Maryland Lawmakers Consider Changes to Development Rights and Responsibility Agreements

by Miles & Stockbridge P.C.

The Maryland General Assembly is currently considering House Bill 1390 (“HB1390”). As introduced, HB 1390 will materially impact the utility of the Development Rights and Responsibility Agreement (“DRRA”) for land owners, developers and local jurisdictions.   

In a three part blog series that included “Development Rights and Responsibility Agreements: The Give and Take of Development”; “Two Recent Maryland Rulings on Development Rights and Responsibility Agreements”; and “A New Maryland Ruling on Development Rights and Responsibility Agreements – Score Another Round for the Developer,” Anne-Herbert Rollins discussed the purpose and intent of the DRRA and the recent journey through the Maryland appellate court system for one particular DRRA originating from Frederick County.

The final blog in that series, “A New Maryland Ruling on Development Rights and Responsibility Agreements – Score Another Round for the Developer” captured the final events of that DRRA’s journey, which culminated in the Maryland Court of Appeals’ decision, Lilian C. Blentlinger , LCC, et al. v. Cleanwater LInganore, Inc. et. al, 456 Md. 272, 173 A.3d 549 (2017). In Blentlinger, the Maryland Court of Appeals held that Maryland law does not require a DRRA to provide enhanced public benefits and therefore, the DRRA at issue was valid and supported by sufficient consideration. Id.

In light of the Court of Appeals’ decision in Blentlinger, HB1390 has been introduced in the Maryland House of Delegates to substantially alter the DRRA law. HB1390, sponsored by Delegate Lafferty, was introduced on February 9, 2018 as a means to modify the DRRA statutes codified in §§7-301 and 7-303 through 7-305 of the Land Use Article of the Maryland Annotated Code.  

As introduced, HB1390 will: (i) cap the duration of a DRRA at ten years (maximum); (ii) freeze only the zoning standards instead of all laws, rules, regulations and policies governing the use, density, or intensity of the real property; (iii) allow local jurisdictions to require compliance with any other new laws, rules, regulations or policies without a finding that such compliance ensures the public health, safety or welfare; (iv) allow the local planning body to revisit the terms of the DRRA if an amendment is sought by the developer; and (v) require enhanced public benefits in the form of either:

  • parklands, open space and afforestation;
  • multimodal transportation facilities;
  • traffic safety improvements;
  • infrastructure; or
  • stormwater management and stream restoration.  

The enhanced public benefits must be bonded by the developer.

On March 6, 2018, the Maryland House of Delegates Environment and Transportation Committee held a public hearing on HB1390. At the public hearing, Delegate Lafferty proposed amendments to HB1390. The amendments relaxed the proposed cap on the duration of the DRRA and eliminated the requirement that developers bond the enhanced public benefits.  

It was clear from the opposition to HB1390 that the DRRA is a tool that retains its utility as long as Maryland remains a late vesting state. DRRAs were created to provide certainty and predictability to all the parties to a DRRA and the DRRA statute was enacted in a way that gives local jurisdictions the maximum flexibility to negotiate the terms of the DRRA, while balancing the leverage of parties’ during the negotiation. HB1390 will significantly alter these fundamental provisions of the DRRA statute, a tool for both landowners/developers and local jurisdictions to plan comprehensively for the development of long term projects.  

We will continue to monitor HB1390 as it moves through the legislative process. Stay tuned for more information. 

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. 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.

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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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