10evolutionpublicprivate.pdf

Bargaining

in

Urban

Development

William

Fulton

The

urban

development

process today is typically characterized

by

intensestudy

and

discussion _ofa

project'simpact

upon

various aspectsofsociety. In this article, theauthorchronicles theriseof the

major

actorsinvolvedin theurban

development

scene: developers, municipalities,

and

citizens.

The

actor's

power

bases

and modes

of interaction aresketched to illustrate their effect

on

the

urban development

process.

WilliamFultonisa journalist in California and a con-tributing editor ofPlanning magazine.Healsoisa

mem-ber ofthePlanning

Commis-sion for West Hollywood,

CA. Mr. Fulton holds an

M.A. in Urban Planning from UCLA.

Introduction

Once

merelya matter ofgettingzone changes

and

abiding

by

a

few

basicrules,governmental approval

of

development

has

become

a complicated

game

of

bargainingin

which

cities

and

neighborhood groups have

become

"civicentrepreneurs,"

and

developers,

as

Donald

G.

Hagman

put it shortly before his

death, have

become

"community

financiers."1

This

method

ofdevelopmentisradically different

from

past

methods

—

indeed, theopposite of

tradi-tional zoning practice

—

in that it is often project-specific

and

less

bound

by

legal constraints than

traditionalland-useregulation.2

_As

_aresult,

the

out-comes

for both thedeveloper

and

the

community

have

become

less predictable.

Thisbargaining process has

come

aboutasaresult

of a variety of pressures placed

on

theland-use regu-lationsystem overthe pasttwentyor so years. But

all these pressures are traceable to three related

developments:

(1)

A

growing

understanding that

development

has external effects and, largely through the

en-vironmental impact process, a

growing

ability to identify,

measure

and

deal with those effects

on

a case-by-case basis.

(2)

The

rise of

what

might

be called "citizen

power"—

environmental, consumer,

and

neighbor-hood

groups

which

haveforced the creation ofsuch

tools as the environmental impact statement

and

have subsequently used

them

towieldgreat

power

over development, even

when

thegroups aresmall

and

haverelativelylittlemoney.

The

undeniable suc-cessof citizen

power

hasbrought citizengroups to

the bargaining table

and

made

developers (and

cities)

more

willing to deal with them.

(3)

The

growing

reluctance ofpolitical

jurisdic-tionsto shoulderthe externalcostsof private

devel-opment,

leading

them

to

push

the

burden

onto the

developer.Thispracticehas beenfar

more

common

in developing

suburban communities

than in the

older cities,

and

in California its

growth

has been

greatlyhastenedalong

by

thepassageofProposition

13.

But

how

havethese three trendsconvergedto cre-atetoday'satmosphereof bargaining?

Would

certain

basic

ground

rules or procedures help

make

the

developmentprocess

more

predictableforthe

devel-oper

and

stillachieve the goals of thecommunities

and

citizensgroupsthatengageinbargainingthese

days?Tobegintofindtheanswersto these questions,

we

must examine

how

bargainingover landuse has

evolvedintheUnitedStatesoverthepastsixtyyears.

The

Inflexibility of Traditional

American

Zoning

Terms

like"bargaining"

and

"flexibility"have been

dirty

words

sincethebeginningoflanduse

regula-tion inAmerica. Infact, zoning

was

introducedto

reduce flexibility

and

protect property

owners

in

high-class

commercial

areas

and

affluent

uses.3_Because

thecourtsconcludedthatzoning

was

derived

from

the police

power

of thestate, itcould not be applied arbitrarily,

and

uniformity in its

application

—

subjecting all property

owners

in a

particularzonetothe

same standards- was

needed

to resist legalattackson groundsthat the

municipal-ity

was

arbitrarily contracting

away

its police

power.4

Good-government

reformersalso

wanted

to

eliminateflexibilityinzoningtodiscourage

corrup-tion—a

fear that proved justified over the years.5

From

thebeginning, of course, flexibilitydidexist inzoning,

and

was

used

—

often by affluent

subur-ban

enclaves to keep out undesirable additions to theircommunities,

and

often

by

corrupturban poli-ticiansto reward their friends

and

supporters.

