Those of us who regularly practice in the area of real estate development have come to expect that municipal land use boards will attempt to extract a quid pro quo in exchange for the permits and approvals that they are bound, statutorily, to issue.

 With the exception of certain communities, it has become an accepted practice for cities and towns to expect applicants to deliver “gifts” to the city or town in exchange for approvals. While the Legislators on Beacon Hill and the Governor ponder ways to encourage businesses to stay in the Commonwealth, local officials continue to discourage new growth and development and torment developers. How did this happen? 
 
I think it all started with the adoption of the Subdivision Control Law and the provisions within Ch. 41, §81Q that allow planning boards to adopt rules and regulations. The statute says that the rules and regulations shall not require that land be dedicated to public use without just compensation. The statute also says that the rules and regulations shall not establish standards for new roads that exceed the standard commonly applied by the town to the construction of publicly financed roads. Well, there is case law that says that we should not pay too much attention to those statutory provisions. We have all seen subdivision roads that look like airport runways. It seems as if in the 60’s and 70’s planning boards decided that if it became too expensive to construct subdivision roads, that development would be discouraged. Planning boards adopted requirements for extremely wide roadways with expensive granite curbs and other features, including sewer and water pipes that connect to nothing. The requirements did not discourage development; it only made home ownership more expensive. Undaunted, planning boards made the rules and regulations more complicated and continued with efforts to discourage new construction; but the overall strategy failed. Ultimately, planning boards learned that the development community would find money to meet the ever-increasing requirements of the boards.
 
The term “mitigation” was stolen from the jargon of the Boston development community. Some speculate that there was a seminar at one point where town planners shared the notion that the development community would donate mitigation fees or public works projects under certain circumstances. Those certain circumstances seem to be that developers would agree to provide mitigation as a quid pro quo to obtaining their permits if the cost of the mitigation was less than the cost of legal fees and delays which would accrue if it became necessary to appeal a decision. Savvy planning boards calculated where the financial breakpoint would be and began routinely requesting mitigation. At first, the mitigation was modest and somehow linked to the proposed development. For example, if a retail store were being proposed at a busy intersection, the applicant would donate remote control traffic signal control equipment for use by the police and fire departments. Throughout the 1990’s with each success, the planning boards got more ingenious in the depth and breadth of their mitigation requests. We all know of projects that were required to donate fire trucks, police cars, off-site sidewalks, ball fields, traffic studies, and cash to a town in exchange for an approval.
 
One practitioner tells the story of how he protested to a town planner that incorporating the requiring of off-site improvements within the conditions of approval was unlawful. The practitioner explained to the planner that such donations were strictly voluntary and should be considered by the planning board as a gift from a cooperative applicant. The planner took the advice to heart and rather than eliminating the need for mitigation in that particular town, for the last ten years the condition of approval incorporating the quid pro quo reads: “The Planning Board gratefully accepts the voluntary gift of the applicant, to be provided prior to obtaining a building permit, in the form of a [insert gift here]”.
 
The practice of seeking and accepting gifts is NOT universal. In one Metro-West suburban town, the planning board refuses to accept gifts from developers, but in a nearby town the police cars are plastered with the advertisements of donors.
 
A colleague recently relayed to me the story of meeting with a town planner to informally introduce a new Ch. 40B Comprehensive Permit project that would significantly address the town’s severely deficient affordable housing needs. The town planner immediately responded by stating that he would expect over a million dollars in mitigation, and this was before he saw a single plan of the proposal! The practitioner made initial inquiries with state law enforcement agencies to determine where the line may be drawn between a bribe and justified mitigation, but was unable to receive any guidance. In the landmark case of Durand and others v. IDC Bellingham, LLC & others, 440 Mass 45, 79 NE 2nd 359 (2003), the SJC determined that the promise of an $8 million gift to a town in exchange for favorable rezoning by Town Meeting was not unlawful contract zoning or a bribe. In essence, the court ruled that it is impossible to bribe a legislative body. That is not to say that towns are authorized to expect and demand gifts in exchange for permits and approvals. The leading case of Sullivan v. Planning Board of Acton, 38 Mass. App. Ct. 918, 645 NE 2nd 703 (1995) stands for the proposition that local land use boards cannot impose conditions upon applicants, the performance of which lies entirely beyond the applicant’s power. The case specifically applied to work within a state highway and the court noted that the Commonwealth of Massachusetts has exclusive authority to regulate the state highway; and local land use boards cannot impose conditions upon an applicant to perform improvements within the state highway. The principles established in that case have been cited on many occasions, including the Land Court case of Kindercare Learning Centers, Inc. v. Cadigan, et al, 10 LCR, 190 (2002). In that case, the Land Court found that a condition imposing the construction of an off-site sidewalk was invalid for two reasons: “First, the zoning by-law does not provide for the imposition of such a requirement” and “the second reason is that a requirement of off-site improvements is counter to case law” citing Gutierrez v. Town of Framingham, 4 LCR, 102 (1996), and Sullivan v. Planning Board of Acton.
 
One of the fundamental aspects of land use regulation is that applicants should know in advance what requirements will apply to their proposal. This fundamental principle allows landowners, developers, and their lenders, an opportunity to evaluate intelligently the development potential of the project. Because the imposition of mitigation (or gifts) by municipal boards is frequently outside the scope of their statutory authority, and because the mathematics used to calculate the expected value of such gifts appears to be arbitrary, it is impossible to predict the costs and obligations that will be imposed upon any new development. This, in turn, discourages development and/or makes it very expensive to do business in the Commonwealth.
 
Perhaps it is an exaggeration to suggest that the gift giving required of developers harms the Massachusetts economy; but, if you combine the cost of the gifts with the extraordinary time required to run the permitting gauntlet and the unpredictability of the final outcome, you would have to agree that Massachusetts is a difficult place within which to do business.