Contracting for Better Places: A Relational Analysis of Development Agreements in Urban Development Projects - Volume 26 Sustainable Urban Areas

399 Pages·2009·4.54 MB·English

by  M. Van Der Veen

S U S T A I N A B L E
U R B A N A R E A S
26
Contracting for
better places
A relational analysis of
development agreements
in urban development
projects
Menno van der Veen
Delft Centre for Sustainable Urban Areas
Delft University of Technology
Delft University of Technology
Contracting for better places
A relational analysis of development agreements
in urban development projects
The series Sustainable Urban Areas
is published by IOS Press under the imprint Delft University Press
IOS Press BV
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The Netherlands
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Sustainable Urban Areas is edited by
Delft Centre for Sustainable Urban Areas
C/o OTB Research Institute for Housing, Urban and Mobility Studies
Delft University of Technology
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The Netherlands
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Contracting for better places
A relational analysis of development agreements
in urban development projects
PROEFSCHRIFT
Ter verkrijging van de graad van doctor
aan de Technische Universiteit Delft,
op gezag van de Rector Magificus Prof. dr. ir. J.T. Fokkema,
voorzitter van het College voor Promoties,
in het openbaar te verdedigen
op woensdag 20 mei 2009 om 12.30 uur
door
Menno VAN DER VEEN
meester in de rechten en doctorandus in de wijsbegeerte
geboren te Amsterdam
Dit proefschrift is goedgekeurd door de promotoren:
Prof. dr. W.K. Korthals Altes
Prof. mr. H.D. Ploeger
Samenstelling promotiecommissie:
Rector Magnificus, voorzitter
Prof. dr. W.K. Korthals Altes, Technische Universiteit Delft, promotor
Prof. mr. H.D. Ploeger, Vrije Universiteit Amsterdam, promotor
Prof. V. Nadin, Technische Universiteit Delft
Prof. mr. J.M. Smits, Universiteit van Tilburg
Prof. dr. W.G.M. Salet, Universiteit van Amsterdam
Prof. C.B. Wiggins, University of San Diego
Prof. mr. J. de Jong, Technische Universiteit Delft
Contracting for better places
A relational analysis of development agreements in urban development
projects
Thesis Delft University of Technology, Delft, the Netherlands
The author wishes to acknowledge the financial assistance of the Delft
University of Technology through the Delft Centre for Sustainable Urban
Areas.
Design: Cyril Strijdonk Ontwerpbureau, Gaanderen
Dtp: Yvonne Alkemade, Delft
Printed in the Netherlands by: Haveka, Alblasserdam
ISSN 1574-6410; 26
ISBN 978-1-60750-005-6
NUR 755
Legal notice: The publisher is not responsible for the use which might be
made of the following information.
© Copyright 2009 by Menno van der Veen
No part of this book may be reproduced in any form by print, photoprint,
micro film or any other means, without written permission from the
copyrightholder.
Contents
Acknowledgements
1 Introduction.............................................................1
1.1 A fascination with urban development projects ................. 1
1.2 Projects covered by this study ........................................ 3
1.3 Research questions ...................................................... 5
1.4 Case studies ............................................................... 6
1.5 Review of the successive chapters ................................... 7
2 Urban development projects and the problem of comparing
contracts .................................................................9
2.1 Characteristics of the projects ........................................ 9
2.1.1 The need for office space .............................................10
2.1.2 Demand for apartments ..............................................11
2.1.3 Mixed neighbourhoods ................................................12
2.1.4 Focus on infrastructure................................................12
2.1.5 Sustainable strategies .................................................13
2.1.6 Competitiveness ........................................................13
2.1.7 Public-private cooperation............................................14
2.1.8 Special project areas ...................................................14
2.2 The concept of an urban development project ..................15
2.3 Focal projects ............................................................17
2.4 Special project approach ..............................................18
2.5 Scientific positioning...................................................21
2.6 Comparing agreements from different legal systems .........23
2.6.1 Law-as-culture ...........................................................24
2.6.2 Functionalism ...........................................................26
2.7 Differences between common law and civil law ................28
2.7.1 Different mentalities ...................................................28
2.7.2 Codifications, good faith and consideration ......................30
2.7.3 Weighing up the differences .........................................32
2.8 Dimensions of a transaction .........................................33
2.8.1 Three approaches .......................................................34
2.8.2 The law and economics approach ..................................34
2.8.3 The relational approach ...............................................35
2.8.4 Transaction costs approach ..........................................36
2.8.5 Balancing the above three positions ...............................37
2.9 The place of the contract in the context of the deal ...........38
2.10 Conclusion ................................................................41
3 Relational contract theory..........................................43
3.1 Introduction ..............................................................43
3.2 Four core propositions .................................................46
3.3 The definition of contracts ...........................................50
3.4 Common contract norms .............................................52
