IN A SEPTEMBER LAND-USE DECISION, MARYLAND'S Court of Appeals ruled that when it comes to Development Rights and Responsibilities Agreement (DRRA) disputes, DRRAs are governed by administrative law and must be handled through administrative channels and not the courts.
“This decision is an important step for protecting developers' rights,” says John Zink, a partner with Washington, D.C.-based Venable, which handled an agreement appeal on behalf of K. Hovnanian. “An administrative appeal procedure will not cause the same costly delays that might occur if the court had found differently.”
DRRA contracts are commonly drafted between developers and local governments to ensure that laws regarding property are not changed after a developer begins to invest in it, but are put in place prior to construction. Negotiations typically freeze existing zoning regulations and ensure the security of land and funds donated for public purposes.
In some states, a DRRAis specifically designated as a legislative act, allowing it to be reviewed by the courts. However, in many states, including Maryland, DRRAs are nonspecific as to whether the contracts are considered legislative or administrative acts. With this ruling, the Court of Appeals has resolved this issue in Maryland and set a possible precedent for consideration in other states.