A New Maryland Ruling on Development Rights and Responsibility Agreements- Score Another Round for the Developer

by Miles & Stockbridge P.C.
Contact

The Maryland Court of Appeals recently heard and decided a case involving Development Rights and Responsibility Agreements.  In my first blog post on this topic, “Development Rights and Responsibility Agreements: The Give and Take of Development.” I discussed the purposes of and requirements for a Development Rights and Responsibility Agreement (“DRRA”) between a land developer and the local government having jurisdiction over the property. In my subsequent blog post, “Two Recent Maryland Rulings on Development Rights and Responsibility Agreements.” I discussed two decisions by the Maryland Court of Special Appeals regarding the interpretation and enforcement of a DRRA. One of those cases was subsequently appealed to Maryland’s highest court, the Court of Appeals, and a decision was recently issued which reversed and remanded the lower appellate court’s ruling.

As a bit of a refresher, under Maryland case law, the rights of a land developer do not “vest” until there is some evidence of visible, lawful construction on the property. So until some visible construction exists, changes could be enacted to the local laws which may affect the property, even if the developer has already expended considerable amounts of time and money on the development in ways that may not be visible but involve actual construction, such as architectural design or title review. The Maryland legislature adopted the use of DRRAs to provide greater certainty to both the land developer and the local government for the development of a property by way of the contractual rights and responsibilities set forth in the DRRA.

As the name implies however, a DRRA contains both rights as well as responsibilities. The Maryland Court of Special Appeals previously issued two decisions interpreting the impacts of a DRRA. Both cases related to the same property, located in Frederick County, and the same DRRA. The opinions were issued just weeks apart, and demonstrated the two sides of a DRRA, with a focus both on the rights under such agreements as well as the related responsibilities.

In the first case, Cleanwater Linganore, Inc. v. Frederick County, 231 Md. App. 373, 151 A.3d 44 (2016), a local environmental group, Cleanwater Linganore, Inc., claimed that the DRRA in question between Frederick County and the land developer consisting of a joint venture between of Lillian C. Blentlinger, LLC and William L. Blentlinger was too broad and that the land developer should be subject to laws, ordinances and rules enacted subsequent to the execution of the DRRA. Cleanwater Linganore claimed the DRRA was too broad in scope because it attempted to freeze future County ordinances regarding various development rights, which it claimed went beyond the use, density and intensity provisions set forth in the DRRA statute (see, Annotated Code of Maryland, Land Use Article, Section 7-303 (the “Statute”)). The Court of Special Appeals (the “Court”) disagreed and affirmed the decision of the Circuit Court, finding that the provisions of the Statute were broad enough to include all types of laws referred to in the DRRA. The Court found that to decide otherwise could impede a developer’s rights by any last minute change of laws, which could discourage developers from undertaking future development projects, and in turn frustrate the government’s interest in obtaining public benefits provided under the terms of the DRRA. So, score round one for the developer and the enforcement of rights under the DRRA.

Less than two months later, the score was somewhat evened, with a decision in favor of the local government. In the second case, Cleanwater Linganore, Inc. v. Frederick County, 231 Md. App. 620, 153 A.3d 874 (2017) (Md. Ct. Spec. App., Feb. 3, 2017), the Court found that the DRRA between the developer and County did not contain sufficient consideration or value to the County and, therefore, was void. In that case, the same environmental group argued that the DRRA was void for lack of consideration because it failed to provide any enhanced public benefits to the County. The Court agreed, finding that a DRRA is a bargained-for agreement and, therefore, must contain benefits for both parties. Although the developer had offered to convey a portion of the property to the County for use as a school site, the Court found that the developer would have been required to grant property for a school site in any event under the County’s adequate public facilities ordinance and, therefore, the offer of a school site provided no additional benefit to the County.  Accordingly, the Court of Special Appeals reversed the decision of the Circuit Court and ordered that the DRRA be vacated. So, score round two for the government and enforcement of responsibilities under the DRRA.

Ah, but the fight did not end there, as the developer decided to go another round by appealing the Court of Special Appeals’ decision to the Court of Appeals. “Cleanwater Linganore” and the developer proceeded to battle it out for another round, and when the bell rang, the Court of Appeals scored round three in favor of the developer.

Specifically, the Court held in Lillian C. Blentlinger, LLC, William L. Blentlinger, LLC v. Cleanwater Linganore, Inc. et. al, 456  Md. 272, 173 A. 3d 549 (2017) (In the Court of Appeals of Maryland, No. 13, September Term 2017) that based on the language and legislative history of the State enabling legislation, the Annotated Code of Maryland, Land Use Article, Sections 7-301 through 7-306 (the “DRRA Statute”), as well as the relevant case law, in order to be a valid DRRA, a developer is not required to confer any “enhanced” public benefit to the local governing body. In other words, the Court of Appeals held that there is no evidence in the DRRA Statute, its legislative history or case law demonstrating the intent to require an enhanced public benefit as part of a DRRA and, therefore, the DRRA at issue in the case was found to be valid and supported by sufficient consideration. Based upon its findings and holding, the Court of Appeals reversed the lower appellate courts’  judgment and remanded the case back to the Circuit Court for Frederick County.