3.4.1 Introduction ..............................................................52
3.4.2 Role integrity .............................................................53
3.4.3 Mutuality and reciprocity .............................................54
3.4.4 Implementation of planning .........................................56
3.4.5 Effectuation of consent ................................................56
3.4.6 Flexibility .................................................................58
3.4.7 Contractual solidarity ..................................................58
3.4.8 The linking norms ......................................................59
3.4.9 Creation and restraint of power .....................................60
3.4.10 Propriety of means .....................................................61
3.4.11 Harmonisation with the social matrix .............................61
3.5 Discrete and relational norms .......................................62
3.5.1 The discrete contract and the relational contract ..............62
3.5.2 Three types of contracts-relation with discrete and
relational norms ........................................................64
3.6 The discrete and relational norms .................................65
3.6.1 Characteristics of the discrete norm ...............................65
3.6.2 Characteristics of relational norms ................................67
3.7 Using relational contract theory as a basis for a critique
of the law .................................................................68
3.8 The common contract norms in a broader perspective .......70
3.8.1 Relation between common contract norms and Dutch
legal principles ..........................................................71
3.8.2 Unifying principles .....................................................73
3.9 Criticisms of relational contract theory ...........................78
3.9.1 The criticism of formalism ...........................................78
3.9.2 Critique of Macneil’s ideas by other relationists ................80
3.10 Case methodology ......................................................84
3.10.1 Brief summary of relational contract theory .....................84
3.10.2 Methodology .............................................................86
4 Development agreements ..........................................89
4.1 Introduction ..............................................................89
4.1.1 Possible approaches to study of the selected agreements ....90
4.2 Nomenclature ...........................................................91
4.2.1 Significance of the term ‘development agreement’ ............91
4.2.2 Names used to denote the development agreements in
the case studies .........................................................93
4.3 Aspects of the development agreement ...........................94
4.4 Positioning of the development agreement within the
project universe .........................................................95
4.5 Main functions of a development agreement ....................98
4.5.1 Exchange ..................................................................98
4.5.2 Project statute ...........................................................99
4.5.3 Planning function ..................................................... 100
4.5.4 Instrumental function ............................................... 102
4.6 Methodological approach of the case studies .................. 104
4.6.1 Introduction ............................................................ 104
4.6.2 Description of urban development projects .................... 105
4.6.3 Focal projects .......................................................... 108
5 Case study Battery Park City, New York
Plot 16/17 (The River House) and 18b (The Verdesian) in
Battery Park City’s North Residential Neighbourhood .......113
5.1 The urban development project: Battery Park City,
New York ................................................................ 113
5.1.1 Introduction ............................................................ 113
5.1.2 Description of the area .............................................. 113
5.1.3 Description of the project ........................................... 116
5.1.4 Momentum ............................................................. 117
5.1.5 Time frame ............................................................. 117
5.1.6 History and background ............................................. 118
5.1.7 Project management ................................................. 121
5.1.8 Project finance ......................................................... 122
5.1.9 Land ownership ....................................................... 122
5.1.10 Affordable housing ................................................... 122
5.1.11 Environmental sustainability ...................................... 123
5.1.12 Other public facilities ................................................ 123
5.1.13 Involvement of the general public ................................ 123
5.1.14 Goals of the project ................................................... 124
5.1.15 Delays .................................................................... 124
5.1.16 Role of private actors in the project .............................. 125
5.1.17 Public actors ............................................................ 125
5.1.18 Critique .................................................................. 125
5.1.19 Conflicts of power: State and City interests .................... 126
5.2 Focal projects: plots 16/17 (the River House) and plot 18b
(the Verdesian) in the North Residential Neighborhood ..... 127
5.2.1 Introduction ............................................................ 127
5.2.2 Positioning (area) ..................................................... 127
5.2.3 Description of the project ........................................... 127
5.2.4 Momentum ............................................................. 129
5.2.5 Pre-contractual procedure .......................................... 129
