MD Court of Special Appeals Finds Development Rights Agreement was Void for Lack of Consideration because it Lacked any “Enhanced Public Benefits”

The Blentlinger family farmed the two parcels of land on their property for multiple generations. Until 2007, the Property had a Low Density Residential (“LDR”) land use designation, pursuant to which a property owner is permitted to apply for a Planned Unit Development (“PUD”). In 2012, however, the BOCC reclassified the property as LDR. After the Property was rezoned as LDR, Lillian C. Blentlinger, LLC and William L. Blentlinger, LLC , appellees, filed a PUD zone application for the Property on February 25, 2014. The Blentlingers also filed a DRRA petition on March 11, 2014, which included a draft DRRA. The PUD rezoning application was approved with conditions that limited the total unit count to 675 residential dwelling units, consisting of 500 single-family units and 175 townhomes.  An additional condition required that the first building permit for the construction of a residence was not to be issued before January 1, 2020. The BOCC enacted the PUD rezoning ordinance and executed the final Development Rights and Responsibilities Agreement (DRRA) on November 24, 2014. The Appellants filed a petition for judicial review of both the PUD and DRRA actions in the Circuit Court for Frederick County, which was denied.

At the outset, the court noted that the BOCC’s approval of the Blentlinger-County DRRA, including the freeze provision set forth in § 8.1, did not impermissibly expand the scope of local laws, rules, regulations, and policies governing use, density, or intensity beyond the limits of LU § 7-304. The court then turned to Appellants’ argument that Maryland DRRA law did not authorize a DRRA to be converted into a real property interest. The court found that the statute plainly provided that a properly recorded DRRA bound not only the parties to the DRRA, but any successors in interest as well. Thus, it rejected Appellants’ covenant running with the land argument.

Appellants next alleged that the DRRA was void for lack of consideration because it lacked any “enhanced public benefits” to the County. Here, the benefits relied upon by the developer were already required of the developer under the County’s Adequate Public Facilities Ordinance. As such, the provisions of the DRRA did not reflect enhanced obligations of the developer, but rather the obligations the developer would otherwise be required to satisfy during the course of the development of the property if no DRRA were in place. Additionally, because the Developer retained fee simple ownership of the middle school site if the BOE “does not approve the Public  School site or determines not to accept conveyance of the site,” the court determined this “benefit,” at the time of execution and recordation of the DRRA, was a conditional promise and potentially illusory. Accordingly, the DRRA was found void for lack of consideration.

Cleanwater Linganore, Inc. et al. v. Frederick County, 2017 WL 462241 (MD 2/3/2017)