy
direction. It minimizes the likelihood of having to
renegotiate the agreement from the dias. (The
downside of which, is inclusion of language in the
agreement which may have unintended
consequences or not fully protect the agency's
interests.)
63 See generally Morrison Homes Corp. v. City of Pleasanton, 58 Cal. App. 3d 724 (19'16)
(analyzing the "contracting away the police power" issue in the context ofan annexation
agreement). See also Denio v. City of Huntington Beach,22Cal.2d 589 (1943); Carruth v. City
ofMadera,233 Cal. App. 2d 688 (1965).
6a See generally Cal. Gov't Code g 54950 and following (The Ralph M. Brown Act).
a
a
a
A development agreement
typically freezes regulatory
requirements in effect at the
time the agreement is
executed. For that reason, it
is helpful to collect all of
those regulatory documents
and file them with the
approved development
agreement. This avoids
confusion several years
afterwards as to what
regulatory requirements
applv.
Copies should also be
provided to the project
proponent.
a
P n.r<"r'r cl- Por N'r'E r{
Insrrrurnfor Loc.lr, SBr,r GovnnNuENT . ColruuNrrv LaNo Use Pnorecr I lq
AcuoN oN THE AcnnprrnNr
The governing body must approve a development agreement by resolution
or ordinance.u' Ordinances must go through a tworeading process, with at
least a five-day intervening period.* Changes require an additional five-day
waiting p€riod. "
RrconnATroN AND Orunn Posr-
Appnovar, Srnps
After a development agreement is approved, the clerk of the goveming
body must:
Record a copy of the development agreement within
l0 days of the entity's entry into the agreement, along
with a description of the land subject to the
development agreement;o' and
a
a Publish the ordinance approving the development
agreement.6e
6s See Cal. Gov't Code $ 65867.5.
66 See Cal. Gov't Code $$ 36934 (city requirements), 25131 (courty requirements).
67 See Cal. Gov't Code $$ 36934 (city requirements), 25131 (county requirements).
68 ,See Cal. Gov't Code $ 65868.5.
6' A clerk must publish each ordinance (or a summary of it) within I 5 days after passage as
follows: I ) In a newspaper of general circulation published within the jurisdiction, or 2) If there
isnone,bypostingasrequiredbystatelaw. Cal.Gov'tCode$$36933(cities),25124(counties)
(note that state codes are available online at htto://www.leeinfo.ca.qov by clicking on
"Califiomia Law"). The publication must include the names of the governing body members
voting for and against the ordinance. Cal. Gov't Code $$ 36933(c) (cities), 25t24 (counties).
40 I unvrr,oPMENT AcRrrrvrcNr MANUAL
ln cities and counties, failure to satisfy the publication requirement in a
timely manner prevents the ordinance from taking effect or being valid.'o
AvrrcNoING THE Drcvnr.,oPMENT
AcnBnMENT
After a development agreement has been signed, it may be amended only
by mutual agreement of parties.'' Most development agreement procedures
require amendments that are initiated by the project proponent to go through
the same process as the initial application for the development agreement.
For local agency-initiated amendments, the procedures usually require
notice to the project proponent and provision of information about the
process that the agency will employ.
Dnvrr,oPMENT AcnnnMENTS AND
AccotrNTABILrrY
Fundamental to the concept of an enforceable agreement is the notion that
each party will do what it promises to do in the agreement. To underscore
that notion, the development agreement law requires local agencies to
include at least an arurual review of the project proponent's compliance
with the delineated responsibilities." The review must require the proponent
to demonstrate good faith conpliance with the terms of the agreement." If
a local agency finds, based on substantial evidence, that such compliance
has not occurred, the agency may modiff or terminate the agreement. To
In addition, the development agreement law provides that the development
agreement is "enforceable by any pzrtir."ts A development agreement
typically contains provisions specifying procedures for notice and
termination in the event of a default by either party.
70 Cal. Gov't Code $ 36933(b) (cities). Cf. Cal. Gov't Code g 25124(c) (providing failure of
county clerk to publish means the ordinance does not take effect for 30 days).
1t See Cal. Gov't Code $ 65868.
12 See Cal. Gov't Code g 65865.1.
73 See Cal. Gov't Code g 65865.I.
1a See Cal. Gov'tCode $ 65865.1.
15 See Cal. Gov't Code g 65865.4.
Some agencies specify the agencies'
annual review procedures in the
agency's ordinances and resolutions
relating to development agreements
Others speciff the annual review
procedures in the development
agreement itself. The latter approach
makes the annual review process
part ofthe negotiations process as it
is the subject ofnegotiation and the
resolution of that negotiation
memorialized as a term of the
development agreement itself.
Other implementation strategies
include:
Assigning one person to
monitor agreement
performance.
2. Creating an implementation
matrix (cross-referencing the
section of the development
agreement, the obligation, the
trigger/timing, which local
agency department has lead
responsibility, and the
status).
Having a well-thought out
implementation strategy helps
ensure the agency gets the benefit of
its bargain.
I
Pn.rclr('[. Porvr'].u
INsrrrurn for Locar, SBr,r GovnRNvrENT . CouuuNrry LeNo Usr PRorpcr I qt
Suvrulnv
A well-crafted set of development agreement procedures will provide a
useful road map to staff and others in sheparding an agreement through the
approval process. Such procedures are also useful for considering any
amendments to and termination of an agreement.
Important parts of the process include the notice and hearing process, as
well as mechanisms for providing decision-maker input.
'6 City of San Diego, Development Agreement Monitoring System, February 2000 (Submission
for League ofCalifornia Cities Helen Putnam Award for Excellence).
The City of San Diego's Development Agreement Monitoring System tracks the status of
payments owed by developers to cover the cost ofproject-related infrastructure, facilities and
public services.T6 In addition to helping city staffmonitor compliance with the terms and
conditions ofdevelopment agreements, the system also generates reminders ofannual report
deadlines and due dates for administrative costs owed to the city.
Before the city developed the system in 1997, several departments shared responsibility for
monitoring the status of development agreements. The lack of effective coordination made
oversight of the agreements uncertain. If, for example, the city's issuance of a building permit for
the 2506 unit ofa residential project obligated the developer to pay the city $250,000 for
fff:::4,
of a library, the city had no means to ensure that it requested the tunds in a timely
To address this problem, city staff formed an inter-departmental task force called the
Development Monitoring Team. The Monitoring Team worked with city Management
Information Systems personnel to create the Development Agreement Monitoring System. The
system comprises a database containing files for each development agreement. The files list
developer obligations and due dates under each agreement.
The monitoring team updates the status of developer obligations and shares this information
with appropriate departments on a regular basis. As a result, the city has improved the
timeliness of developer invoicing and collection. By February 2000, the Development
Agreement Monitoring System helped the city to collect $17 million in developer obligations,
and to track another $28 million that the city is due to receive by 2005.
