Cary D. Lowe
Copyright 1997 Lowe
The dynamics of negotiations over real estate development projects are becoming increasingly complex and require ever-greater sophistication on the parts of the various participants. They have evolved from what was once seen as a wide-open game to a deck stacked heavily in favor of regulatory agencies, and now to a situation in which legal, legislative, political and other considerations all function as wild cards. Conflicting court decisions on environmental laws, the tug-of-war over reform of the federal Clean Water Act and Endangered Species Act, and bitter fights over financing of infrastructure such as school facilities typify the uncertainty looming over development issues today.
Nonetheless, there have been some encouraging recent developments. Despite some controversy over interpretation, the decision by the U.S. Supreme Court (Dolan v. City of Tigard (1994)) requiring that public agency exactions not only be based upon a nexus with the project impacts, but that they display a "rough proportionality" to the magnitude of those impacts, has substantially leveled the playing field for developers and their advocates in negotiating over project approvals and conditions, and thereby increased the incentive to all parties to enter into negotiations in the first place. Similarly, adoption of statutes such as California Government Code Sections 66030, et seq., establishing an official mechanism for courts to press parties to a development-related dispute to enter into mediation, create important new opportunities for negotiated resolution of such disputes.
Negotiations over any real estate development automatically involve at least two sets of parties: (i) the developers, and (ii) the public agencies having jurisdiction over the proposed project. Very frequently, there is a third interest group which inserts itself into the process at some point: nearby residents/landowners, or issue-oriented advocates, who believe themselves or the larger community to be impacted negatively by the proposed project.
Sometimes one or more of the parties to such disputes recognize on their own that there are more productive and desirable approaches to dispute resolution than confrontation. Over two thousand years ago, Chinese military theoretician Sun Tzu observed, "To subdue the enemy without fighting is the height of skill" (Tzu 1971), and his words continue to ring true today.
In rare instances, a project so clearly is perceived to be desirable to the community, and to have no significant negative impacts, that there is little if any conflict between the developer, on the one hand, and either the local jurisdiction or opposition interest groups, on the other hand. In most cases, there is some amount of conflict. It may be between the developer and the local jurisdiction, or between the developer and a combination of the local jurisdiction and private advocates, or even between private advocates and a combination of the developer and the local jurisdiction. In any of these cases, with much at stake for all concerned, all the parties need to ensure that they make the most of the limited opportunities to come to a workable, mutually satisfactory outcome.
Negotiations between or among public agencies, private advocates and development applicants are, as a general rule, fundamentally different from negotiations between private parties acting in a strictly commercial context. First of all, a development negotiation need not be viewed by any party as a zero-sum game in which a gain by one must come at the expense of another, since their respective interests often are qualitatively different in nature, e.g., a desire by a developer to achieve a certain density versus a desire by a city and local environmentalists to preserve a ridgeline or a critical wildlife habitat area. Next, land use negotiations rarely allow for the option of simply walking away from the deal, particularly for a developer who already has made a substantial investment in a property or project or for a jurisdiction which has received a development application and is required to process it. Last, the most disruptive impact on the process often can be made by parties, e.g., community groups or environmentalists, who are not stakeholders in the traditional sense but must be reckoned with onetheless; there even is case law holding that it is appropriate and possibly necessary for public agencies to consider the interests of neighboring property owners (e.g., Mitri Saad v. City of Berkeley (1994) and Guinnane v. San Francisco City Planning Commission (1989)).
Consequently, such negotiations should be regarded as a process of seeking an outcome that is mutually advantageous, or at least acceptable, to all concerned. Whether the focus is on the general concept of a project, a development agreement, a subdivision map condition or a zone change, the goal should be to achieve a win-win situation or, at the very least, an outcome in which no party feels it has lost. The focus must be kept on a mutual commitment to a cooperative process, whether through negotiation or an alternative such as mediation, in which the parties share information and other resources in an attempt to reach such a mutually acceptable result. A dispute which has to be played out in contested public hearings or in a courtroom represents a failure by at least one party to make an accurate and reasonable assessment of its position. As Mick Jagger, once of the London School of Economics, noted, "you can't always get what you want, but if you try...you'll get what you need" (Jagger and Richards 1969).
