Santa Margarita Area Residents Together v. County of San Luis Obispo, California Court of Appeal (2000)

Facts:
The Santa Margarita Ranch is a 13,800-acre property in San Luis Obispo County. The owner of the ranch, Santa Margarita Limited, has long desired to develop the property. The Santa Margarita Area Advisory Council, a community organization, has opposed development of the property. After Santa Margarita Limited sued the County to facilitate development by increasing the number of legal parcels in the Ranch, Santa Margarita Limited, the County, and representatives from the Santa Margarita Area Advisory Council agreed to mediate their differences over long-range development of the ranch. The mediation achieved consensus among most of the participants, including representatives from the advisory council. A report resulting from the mediation recommended approval of the project, which would include 550 housing units and non-residential improvements in a 1,800-acre area, devote at least 8,400 acres to permanent open space easements, and place a minimum of 3,600 acres under 40-year Williamson Act contracts for preservation of agricultural land. The report also recommended use of a development agreement to guarantee that the 550 residential units would be “subject to applicable laws and regulations.” Shortly after the mediation, the County began preparing a development agreement with Santa Margarita Limited for the specific planning of the project. At the same time, the County amended part of its general plan, the Salinas River Area Plan, to describe the project and establish the criteria for its ultimate implementation. After lengthy negotiations and a public hearing, the County enacted an ordinance authorizing it to enter into the development agreement, under the authority of the Development Agreement Statute. The next day, the chairperson of the county’s board of supervisors signed the agreement. The agreement freezes zoning on the project property for up to five years during the review and approval process. In return, the developer will to submit a specific plan for construction, including a vesting tentative map and environmental impact report, in compliance with County land use requirements. The appellants contend that the agreement is invalid under the statute because it covers the planning stage of a development before buildings or other structures have been designed or approved. The also contend that the zoning “freeze” unconstitutionally contracts away the County’s police power.

Procedure:
A petition for writ of mandate to set aside the agreement was denied.

Issue:
Is the granting of a development agreement between a private landowner and local government during the planning stages of a development project, before buildings and other structures have been designed and approved, in violation of the Development Agreement Statute and a contracting away the local government’s police power?

Holding:
The court found that the agreement complies with the Development Agreement Statute and does not contract away the county’s police power. Accordingly, it affirmed the decision of the lower court.

Rationale:
The Development Agreement Statute permits a city or county to enter into a development agreement with any property owner for the development of the property, and allows a city or county to freeze zoning and other land use regulations in order to guarantee that a developer will not be affected by changes during development. A development agreement is a legislative act, and the legislation is presumed to be valid unless it is found to be arbitrary or capricious by the court. The court found no evidence of arbitrary action and the Santa Margarita agreement complies with the statute.
The claim that a development agreement could only be reached after a project has been approved for actual construction was found to be invalid. The statute permits local government to make commitments to developers at the time the developer makes a substantial investment in a project, as was the case here. Additionally, since the agreement focuses on the planning stage of the project, it meets the statute’s goal of increasing the public’s role in the final development and control over the inclusion of public facilities and benefits in the project.
In addition, the court found that the county was not surrendering its police power by entering into the agreement. The project must be developed in accordance with the County’s general plan and the agreement does not permit construction until the County has approved detailed building plans. Furthermore, the agreement retains the County’s discretionary authority in the future and it is not of unlimited duration (five years only).