Original Author: Ashburn, Melissa
Date of Material: 02/11/2002
Contracts--Laws and regulations
Zoning--Laws and regulations
Reviewed Date: 07/29/2021
MTAS was asked if a city could enter into an agreement with a developer to refrain from rezoning city-owned property for commercial use for a period of five years.
February 11, 2002
Re: Proposed moratorium on rezoning city-owned property
You have asked for an opinion concerning a potential agreement between your City and a developer seeing to redevelop the local shopping mall. The developer wants an agreement by the city that city-owned property will not be rezoned so as to permit such property to be developed for use as another shopping mall, for a period of 5 years. Based on my research, such an agreement would be legal and permissible.
Moratoriums on zoning are generally disfavored as such measures are used to place restrictions on property owned by individuals or businesses which were not parties to the transaction precipitating the moratorium. Essentially, moratoriums hinder property owners’ rights by unilaterally prohibiting specific uses of the property.
In the current situation proposed for your City, only city-owned property would be subject to the moratorium, so no property owner can complain that their rights have been limited by the agreement. Unless there are other plans for city-owned property which would be hindered by the agreement, your City has a clear right to enter into an agreement concerning future uses of city-owned property.
The Tennessee Supreme Court has long held that municipalities may sell, lease or dispose of city property for the benefit of the city, and that such power is only limited by the charter. The Court explains that a municipality is:
a body created for special purposes, and there is no good reason why it should not,
in the execution of those purposes, resort to any means that would be necessary and
proper for the individual, in executing the same, unless it be prohibited by the terms
of its charter, or some public law, from doing so.
Adams v. Memphis & Little Rock R.R. Co., 42 Tenn. 645, 654-655 (1866).
The Charter for your City adopts by reference the powers granted to municipalities by Tennessee Code Annotated sections 6-2-201, 6-19-101 and 6-19-102. Article III, Section 1. These sections of the Code provide that municipalities may “contract and be contracted with” and may “acquire....sell, lease, mortgage, pledge or otherwise dispose of property...and any estate or interest therein.” T.C.A.§§ 6-2-201(8), 6-19-101(8). The City therefore has wide latitude with regard to city-owned property, and may contractually hinder uses of city property.
There is no language contained in the Charter which would prohibit the City from agreeing to refrain from rezoning city-owned property for commercial use for a period of 5 years. Whether this is accomplished by moratorium or by contract is of no consequence to the legality of the transaction.
I hope this information is helpful. Please feel free to contact me should you have any further questions. Thank you for consulting with MTAS.
Melissa A. Ashburn
Rezoning City-Owned Property public.doc