Development agreements

Development agreements (utbyggingsavtaler) are regulated by the Planning and Building Act (plan- og bygningsloven). In this article you will find information about what a development agreement is and what it contains.

Development agreements were given their own chapter in plan- og bygningsloven in 2006; it was the first time this area was regulated by statute.

The statutory provisions are supplemented by separate regulations under the Act, in what is called saksbehandlingsforskriften (SAK). The reason for regulating this area by statute, and removing the possibility of complete freedom of contract, was to set a framework for the use of development agreements. It was also meant to ensure that the municipality acts as a predictable negotiating party. It should be clear when such agreements are relevant, what agreements may be entered into, and that such agreements can be used to implement municipal development agreements.

The Act is also intended to prevent abuse of authority and the conclusion of unreasonable, cost-inflating agreements. In addition, the statutory provisions are intended to help protect neighbourhoods, competitors and interest groups against development agreements influencing plan design in an unfortunate way, and against the agreements contributing to poor planning.

What is a development agreement?

Plan- og bygningsloven §17-1 defines a development agreement as follows:

“An agreement between the municipality and a landowner or developer concerning the development of an area. It is based on the planning part of plan- og bygningsloven and concerns the implementation of a municipal land-use plan, i.e. the land-use element of the municipality plan (kommuneplanens arealdel) or a zoning plan (reguleringsplan).”

Lov om planlegging og byggesaksbehandling (plan- og bygningsloven) - Chapter 17. Development agreements

For a development agreement to be covered by the rules in plan- og bygningsloven, the agreement must concern the content of a plan or the implementation of a plan. Other types of agreement between a landowner and the municipality are not necessarily covered by the rules. The decisive factor is whether the agreement is positive towards the implementation of an adopted plan. In the vast majority of cases, development agreements will cover:

• Implementation of measures in zoning plans proposed by private parties (not the municipality itself)
• Implementation of phasing requirements (rekkefølgekrav) in the land-use element of the municipality plan, a municipal sub-plan (kommunedelplan) or a zoning plan.

For the municipality, development agreements provide assurance that the development takes place as envisaged in the plans. For the developer, the main significance of such agreements is that they are a flexible and transparent way of implementing plans.

The content of a development agreement

Plan- og bygningsloven §17-3 sets out guidelines for what a development agreement may cover, namely matters on which the municipality has laid down provisions in the land-use element of the municipality plan or in the zoning plan.

The agreements often cover:

• Regulation of the number of homes in an area, the largest and smallest home sizes, and requirements for the design of buildings where appropriate.
• Regulating whether the municipality or others should have a right of pre-emption to buy a share of the housing at market price.
• Provisions on who is to carry out, or wholly or partly pay for, measures necessary to implement planning decisions. Any measures must be reasonable in relation to the nature and scale of the development and the municipality's contribution to implementing the plan and its obligations under the agreement. The costs charged must be proportionate to the burden that the development in question places on the municipality.
• Technical and green infrastructure arising from the obligation to construct infrastructure (opparbeidelsesplikten) in Chapter 18 of plan- og bygningsloven.