Host Community Agreements (“HCA”) are legally binding contracts between a host municipality and a developer that can be utilized to facilitate development by mitigating its impacts on the host community. These agreements are important tools to establish a productive, mutually beneficial working relationship between the host municipality and developer. In a typical HCA, the developer makes certain voluntary commitments to the municipality, such as targeted investments in community projects or programs, or lump-sum and/or annual payments to a general fund. In exchange, the municipality agrees to exercise its judgment in favor of various local permits, approvals, and zoning relief required for the project. Payment-in-lieu-of-tax (“PILOT”) agreements are popular provisions in HCAs for large educational, industrial, or energy infrastructure projects whereby the developer pays municipal taxes based on its impacts or energy capacity rather than standard taxes on real property and personal property. The beauty of HCAs is that they are highly customizable and therefore highly effective tools to address areas of concern for both the local community and the developer.
Every developer is familiar with the complex negotiation and skepticism that may arise with community members and local government officials. Opponents of a project may have concerns about the environment, economy, health, traffic, or simply the style or appearance of a project. When community groups are in the dark about a project, they often assume the worst about both the project and the developer. The worst fear of the developer is to sink millions of dollars and countless hours into a project only to be stonewalled during the permitting and approval process. Suddenly a project faces lengthy delays or may never be awarded the necessary permits. The best way to avoid these setbacks is to start meeting with local leaders and community groups early and often in the process. HCAs often include provisions for a project website to promote transparency and open dialogue between developers and communities.
Companies that engage early with the community are better equipped to understand and address local concerns, which can often lead to invaluable partnerships and allies as well as marked community improvement.
What steps can be taken to mitigate development impacts and assure host communities that target projects will actually improve the community? Host communities often wish for some kind of financial commitment from a developer. Usually this means a lump-sum payment up front and/or continued annual payments throughout the life of the project. However, it’s usually about more than just money. Communities often wish for other measures with enduring benefits such as hiring local labor; using green technology and limiting pollution; hosting job fairs to connect community members with opportunities; mitigating noise; supporting local fire and police departments with training and new equipment; beautifying community spaces such as town parks; or repairing old athletic fields. These types of commitments can all be included in HCAs and turn a development project into a genuine community partnership. Every community has different needs and concerns, which may only be revealed through community outreach and engagement. Spending the extra time and money to address community concerns is always worth the investment if it ensures that a development project will receive the necessary permits and approvals to proceed to construction.
D’Ambrosio LLP provides expert assistance and early planning to real estate developers, municipalities, corporations, and nonprofit institutions to facilitate and quicken the resolution of complex permitting and review processes. Please contact D’Ambrosio LLP to find out more about host community agreements that may impact your development project.
