Some Statutory Basics for Development Agreements With North Carolina Municipalities

Under North Carolina, land developers have long had the ability to enter into written agreements with towns and local municipalities with respect to subdivisions and developments. That continues to be the law in North Carolina. Our North Carolina General Assembly recently re-wrote the relevant statutes and imposed some new requirements for land development agreements. See N. Car. Gen. Stat., § 160D-1001 et seq. But, in general, the process remains the same. This article will discuss the statutory basics of obtaining approval from a municipality for a development agreement and, where significant, will highlight changes imposed under the new statute.

As with most written agreements, a land development agreement begins with negotiations and, in general, nothing has changed in this respect. These negotiations take place between the developer and the relevant staff of the local planning and/or zoning office. As the negotiations progress, input is obtained from relevant decision-makers. If agreement can be reached, as noted, then final approval is needed from the governing body. Local governments are permitted to establish procedures for these types of negotiations. See N. Car. Gen. Stat., § 160D-1003(a).

Under the previous statute, developer agreements had to be approved following a public hearing. Now, development agreements must be approved by the governing board of a local government following a legislative hearing as outlined at N. Car. Gen. Stat., 160D-1005. This change is potentially important since it clarifies that approving a proposed development agreement is a legislative decision and that governing bodies must engage in quasi-legislative actions when considering approval. This means that a hearing must be scheduled with proper notice and with presentation of evidence from proponents and opponents. Notice must be provided in the same manner as when a zoning map or amendment is considered. See N. Car. Gen. Stat., § 160D-602(d).

Once approved, a development contract must be recorded. The new version of the statute had added a provision that "No development approvals may be issued until the development agreement has been recorded." N. Car. Gen. Stat., § 160D-10-11.

N. Car. Gen. Stat., §§ 160D-1006(a) and (b) require the following be included in a development agreement "at a minimum":

• A description of the property subject to the agreement and the names of its legal and equitable property owners
• The duration of the agreement. However, the parties are not precluded from entering into subsequent development agreements that may extend the original duration period
• The development uses permitted on the property, including population densities and building types, intensities, placement on the site, and design
• A description of public facilities that will serve the development, including who provides the facilities, the date any new public facilities, if needed, will be constructed, and a schedule to assure public facilities are available concurrent with the impacts of the development
• A description, where appropriate, of any reservation or dedication of land for public purposes and any provisions agreed to by the developer that exceed existing laws related to protection of environmentally sensitive property
• A description, where appropriate, of any conditions, terms, restrictions, or other requirements for the protection of public health, safety, or welfare
• A description, where appropriate, of any provisions for the preservation and restoration of historic structures
• A development schedule, if required by ordinance or in the agreement

According to the statute, a development agreement also "may cover any other matter, including defined performance standards, not inconsistent with" the statute. The statute specifically states that a development agreement "may" include the following:

"mutually acceptable terms regarding provision of public facilities and other amenities and the allocation of financial responsibility for their provision, provided any impact mitigation measures offered by the developer beyond those that could be required by the local government shall be expressly enumerated within the agreement."

See N. Car. Gen. Stat., § 1006(d).

A development agreement cannot relieve a developer from compliance with applicable laws, including ordinances, zoning regulations, comprehensive plans etc. N. Car. Gen. Stat., § 160D-1001(d).

In addition, the agreement may not include a tax or impact fee not otherwise authorized by law. N. Car. Gen. Stat., § 160D-1006(d).

The term of a development agreement "shall be … reasonable." N. Car. Gen. Stat., § 160D-1004.

If a development agreement is modified in any "major" respect, the agreement must be approved in the same manner as the initial approval. The statute leaves it to the municipality to define what constitutes a "major modification." N. Car. Gen. Stat., § 1006(e).

For more information, and to schedule a confidential consultation with experienced and dedicated zoning and land use attorneys in Charlotte, contact Arnold & Smith, PLLC. Use our “Contact” page or give us a call at 704-370-2828. We handle land use, zoning and condemnation legal matters in Mecklenburg County and elsewhere in North Carolina. We have offices in Charlotte, Lake Norman, and Union County.