Several states authorize negotiated agreements between local governments and private developers that stipulate the rights and obligations of each party regarding certain planning issues or problems related to a specific development or redevelopment project. Such agreements can reduce sprawl and facilitate the construction of transportation infrastructure needed to support comprehensive, large-scale development. Development agreements contain provisions that establish the character, rate and intensity of the development and usually provide financing for roads and other public facilities that are needed to complete the development.
One advantage of a development agreement is that it encourages private investment in transportation infrastructure by making more predictable the process for large-scale, comprehensively planned developments. Without an agreement, developers may decide that risks are too great for of building transportation infrastructure that can accommodate significant growth. For example, a developer might want to build a multiphase project over many years. During the project, construction circumstances can change. People who move into an area during initial phases could organize opposition to the project. If there is no guarantee that the developer will be able to complete the more extensive project, the incentive may be to build only enough to cover the project phases as they are built, rather than constructing a larger and more efficient network. Development agreements protect a developer's right to complete a previously planned and approved development.
A disadvantage of development agreements is that they limit the public's ability to challenge a development well before they may be aware of the development plans. Over time, developments may become less desirable in the community, and residents may not want to be bound by an agreement that was drafted years earlier. In addition, such agreements may not always be necessary because developers may already have rights under other state laws.
Development agreements are fairly common in high-growth states. Examples can be found in Arizona,22 California,23 Delaware, Florida,24 Hawaii,25 Idaho,26 Maryland,27 Massachusetts, Nevada,28 South Carolina, Texas and Virginia.