S,ts DTEGO DATABASE KEEps DEvELopuE\T AGR[-E]\tENTS
OT TRACK
42 | lnvnloPMENT AcRnnunNr MANUAL
THnAnr Or
NnCOTIATING
DEvELOPMENT
ACnEEMENTS
The art of negotiation comprises several facets. Fundamentally, it is
important to decide who is going to negotiate and how the parties will reach
consensus. This chapter addresses the issues associated with each facet of
negotiation.
Wno rs GorNG To Nncorrarn?
Within the public agency, senior staff or their representatives typically
negotiate development agreements. The manager (or representative) should
be involved because he or she presumably knows the community,
understands the desires of the legislative body and can gauge the
agreement's value to the community.
The agency's planning director (or representative) is typically on the
negotiating team because of his or her planning background. While the
manager may focus on financial benefits to the community, the planning
director will be concerned with the impact of the project on land use issues,
including its compatibility with surrounding land uses. Engineering or public
works staff should be included if infrastructure issues are involved.
The public agency also may want to include the attomey on the negotiating
team, rather than just at the agreement's drafting stage, especially if the
project proponent is represented by legal counsel. Legal issues will
undoubtedly arise during negotiations, and drafting issues may overlap with
substantive deal points. Whether or not legal counsel participates in the
negotiations, he or she should be fully apprised as the negotiations proceed.
C UAPTER
Who Is Going to Negotiate? .......43
Reaching Consensus.................,, 44
Summary...... ........48
44 IDEvELoPMENT AcREEMENT MlNuar,
As for the project proponent, he or she (or a representative with full legal
authority to bind the project proponent) should participate in the
negotiations. On larger projects, the project proponent may want to
assemble a team that includes the project proponent, an architect, planner
and land use attomey. Depending on what aspect of the agreement is being
negotiated, the project proponent may want to include one or more of the
team members in the negotiations.
RracruNc CoNsBNsus
How parties conduct negotiations may be the best indicator of whether they
will achieve consensus. Participants should be tained in the process of
negotiations, and have a framework in mind to guide the negotiation
process.
KxowrNc Wno rs AcRoSs rHE Tnnln
Before negotiations begin, each party should become familiar with the
other's background. [n addition, the project proponent should become
familiar with the local political climate, while local agency staff should leam
about the project proponent's reputation in the community, or in other
communities where the proponent's developments have been approved.
The parties should also determine in advance what they expect to gain
through the negotiations, what the other party may need, and what they are
*illirg to give.
SnrrrNc ExpBcr.r,TroNS
Once the parties meet, they should frankly discuss their respective
expectations. The local agency should emphasize that it expects to gain
greater exactions than it could require under its regulatory authority. The
project proponent should explain why the particular project requires a
development agreement. The parties should agree upon an initial timeframe
in which to complete negotiations.
The agency negotiators should explain that they do not have authority to
bind the agency-that is the province of the legislative body during final
public hearings. The parties may benefit from adopting a "check-off'
system so that once they reach a conceptual agreement on deal points, they
71 See Cal. Gov't Code $ 1090. the Attorney General reached this conclusion even though the
spouse had no ownership interests in the firm, he would not work on the agency's project, and
his income would not be affected by the outcome ofthe development agreement or project.
The Attorney General's opinion will be published at 85 Cal. Op. Att'y Gen._(2002), and is
available online at http://caag.state.ca.us/opinions/index.htm.
Legislative Body Member
Participation. Veterans of the
development agreement negotiation
process typically advise against
including a goveming body
representative on the negotiating
team.
Such involvement can put the
elected official in a constrained
position when the final agreement
goes before the council or board.
Conflicts oflnterest Issues. In
selecting negotiating team members,
keep in mind conflicts of interest
issues. For example, the Attorney
General opined in 2002 that a senior
local agency staff member may not
participate in the negotiations and
drafting of a development agreement
if her spouse is employed by a firm
that will provide outreach services
for the developer with respect to the
project pursuant to a yearly retainer
agreement. The Attcrney General
found that the staff member's
participation would violate conflicts
of interest laws relating to
contracts,TT even though the spouse
had no ownership interest in the
firm, he will not work on the city's
project, and his income will not be
affected by the outcome of the
development agreement or project.
For more information about ethics
laws, please See The Local Olficial's
Guide to Ethics Zaws published by
the Institute for Local Self
Government.
P n,rr"r'r ('t.t Po I r t'E t{ s
INsrtrurn for Loc.lt Srr,n GovrRxurENT . Couvuurry LaNo UsE Pnorpcr I qS
do not need to continually renegotiate those points, unless circumstances
change.
Tnr Uru;TY oF GnouNo Rur,rs
Ground nrles for negotiations are very important. Typical ground rules
include:
Who is the spokesperson for each side? To what
extent does that person have authority to bind their
respective principals?
o Who will take notes and document the poinb of
agreement?
o Where, when and for how long will the negotiators
meet? Will telephone negotiations be allowed?
o Are these meetings open to the media and public?
o When and how will issues related to the development
be presented to decisionmakers, including individual
members of the governing body?
o How will media inquiries be handled?
o What strategies, if any, will be employed if bargaining
reaches an impasse?
a
The following types of ground rules may be adopted prior to negotiating a development
agreement, in order to improve the parties' chances of negotiating mutually acceptable terms and
provisions.
The parties agree during negotiations to:
l. Listen to the other party's needs and desires
2. Discuss mutual "interests" rather than individual "positions"
3. Encourage creative ideas by agreeing there are no stupid suggestions
4. Take into account each other's needs and desires
5. Use objective standards and criteria to assess interests
6. Use a check-off system to conceptually approve deal points along the way
7. Avoid returning to approved points absent changed circumstances
8. Use a deal point outline rather than iterations of the agreement itself
9. Avoid drafting the agreement itselfuntil all deal points are agreed upon
10. Develop a common understanding of the agency's land use policies
S.rrtpl-l: (lnotttu Rr l.lls t.-on Nl:r;o'l't.\t'to\s
46 IDEVELoPMENT AGREEMENT MaNulr,
Such ground rules should be memorialized in writing.
SnrrrNc PRroRrrms
Each party should be clear on their organization's priority issues going into
the negotiations, so each priority can be addressed early on. Reaching
agreement on these priority issues is, of course, the key to successful
negotiations.
Typical priority issues for local agencies include:
Land Use Issues. What regulations relating to density,
design, uses, and construction standards is the agency
willing to freeze in place at the time the agreement is
executed? On what issues does the agency wish to
retain the flexibility to adapt its regulations to changing
circumstances and new information?
Exaction lsszes. Which public improvements and
facilities will be constructed, dedicated or financed by
the project proponent? On what schedule? Will there
be a reimbursement provision if the project proponent
fronts the financing for a facility?
a
a
a Special Issues Relating to State Requirements.
What role will school facilities and affordable housing
issues play?