The

variance

was

suggestedbythe federal1923 Standard

State

Zoning

EnablingAct,

which

intended ittobe used in hardship cases. But in practice, according

to Richard Babcock, it

was

used"togrant

and deny

favors"toparticular developers.6_After

_World

_War

II,the specialpermit

was added

to

many

zoning sys-tems,

and

many

communities took advantageofthis

additional discretion

by

using it to keep out such

"undesirable" uses as motels

and

glue works. This widespread misuseof thespecial permit

prompted

one prominent

planninglawyer, WalterBlucher, to

ask in the '50s

whether

zoning

was

"increasingly

becoming

the rule of

man

rather than the rule of

law."7

Despitethe successfuluse of variances

and

special

permits for exclusionary or corrupt purposes, the

zoning system remained in principle an inflexible

guide to development, designed toencourage

good

city planning through general land use decisions

made

inadvance

and

discouragelocalofficials

from

assessing

development

projects

on

a case-by-case

basis.According toProfessor Jan Z. Krasnowiecki,

this

method

ofzoning,

which

began withthe federal

enablinglegislation of the'20s, left"alegacy of rigid-ity: asystem designedtopreventchangeratherthan

toencourage it

-a

static, end-stateconcept ofland

use control."8

The

Will to Bargain: Citizens

With

theexception of thewealthy

and

powerful

residents of exclusivesuburban communities

and

the

organized

downtown

business interests that

domi-nated local politics in

most

communities,

up

until

i the 1960s citizen groups

had

little direct effect

on

a community's

development

decisions. In the '60s,

however, the

growth

ofthe

modern

environmental

movement

helpedlay the

groundwork

for

two

im-portantdevelopments that ledtothebargaining

pro-cess

we

see today: the willingness to deal with

project-specific effectsofdevelopment,

and

therise

ofcitizengroups powerful

enough

to take aseat at

the bargaining table.

'Thereisa

new

mood

in America,"theRockefeller Brothers

Fund

Task Force

on

Land Use and Urban

Growth

reported in 1973:

Increasingly, citizens are asking

what

urban

growth

will

add

to the quality of their lives.

They

are questioning the

way

relatively

un-constrained, piecemealurbanizationis chang-ing theircommunities

and

are rebellingagainst the traditional processes of

government and

themarketplace which, theybelieve, have

in-adequately guided

development

in the past.

They

aremeasuring

new

development

propo-sals

by

theextentto

which

environmental cri-teria are satisfied

—

_{by what}

new

housing or business will generate in terms of additional

traffic, pollutionofair

and

water, erosion,

and

scenic disturbance.9

The

environmentalists of the late '60s

were

re-markably

successful inashort periodof time,

per-haps because

development

of allkinds

was coming

so quickly. In questioning the true cost of

growth

forthefirsttime, the

new

environmental

movement

was

able toforcepassageof the National Environ-mentalPolicyActof1969and, subsequently, similar

lawsat thestate

and

local levels."Armingthemselves

withtechnical experts, citizensusedpublichearings,

themedia,

and

the courts toexertpressure

on

gov-ernment

to

deny

approvals for controversial

proj-ects,"wrote planningconsultant

Malcolm

Rivkin.10

Almost

overnight, groups of ordinary citizens

ac-quired

power

to stop developments cold.

Justasimportant, however,

was

thefact that the

new

environmental laws

acknowledged

that each

land-use caseisdifferentbecause each development

project's "external effects"—itsimpact

on

neighbors

and on

themunicipalityin

which

itislocated

—

are

different.

The

environmental impactstatement

was

thecrucial tool in thisregard. Unlikezoning,it

was

not aset ofdevelopmentlimitationsintended to en-surethatall piecesofpropertydedicated tosimilar uses

were

treated the same. Quitethe opposite

—

it

was

a procedure, designedtoassure thateachpiece of land's differences were taken into account.

The

environmental impactprocess lendsitselfto discre-tion

and

performancestandards.

The

EIS,

Malcolm

Rivkin wrote,

zoninghistory

misuse orpower

jJ

TOi

m

z

acquiring influence

controlling sprawl

forces thedeveloperto thinkthrough the

im-pact of a project

on

natural conditions

and

community

patterns, to

pay

explicitattention

toalternative solutions,

and

toevaluate meth-ods to mitigate adverse consequences.

The

publiccan

comment

—

and

does.

The

reviewer, lacking prescribedstandardsagainst

which

to

measure

much

of theinformation submitted,

can exercise considerable discretion reaching

final judgments

and

settingperformance

stan-dards(e.g., protectingwatersupply

and

sensi-tiveland

and

water features, orpreventinga

drain

on

community

services).

Options

and

modifications are possible

on

mattersranging

from

density to storm-water

management.

Thus, theEIS can providea legitimate

frame-work

for discussion, for establishing trade-offs

and

conditions

—

in short, for negotiation.11

Environmentalistswerenot theonlycitizens

gain-ing

power

inthe'60s

and

early70s. Poor urban

resi-dents, feelingthreatened

by

largerforces in society, flexed their musclestoo, gaining

power

and

respect and, hence, a place at the bargaining table.

