SJC Finds Contract Zoning Theory Outdated

Published on: October 22, 2003

Massachusetts courts have been clarifying, and progressively weakening, the theory of “contract zoning” for years. But a recent decision by the Supreme Judicial Court (SJC) all but completely discards this legal precept.

Plaintiffs have used contract zoning claims to thwart or delay developments they oppose, by arguing that zoning changes approved by local officials benefit private parties exclusively, to the detriment of the public interest as a whole. Prior court decisions have weakened this legal weapon, but left some elements of it intact. In a decision just last year (McLean Hospital Corporation vs. Town of Belmont), the Massachusetts Appeals Court concluded that it is permissible for a community to require a concession from a developer as a condition of approving a development plan, as long as the benefit offered bears some reasonable relationship to the project approved. That relationship could be tenuous, the court said, but there had to be a colorable connection between the two.

No Link Required

The SJC has gone a step beyond, ruling that even the tenuous connection the Appeals Court required in McLean isn’t necessary. Developers and communities can negotiate any benefit they choose, the SJC has ruled, as long as the benefit is in the public interest. This essentially buries contract zoning as a legal argument in Massachusetts.

The SJC’s decision, Maurice Durand v. IDC Bellingham, overturned a Land Court ruling favoring Bellingham residents who had opposed a proposal to construct a new power plant in that community. The developer had offered to contribute $8 million to finance the construction of a new school in exchange for the rezoning the project required. The plaintiffs objected and Land Court Chief Justice Peter Kilborn agreed that the rezoning was “offensive to public policy” because it was based on a contract that involved “extraneous considerations” unrelated to the project. The developer’s contribution for the school, he said, “was purely and simply designed to generate support for the project,” and the rezoning was improper, as a result.

The SJC reversed, finding nothing wrong with that arrangement. Consideration offered by a developer can be extraneous, the court said, as long as it is in the public interest. Writing for the majority on a divided court, Justice Robert Cordy explained: “The practice of conditioning otherwise valid zoning enactments on agreements reached between municipalities and landowners that include limitations on their use of the land or other forms of mitigation…is a commonly accepted tool of modern land use planning….”

Rejecting criteria the courts have applied in the past, Cordy argued, “The voluntary offer of public benefits beyond what might be necessary to mitigate the development of a parcel of land does not, standing alone, invalidate a legislative act.”

Broad Deference Required

The courts properly defer broadly to legislative enactments, and rezoning, the SJC said, is entitled to the same broad presumption of legality. “The proper focus of a review of a zoning enactment is whether it violates state law or constitutional provisions, is arbitrary or unreasonable, or is substantially unrelated to the public health, safety, or general welfare.” The motives behind a legislative act, the court suggested, are not subject to judicial scrutiny.   

“In general, there is no reason to invalidate a legislative act on the basis of extraneous consideration,” the court concluded, “because we defer to legislative findings and choices without regard to motive. And we see no reason to make an exception for zoning decisions. We find no persuasive authority that an otherwise valid zoning enactment is invalid if it is in any way principled on or encouraged by a public benefit voluntarily offered.”

Scathing Dissent

A scathing dissent, written by Justice Francis Spina, disputed the majority’s conclusion that zoning decisions have the same status and should receive the same deference as a legislative act. “The motives and reasons of a town meeting, unlike the motives and reasons of members of the Legislature, may be a proper subject of inquiry,” Spina wrote. The principal underlying contract zoning, he said, is that “towns may not exact hefty payments or require conditions unrelated to any aspect of a site for favorable government action.”

Unwilling to accept the majority’s conclusion that this theory has become passé, Spina asserted, “The facts show that the town meeting improperly agreed to exercise its power to rezone land in exchange for a promise to pay money.” That represents precisely the “sale of police power” that contract zoning prohibit, he said, and it demonstrates “government and private interests at their shameful worst.”

The minority opinion is interesting, but it is a minority opinion. The majority establishes the legal precedent and that decision clearly drives the last nail in the coffin for contract zoning in Massachusetts. Winning a contract zoning claim was already difficult; now it will be nearly impossible.

The SJC decision did leave one slim strand of the contract zoning theory intact. The courts have held consistently that towns cannot make the developer’s concession a condition of a zoning change, but the developer can make the zoning change a condition for providing the promised benefit. As long as the community approves the rezoning before collecting the benefit, the rezoning will be deemed valid.

Don’t Ask

Eliminating contract zoning as a restraint on the development approval process raises some obvious public policy concerns, legally blessing a process that enables developers to secure zoning changes based on the size of the benefit they are willing to offer rather than on the merits of the project they are planning to build. At its worst, this could lead communities to approve projects that are not particularly desirable in order to obtain unrelated benefits that are.

But this cuts both ways, giving communities more room to define the benefits they need. And that was the crux of the court’s decision: As long as zoning decisions aren’t arbitrary or contrary to the public interest, the courts shouldn’t question the motives behind them. In this respect, the SJC appears to be suggesting that development deals belong in the same category with laws, sausage, and other things that look and taste a lot better if you don’t actually watch them being made.