Thinking through these issues and what the local agency will need to make
the development agreement a net gain in terms of the public's interest is a
key to successful negotiations.
H,q,vE A STRATEGY
Fundamentally, each party comes to the negotiations with certain priorities
and objectives-some of which may be unrealistic. Finding compromise
solutions can require a sense of the other party's true objectives (and
presenting one's proposals in terms of those objectives) and patience while
the other party works through what they had hoped to receive as the result
of the negotiations and what they actually can receive. Moreover,
negotiations can be stessful; less skilled negotiators may react to such
stress with displays of anger and attempts to badger their way into
prevailing.
It can be useful to have a list
of what the agency must
receive as a condition of
agreeing to the development
agreement and what the
agency is willing to trade for
other concessions.
The list should include the
various options available to
satisfy the agency's
objectives (for example,
building versus funding an
improvement). The list
should also include any limits
on what the agency can do
(for example, waiving a fee
that others must pay).
Making such determinations
in the heat ofnegotiations
can sometimes be a risky
strategy.
Pn,rcll< r- PoI \r'l.-ns
INsrrrurn for Locar, SBLr GovnRNnrENT . ColavuNrry LaNo UsB Pnorpcr I ql
In most instances, it is important for both sides to keep in mind that there is
a long-term relationship to be fostered. This relationship is frequently more
important than short-term gains or "gotchas" on elements of the deal.
INrnnrsr-Bn sro BlRcuNrNG TECHNTeUES
The parties may also agree in advance to use a particular negotiating
approach. Historically, the negotiating model has involved a static process
of developing positions in advance, based on confidential parameters set by
the principals. More recently, professionals have advocated a more
dynamic or synergistic approach that involves both parties working together
to transcend competing interests.
Advocates of synergistic negotiations suggest that parties should:
Share interests during negotiations (for example, what
they fundamentally wish to accomplish or avoid) rather
than pre-determine, then haggle over positions;
Acquire a real (in other words, empathetic)
understanding of what the other parly needs;
Use brainstorming techniques to develop lists of options
from which "outside-the-box" solutions can flow; and
Agree to rely on objective standards or thirdparly
authority to settle differences and overcome obstacles.
Although conducting successful negotiations is a much larger topic than can
be adequately addressed here, there are a number ofresources that explain
the benefits of negotiating in a more dynamic or synergistic fashion."
For the local agency, an interest-based approach works better in light of the
constraints of the state's open meeting law. As a general matter there is
no exception to the open meeting laws for local agencies to instruct their
negotiating team on the provisions of a development agreement.
78 See, for example, Getting to IZes by William Ury and Roger Fischer, and The Seven Habits of
Highly Effective People by Stephen R. Covey.
a
a
a
a
48 IDEvELoPMENT AcREEMENT MaNuar,
The following illustrates this approach toward negotiations.
Suvrvr,q.ny
By preparing in advance, developing a negotiating framework in which to
proceed, and adopting ground rules, including how negotiations should be
conducted, the parties *rould be able to create a negotiating environment
that will increase the likelihood of reaching consensus.
Serene Valley is a large unincorporated area with an agricultural past. Much of the area is now built out, and
the outlying farmland is seriously threatened by ever-expanding suburban development. As a result, the
board of supervisors has established an urban limit line to prevent further sprawl.
Henry House is a project proponent who wishes to construct homes in Serene Valley. He is accustomed to
building typical subdivisions projects with little open space, noting the continually increasing need for
additional housing.
Mr. House applies for a development agreement to allow him to construct high-density housing beyond the
urban limit line. Planning staff advises him that his application is likely to be denied (some would say dead on
arrival). Some of his equity partners have owned property beyond the urban limit line for decades, and resent
the influence of no-growth advocates who have only recently moved to the area.
As negotiations begin, the (somewhat skeptical) parties adopt a dynamic approach to negotiations, in which
they agree to discuss respective interests rather than relative positions. Planning staffexplain, for example,
that they are interested in preserving the scenic nature of Serene Valley for future generations, rather than
taking the position that they will never recommend construction beyond the urban limit line.
In turn, Mr. House explains that he is interested in constructing a project that will pencil out financially, rather
than taking the position that the project must be constructed in a certain manner.
The parties eventually reach the conclusion that it is impossible to construct a conventional residential
project that will make business sense while also respecting the urban limit line.
Nonetheless, they begin the next step in the process, which is brainstorming to identifu mutually acceptable
solutions. The parties are careful not to criticize ideas during the process or to dismiss any ideas as
unrealistic. Slowly, suggestions emerge, ranging from creative suggestions that homes should not be visible
from public streets to building underground homes.
It occurs to planning staffthat the county has infill properfy that could fill out a town center concept
envisioned by the specific plan for this part ofthe county's unincorporated area. Moreover, the county has
access to state park bond funds to potentially purchase conservation easements over Mr. House's existing
parcel, thereby helping the project pencil out for Mr. House and his partners. The mixed-use development
contemplated by the specific plan is also consistent with Mr. House's familiarity with higher density projects.
Helping Mr. House acquire the land may even help the county meet its affordable housing goals.
Planning staff also are aware, from a number of workshops the county has held on smart growth issues, that
the supervisors are interested in more sustainable forms of development. The negotiators go forward with
this concept successfully, creating a win-win situation.
Il.t.t s t tr.\'r'ro\-]'r[- URr] \\ l-r\r'r' l,t\r- .\ru Br-\ o\r)
THn SUSSTANCE oFA
DpvELOPMENT
AcnnEMENT
A number of considerations should be taken into account when drafting a
development agreement. For effrcierrcy, many jurisdictions start with a
standard form agteement that has already been reviewed and approved by
the agency's attomey. It is also helpful for negotiators to have reviewed:
Current version of the development agreement law;"
Planning policies for the area in question, including fee
and dedications requirements and environmental
analyses; and
Agency procedures for processing development
agreements.so
These steps help those involved in the negotiations identify the issues that
will need to be negotiated to protect the public's interests when drafting the
agreement. It is also important to think ahead about implementation issues.
This chapter discusses some of the drafting and drafting-process issues that
typically arise with development agreements.
A threshold issue is: From whose draft will the parties work? As indicated
above, for local agencies expecting to be involved in a number of
development agreements, it can be helpful for the agency to begin with a
standard development agreement form that covers ley and standard issues
of concern to the agency. Sample development agreements are available
online atwww
1e See Cal. Gov't Code $ 65864 and following (also available online atblp@!qi4,1fo44sov
by clicking on "California Law").
80 .See Chapter IV and the sample procedures available online atwww.ilse.ors/der.taemt.
a
o
C UAPTER
Who Will Do The
Drafting?
When Should The
Drafting Begin?
Common Provisions in
Development
Agreements... ........50
o
49
50
Wuo Wrr,r, Do rHE DnArrrNc?
