Development Agreements: To What Extent Are They Enforceable?

Under an innovative law recently enacted in California, which could be the precursor of similar legislation elsewhere, local governments may enter into development agreements with developers which prohibit the local legislative body from changing the land use restrictions on a parcel prior to the vesting of development rights. However, what if subsequent legislation is passed which impairs the development agreement? Is the developer protected under the impairment-of-contracts clause of the Constitution or can the local legislative body invoke the reserved powers doctrine which protects any valid exercise of the state's police power? To answer this question, Professor Kramer analyzes the leading cases on the contracts clause and the reserved powers doctrine. He also considers the applicability of judicial decisions involving the validity of contract zoning—situations where there is an agreement that purports to bind both the landowner and the local governmental agency—and conditional zoning—where the person seeking the development permission agreed unilaterally to do something but the governmental agency made no binding agreement.