Perhapstheseminalfigurein thisdrivetoorganize

the

urban

poor

was

Saul Alinsky, a blunt-spoken

organizer

from

Chicago

who

gained

wide

acclaim

for spearheading

The

Woodlawn

Organization's successful standagainst the University of Chicago's

expansion plans in 1960,

and

who

subsequently

trained a

whole

new

generation of organizers

through his Industrial Areas Foundation.12

_While

Alinsky

was showing

slum neighborhoodsthe nuts-and-bolts of

how

togain

power

through

confronta-tion, thefederal

urban

renewal

program

of the'50s

and

'60store theirneighborhoodsapart,giving

them

urgent reason toorganize. Later, a

wave

offederal

programs

—

most

notably

Community

Action

and

Model

Cities

—

werestructuredtorequire

more

citi-zenparticipation, thusencouragingthe

urban

poor

to acquire

more

power.13

The

environmentalists

and

the

urban

organizers

were

part of alargertrendtowardthesuccessfuluse ofcitizen

power

againstsociety'slarge institutions,

public

and

private. Both theenvironmental

move-ment and

theriseof

urban

activistsforcedonto the

land-use

agenda

thesocial

and

environmentalcosts

of

development

that zoning has never addressed,

and

both usedconflict

and

confrontationtoacquire

enough

power

to sit at the bargaining table.

The

Will to Bargain: Municipalities

While

the "country"

and

the"city"

were

awaken-ing, thesuburbs

—

where

local jurisdictionshave tra-ditionallybeenthe

most

effectivecontrollersofland

use

—

also

were

coming

to see that development

exacted a cost traditional zoning did not begin to address.

Whereas

theEIS addressedthe

environmen-tal

and

social costsof

new

development, suburban

communities

began

tofeelthefiscalcostof sprawl.

In the late '60s

and

early 70s, the suburbs were continuing to

grow

at an almost frightening pace. Infact,1973

was

thehigh-water

mark

in

American

history forhousing starts.14

Many

planners of the

timesoughttoeliminatesprawl through such meth-ods as planned unit

and

clustered development.15

Inaddition, alarge

number

of

suburban

communi-ties

began

trying toguide, control, or simplylimit

growth by

setting

up growth

quotas, ratingsystems

for potential developments, or restrictions

on

de-velopment

according to the availability of such

public services as water

and

sewer lines.16

Most

communities, however, just

wanted

to

make

sure thecostof capital

improvements

made

neces-sary

by

sprawl got passed

on

to

somebody

else

—

namely, the

new

residents.

Through

their subdivi-sionregulations,

suburban

municipalitiesbegan

re-quiring thedeveloper orthe

new

residents topick

up

the cost of such necessary

improvements

as

roads, water

and

sewer lines, drainage ways, and

re-quired to build

and

dedicate these facilities to the municipality; inothercases, specialassessment dis-trictswerecreatedtoshieldotherresidents

from

the taxes needed to provide them.17

Inthe'60s, as

growth became

more

rapid,

many

communities began

requiring that

new

develop-ments

set aside land or in lieu fees for parks

and

schools.18

By

1970, thissystemof capitalfinancing

had

been

refined further,

and

suburbs

had begun

requiring "impact"or"developmentfees."Thesefees, based

on

the

number

of

bedrooms

or

homes

in a develop-ment,were usednotonlytoprovideservices directly tothe

new

subdivision, butalso toprovidefor ser-vicesoutsidethe

development

which

needed

expan-sion because of the

new

residents.19

Many

states

passed enablinglegislation toauthorizelocal

govern-ments

to assess such fees.20

Impact feeswere treatedroughlyin thecourtsat first

—

developers attacked

them

asbeing disguised

taxes, takings,

and

unauthorized uses of police

power.21

_Although

courts still are not entirely in

agreement

on

thematterof impactfees, a

growing

number

of judicial decisions are upholding their validitysolongasthereisa"rationalnexus"—a

rea-sonably close relationship

—

between

the

develop-ment

in question

and

the use of the fees.22

Suburban

impactfees

and

exactionshave

contrib-uted toan

atmosphere

conducive tobargaining

by

suggestingthatadeveloperhas anobligationto "in-ternalize the externalities" of his project,

and

that

this sort of internalization can be translated into

dollars paid to the city.

Inthe70s, dollars

became

critically importantto

both suburbs

and

cities.

