Pumping the Brakes on Developer-Focused Legislation

February 3, 2020 | By Eric B. Freedman

Forecasting How Mayor Kenney’s Pocket Veto May Impact Future Legislation Requiring Developers to Give Back to the Communities they Impact

For the first time since taking office, Mayor Kenney vetoed six pieces of legislation passed by City Council in December of 2019. Specifically, Mayor Kenney pocket vetoed the pending bills upon the expiration of the former councilpersons’ terms, which also expired in December 2019. Among those vetoed was a bill requiring developers to provide public services and amenities to neighborhoods in which they are building high impact projects.

The legislation, written by City Council President Darrell Clarke’s office, has been regarded as a means to compel large developers to come to the table to reach terms satisfactory to local registered community organizations (“RCO’s”). Mayor Kenney wrote in his letter that the legislation should not impose this burden on developers until there are more solidified processes for registering and maintaining the RCO’s.

What Mayor Kenney did not point out and what is patently obviously by reading the bill, is that it is severely lacking in detail. The bill contains suggestions of ways developers can give back to their “host” communities. For example, developers may meet their obligation by offering: (1) support for educational programs; (2) support for educational activities that provide employment opportunities; (3) contractors in the community technical assistance or training opportunities; (4) investment opportunities in the development project; (5) opportunities to allow small businesses to bid on portions of the overall construction projects; and (6) commitments to host periodical meetings to accept input and comment on the ongoing development. Proposed community benefits are just about the only comprehensive part of the bill.

The bill specifically confirms that the community benefits offered by developers must be reduced to writing in a legally enforceable contract. The requirement for a binding contract imposes legal complications of its own. Negotiations in trying to reach an agreement satisfactory to the host community could heighten tensions and delay approval. There’s nothing in the bill that limits the host community’s power in determining its entitlement in connection with the high impact development. This potential for a hold-out raises another question: could this bill undermine the authority of the zoning code and the associated rights of property owners in pursuing “by-right” projects? The bill does not in any way account for what, if any, developers’ obligations are with respect to offering benefits to host communities on “by right” projects.

Observers of the bill criticize it for having “no teeth.” By way of example, developers are required to provide community benefits “wherever feasible.” The penalty for “material” noncompliance with the bill “may result in denial or termination of City Support or Financial Assistance.” Given this non-restrictive language, developers pursuing “by right” projects or those not requiring financial assistance may wind up disregarding the bill altogether.

Logistically, the pocket veto is not a final rejection of the proposed bill. With new councilpersons taking office this year, we could see a revamped proposed bill using the pocket vetoed draft as a framework. In any event, it will be impactful to see whether there’s a revised bill, whether it passes, and what the legal implications will be.

For more information or assistance with real estate litigation matters, please contact Eric Freedman at eric.freedman@obermayer.com.



The information contained in this publication should not be construed as legal advice, is not a substitute for legal counsel, and should not be relied on as such. For legal advice or answers to specific questions, please contact one of our attorneys.

About the Authors

Eric B. Freedman

Associate

Eric focuses his practice on litigation, business and finance, and real estate services. As an attorney, Eric finds creative solutions to complex legal issues and has a long-held passion for helping others...

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