Development Rights and Responsibility Agreements: The Give and Take of Development

by Miles & Stockbridge P.C.

Under Maryland law, the rights of a land developer to develop property for commercial or residential uses generally do not “vest” until there is some visible, lawful, construction on the property. Of course, development of a property takes time, and intervening market conditions can have a significant impact on the timing, financial viability, and ultimate development of a property. As a way to provide protections from uncertainties, both to the developer and to the local government, Maryland adopted laws to allow for land developers to enter into a Development Rights and Responsibility Agreement (“DRRA”) with the local government having jurisdiction over the land where the proposed development is located. The DRRA is a contract between the developer and government to govern the future development of the property and the rights of both parties, and to provide greater predictability, certainty and assurances to both parties. Since DRRAs are a more recent development tool, Maryland courts are now being asked to review and interpret DRRAs.

So what exactly is a DRRA and what does it include? The Annotated Code of Maryland, Land Use Article, Section 7-303, states the requirements for a DRRA. The written contract or DRRA shall include:

  1. A legal description of the real property which will be subject to the DRRA.
  2. The names of the “persons” having legal or equitable interest in the real property which will be subject to the DRRA. (The Land Use Article defines “person” as including individuals, trusts, guardians, personal representatives, fiduciaries and various forms of business entities.)
  3. The duration or term of the DRRA.
  4. The permissible uses of the real property.
  5. The density or intensity of use of the real property.
  6. The maximum height and size of structures to be located on the real property.
  7. A description of the permits required (or already approved) for the development of the real property.
  8. A statement that the proposed development is consistent with the comprehensive plan and development regulations of the local jurisdiction.
  9. A description of the conditions, terms, restrictions or other requirements determined by the local governing body of the local jurisdiction to be necessary to ensure the public health, safety and welfare.
  10. In addition, to the extent applicable, the DRRA shall include provisions for:
    a.    Dedication of a portion of the real property for public use;
    b.    Protection of sensitive areas;
    c.    Preservation and restoration of historic structures; and
    d.    Construction or financing of public facilities.

In addition to these mandatory requirements, there are two additional permissible areas of content for a DRRA, including:

  1. The establishment of a time frame and terms for development and construction on the real property; and
  2. Other matters which are consistent with the intent of the statute (which could include, for example, terms related to specific or unique conditions of the property or development).

Of course, since a DRRA is an agreement with the local governing body, all of the prerequisites of a public agreement are required, including public notice and a public hearing. So, arguably, the public is a third “party” to a DRRA, which has the right to provide input which may affect the terms of the DRRA, as well as the subsequent interpretation and enforcement of a DRRA.

Maryland courts recently issued two decisions interpreting DRRAs, which I will address in my next blog article.

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. 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.

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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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