When

the dull

and

gray municipal

bond

market

was

suddenly

thrown

into

convulsions, municipalities

had

tosearchfor

innova-tive

ways

tofinancecapitalimprovements.23

In Cali-fornia, asingleevent

—

thepassageof 1978's

Proposi-tion 13,

which

drasticallycutpropertytaxes

—

had

a dramatic effect

on

cities' attitudes toward

new

development

by

simultaneouslycutting their

main

sources ofrevenue

and

virtuallyeliminatingthe tax

benefitsof

new

growth.24_Thus,

_many

_communities

began

to

expand

the definition of"rational nexus"

in an effort to getas

much

as theycould out ofa

new

development—

theonlypotential sourceof

ex-panded

revenue they could see.25

And, by

thelate '70s,theywerewillingtobargain

toget

what

theywanted.

The

federal

Urban

Devel-opment

ActionGrantcastcitiesintheroleof

entre-preneurs

by

rewardingaggressive municipalitiesfor their attempts to capture privatedevelopment.

As

thehousingmarket

grew

competitive, local

govern-ments

actually

went

into the

development

business

to

make

sure housing

was

built.26 Others

became

brokers

who

went beyond

merely trying to attract

growth.

They

aggressivelysought

development

of the right type

and

in the right place.27

Thus,citieswere

becoming

"civicentrepreneurs"—

dealmakers

accustomed

tositting

down

atthetable

with private businessmen

and

hammering

things

out.

The

Will to Bargain: Developers

Once

citizengroups

and

communities

saw

the

eco-nomic, social,

and

fiscalcostsof

growth and began

tryingtodealwithit, the cost of

development

sky-rocketed

—

in terms of both time

and money.

Impact fees

had

reached the point at which, at leastaccordingto

Hagman,

theyalmostconstituted a buy-in fee.28

The

environmental impact process

was

costingdeveloperstime

and

money

even

when

it

went

smoothly. Itgavecitizengroups the

power

tochallenge a projectincourt,sometimes

on

techni-calities—a process

which

was

bound

to cost the

developerfar

more

time

and

far

more

money

even if the challenge

had

no

merit at all.

Furthermore, thepassageofenvironmental laws

created a host of

government

agencies, such as the

federal Environmental Protection

Agency

and

its state counterparts, with single-issue agendas.

To

developersusedto

working

out a mutually accept-able project with a local general-purpose govern-ment,dealingwith theseagencies

was

arudeshock.

Nowhere

did developersfind a

more

frustrating series of events than in California,

where growth

had

traditionally been encouraged.

One

environ-mentalagency, the California Coastal

Commission,

had

remarkable discretionary authority,

and

used ittoforcedeveloperstodealwith theexternal effects

of

development

by

mitigatingor payingfor them.

The

coastalcommission, broughtintobeingthrough

a ballot initiative,

sometimes

required residential

builders to include

low-income

housing in their

beachfront developments; forced almost all

land-owners

to provide public access tothe coast in

ex-changefor the smallestpermit approvals;

and

inone

case evenrequired a shopping center developer to

implement

a series of transit improvements.29

Furthermore,

some

prominent California

devel-opers

who

triedtoasserta vestedrightsclaim over

new approaches

cost todevelopers

tal

use ofthe courts

modeled onlabor disputes

the coastallegislation"suffereda seriesofcrushing

rejections"

from

the courts.30

And

aftera timein California,asthe costof

hous-ing

became

the

dominant

local issue inthelate70s,

even "general purpose" local

governments began

adopting the Coastal Commission's "inclusionary housing"demands, withvarying degreesof success.31

Facing a high-costenvironmental impactprocess, citizengroupsthatcouldtietheirprojects

up

incourt

indefinitely, hostile single-purpose agencies,

and

once-friendly local

governments

tryingtoextract as

much

from

them

aspossible, developerswere

more

than willingto bargainfor

development

approvals

just to keep their projects going forward.

Bargaining Begins: Environmental Disputes Bargaining

came

firsttoenvironmentaldisputes.

These

disputesusuallyinvolvedlargeprojectssuch

as

power

plants or oil refineries,

and

federal

and

statelaws

had

givenenvironmentalgroups

tremen-dous

power

to

impede

or stop them. In addition,

because of the project-specific nature of the legal

process, environmental disputes lent themselves

more

easilytobargainingthanland-use disputesdid,

and

some

industrial

and

utility executives

seemed

more

willingtositatthetable, atleastatfirst, than

real estate developers.

In

some

cases, governmental bodies

—

mostly

be-yond

the locallevel

—

triedtoheadoffconfrontation

by

creating a process that

would

bringdevelopers

in

and

talkaboutthechancesoftheirprojectin ad-vance.

