Real Estate and Construction Law Blog

The California Court of Appeal recently re-affirmed the limits on a city's ability to contract away its police power and placed limits on actions that a government can take in closed session. The Court also re-affirmed development agreements as an appropriate method for a city and an owner-developer to exempt a described development from future changes in zoning and density requirements.

The California Court of Appeal in Trancas Property Owners Association v. City of Malibu, 131 Cal. App. 4th ___ (2005) held that the City impermissibly contracted away its police powers by entering into an agreement that exempted a development from certain existing and prospective zoning restrictions. Moreover, by entering into the agreement in closed session the City violated the Ralph M. Brown Act, Gov't Code section 54950 et seq. (Brown Act), even though the agreement was to settle pending litigation.

In Trancas, the City of Malibu executed a settlement agreement with a developer in which the City agreed that, once tentative map conditions were met, the City would approve the project's final map, and would not subject the project to future zoning changes, or to compliance with current or future density restrictions. Moreover, the City would, if necessary, expedite the processing of a general plan amendment for the project. In exchange, the developer agreed to lower its densities, develop on-site affordable housing, and provide land to the City.

The settlement agreement terms were discussed in closed sessions, and only after it was entered into did the City announced the agreement and its terms at a public hearing.

A property owners' association brought a writ of mandate to set aside the settlement agreement. The trial court denied the writ, finding the agreement consistent with the Subdivision Map Act and local municipal code, and holding that the City Council's action fell within the exception for settlement of litigation found in Section 54956.9 of the Brown Act.

The Court of Appeal reversed, finding the agreement invalid because of the City's commitment to take or refrain from taking regulatory actions regarding zoning of the project. The Court, citing Avco Community Developers, Inc. v. South Coast Regional Com., 17 Cal. 3d 785 (1976), emphasized that a promise by the government that future zoning laws will not apply is invalid and unenforceable, unless done pursuant to the statutory procedural and substantive rules governing development agreements.

The Court also found the settlement agreement invalid because its adoption in closed session violated the Brown Act. The exemption in the Brown Act for settlement of pending litigation does not authorize approval in closed session of an agreement that includes provisions for future action that ordinarily would be subject to the open meeting requirements or decisions intrinsically required to be made after public hearing. According to the Trancas Court, the statutory allowance in the Brown Act for settlements in closed session does not override the requirements for public proceedings. When a settlement includes authorization or taking of action that by law requires a public hearing, Section 54956.9 of the Brown Act cannot provide an exemption from that mandate or from the public meeting requirements.

Donna Jones is Special Counsel in Sheppard Mullin's San Diego office.