This recent opinion further demonstrates the two sides of a DRRA: the enforceable rights and the concurrent responsibilities, and sets the stage for continuing battles likely to ensue in future cases. As new challenges and new cases continue to present themselves, which they inevitably will in the high stakes world of land development, it will be interesting to see how Maryland courts interpret the respective rights and responsibilities of developers and government bodies in enforcing DRRAs.

Opinions and conclusions in this post are solely those of the author unless otherwise indicated. The information contained in this blog is general in nature and is not offered and cannot be considered as legal advice for any particular situation. Accessing this blog and reading its content does not create an attorney-client relationship with the author or with Miles & Stockbridge. The author has provided the links referenced above for information purposes only and by doing so, does not adopt or incorporate the contents. Any federal tax advice provided in this communication is not intended or written by the author to be used, and cannot be used by the recipient, for the purpose of avoiding penalties which may be imposed on the recipient by the IRS. Please contact the author if you would like to receive written advice in a format which complies with IRS rules and may be relied upon to avoid penalties.

[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.

© Miles & Stockbridge P.C. | Attorney Advertising

Written by:

Miles & Stockbridge P.C.
Contact
more
less

Miles & Stockbridge P.C. on:

Readers' Choice 2017
Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
Sign up using*

Already signed up? Log in here

*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Custom Email Digest
Privacy Policy (Updated: October 8, 2015):
hide

JD Supra provides users with access to its legal industry publishing services (the "Service") through its website (the "Website") as well as through other sources. Our policies with regard to data collection and use of personal information of users of the Service, regardless of the manner in which users access the Service, and visitors to the Website are set forth in this statement ("Policy"). By using the Service, you signify your acceptance of this Policy.

Information Collection and Use by JD Supra

JD Supra collects users' names, companies, titles, e-mail address and industry. JD Supra also tracks the pages that users visit, logs IP addresses and aggregates non-personally identifiable user data and browser type. This data is gathered using cookies and other technologies.

The information and data collected is used to authenticate users and to send notifications relating to the Service, including email alerts to which users have subscribed; to manage the Service and Website, to improve the Service and to customize the user's experience. This information is also provided to the authors of the content to give them insight into their readership and help them to improve their content, so that it is most useful for our users.

JD Supra does not sell, rent or otherwise provide your details to third parties, other than to the authors of the content on JD Supra.

If you prefer not to enable cookies, you may change your browser settings to disable cookies; however, please note that rejecting cookies while visiting the Website may result in certain parts of the Website not operating correctly or as efficiently as if cookies were allowed.

Email Choice/Opt-out

Users who opt in to receive emails may choose to no longer receive e-mail updates and newsletters by selecting the "opt-out of future email" option in the email they receive from JD Supra or in their JD Supra account management screen.

Security

JD Supra takes reasonable precautions to insure that user information is kept private. We restrict access to user information to those individuals who reasonably need access to perform their job functions, such as our third party email service, customer service personnel and technical staff. However, please note that no method of transmitting or storing data is completely secure and we cannot guarantee the security of user information. Unauthorized entry or use, hardware or software failure, and other factors may compromise the security of user information at any time.

If you have reason to believe that your interaction with us is no longer secure, you must immediately notify us of the problem by contacting us at info@jdsupra.com. In the unlikely event that we believe that the security of your user information in our possession or control may have been compromised, we may seek to notify you of that development and, if so, will endeavor to do so as promptly as practicable under the circumstances.

Sharing and Disclosure of Information JD Supra Collects

Except as otherwise described in this privacy statement, JD Supra will not disclose personal information to any third party unless we believe that disclosure is necessary to: (1) comply with applicable laws; (2) respond to governmental inquiries or requests; (3) comply with valid legal process; (4) protect the rights, privacy, safety or property of JD Supra, users of the Service, Website visitors or the public; (5) permit us to pursue available remedies or limit the damages that we may sustain; and (6) enforce our Terms & Conditions of Use.

In the event there is a change in the corporate structure of JD Supra such as, but not limited to, merger, consolidation, sale, liquidation or transfer of substantial assets, JD Supra may, in its sole discretion, transfer, sell or assign information collected on and through the Service to one or more affiliated or unaffiliated third parties.

Links to Other Websites

This Website and the Service may contain links to other websites. The operator of such other websites may collect information about you, including through cookies or other technologies. If you are using the Service through the Website and link to another site, you will leave the Website and this Policy will not apply to your use of and activity on those other sites. We encourage you to read the legal notices posted on those sites, including their privacy policies. We shall have no responsibility or liability for your visitation to, and the data collection and use practices of, such other sites. This Policy applies solely to the information collected in connection with your use of this Website and does not apply to any practices conducted offline or in connection with any other websites.

Changes in Our Privacy Policy

We reserve the right to change this Policy at any time. Please refer to the date at the top of this page to determine when this Policy was last revised. Any changes to our privacy policy will become effective upon posting of the revised policy on the Website. By continuing to use the Service or Website following such changes, you will be deemed to have agreed to such changes. If you do not agree with the terms of this Policy, as it may be amended from time to time, in whole or part, please do not continue using the Service or the Website.

Contacting JD Supra

If you have any questions about this privacy statement, the practices of this site, your dealings with this Web site, or if you would like to change any of the information you have provided to us, please contact us at: info@jdsupra.com.

- hide
*With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name. Or, sign up using your email address.