As

early as 1973,

New

Jerseyenvironmental

officials set

up

the"preapplicationconference" proce-dure, encouragingcoastaldeveloperstodiscusstheir project's chances with regulators even before they

apply for a permit.32

In

many

instances,

however

the partiestoan

envi-ronmentaldisputetried to setupamediationprocess, oftenmodeledaftermediationinlabordisputes.These environmental mediations

met

with varyingdegrees of success.

In

New

York, forexample, thelongstanding

con-flictsover a

number

of projects

on

the

Hudson

River

were

broughttogether

and

successfullymediated

by

former

EPA

AdministratorRussellTrain

—

butTrain

bowed

out immediately after mediation,

and

the

agreement

was

difficultto

implement

without him.

InMaine, adisputeovera small-scale hydroelectric plant

was

resolved

when

the partiesagreedto

mini-mum

and

maximum

lakelevels,conditionsthatwere

incorporatedintotheplant'sfederallicense.

An

argu-ment

over

how

toextendInterstate90across a lake

intoSeattle

was

extensivelymediated, but environ-mentalists

were

dissatisfied with the

outcome and

subsequently sued.33

Mediation

in this context turned out to be far

more

difficult than mediation in labor disputes,

which

involveonly

two

parties

and

limitedissues.34

And

environmental mediation is not necessarily a

way

to circumvent legal action. Because

any

party

may

stillfilea lawsuitafterthemediation, chances

for success are usually highest

when

then parties' legal options have already been played out.35

Nonetheless, mediationinenvironmentaldisputes didprovethatmulti-party negotiationoverlanduse

and development

was

possible

and sometimes

suc-cessful,

and

severalgroups sprang

up

that

special-ized in mediating environmental issues.

Bargaining

Goes

Urban

Inthecities, however,bargainingto resolve

devel-opment

disputes

met

with

more

resistance.

Though

negotiation

and

bargainingover

urban

landusesis

common

in

some

other countries such as Japan

(where a developer might

show

up

at a neighbor's

door

withagift),36in the U.S. there

were

consider-ablelegalimpedimentstoit, springing

from

therigid

land use laws developed earlier in this century. Nonetheless,beginninginthe70s, bargaining

came

to

urban

areas

—

oftenindealsdirectly

between

citi-zens

and

developers (with the municipality only

peripherally involved)

and

often with an

environ-mental basis.

An

early

example

ofsuccessful

development

bar-gaining in a built-up area

came

in the case of the

White

Flint Mall near Washington,

DC.

Previous

attemptstobuild a shoppingcenterinthearea

had

beenfruitless,

and

azone change

was

required.

The

developerhiredplanning consultant

Malcolm

Riv-kin tonegotiatewith the

neighborhood group and

try to

work

out"a

development

scheme

acceptable

tothe residents yeteconomicallyfeasiblefor the pro-ponents."37

_Working

_together,

the

two

sides

drew

up

aspecialagreement, enforceableincourt, that speci-fied a

number

of details including a guarantee by

thedeveloperofan appraisedmarketvalue

on

each

home

in the neighborhood.38

Soon

enough, however, theAlinsky-style

neigh-borhood

activists

— who

did not necessarily think

in environmental terms

—

saw

that they too could bargainwithdevelopers

and

getsomethingoutofit.

but the office market has been

booming,

housing

activistspersuadedthecity toadopt aninformalcity

policy requiringofficedeveloperstoprovideorpay

for housing.39

In that

same

city, as federalhousingsubsidyfunds

dried

up

in 1981,povertyworkersinthelow-income Tenderloin district

managed

to strike a deal with

high-rise hotel developers to subsidize low-cost

single resident

occupancy

hotels; in thiscase,

how-ever, thecity's

UDAG

was

usedasthe carrot.40 Gen-erally, developers

grumbled

but werewilling to

do

it to take advantage of hot markets.

More

formalbargainingproceduresinurban

situ-ationswere

hampered somewhat by

theinflexibility ofland-uselaws.

A

deal struckbetweenadeveloper

and

neighborhoodresidents

was more

orlessprivate,

of course, but

any

sortofofficialdealwith thecity

always

opened up

the question of contract zoning

and

even the still-unsettled legalquestion ofimpact

fees.

suchdevicesasinclusionaryhousing,redevelopment

areas,

and

density bonuses.'12

_One

_such

authoriza-tion

was

California'sdevelopment agreement legisla-tion. This law, authorizing local

governments and

developers toenterintobinding agreements

on

the

conditions ofdevelopment, grew, ironically, outof theCaliforniaCoastalCommission'srefusaltogrant vested rights to a large developer

which had

ex-pended

some

$3million

on

sitegrading but

had

not

obtaineda buildingpermit

when

the coastal initia-tive passed in 1972.

