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Judge Confirms Controversial Issue

February 25, 2002

Development Agreements Must Be Kept ? Even If All Work Is Not Done

Inman News Features

Local jurisdictions that enter into a development agreement with a real estate developer must ensure that promises to perform public benefits made by the developer in the agreement are fulfilled regardless of whether the development ever happens, according to a California court ruling.

In the state's first court judgment related to development agreements, Orange County Superior Court Judge William McDonald confirmed that the City of San Juan Capistrano must fulfill the obligations of a development agreement it entered into on June 16, 1992, with the original owners/developers of a 256-acre residential project in the city called Pacific Point.

The development agreement was between the city and the original project owner/developer, Pacific Point Partners. SJD Development Corp. purchased the Pacific Point project site in June 1997. The current owners are SJD Development Corp., SJD Partners and CWC (Suncal Co).

McDonald had ruled the city must enforce a provision in the development agreement for Pacific Point, requiring the developer to stabilize the adjacent Meredith Canyon slope. The slope, which was not stabilized, suffered a landslide in May 1998 that severely damaged several homes.

The development agreement ruling stems from a lawsuit by five Meredith Canyon homeowners whose homes were damaged as a result of the landslide.

The judge confirmed that the city and the developers were legally required to fulfill the public benefits contained in the agreement because the original developer took advantage of the contract by securing development permits and starting grading at Pacific Point.

The judge ruled that state law requires the development agreement to be enforced because the developers already obtained significant benefits from the city under the agreement.

Copyright: Inman News Service

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