50 lDrvrr,oPMENT AcnBBurNr MANUAL
Of course, the standard form agreement can take negotiators only so far.
The next question is which party's attomey will take the first crack at filling
in the project-specific elements of the form. Development agreement
negotiation veterans typically advise that the public agency's counsel retain
this role. In either event, it is not desirable to have both attomeys generating
drafts of their own.
WnrcN Ssour,n rHE DnarrrNc BncrN?
It may be tempting to prepare drafts of the development agreement as
negotiations proceed. Some participants may derive comfort from having
concrete proof that they are actually making progress.
However, the practice of preparing a draft as each of the deal points
emerges can be expensive and result in unnecessary rewrites of the
agreement. This practice may also afford the opportunity for draftirrg
gamesmanship, in which slight but important changes are attempted beyond
the scope of what the negotiators agreed to. The attomeys for each
negotiating team must thoroughly review every draft, elevating otherwise
avoidable tension in ttre remaining negotiations. It is preferable to list
agreed-upon deal points for the entire agreement, including dates of each
proposal and the name of the person who made it. Then, the development
agreement can be drafted in close-to-finished form and subjected to final
editing and review by all parties. Use of the redline/strikeout computer
function simplifies the process.
Tnn PlnrrEs ro rHE AcREEMENT
Local agencies may enter into development agreements only with persons
who have a "legal or equitable interest" in the real property in question.8l
There may be others who should be parties to the agreement (for example,
lenders). The goal is to identiff whether there is anyone whose
participation is necessary for the local agency to receive the benefit of its
bargain, who would not automatically be bound by the agreement by its
provisions as a successor-in-interest when the agreement is recorded.*'
8r See Cal. Gov't Code $ 65865(a). See also National Parks and Conservation Association v.
County of Riverside, 42 Cal. App. 4'n I 505 ( I 996).
82 See Cal. Gov't Code $ 65868.5.
Sometimes it is tempting
to use ambiguous
language to describe
issues on which the
parties are having
difficulties agreeing. This
temptation should be
avoided, inasmuch as it
only postpones
problems.
Moreover, given that the
agency will be able to
terminate the agreement
only upon substantial
evidence of
noncomplianc e, s e e Cal.
Gov't Code $ 65865.1
(there must be substantial
evidence the project
proponent has not
complied in good faith
with the agreement), there
is a high degree ofrisk
that ambiguities will
ultimately be resolved
against the public
agency.
{ Nor'[, ABtrur
C l,rn lrY
CovrnnoN PRovrsroNs IN DnvELopMENT
AcnmMENTS
INsrrrurn for Local Snlr GovrnNprENT . CouuuNrry LRNo Usp PnorBcr I S t
Usn or Rncrrm,s
It is common to include recitals, typically following the first paragraph of the
agreement, that identiff the parties to the agreement. Many development
agreements begin with a recital explaining the advantages offered by this
development agreement, and stating that the agreement is entered into
pursuant to state development agreement law, Govemment Code section
65864 and following.
Recitals typically explain:
That the project is consistent with the general plan and
any applicable specific plan; and
That the parties have complied with the Califomia
Environmental Quality Act.
Recitals may also identify other discretionary land use approvals that are
required for the project (for example, approval of a subdivision map or
discretionary land use permit), and whether those approvals have previously
occurred, will occur simultaneously, or will occur only after the
development agreement has been approved."
On occasion, a recital may address contingencies that will delay the
effective date of the agreement, such as the need for property annexation.8a
Trnu
The term must be stated in the body of the agreement.8s Larger projects,
especially those constructed in phases, may require longer terms. In other
instances, planning staff may argue for a shorter term, perhaps five to ten
years, to enable the local entity to revisit the properfy's zoning and general
plan designations sooner rather than later
There is some indication that the term of the agreement - or at least the
time during which the agency agrees not to apply changes in land use
t3 See Cal. Gov't Code $ 65865.2.
8a See generally Cal. Gov't Code $ 65865.3 (development agreements and newly incorporated
or annexed areas).
E5 See Cal.Gov't Code g 65865.2
a
a
o Who the parties are;
o What the project is;
52 IDEVELoPMENT AcREEMENT M,rNulr,
regulations to the development-is one factor that the courts will evaluate if
the development agreement is challenged.'u
It is generally a good idea to allow the parties to terminate the agreement
early in the event of a material breach. (See further discussion concerning
default, remedies, and termination, below.)
Note that development agreements for unincorporated territory within
cities' sphere of influence must specify a timeframe within which the
annexation must occur.s' The agreement does not become operative until
the annexation occurs."
RnqurnrD CoNTENTS
A development agreement must speciff the
Permitted uses of the property;
Density or intensity of use; and
Maximum height and size of proposed buildings.'n
These are also known as the development plan. Because development
agreements can and are being used in a variety of applications, the required
content outlined above can be addressed more generically or more
specifically, depending on the goals of the parties and the degree to which
the absence of such specification in the agreement means that the agency's
regulations apply.'o As a matter of drafumanship and avoiding a basis for
challenge, however, it is useful to address each of the required content
elements. e'
For example, the permitted uses can be generically established by reference
to a zoning category, such as retail commercial, or specifically established
86 See generally Santa Margarita Area Residents Together v. San Luis Obispo County Board of
Supervisors,84 Cal. App. +th ZZI 12OOO1 (suggesting such freezes cannot be of unlimited
duration and upholding a zoning freeze for five years)
81 See Cal. Gov't Code g 65S65(b).
88 See Cal. Gov't Code g 65865(b).
8e Cal. Gov't Code $ 65865.2 (contents ofdevelopment agreements).
eo See generolly Santa Margarita Area Residents Together v. San Luis Obispo County Board of
Supertisors,84 Cal. App. 4th 221 (2OOO) (finding the fact that the agreement did not mention
maximum height and size ofproposed buildings was not fatal because the agreement was subject
to the county regulations ofthese variables).
e1 See generally Santa Margarita Area Residents Together v. San Luis Obispo County Board of
Supervisors,84 Cal. App. 4th 221 (2OOO) (adopting a "substantial compliance" approach to
these required content elements).
a
a
a
A good rule of thumb for
the term of a development
agreement is five to ten
years. Any longer may
constrain a local agency's
ability to impose new
regulatory requirements to
respond to changing needs
and issues in the
community.
Pn,tt't'I (' E P<; r yt't. n
INsrrrurt for Loc,lI, Serr GovrRNnrENT. CourvruNrrv LaNo Usp PRolBcr lSl
by reference to a site plan detailing every aspect of a proposed project.
Likewise, the density and intensity can be generically designated by using a
range of possibilities, (six to ten units per acre, for example), or specifically
designated (t'wo units per acre). Similarly, the requirement that the
maximum size and height of proposed buildings be included does not mean
that every development agreement must propose buildings.