Development

agreements,

strongly supported in the state Legislature

by

the

development

lobby,

were

intended to protect the

vested rights of developers against future changes

in land-use laws.43

Development

agreements,

which

areenactedinto

ordinance

by

local governments, have not been widely used in California. But in Santa

Monica

a

liberalcity

government

usedthedevelopment

agree-ment

processtorequiredeveloperswithfairlygood,

effect ofland use laws

IUUMJI

»--

•«*3Q£n

<

Intime, however, statesbeganto allow

more

bar-gaining. Early in the 70s, Virginia,

though

tradi-tionally hostile to land-use reform, passed a law allowingcontract zoning

and

fast-growing Fairfax

County, near Washington,

DC,

used the law to

make

considerable

demands

on

developers in

ex-changeforpermissiontodevelop.

By

1978, the

Gen-eral

Assembly had

amended

Virginia'szoning

law

toallowforconditionalzoningstatewide.

The

"prof-fer"system, asit is

now

called, has

become

a

routin-ized

form

of the zoning approval process in the

state.41

InCalifornia, a

number

ofstatelaws authorized

localgovernmentstobargainwithdevelopers, using

but

by no

means

airtight, vested rights claims to

make

concessions to the city in exchangefor

per-mission to build in the face of a moratorium.

Beyond

Bargaining

Bargaining, while providingflexibilitythatarigid setofland-userulescannot,isstillaprocessrifewith problems. Legal

problems

still exist. Negotiations

among many

parties

—

some

unrepresentedoreven

unborn

—

are complicated.

And

bargaining takes

time. In Santa Monica, for example, the

develop-ment

agreementprocess

became

sotime

consuming

that city officialsdiscourageddevelopers

from

ap-plying for them.44

ad hocbargaining

performance zoning

agovernmentof deals

Because, in

many

instances, city, developer,

and

citizen

group

have

come

tobe recognizedasequals

in the

development

process, there have

been

at-temptsto

move

beyond

bargaining

and

backtorigid

programs

—

onlywithvastly different

ground

rules.

Some

citieshave usedthe

ad

hoc

bargaining

pro-cess as a springboard to

programmatic

change. In

San

Francisco, the office-housing connection

was

passedinto ordinance

by

the

San

Francisco

Board

ofSupervisors.

Under

theprogram,

downtown

of-fice developers

pay

$13.34 per square foot in fees forhousing, transit, daycare,

and

thearts.45In1983,

Bostonadopteda "linkage"program, similarto

San

Francisco's office-housing program, that required

downtown

office developers to

pay

$5 per square

foot over a 12-year period into a housing trust

fund.46

Even Santa

Monica

adoptedfirmrules. Afterthree

years of negotiatingwithdevelopers, the citycouncil

adoptedaGeneral Planin 1984requiringoffice de-velopers to build housing

and

parksor

pay an

in-lieufeeof$2.25 persquarefoot forthefirst15,000 square feet

and

$5 per square foot thereafter.47

And

other cities have tried innovative land-use

programs

that trytoget

away

from

zoning.Ft.

Col-lins, Colo., forexample,usesakindof"performance zoning" that does

away

with site-specific zoning, and, inaddition,thecityagreedwiththe local build-ersassociation

on

asetofmutuallyagreeable

devel-opment

fees.48

Such

programmatic

attempts, however, once

againraisethequestion ofrigidity. Willtheybe

flex-ible

enough

to

accommodate

the differencesineach

piece of land,each

development

deal? Willthey

re-turn us to an era of zoning-type inflexibility? Or,

if they are general guidelines rather than specific

"end state" plans, will they merely lead to

more

negotiation?

But there is a deeper question about negotiated

development

—

one

involvingfairness.Take, for

ex-ample, ourattemptsto"internalizetheexternalities,"

which

lieattheheart of

many

of these negotiations.

Are

our

methods

good

enough

sothat

we

can

iden-tify

what

all theexternalitiesare

and

who

they af-fect?

Or

willtheonlyexternalities identifiedbethose affecting organized interests participating in the discussion?

Perhapsthatisthe

most

troubling question.

Does

negotiated

development

connotethe very

problem

Walter Blucher

warned

us againstthirtyyearsago

—

a

government

of deals, not laws?

