A Development Agreement Is A Contract And Can Alter Map “Vested Rights”

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Most developers are familiar with the notion that under California’s Subdivision Map Act, the vesting tentative map statutes provide a way of fixing a developer’s rights. Put simply, obtaining a vesting tentative map allows a builder to rely on the regulations, conditions, and fees existing at the project planning stage even though the development might take years to complete. This brings some degree of certainty for the economics of a long-term project.

Development agreements between a developer and a local agency can also provide certainty. But what happens when a development agreement is entered into after a vesting tentative map? Can the agreement impact the developer’s “vested rights” under the map?

A recent opinion from California’s Fourth Appellate District — North Murrieta Community, LLC v. City of Murrieta — tackles the issue. Developers should take note.

Facts: Developer obtains vesting tentative map, then enters into development agreement

North Murrieta Community, LLC was the master developer of a large development project in the City of Murrieta called the Golden City Project. In July 1999, the developer obtained approval for a vesting tentative map on part of the project property. The map locked in place fees the City could charge on the project until the vesting tentative map expired two years later.

In March 2001, four months before the map would expire, the developer and City entered into a development agreement covering the entire project property. The agreement extended the term of the vesting tentative map for fifteen years and locked in place the regulations and most of the fees the City could enforce against the developer on the entire project for the same period. (The parties later extended the term an additional five years, through March 2021.)

However, the development agreement expressly allowed the City to impose new fees to mitigate the effects of development as long as the new fees were generally applicable City-wide and designed to address project impacts not fully mitigated by fees or exactions in place when the parties entered into the development agreement.

The City later enacted a new transportation fee ordinance, generally applicable to “all new development projects within the City” and designed to mitigate the effects of development projects on transportation and traffic.

The new fees were assessed against some of the project properties. The developer, relying on the vesting tentative map rights, protested the fees and filed a petition for writ of mandate.

Trial court: new fees permissible under the development agreement

The trial court rejected the developer’s arguments, holding that the new fees were permissible under the parties’ development agreement.

The developer appealed.

Court of Appeal: affirmed

The Court of Appeal affirmed the trial court’s judgment, holding: “The development agreement is a contract, which the trial court correctly enforced.” The development agreement, the court held, could alter the developer’s rights under the vesting tentative map.

The court noted that a “vesting tentative map doesn’t freeze regulations and fees indefinitely.” Instead, the statutes provide that all tentative maps expire 24 months after their initial approval. It was only by entering into the development agreement that the developer extended some of its map rights for the project.

But the development agreement made clear that the City did not agree to extend all of the rights conveyed by the vesting tentative map. The parties agreed that the City could impose new mitigation fees under certain conditions, and the City later exercised its right to do just that. “The agreement,” the court held, “is binding on both the City and the developer.”

The court rejected the developer’s argument that the vesting tentative map statutes provide a way of fixing a developer’s rights that “operates beyond the reach of any development agreement.” The court observed that the developer

offers no authority — and really no reason — for thinking vesting tentative maps impart a species of super rights that cannot be negotiated away. Nor do they offer any reason for thinking development agreements should be treated differently than other contractual agreements.

Noting that “developers are sophisticated entities,” the court held the developer “can’t claim the benefits of the provisions that benefit them but disclaim the provisions that don’t.”

Lesson

A development agreement is an enforceable contract. Any rights obtained through the issuance of a vesting tentative map can be “negotiated away” in a development agreement.

[View source.]

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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