ATTACHMENT 1
TO: Chapel Hill Town Council
Trustees/Chancellor
FROM: David Owens
RE: Additional Information on Development Agreements
DATE: October 15, 2008
At the Council-Trustees meeting on September 25, 2008, several questions were raised about development agreements. The Joint Staff Work Group (JSWG) has discussed those queries and this memorandum provides the requested additional information.
Comparison to Previously Available Tools
The JSWG proposed a Carolina North development review process that uses a development agreement as a key tool. Council Member Kleinschmidt asked for a summary of how this compares to the land use management tools available to the Town prior to 2006 when the development agreement was first authorized by North Carolina statutes.
Without a development agreement, there are five principal tools available to the Town to set the standards for the Carolina North project and to review discrete portions of the development. These would likely be used in some combination, but there are particular attributes of each that are important for this discussion. These tools are:
The discussion below highlights the comparative features of each of these tools relative to a development agreement. The discussion is organized relative to several critical factors. Appendix A is a summary chart of this discussion. Again, it is important to note that the development agreement and each of these tools would likely be used in some combination with one another.
Process. The process that must be followed by the Council is determined based upon whether the decision is legislative, quasi-judicial, or administrative. State law mandates broad public notice and hearing requirements for legislative decisions, but allows ex parte communications about the decision and informal discussion with the applicant, neighbors, and the community at large. By contrast, the courts have imposed strict procedural requirements on quasi-judicial decisions in order to protect the due process rights of the parties. A quasi-judicial decision must be based on competent, substantial evidence presented at the hearing. Witnesses at the hearing are under oath and subject to cross-examination. Opinion and hearsay testimony is limited and cannot be the basis for findings or conditions. No ex parte discussion of the case is allowed. Only the pre-determined standards for decision may be considered. Administrative decisions are those made when the staff applies predetermined objective standards. There are no public hearings and no Council involvement in the decision.
The tools noted above are categorized as follows:
Scope of Standards. All of the tools other than a development agreement are limited to addressing only those issues covered by state enabling law. Each of the other tools is also subject to the exemptions in those laws. For example, land uses by a state or local government agency (including the University) that do not involve the construction or use of a building (such as a parking lot) are not subject to Town zoning. Ownership of land or structures cannot be regulated through zoning. Divisions of land into parcels greater than ten acres with no new public roads are not subject to Town subdivision regulations. By contrast, development agreements can cover any matter not inconsistent with the specific provisions of the development agreement statute.
In addition to these general limits on the scope of standards, each of the tools other than the development agreement has other specific limitations. If a conventional zoning district is used, the standards applied must be uniformly applied to all land within that district, precluding standards unique to the Horace Williams tract if the district is applied anywhere else within the Town. With a conditional zoning district, site-specific conditions are limited to those needed to bring the project into compliance with Town plans and ordinances or to address impacts reasonably expected to be generated by development or use of the site. Only the specific standards set out in the ordinance may be considered for master land use plans, special use permits, and site plans.
Community impacts and mitigation measures. Special use permits and site plans provide very limited opportunities to address impacts other than site-specific impacts that are directly related to project impacts. To the extent exactions are required, with master land use plans, special use permits, and site plans the exactions must be reasonably related to the anticipated impacts of the specific development approved and the exactions are limited to those roughly proportionate to those documented project impacts. Conditional zoning districts have similar statutory limits on the conditions that can be imposed. Conventional zoning and master land use plans can address somewhat broader impacts if a large site is involved. This provides greater flexibility in that standards and conditions can be based on the entire project. However, it is likely that conditions and mitigation measures would still have to be reasonably related to projected impacts of the project and would certainly have to be within the scope of the statutory authorizations noted above. It is unlikely that developments agreements are limited in that fashion. The development agreement can be as broad on this matter as is mutually agreeable.