The developer normally will initiate this process, by filing an application or at least presenting a development concept for consideration, and thereby is in a position to lay out the initial parameters of the discussion. The public agency holds the ultimate trump card, by virtue of its ability to reject any proposal, and thus holds considerable power to redefine those parameters. And private groups, through use of the legislative and judicial systems, can delay and disrupt the process, in order to ensure that their positions are taken into account. Yet, all parties have a tendency to forget their own points of strength and focus excessively on their fear and anger toward the opposing position, with the frequent result that all lose sight of their common goals and sacrifice the opportunity for mutual advantage. For this very reason, simply keeping communications open among the disagreeing parties is not enough. Sometimes, the more people of different viewpoints talk, the more they find they disagree with, or even fear, one another. What began as a negotiation then typically slips into a dance of deadlock, in which no parties' interests are advanced. As Judge Musmanno of the Pennsylvania Supreme Court once observed of contracts, a development negotiation is not a "kamikaze plane in which the parties seal themselves for mutual destruction" (Nash v. Atlantic White Tower System (1961)). In fact, it should, and readily can, be quite the opposite.
It is to be expected that public agencies, private advocates and developers, and consequently their respective counsel, will approach project-related negotiations from different perspectives. A private developer is in the business of taking substantial economic risks, and has an expectation of being rewarded for those risks over the long run. The agency also has economic expectations, e.g., local economic stimulus, tax revenues, new jobs and support for local businesses, but other, less-quantifiable interests frequently are at stake as well, e.g., aesthetic improvement of a rundown area or diversifying local housing opportunities. Some objectives of the local jurisdiction, such as catalyzing revitalization of a downtown, may require incurring short-term sacrifices or subsidies, as is particularly common in the redevelopment context. The objectives of private advocates may be less definable in objective terms, but generally come down to concerns about quality of life or environmental impact.
For any of the parties, the fact that their concerns are generalized should not be allowed to serve as an excuse for making vague charges and expecting others to work out a real solution. As Saul Alinsky, the patron saint of all community activists conceded, "The price of a successful attack is a constructive alternative" (Alinsky 1972).
The differing perspectives of the parties make it even more imperative that their representatives identify and then remain fixed on any points of potential common interest. Indeed, focusing on interests (e.g., a landowner's desire to make economically productive use of their property, and a city's desire for certain aesthetic standards) is far more likely to yield consensus or at least compromise than bickering over narrower positions on issues such as development density. Otherwise, there will be a natural tendency for development-related negotiations to take on an aura of mistrust or even confrontation, particularly if one or more parties forget that their goal should be an agreement, not a personal victory. Even when advocates find it difficult to understand or appreciate the concerns of other parties, they must maintain a commitment to work toward a solution within the agreed process.
Aggressive advocacy is one thing, but tactics which are destructive to the negotiating environment are a different matter altogether. And once the negotiations have taken a turn in such a negative direction, it is difficult to restore the cooperative atmosphere that tends to lead to mutually beneficial outcomes. Whoever observed that it is necessary to break a few eggs to make an omelet never met Humpty Dumpty.
With the foregoing principles in mind, we suggest the following more specific guidelines for the conduct of negotiations between or among agency counsel, developer counsel and private advocacy counsel:
At the same time:
We try to operate by these rules, and we look forward to negotiating with or alongside you.
Alinsky, Saul D. 1972. Rules for Radicals. New York: Vintage Books.
Dolan v. City of Tigard (1994) 512 U.S. 374, 114 S.Ct. 2309.
Guinnane v. San Francisco City Planning Commission (1989) 209 Cal.App.3d 732, 257 Cal.Rptr. 742.
Jagger, Mick, and Richards, Keith. 1969. "You Can't Always Get What You Want." New York: Gideon Music, Inc.
Lacher v. Superior Court (1991) 230 Cal.App.3d 1038, 281 Cal.Rptr. 640.
Mitri Saad v. City of Berkeley (1994) 24 Cal.App.4th 1206, 30 Cal.Rptr.2d 95.
Nash v. Atlantic White Tower System (1961) 404 Pa. 83, 170 A.2d 341.
Tzu, Sun. 1971. The Art of War. New York: Oxford University Press.
Negotiation and Settlement. 1993. Berkeley, CA: Continuing Education of the Bar.
Participation Tools for Better Land Use Planning. 1995. Sacramento, CA: Center for Liveable Communities.
"Resolving Land Use and Environmental Disputes." 1993. Land Use Forum 6, 1: entire issue.
Stein, Debra, and Stickel, David. 1993. "When Neighbors Refuse to Negotiate." Land Development 5, 1: 17-20.
Stein, Debra. 1992. Winning Community Support for Land Use Projects. Washington, DC: Urban Land Institute.
Susskind, Lawrence. 1995. "Resolving Disputes the Kinder, Gentler Way." Planning 61, 5: 16-20.
Working with the Community: A Developer's Guide. 1985. Washington, DC: Urban Land Institute.
Cary D. Lowe, Attorney
Paone, Callahan, McHolm & Winton LLP, Irvine California