Pusr-rc BnNBrrrs
Another required element of a development agreement is the provision for
reservation or dedication of land for a public purpose." A "permissive
element" refers to the terms and conditions relating to the project
proponent's financing of necessary public facilities and the subsequent
reimbursement of the project proponent for its non-pro rata share over time.
ln fact, it is a good idea to specify all of the public benefits that will result
from the agreement, following a recital explaining that the project proponent
recognizes that he or she is being afforded greater latitude in exchange for
agreeing to contribute greater public benefits than could otherwise be
required, and that the project proponent does so freely and with full
knowledge and consent.
AnnnrsslNc A PornNtr,q.L PoLICE PowBn Cnar,r,nNcn
Early on, commentators speculated whether adopting a development
agreement might constitute an illegal "contracting away" of an agency's
police powers, which, in this context, refers to a local agency's governing
powers. "Police" derives from the Greek word polis, which means city.
Cities and counties typically obtain their police powers through the state
Constitution.'o
The California Constitution says, for example: "A count5r or city may make
and enforce within its limits all local, police, sanitary, and other ordinances
and regulations not in conflict with general laws."" These powers afford
the local agency latitude in dealing with issues that are local in nature and
have not been addressed by the state legislature.
e2 Cal. Gov't Code g 65865.2.
e3 See generally Santa Margarita Area Residents Together v. San Luis Obispo County Board of
Supervisors, 34 Cal. App. a'n 22t 12OOO1 (finding the fact that the agreement did not mention
maximum height and size ofproposed buildings was not fatal because the agreement was subject
to county regulations ofthese variables).
ea See Cal. Const. Art. XI, $7.
e5 Cal. Const. art. XI, g 7.
54 | D EvELopMENT AcREEMENT M.lxu.r,r,
One thing a public agency cannot do is to contract away its police powers
by enabling a private body or individual to contol the exercise of its
governing powers.'u In the case of development agreements, the question is
whether the "freezing" of applicable land use regulations, so that the public
agency cannot change the rules in a way that will prevent the project
proponent from constructing or operating the project as approved,
constitutes an illegal contracting away of police powers.
There are two ways that freezing of rules and regulations could conceivably
constitute an illegal contracting away of police powers.
First, development agreements lock in the right to constuct the project as
approved once the agreement is in effect. Without a development
agreement, the law allows the agency to impose additional requirements on
a project up to the point at which the project proponent acquires vested
rights by obaining a building permit and doing substantial construction work
in reliance on that permit.e'
Second, development agreements do not allow the imposition of new rules
that conflict with those in existence when the agreement was approved."
Without a development agreement, the agency may dnnge the applicable
zoning in a manner that is inconsistent with the project proponent's vested
rights, in which case, the property may acquire what is known as a
"nonconforming use status" because the development on the property no
longer conforms with tre applicable zoning. While vested rights allow the
owner to continue building and operating the project as originally approved,
there may nonetheless be limitations on how the property can be used,
including a prohibition against expanding nonconforming uses.
Whether either of these two aspects of development agreements
constitutes an illegal contracting away of police powers may turn on the
extent to which an agency surrenders all of its control over land use
functions, rather than reserving most of its police powers except to the
limited extent otherwise provided by the agreement.ee
e6 See generally Santa Margarita Area Residents Together v. San Luis Obispo County Board of
Supervisors,84 Cal. App. 4'h 221 (2OOO) (finding government entity does not contract away its
police power unless the contract amounts to a surrender or abnegation ofa proper
governmental function).
e7 See Avco Community Project Proponents, Inc. v. Soulh Coast Regional Commission, lT
Cal.3d 785 (1976).
e8 Cal. cov't Code g 65865.4.
ee See Morrison Homes Corp. v. City of Pleasanton, 58 Cal. App. 3d 724 (19'16\ (holding that
an annexation agreement did not constitute an illegal "contracting away" of its legislative
authority because it did not contract away all ofthe agency's authority).
INsrrrutnfor Loclr SBLr GovBnn*rENT . CorvrrvruNtrv LeNo Use PRorpcr I SS
Accordingly, it is a good idea for the drafters to include a provision in the
development agreement explaining the extent to which the property will
continue to be subject to the entity's zoning rules, regulations and policies,
as well as a provision explicitly reserving the entity's police powers unto
itself, except as otherwise provided in the agreement.
Rrcovrny oF Cosrs
Depending on the nature of the project, negotiating a development
agreement can involve significant costs for the public agency in the form of
staff time and legal fees. The agency may want to provide for the recovery
of some or all of those costs, either in its local procedures (as part of the
cost of processing a development agreement) or as a term of the
agreement itself. If provided for in the agency's local procedures, the
agency will want to ensure that it does not assess the project proponent
more than its actual costs. One way is to establish an hourly rate atd
record the stafPs time spent working on the project.
Wmcu Rpcur,auoNs Anr FnozEN?
Three drafting considerations affect which local land use rules and
regulations will apply under the terms and conditions of the development
agreement.
First, state law says that unless the agreement provides otherwise (see
sidebar at right), the rules and land use policies in effect when the
development agreement is adopted will apply to the project. The project
proponent will be inclined to want language to the effect that the local
agency is not allowed to apply rules or land use policies that would
effectively nulliff its prior approval of the project. ln tum, the agency's
attorney will want language that confirms the statute allows the agency to
apply new rules in tre future, as long as they are not in conflict with the
rules and regulations that were in place when the agreement was adopted.
Second, the attorneys need to decide what language to use in the event the
parties agree to allow land uses that are inconsistent with the otherwise
applicable zoning requirements in existence at the time the development
agreement was negotiated. One approach is to include language saying the
then-existing zoning ordinance govems, but only to the extent it is not
inconsistent with any provisions of the agreement. Depending on the
circumstances, the agency attorney may prefer to actually amend the
zoning ordinance so that it is consistent with the development agreement, in
order to allow other projects to request that zoning in the future.
Local agencies may wish to
discuss retaining their
discretion to apply changes to
the following components of a
development agreement:
o lmpact fees;
Processing fees; and
Procedural regulations
a
a
a
Uniform codes;
P<lsslgt-tl
Erct.t. sto\s FltoNt
lrrl. FREEZ-rl
56 IDEvELoPMENT AcREEMENT MlNulr,
Third, the development agreement should state that the agency's
compliance is subject to later-enacted state and federal regulations.'oo
..MILESTONE'' RngunnMENTS
On larger, phasedin projects, it may be useful to include "milestone"
requirements so the agency can terminate the agreement if phases of
construction have not been completed within a specified timeframe.
The project proponent may resist agreeing to absolute deadlines. In this
case, the public agency may want to consider allowing the timeframe to
begin with a specified event, such as issuance of building permits. Before
doing so, however, the public agency should make sure there are adequate
incentives for the project proponent to stay on schedule, and that the
decision to begin the next phase is not left entirely to the project
proponent's discretion.