Overall project design and flexibility. Since conventional zoning districts cannot be based on particular projects, with this option there would be limited Council ability to consider project specific design and much less flexibility in revising the proposed design. The Council could address particular design standards, such as height limits, floor area ratios, buffer requirements, and the like. There is little if any opportunity to address this with special use permit and site plan reviews as they are limited to the particular portion of the project included in that specific application. The overall project design can be considered with master land use plans (provided the ordinance standards have sufficient breadth). The development agreement can be as broad on this matter as is mutually agreeable.
Vesting. The right to continue and operate a project under the standards in effect at a particular time, even if the regulations are subsequently amended, is termed a “vested right.” A land owner has no vested rights based on a land use regulation itself. Therefore adopting and applying a conventional or conditional zoning district in and of itself creates no vested rights for the University. State law does not require that a master land use plan, special use permit, or site plan confer any vested rights. However, the Town has the option of designating in the LUMO any of these as a “site specific development plan” and thereby creating a vested right of at least two but not more than five years. The LUMO now defines a special use permit as a “site specific development plan.” The development agreement can provide for any negotiated period of vesting up to a maximum of twenty years.
Overall length of process. There are no mandatory procedural requirements for the tools being discussed that make one approach inherently longer or shorter than another. Rather, the time it would take to reach an overall project decision depends largely on how many of the tools are used and the extent to which the various tools are discussed and resolved concurrently.
Without a development agreement, the process now typically used by the Town would involve submittal of a concept plan for preliminary review, formal application for a new zone and/or zoning atlas amendment, staff review and negotiation with the applicant, advisory board review, council public hearing, and council action. This would typically take twelve to twenty-four months depending on the complexity and scale of the project.
The process proposed using a development agreement can be shorter primarily because the discussion about the zoning text, area to be rezoned, and terms of approval (included in the development agreement) are submitted, reviewed, and negotiated concurrently as an integrated package. The JSWG concluded this could potentially be done in eight to nine months largely because of the extensive prior community discussions about the issues involved with Carolina North and the extensive substantive analysis already completed or nearing completion.
Another key difference with the recommended development agreement approach is to involve the Council (and the public) in the discussions and negotiations about the substantive conditions of approval at a much earlier stage of the process. This results from considering the adoption of a new zoning district, a zoning atlas amendment, and a development agreement concurrently rather than sequentially.
Appendix B is a flow chart illustrating the key steps in these two processes.
Enforcement after Expiration of Development Agreement
Mayor Foy asked about the enforceability of provisions in a development agreement that may have a longer life than the term of the development agreement.
Assuming the new underlying zoning district would include a requirement that all development must be consistent with an approved development agreement, all of the usual ordinance enforcement tools would be available. A violation the substantive provisions of the agreement, even if the violation occurs after the term of the agreement, would be a zoning violation.
If the approved plan and development agreement included an on-going operational requirement (e.g., maintenance of a vegetated buffer, retention of specified open space, or specified financial contributions to transit services), failure on the part of the University to honor those requirements as agreed to would create an inconsistency with the original terms of the development agreement even if this occurred after the expiration of the agreement and would thus create a zoning violation. G.S. 160A-400.26(a) specifically provides that “the laws applicable to development of the property subject to a development agreement are those in force at the time of execution of the agreement.” Further, G.S. 160A-400.30 requires that the agreement be recorded and explicitly provides that the burdens and benefits of the agreement run with the land. While the University’s vested rights to continue to build under the approved plan and development agreement would expire at the end of the development agreement, I do not believe this would relieve the University (and any purchasers of land within the approved project that is subject to a development agreement) of its obligation to remain in compliance with the terms of the agreement.
As a practical matter, additional safeguards are often incorporated into development agreements. For example, the development agreement could require that the parties execute a separate contract, lease, or easement to formalize a particular provision within a development agreement. Any of those could have a life that is shorter or longer than the development agreement itself. These measures would provide more efficient enforcement relative to the usual zoning enforcement tools. Additional flexibility is available in that either the Town or the University could agree to take specified actions only upon reaching specified development thresholds. For example, the Town and University could agree to reach/maintain agreed performance standards with initial portions of the development, with subsequent portions of the approved development being contingent upon meeting those standards.