The

outcome

of

negotiated

development

depends almostentirely

on

who

the negotiators are. If

one

neighborhood

is

organized

and

another, also affected

by

the

develop-ment, is not, it is likelythat the second

neighbor-hood

will be left out of the final deal.

How,

then, can

we

maintainthe usefulflexibility

ofbargaininginlanduse

and development

without

degeneratingintoafree-for-allwithoutrules?

As

ex-periments with bargaining

—

and

with

more

flexible

land-use

programs

—

continue, that is the question

we

must

seek to answer.

NOTES

1.DonaldG.Hagman,'The DeveloperorLandowneras Com-munityFinancier,"unpublishedpaperdated April 15, 1982.

2.JohnJ.KirlinandAnneM.Kirlin,PublicChoices-Private

Resources: FinancingCapital Infrastructure forCalifornia's

Growth Through Public-Private Bargaining (Sacramento, Calif.: CaliforniaTax Foundation, 1982), p. ii.

3.SeymourI.Toll,ZonedAmerican(NewYork:Grossman Pub-lishers, 1969), Chapters5-6;RichardBabcock, TheZoning

Game

(Madison, Wis.:TheUniversity ofWisconsin Press, 1966), p. 4.

4.DouglasW.Kmiec,"DeregulatingLandUse:

An

Alternative Free EnterpriseDevelopmentSystem,"130 University of Penn-sylvaniaLawReview 28 (1981), p. 100; BruceM. Kramer, "Development Agreements:ToWhatExtentAreThey Enforce-able?" Real Estate LawJournal 10:3 (1981), pp. 31-37.

5.Kmiec, "Deregulating LandUse," op. cit., p. 99-100.

6.Babcock, The Zoning Game, op. cit., p. 7. 7.Ibid., pp. 7-8.

8.JanS.Krasnowiecki,"Abolish Zoning," 31SyracuseLaw Re-view 719(1980), p. 727.

9.WilliamK. Reilly,ed., TheUseofLand:

A

Citizens'Policy GuidetoUrbanGrowth(NewYork:ThomasY.CrowellCo., 1973), p. 33.

10.Malcolm D. Rivkin, Negotiated Development:

A

Break-throughinEnvironmentalControversies(Washington,

DC:

The Conservation Foundation, 1977), p.2.

11. Ibid., p. 7.

12.See,forexample, CharlesE.Silberman, Crisis inBlack and White(NewYork: RandomHouse, 1964), pp. 318-350. 13. See, forexample, PeterMarrisand MartinRein, Dilemmas

of Social Reform: Povertyand CommunityAction in the UnitedStates(New York:Atherton Press, 1967). 14."GrassrootsHearingsontheEconomy,"Part3,House

Com-mitteeonBanking,Housing, and UrbanAffairs,December

4,1981(Atlanta,Ga.), andDecember7,1981(Providence,

R.I.), pp. 143-44.

16. See, forexample,DavidR.Godschalk,David].Brower,Larry D.McBennett, and BarbaraA.Vestal. ConstitutionalIssues ofGrowth Management(Chicago:The

ASPO

Press, 1977). 17.Hagman,'The DeveloperorLandownerasCommunity

Fi-nancier," op. cit., pp. 1-4.

18.JulianConradJuergensmeyer and RobertMasonBlake, "Im-pactFees:

An

AnswertoLocalGovernments'CapitalFunding Dilemma,"9 Florida State UniversityLawReview 415

(Sum-mer 1981), p. 418. 19. Ibid., pp. 418-420.

20.Jay Sheen,"DevelopmentFees:StandardstoDetermineTheir Reasonableness,"UtahLawReview 549(1982), pp.556-559. 21. Ibid.;JuergensmeyerandBlake, "Impact Fees,"op. cit., pp.

418-420.

22.Hagman, TheDeveloperorLandownerasCommunity

Fi-nancier," op. cit.; Susan R. Diamond, 'The San Francisco Office/Housing Program: Social Policy Underwritten by Private Enterprise,"7 HarvardEnvironmentalLaw Review 449-486(1983).

23. See, forexample,John MatzerJr.,ed.,Capital Financing Strat-egies forLocalGovernments(Washington,

DC:

International City ManagementAssociation, 1983).

24.Accordingtoonesurvey,inthefirstfiscalyearafter Proposi-tion13 passed,between26and48 percentofCalifornia

juris-dictions increased various land-use related fees. Jeffrey I.

Chapman, Proposition 13andLandUse(Lexington,Mass.: LexingtonBooks, 1981), pp. 108-109.

25.Diamond, TheSanFranciscoOffice/HousingProgram,"op.

cit., pp. 470-474.