Dnr^q.ulr, Rnvmorns AND Tnntvrn{arloN
Drafters typically recite that upon the commission of a material breach, the
other party may terminate the agreement and exercise other legal remedies
that it may have.
Especially with respect to larger projects, parties may be motivated to enter
into elaborate provisions conceming default, available remedies and
termination, so that in the event of a material breach, the breaching party
has a specified time to "cure" the breach, before the other party can
terminate the agreement. These provisions may contain what are known as
"force majeure" recitals that preclude terminating the agreement, or that
extend the term of the agreement when performance is not possible due to
war, insurrection, terrorism, strikes and other events that are beyond the
control of the parties. Such provisions are generally advantageous to the
project proponent, and create potentially lengthy periods in which the
agency is unable to apply new land use rules and regulations that may
affect the agency's ability to do responsive land use planning.
NoN-PTnFoRMANCE IssuES
It is important to remember that a development agreement is indeed a
contract, the breach of which may be subject to monetary damages. Some
local agency attomeys include clauses limiting remedies against the agency
to specific performance. Under some circumstances, liquidated damages
'oo Cal. Gov't Code g 65869.5.
Ixsrrturn for Loc.c,L Srlr GovnnNuENT . ColauuNrrv LaNo Use Pnorrcr I Sl
clauses may protect the agency from the upside risks associated with
damages awards.
The local agency will also find it helpful to consider what kinds of
assurances it wants to have available in the event the project proponent
defaults on certain obligations. Some of the options local agencies may
want to consider include:
a
a
a
Letters of credit;
Performance bonds; and
Withholding certain approvals (for example building
p€rrnits, until satisfactory performance occurs)
The agency may also want to think through timing issues associated with
the project proponent's performance. ln some instances, it may be
advisable to speciff timeframes for performing aspects of the development
agreements and the consequences of not meeting those timeframes.
Srlrn oR FEDERAL LAws
The parties may want to include a provision addressing the fact that state
and federal regulations are not suspended by a development agreement. If
a state or federal regulation is amended in a way that would preclude
further performance under the agreement, the affected provisions of the
development agreement will be modified or suspended.'o'
ANNu.Lr, RnvtBw
The parties may want to recite their awareness of the requirement for an
annual review of ttre development agreement by the local entity. Recognize,
however, that to the extent the parties make it the agency's confiactual
obligation to conduct srch a review, they may be setting the agency up for
a failure to perform.',':It is preferable to speciff the agency's procedures
for conducting its annual review in the agency's procedures ordinance or by
resolution.
ror .See Cal. Gov't Code g 65869.5.
r02 A number of agencies admit to having neglected annual reviews, which is inadvisable. A
"tickler" system developed in collaboration with the clerk's office can be a helpful reminder to
hold these hearings once a year.
58 IDEvELoPMENT AcREEMENT MlNulr,
ENToncBMENT
The parties may want to inchde an enforcement provision reciting that the
agreement is enforceable notwithstanding any changes to the general plan,
specific plan (if any), or the zoning, which alters or amends an ordinance,
rule, regulation or policy goveming the zoning of the property during the
term of the agreement.
RnconnarroN
The parties may want to recite their awareness of the requirement that the
agreement be recorded within l0 days following execution. Recognize,
however, that to the extent the parties make it a contractual obligation of
the local agency to timely record the agreement, they may be setting the
agency up for a failure to perform.
CnRrrrrcATE oF S^lrrsracrroN
The project proponent may wish to obtain "certificates of satisfaction" from
the agency as phases of construction are completed, reciting that each
phase is in full compliance with its obligations under the development
agreement. This certificate may be important to potential lenders. To the
extent there are ongoing obligations, or obligations that transcerd the
physical boundaries of a particular phase, it may be difficult for the local
agency to make such attestations until the term of the development
agreement has fully expired.
INonUNTTICATIoN AND HoLD IIARMLESS PRovIsIoN
It is not uncommon to have the poject proponent hold the local agency
harmless from any liability the agency may incur as a result of entering into
the agreement. Also helpful is a provision requiring the project proponent to
indemnify and defend the agency at the proponent's cost against any legal
action instituted by a third party to challenge the validity of the agreement,
including a challenge based on an assertion that the Califomia
Environmental Quality Act has not been complied with.'03
'0' Such arrangements have received the blessing ofthe Califomia Attorney General's Office.
See 85 Cal. Op. Att'y Gen. _ (2002), available online at
http://caag.state.ca.us/opinions/index.htm.
INsrrrurnfor Loc.c,L Splr GovrnNrvrENT . CourvruNrry LRNo UsE Pnorncr I Sq
AunnnuENT oR CaNcBr.r,ATIoN
State law provides that a development agreement can be amended or
canceled, in whole or in part, by the mutual consent of the parties upon
notice of intention to amend or cancel in the form required by Govemment
Code sections 65090 and 65091, and adoption of an ordinance amending the
agreement. The ordinance must also be found to be consistent with the
general plan and any applicable specific plan, and is subject to referendum,
just as the original ordinance adopting the development agreement was.
Drafters typically recite these statutory requirements in the agreement for
the convenience ofthe parties.
AssrcNurnNr
Drafters typically include a provision that neither party shall assigr or
transfer any of its rights, interests or obligations under the agreement
without the prior written consent of the other, which consent shall not be
unreasonably withheld.
The project proponent may want to seek additional language, which states
that subsequent purchasers automatically become parties to the agreement
upon transfer of ownership.
Succrssons
It is common to include a provision indicating that the obligations imposed
by the agreement constitute "covenants running with the land" and that the
burdens and benefits bind and inure to all estates and interests created in
the subject property and to all "successors-in-interest" of the original
parties.
Public agencies have faced difficulties once a number of people become
successors-in-interest by vinue of acquiring property govemed by the
agreement. In some cases, project proponents lave gone bankrupt, making
it difficult to justify enforcing the agreement against individual owners.
Depending on the circumstances, public agencies may want to require as a
condition of approval that project proponents have homeowners (or
property owners) associations govemed by covenants, conditions, and
restrictions (CC&Rs). The CC&Rs should include the development
agreement obligations so that the association, as well as individual property
owners, is responsible for ensuring performance of the development
agreement.
To the extent the provisions of the CC&RS supersede the development
agreement, the association may have the flexibility to amend development
60 | DEvELoPMENT AGREEMENT M.lNuar,
agreement obligations by a vote of less than 100 percent of the association
membership. Also, the public agency may be granted enforcement rights
under the CC&Rs.
Var.rorry oF PoRTIoNS oF THE AcREEMENT
SBvBnAsrLrrY
It is common to include a provision statrng that if one aspect of the
agreement is held by a court to be illegal, the validity of the remaining
provisions are not affected.
ArronNrYs FEEs
In lawsuiS involving contracts, the law does not allow a party to recoup its
attorneys fees as part of its damages unless the agreement so provides. As
a result, many written agreements contain a provision stating that if a
lawsuit or other legal action is brought with respect to the agteement, the
prevailing party is entitled to recoup reasonable attorneys fees and costs.
