- Agreements between project developer and municipality
An environmental permit is required for the realization of a new project. The project developer needs the cooperation of the municipality as a public body, especially if the planning framework with the correct zoning plan is still lacking. The municipal executive can promise public-law cooperation, but cannot guarantee that the desired permit, if granted at all, will be irrevocable. The municipality has an best efforts obligation, not an obligation of result. The municipality has a dual role when it performs activities as a public law person but also acts as a private law person. Although the name of an agreement does not determine the content of the mutual obligations, the cooperation agreement with a municipality is often referred to as a development agreement.
- Intent agreement
Depending on the complexity of a project, a development agreement is preceded by an intention agreement. Without far-reaching legal obligations, the parties agree on an investigation period. During this period, they examine whether a project has a chance of success: the feasibility study. In the letter of intent, the underlying intentions of the parties are recorded, along with the ultimate goals to be achieved. A number of necessary intermediate steps, chosen by the parties themselves, are usually mentioned. On this basis, a decision is taken as to whether the development will proceed. For the project developer, a letter of intent means involvement of the municipality concerned.
- Development Agreement
A development agreement is then drawn up. The content is as varied as the projects they deal with. There are, however, recurring subjects which can or must be worked out in various depths, depending on the circumstances or the stage of development. The decisive factor is whether the municipality has drawn up an exploitation plan for the recovery of land exploitation costs. If the exploitation plan has not yet been drawn up, an agreement on this subject is called an anterior agreement. If there is an exploitation plan, it is called a posterior agreement. An anterior agreement allows the municipality and the private landowner to make arrangements that are precisely tailored to the circumstances of the case. The possibilities are more limited in a posterior agreement. The parties must then observe the exploitation plan. The content of the posterior agreement must be compatible with the zoning plan. Subjects that are not regulated in the exploitation plan, but could have been regulated there, may no longer be regulated in a posterior agreement. All risks that have to be dealt with in a development project must be addressed in a development agreement. For example the acquisition of the necessary land, the environmental aspects of the soil and – in the case of redevelopment – the environmental aspects of the existing buildings. Aspects of spatial planning and market conditions also come into play. The latter in particular can change, and flexible arrangements must deal with this. It is advisable to include a good ‘preamble’ in the agreement. This contains, in plain language, the reasons and considerations for entering into the agreement. If, at a later stage, problems arise in interpreting a provision, the parties can refer back to this. Contracts often start with an article containing definitions. This is useful when branch terms are used. It prevents a difference in interpretation, for example of the term: ‘usable environmental permit’. The environmental permit is a statutory concept but ‘usable’ must be interpreted by the parties themselves.
- Implementation agreements
Sometimes a development agreement is followed by an agreement that is aimed at establishing the sale of land or realization obligations. Project developers must beware of excessively strict building obligations and requirements from the municipality with which the intended buildings must comply, because this can throw a spanner in the works under procurement law. If the obligation to build and the requirements mentioned are to be considered as the procurement of a work by a public authority, then the rules of the Public Procurement Act must be followed. This could destroy the one-to-one relationship of the developer with the municipality.
- Negotiating with a municipality
When contracting with a municipality, one must keep a close eye on the functions of the various persons. Civil servants are often involved at the preliminary stage. However important they may be, they do not have the power to legally bind the municipality. The Mayor represents the municipality and can bind it, although usually authorized officials can sign on his behalf. Often a council decision is also necessary for a valid agreement. Many project developers have been misled by the legally (non-)enforceable bond with a municipality after discussions with an alderman. The most important case law of the Supreme Court about the possibility of breaking off negotiations unilaterally arose in cases of unsuccessful negotiations by project developers with municipalities.