26.Forexample,MontgomeryCounty,Md.,insuburban

Wash-ington, D.C., wherehomepricesare high, countyofficials have, inaddition toinclusionary housingand other tech-niques,issued tax-exemptbondstofinancelow-interest mort-gages, particularly for the county's own employees. See WilliamA.Witte,MaryK.Nenno,andPaul C. Brophy,

"Pro-files of Innovative Housing Administration," in Mary K.

NennoandPaul C.Brophy,eds.,HousingandLocal Govern-ments (Washington, D.C.: InternationalCity Management

Association, 1983).

27.See, forexample,"Negotiating BusinessDevelopment: The ManagerasaBrokerinLandDevelopment," 34Municipal Innovations(Summer1981),adescriptionoftheaggressive effortsofMercer County, Wash.,tobringanofficebuilding toits downtownarea.

28.Hagman, "The DeveloperorLandownerasCommunity

Fi-nancier," op. cit., p. 1.

29.Robert G. Healy,"An EconomicInterpretationofthe Califor-niaCoastalCommissions,"inRobertG.Healy,ed.,Protecting theGoldenShore:LessonsfromtheCalifornia Coastal

Com-missions(Washington,

DC:

TheConservationFoundation, 1978),pp. 145-150.

30.Hagman, "Development Agreements," op. cit., p. 66. 31.SeymourI.SchwartzandRobertA. Johnston with Dallas

Bur-traw, LocalGovernmentInitiativesfor AffordableHousing:

An

Evaluation of InclusionaryHousing Programsin

Califor-nia.EnvironmentalQualitySeriesNo.35, Instituteof

Govern-mentAffairsandInstituteofEcology,Kellogg Public Service ResearchProgram,Universityof California,Davis(December 1981).

32.DavidN. Kinsey, TheCoastalDevelopment ReviewProcess

in

New

Jersey:AvoidingDisputesandResolvingConflicts," EnvironmentalComment(May1977), pp. 19-20; alsoRivkin, Negotiated Development, op. cit., pp. 14-19.

33.Allan K. Talbot,SettlingThings:SixCaseStudiesin Environ-mentalMediation(Washington,

DC:

TheConservation Foun-dationand TheFordFoundation, 1983).

34.Lawrence SusskindandConnieOzawa,"Mediated Negotia-tionin the PublicSector: MediatorAccountabilityand the PublicInterest Problem," unpublished, undated paper. 35.Talbot, Settling Things, op. cit., pp. 97-98.

36.FredP.Bosselman,"BuyingofftheNeighbors: Negotiated Pri-vate SettlementsinJapan,"EnvironmentalComment(May

1977), pp. 12-13.

37.Rivkin, Negotiated Development, op. cit., p.9.

38. Ibid., pp. 10-12.

39.Diamond, TheSanFranciscoOffice/HousingProgram,"op.

cit.Othercities,includingBoston and

New

York,havebegun

tofollowSanFrancisco's lead.SeeJoelWerth,'Tapping Devel-opers,"Planning(January1984), p.21-23.

40.BillFulton, "

'FriscoHotel BuildersSettleWithTenderloin," The Washington Star, July 19, 1981, p. E-l.

41.NancyH.Lieberman,"ContractZoning andConditional Re-zoning:

A

JudicialandLegislativeReview,"UrbanLand

(No-vember1981),p.10.Developeroppositionmountedastime went onandFairfaxCountytriedtoexactmoreconditions. NadineHuff, "NegotiatingRezoning Conditions inFairfax County, Virginia," Urban Land (November 1981), p. 13. 42. KirlinandKirlin,Public Choices-Private Resources,op.cit..

p. 15.

43.Foracompletedescription ofthehistory of thedevelopment agreementlegislation,seeWilliamG.HollimanJr.,

"Develop-mentAgreements andVested RightsinCalifornia,"13Urban

Lawyer44-64(1981).

44.MarkFabian,"SMThawsStaff Treeze'on DevelopmentPacts," Evening Outlook(SantaMonica,Calif.),Sept. 21,1983,p. 1.

45.Remarksby GeorgeWilliams, AssistantDirector,San Fran-ciscoCityPlanning Department, SeventhInternational

Con-ferenceonUrbanDesign, Chicago, October24, 1985. 46.Remarksby SusanAllen,DeputyDirector, Boston

Redevelop-mentAuthority,SeventhInternationalConferenceonUrban

Design, Chicago, October24, 1985.

47.City of SantaMonica,"FinalAdopted LandUse and Circula-tion Elements,"October23, 1984, p. 151.