Goon F,urH AND FArR Drar,rNc
Many agreements recite that the parties expressly acknowledge that any
actions they take pursuant to the development agreement will be measured
by the "implied covenant of good faith and fair dealing."
SrcN,lrunrs AND SunonurNATroN
The drafter will want to decide who should sign the development
agreement. In addition to the property owner and public agency, some
practitioners require lenders, lessees and others with an interest in the
property to sign the development agreement. Other attomeys require
lenders, lessees and other interested parties to sign subordination
agreements, which make their interests in the property subject to the terms
and conditions of the development agreement. ln the event subordination
agreements are balked at, local agencies may want to consider requiring
other interested parties to at }ast sign a written acknowledgment and
consent, stating they are aware of the existence of the development
agreement and that they understand its terms.
INsrrrurnfor Loc.ll Splr GovpnNvrENT . CovuuNrrv LaNo Usp Pnorpcr I Ot
Suvrvmnv
A number of issues warrant consideration when drafting a development
agreement. In the final analysis, a well-drafted development agreement
should accurately capture the deal points negotiated by the parties, and
anticipate and address potential problems that may arise dunng
implementation of its terms.
The lnstitute offers a variety of sample development agreements online
through its database. The database is accessible through
www.ilse.orddevtamt. The lnstitute also welcomes submittals from
public agencies of additional samples for this database.
62 IDEvELopMENT AcREEMENT M .tNuar.
Actions By Third Parties Necessary To Implement The Agreement: describes permits or fees required by other agencies
such as school mitigation fees, environmental mitigation measures, etc.
Agency Default: describes the instances in which the agency would be in default such as:
o Ifa material warranty, representation or statement made or furnished by agency to the developer is false or proves to
have been false in any material respect
r The agency fails to comply in good faith with a material requirement
o An express repudiation, refusal, or renunciation of the agreement
Agency Default; Developer Remedies: describes the options the developer would have in the event the agency is in
default such as:
r To waive the default as not material
. To pursue legal remedies provided for elsewhere in agreement
o To terminate the agreement
r To delay or suspend developer performance which is delayed or precluded by the default ofthe agency
Agency Obligations: heart of development agreement; describes what the agency is obligated to do such as diligently
process further discretionary approvals, provide capacity, construct some improvements, reimburse certain funds advanced
by developer, etc.
Amendment Of Agreement: describes how agreement will be amended; stardard is that it is amended in same manner in
which it was initially adopted (public hearing process through agency) (but see "Operating Memorandum")
Annual Review: a reminder that there is a state law requirement that there be an annual review of the agreement by the
agency
Assignment: sets forth that neither party shall assign or transfer any of its rights, interests or obligations, without the prior
written consent ofthe other, which consent shall not be unreasonably withheld
Attorneys' Fees And Applicable Law: states that if a lawsuit or other legal action is brought with respect to the agreement,
the prevailing party is entitled to reasonable attomey's fees and costs and identilies that California law will be used to
interpret agreement
Bankruptcy: describes what happens in the case of a bankruptcy
Certificate OfSatisfaction: a writing from the agency, as phases ofconstruction are completed, stating that each phase is
in compliance with its obligations under the agreement, often important to potential lenders
Consistency With General Plan: required provision which states that the agreement is consistent with agency's general
plan
Cost Recovery: describes the method by which the agency will recover costs of stafftime including legal fees for
negotiation of the agreement
Covenants Run With The Land: states that the agreement is specific to the property, binds future owners and is not
transferable to another property
Default And Remedies: describes what constitutes a default, what notice is required if one party thinks there is a default
(generally a material breach), what remedies can be purused (for ex. damages, injunction, termination)
Delay, Extension Of Times Of Performance: identifies thatperformance by a party may not be a default if the delays
are due to war, strikes, riots, acts of God, or govemmental entities other than agency ("see Force Majeur")
Gl.oss.\R\ or Kl-\ T[.Rus
INsrrrurr,for Loclr, Srr,r GovrnNrrENT . CovvuNrrv LeNo Usp Pnorpcr I O:
Gt-oss.\rt\' <ll Kr:r Tl-R\rs (Covt r\t l-t)).
64 IDEvELoPMENT AcREEMENT MlNuar,
Developer Default: describes the instances in which the developer would be in default such as:
r Ifa material warranty, representation, or statement made by the developer to the agency is false or 1
been false in any material respect
. A finding by the agency that the developer fails to comply in good faith with any other material reqt
agreement
o An express repudiation, refusal, or renunciation ofthe agreement
Developer Default; Agency Remedies: describes the options the agency would have in the event der
default such as:
o To waive the default as not material
o Refuse processing of a permit, approval, or other entitlement for
o To terminate the agreement
o To delay or suspend agency performance which is delayed or precluded by the default ofdeveloper
o To cure and charge back costs to the developer in emergency situations posing an immediate danger
safety
Developers' Interest: describes what legal interest the developer has in the property
Developer Obligations: heart of development agreement; describes what property owner/developer is ob
such as what improvements to be constructed and when, property to be dedicated and when, money to
when, etc.
Development Plan: a development agreement must speci$ the permitted uses of the property, the
intensity ofuse, and the maximum height and size ofproposed buildings; because development agreements
being used in a variety of applications, the required content can be addressed more generically or more
depending on the goals of the parties and the degree to which the absence of such specification in the agre(
that the agency's regulations apply. For example, the permitted uses can be generically established by re
zoning category such as "retail commercial" or specifically established by reference to a site plan detailing
of a proposed project. Likewise, the "density and intensity" can be generically designated by using
possibilities, ("6 to 10 units per acre," for example), or specifically designated at "2 units per acre". S
requirement that the maximum size and height ofproposed buildings be included does not mean that ever
must propose buildings
Encumbrances On The Subject Property: identifies subordination and mortagee information regardin
and obligations including notice ofdefault and right to cure
Entire Agreement: provides that the agleement embodies all the terms of the agreement and no "outside''
are valid
Estoppel Certificate: a written notice that the agreement is in full force and effect, a binding obligation c
and there is not a default
Exhibits: outlines what exhibits are attached and made a part of the agreement
Force Majeure: describes that performance may be excused due to war, terrorism, strikes, and other ev
the control ofthe parties
Good Faith And Fair Dealing: sets forth that the parties expressly acknowledge that any actions they
measured by the "covenant ofgood faith and fair dealing"
Hold Harmless And Indemnification: requires the developer to hold the local agency harmless from any
agency may incur as a result of entering into the agreement; states that the developer will to indemnifr anr
agency at the developer's ost against any legal action instituted by a third party to challenge the val
agreement, including a challenge based on CEQA compliance
INsrrrurn for Loc,tI, SBr,r GovnRNvrENT . CouuuNrry LeNo Use PRorpcr I OS
Incorporation Of Recitals: generally states that the recitals which precede the "now therefore" clause are
incorporated into the agreement itself.
