California law does not allow local legislative bodies to pass statutory development agreements by initiative.   
 
In Center for Community Action & Environmental Justice v. City of Moreno Valley, decided late last month by a California Appellate Court, the City of Moreno Valley adopted ordinances and resolutions in 2015 approving a development agreement. Several entities challenged the project for failing to comply with the California Environmental Quality Act. Later, the Moreno Valley Jobs Coalition filed an initiative petition (the Moreno Valley Workforce Training Initiative) creating a ballot measure to repeal the ordinance and approve a new development agreement substantially similar to the first agreement. The Moreno Valley Workforce Training Initiative, though, replaced the names of the real parties, the developers, and instead used only “the property owners.” After the initiative received enough signatures to qualify for the ballot, the City Council voted to adopt the initiative rather than place it on the ballot. The Center for Community Action & Environmental Justice then filed petitions in court challenging the City Council’s adoption of the initiative. The trial court denied the Center’s petition and the Center appealed to the Fourth District Court of Appeal.
 
The court held that the development agreement statute, Government Code section 65867.5, does not include a process for adoption of a development agreement by initiative. Instead, the statute provides that “A development agreement is a legislative act that shall be approved by ordinance and is subject to referendum.”
 
The court also found the development agreement process fundamentally incompatible with the initiative process as an initiative precludes negotiations of a contract and leaves no way to ensure compliance with statutory requirements, such as continued monitoring, modifications or termination as necessary.
 
Lastly, the court found that the development agreement statute’s legislative history supported the idea that it was intended to delegate exclusive authority for adopting development agreements to local governing bodies and to make the agreements subject to referendum, but not to initiative.
 
In light of this decision, cities have less flexibility in approving development agreements as they can no longer pass them by initiative or pit them against competing initiatives. Unless this case is overturned, the only way local agencies will be able to approve development agreements by the initiative process will be by new state legislation providing for that procedure.

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