Contract zoning is just a concept, and only courts can make a determination of when it occurs. When a particular zoning classification, such as Downtown Commercial, is assigned to a land parcel, courts have ruled that it is unconstitutional for the municipal government to provide that rezoning in return for a promise not to do something that otherwise would be permitted under the local land use law.
The term "contract," in this case, implies that the municipality has granted the zoning as a favor, on the basis of promises by a developer or property owner not to do something that the public finds objectionable.
The idea that historically has made judges cringe is that if there is contract zoning, the zoning amendment is granted as a private benefit, not a public one.
Sound theory holds that the applicant should be able to build as he or she sees fit, as long as the construction fits within the regulations that have been enacted for a particular district. Property owners have an implicit right to change oral promises, representations, renderings (architectural drawings), and sketches as they move further toward actually implementing a development.
In some instances, local governments have tried to make contract zoning into a virtue and even discussed enacting contract zoning ordinances to permit the practice. This is a variation on the theme of flexible zoning, which certainly is gaining in popularity among decision makers who have tired of seeing awkward results from traditional zoning theory.
However, it remains very sound advice to avoid contract zoning, or the appearance of it. The criteria are rather simple:
• Rezonings that appear to be the result of deal-making that favors a particular applicant should be avoided.
• A rezoning based on a promise not to do something that would be permitted may be considered suspect.
• A rezoning that benefits a private party, but appears to be contrary to the public interest, may be considered contract zoning. The rezoning could be nullified by a court.
In general, the municipality has a fairly substantial toolbox already for providing a developer some flexibility. These are the methods that are preferred:
• Requiring special use permits, or even better, conditional use permits, when a particular type of land use seems likely to be problematic. The two procedures are similar, in that both generally require the same level of public notice and hearings as a rezoning. A conditional use allows special "conditions" to be listed for a particular applicant, business, and location. Generally any change to the conditions would require the applicant to repeat the original conditional use process.
• Zoning variances provide relief when strict application of the zoning ordinance would present a unique hardship.
• Planned unit developments (PUD), now often simply called PD (planned development), and all types of site plan review and approval requirements are appropriate measures to protect the public interest within the context of a set of site specifics.
• Development agreements also are considered legal in most situations, providing the zoning and other development codes spell out in advance of the particular zoning application when developer agreements will be required and the ways that the public interest will be protected. However, the local government should be very careful in maintaining the appearance and the reality that a particular development agreement is not a condition of rezoning.
I know it's a fine line. And one that probably will eventually fall away in the courts. But it's a line that exists now, and it's not worth subjecting yourself to a lawsuit when other methods outlined above are readily available.
If local elected officials would like to grant a rezoning, but only as a favor to the particular applicant, that's a sure sign that the rezoning is inappropriate.
Local governments need to remember that they are not obligated to grant a rezoning just because they like an applicant, or because an applicant has purchased land or an option on it. A development that would be slightly positive isn't enough justification for the appearance of favoritism.
If governments protect the public interest at large in zoning, all will be well. An allegation of contract zoning shouldn't stick.
Growth and Development: