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Transportation Funding & Financing

Development Agreements

"Development agreements" are contracts that have different provisions binding the parties thereto to its terms establishing the character, rate, and intensity of development of a parcel of land. These agreements often contain the terms of the provision and financing of public facilities, such as roads, required for the proposed development. Legislation allowing for development agreements, a form of contingent zoning, has gained acceptance only recently in a handful of states. One of the challenges of these agreements is that the rules they establish cannot change, which can pose problems as conditions evolve over the period of time during which they are valid.

In high-growth areas of Florida, California, and Hawaii, development agreements have become commonplace. Other states have comparable provisions, although they may not call them "development agreements." Illinois, for example, has had legislation for "annexation agreements," while New Jersey utilizes "municipal development agreements" for planned developments of more than 100 acres. Nevada has likewise adopted development agreement legislation.

Model Legislation

The following draft "model" development agreement statute and ordinance combine many of the features found and used successfully in the few states that have enacted such legislation. The model legislation was prepared for NCHRP Project 2-14, Public/Private Partnerships for Financing Highway Improvements and is taken from NCHRP Program Report 307. Although it dates from 1986 (making some sections dated), this sample legislation remains helpful for municipalities considering development agreements.

Sample Development Agreement Act.pdf (21 KB) which would be enacted by a State government to grant municipal and county governments the authority to enter into development agreements.

Sample Development Agreement Ordinance.pdf (28 KB) which would be enacted by a local government to create a development agreement.

South Carolina

South Carolina Code Title 6 Chapter 31, the Act is intended to foster a stronger commitment to comprehensive and capital facilities planning, ensure the provision of adequate public facilities for development, encourage the efficient use of resources, and reduce the economic cost of development. The Act allows local governments to enter into a development agreement with a developer for the development of property pursuant to a master plan.