Insurance: sets forth types and amounts ofinsurance that the developer is to provide as security for the hold
harmless and indenrnniry requirements
Jurisdiction And Venue: identifies the county in which any litigation should be filed and that the interpretation,
validity, and enforcement ofthe agreement shall be governed by California law
Liquidated Damages: identifies circumstances which would limit remedies against the agency to specific performance
(no ability to receive money damages); under some circumstances, liquidated damages clauses may protect the agency
from upside risks associated with damages awards. There may be instances in which the agency desires liquidated
damages ifdeveloper fails to perform (such as failure to dedicate property
Milestones: see Phasing
Notices: describes where and how notices required in the agreement are to be sent
Operating Memorandum: describes instances in which formal amendment to agreement is not needed to implement
the agreement such as minor refinements and/or clarifications; should be up to agency's sole discretion to determine
whether amendment or "Operating Memorandum" is appropriate
Parties To The Agreement: identifies the persons having "legal or equitable interest" in the property
Phasing Of Development: describes the "triggers" or "milestones" of the project; may also be known as the
"development plan"; on larger, phased projects, it may be useful to include "milestone" requirements so the agency can
terminate the agreement if phases have not been completed within a specified time frame
Private Undertaking: identifies thatthe project is a private development and there is no partnership,joint venture,
or other association ofany kind between the developer and the agency
Project And Property Subject To This Agreement: describes the project name, street address and references a legal
description ofthe property (generally an exhibit)
Protest Rights: provides for the developer to waive protest rights, and releases the agency from any claims arising out
of the calculation, allocation, and use of development mitigation fees (AB 1600 fees)
Public Benefits: this provision is a required element of a development agreement related to the reservation or
dedication of land for a public purpose; a permissive element is the terms and conditions relating to the project
financing ofnecessary public facilities and the subsequent reimbursement for the developer's non-pro rata share over
time, and generally includes a description of the public benefits that will result from the agreement, following a recital
explaining that the developer recognizes that greater latitude is provided in exchange for agreeing to contribute greater
public benefits than could otherwise be required.
Recitals: describes the parties to the agreement; also describes applications and hearing process as well as CEQA
review (for example: development agreement application number, general plan amendment application number, type of
CEQA review done (ifEIR gives state clearinghouse number), also identifies dates ofpublic hearings before planning
commission and agency; many development agreements begin with a recital explaining the positive effects of entering
into a development agreement, and that the agreement is entered into pursuant to the state development agreement law; a
recital may address contingencies that will delay the effective date ofthe agreement, such as the need for annexation of
the property
Recordation: implements state law requirement which requires the agrcement to be recorded
Gr.<lss,\R\' or- K[-\' l-t]r{\rs (C<lrt't\t't.tD).
66 | DEvELopMENT AGREEMENT M,c.Nu,{L
INsrrrurt for Locll SrI,p GovrRxuENT . CouuuNIrv LeNo Use PRorpcr I Ol
Reserved Discretionary Approvals: describes, generally in some detail, the approvals which are subject to discretion even
after the agreement locks in or freezes other regulations; some regulations which may be important to "reserve" are impact
fees, uniform codes, processing fees, certain procedural regulations (method of submitting final map - number ofcopies,
Mylar, GIS format, etc.)
Security: describes what the agency will require to assure performance such as letters ofcredit, performance bonds, or the
ability to withhold certain approvals (for example building permits), until performance occurs
Severability; also called Validity: sets forth that if one aspect of the agteement is held by a court to be illegal, the validity
of the remaining provisions are not affected
Signatures: identifies who should sign the development agreement; in addition to the property owner and agency' some
agencies require lenders, lessees and others with an interest in the property, to sign the development agreement or to sign
subordination agreements (see "subordination").
Subordination: an action by which another entity makes their interests in the property subject to the terms and
conditions ofthe agreement and acknowledges the existence ofthe agreement
Successors: identifies that the obligations imposed by the agreement constitute "covenants running with the land" and
that the burdens and benefits bind all future purchasers
Term: identifies the length of time the agreement (which must be stated in the agreement); larger projects, especially those
constructed in phases, may require 10, 15 or 20 year terms
Termination (upon completion of development): provides that upon sale of individual lots allobligationsof developer
are discharged with respect to lots upon final inspection and issuance ofcertificates ofoccupancy
Vested Components: describes, generally in some detail, the existing development regulations, etc. that are "frozen" or
"locked in" by the agreement
Waivers: states that a waiver of one breach is not a waiver of any other breach
Gr.<lss.\R\ ol' Kh\' l'[.R]ls (C<lrll\tr[-l))
OS I nEvELopMnNr AcRBEMENT MLNu^lr,
CoxcLUSIoN
Development agreements can be a useful tool in land use planning, creating
win-win opportunifies for both project proponents and local agencies when
dealing with uncertainties associated with the regulatory environment.
The goal of this manual is to help local agencies in understanding
development agreements and to provide them with practical tools to assist
them in using development agreements within their jurisdiction.
Did the manual succeed in achieving this goal? The Institute and its
financial supporters are very interested in local agency feedback. Please fill
out the form at the end of this publication to let the Institute know whether
this material was useful and how it could be improved.
C HAPTER
Feedback Form............................. 67
Additional Institute
Publications.. ........69
ZO I oEvELopMrNr AcRnEMENT MlNu.tl
DrvnlopMENT AcnnBMENT M.tNuar, Fnrcona,cr Fonvr
We are interested to hear your comments. This is your chance to shape futr.ue Institute
publications. You may either copy this page and mail or fa:r it to:
Institute for Local Self Govemment
Attrr: Development Agreement
1400 K Steet, Suite 400
Sacramento, CA 95814
Fa:r: (916) 658-82,t0
Or comment by ernail to ilsg@ilse.org Please put "Development Agreemerf Manual" in the
subject line.
Natrm:
Tm-r:
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Ixro:
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Address:
City:State:Tioz (optional)
wAs rrrr InrONU.IrrON IN THE D EWLOPMEI,IT AGREEMENT M NqIU USUTUT, TO YOU?
Eve. tr No
Wru,r ASPECTS WERE MOST USEFI.]L? LMST USEI.UL?
DID tr\FORMATION IN THIS MANUAL INFLT]ENCE HOW YOUR AGENCY APPROACIIED TIM
DEVEIOPMENT AGREEMEN T PROCESS ?fl Yes tr No
How?
DID YoU FIND ANY ERRORS? IF SO WHATWERE THEY?
I USED Trm MATERIAL TI TIr., DNWOPMENT A ENNaANT,T M N*IIT TO Z
tr Update/create our agency's development agreement procedures
tr Update/create our agency's standard form development agreement
tr Other (please speciff)