Development Agreements: Contracting for Vested Rights

Abstract

The development process is risky for developers. They spend large sums of money on various development activities prior to receiving a municipality’s approval to proceed with the project. Uncertainty exists because a municipality may enact a subsequent zoning regulation which renders the proposed use impermissible. A vested right protects developer investments from subsequent zoning change. This Note examines one method by which a developer can obtain a vested right: the development agreement. A development agreement is a contract between a municipality and a property owner/developer, through which the municipality agrees to freeze the existing zoning regulations in exchange for public benefits. This Note concludes that development agreements are readily enforceable, and are attractive tools in both early and late vesting states.