NMAGO 02-02.

• Case Date: June 13, 2002
• Court: New Mexico

New Mexico Attorney General Opinions 2002. NMAGO 02-02. June 13, 2002OPINION OF Opinion No. 02-02PATRICIA A. MADRID Attorney General BY: Zachary Shandler Assistant Attorney GeneralTO: The Honorable James Roger MadalenaState Representative Box 255Jemez Pueblo, NM 87024 QUESTIONS:í1. Does Rio Rancho have the statutory authority to grant itself the right to enter into a contract with a private developer in order to facilitate the construction of retail business establishments? í2. Does Rio Rancho have the constitutional authority to reimburse a developer consistent with the antidonation clause of Article IX, Section 14 of the New Mexico Constitution? í3. Does Rio Rancho have the constitutional authority to reimburse a developer consistent with Article IV, Section 32 of the New Mexico Constitution? í4. Does Rio Rancho have the statutory authority to reimburse the developer in accordance with the Bateman Act? CONCLUSION: íRio Rancho, as a home rule municipality, has authority to enter into such a contract and the authority to reimburse the developer as long as these reimbursements are derived from a special fund. íFACTS: íThe Rio Rancho city council adopted a Gross Receipts Investment Policy ("GRIP") on October 11, 2001. The GRIP appears to be an effort to provide an incentive to encourage commercial development of retail business establishments (i.e, malls) in Rio Rancho. According to the GRIP, Rio Rancho and a developer will enter into a contract called a development agreement. The agreement will require the developer to build the establishment and the necessary adjoining public infrastructure (i.e., improvements to roads, landscaping, connections to existing sewage lines). In exchange, Rio Rancho will reimburse the developer for his costs with "one-half of those gross receipts taxes directly attributable to retail sales within the project received by the City in each year for a specified number of years...." GRIP Resolution, City of Rio Rancho Resolution No. 59, No. 01-057, ¶10 (Oct. 11, 2001). (fn1) íANALYSIS: Development Agreements íThe term "development agreement" is a term of art. It is a "contract between a municipality and a property owner/developer, through which the municipality agrees to freeze the existing zoning regulations in exchange for public benefits." Brad Schwartz, Development Agreements: Contracting for Vested Rights, 28 B.C. Envtl. Aff. L. Rev. 719, 719 (2000-2001). The benefit to a municipality is that a developer agrees to build the public infrastructure necessary to connect the new development with existing public infrastructure. See id. at 728-729. The benefit to the developer is that the municipality agrees not to revisit zoning issues for the property. Thus, the developer gains a fixed certainty for the project. íThese agreements intersect, however, with two contrary principles of law. First, the "reserved powers doctrine" dictates that a municipality cannot contract away its current, and future, police power authority. See id. at 734. This means a municipality cannot enter into a contract where it agrees not to enforce its zoning powers at a future date. On the other hand, the "contracts clause" of the United States Constitution forbids parties from impairing existing contracts. See U.S. Const. art. I, § 10, cl. 1. This means a state and local governmental body cannot revisit a zoning issue and subsequently violate the terms of a...