5.2.6 Time frame ............................................................. 130
5.2.7 The contracting parties.............................................. 130
5.2.8a Other shareholders and stakeholders ........................... 131
5.2.8b Involvement of the public .......................................... 131
5.2.9 Payments ............................................................... 131
5.2.10a Which conflicts rose with respect to the project? ............ 132
5.2.10b How do parties deal with future conflicts? ..................... 132
5.2.11 Affordable housing ................................................... 133
5.2.12 Environmental sustainability ...................................... 133
5.2.13 Other public facilities ................................................ 133
5.2.14 Goals of the project ................................................... 133
5.2.15 Delays .................................................................... 134
5.3 Common contract norms ........................................... 134
5.3.1 Introduction: general sketch of the agreements .............. 134
5.3.2 Role integrity: relational and discrete elements .............. 134
5.3.3 Mutuality and reciprocity: more discrete than relational ... 136
5.3.4 Implementation of planning: equally discrete and
relational ................................................................ 137
5.3.5 Effectuation of consent: more discrete than relational ...... 138
5.3.6 Flexibility: equally discrete and relational ...................... 139
5.3.7 Contractual solidarity: equally discrete and relational ...... 140
5.3.8 The linking norms: restitution, reliance and expectation
interests: equally discrete and relational ....................... 141
5.3.9 Creation and restraint of power: equally discrete and
relational ................................................................ 141
5.3.10 Propriety of means: more discrete than relational ........... 142
5.3.11 Harmonisation with the social matrix: equally discrete
and relational .......................................................... 143
5.3.12 Balance of discrete and relational norms in the
agreements for the Battery Park City projects ................. 143
6 Case Study Hudson Yards, New York
No. 7 subway extension ...........................................147
6.1 The urban development project: Hudson Yards, New York ..147
6.1.1 Introduction ............................................................ 147
6.1.2 Description of the area .............................................. 147
6.1.3 Description of the project ........................................... 150
6.1.4 Momentum ............................................................. 154
6.1.5 Time frame ............................................................. 155
6.1.6 History and background ............................................. 156
6.1.7 Project Management ................................................. 157
6.1.8 Project finance ......................................................... 157
6.1.9 Ownership .............................................................. 161
6.1.10 Affordable housing ................................................... 161
6.1.11 Environmental sustainability ...................................... 162
6.1.12 Other public facilities ................................................ 163
6.1.13 Involvement of the general public ................................ 164
6.1.14 Goals of the project ................................................... 165
6.1.15 Delays .................................................................... 165
6.1.16 Role of private actors in the project .............................. 166
6.1.17 Public actors ............................................................ 166
6.1.18 Critique .................................................................. 167
6.1.19 Conflicts of power: State and City interests .................... 167
6.2 Focal project: the No. 7 subway extension ...................... 168
6.2.1 Introduction ............................................................ 168
6.2.2 Positioning (area) ..................................................... 170
6.2.3 Description of the project ........................................... 170
6.2.4 Momentum ............................................................. 172
6.2.5 Pre-contractual procedure .......................................... 173
6.2.6 Time frame ............................................................. 173
6.2.7 The contracting parties.............................................. 174
6.2.8a Other stakeholders ................................................... 175
6.2.8b Involvement of the public .......................................... 175
6.2.9 Payments ............................................................... 175
6.2.10a Conflicts that arose during the project .......................... 175
6.2.10b Future conflicts ........................................................ 176
6.2.11 Affordable housing ................................................... 176
6.2.12 Environmental sustainability ...................................... 176
6.2.13 Other public facilities ................................................ 176
6.2.14 Goals of the project ................................................... 177
6.2.15 Delays .................................................................... 178
6.2.16 Critique .................................................................. 178
6.3 Common contract norms in Hudson Yards No. 7 subway
extension ............................................................... 179
6.3.1 Introduction: General sketch of the agreements .............. 179
6.3.2 Role integrity: more relational than discrete ................... 180
6.3.3 Mutuality and reciprocity: more discrete than relational ... 181
6.3.4 Implementation of planning: more relational than
discrete .................................................................. 181
6.3.5 Effectuation of consent: equally discrete and relational .... 182
6.3.6 Flexibility: more relational than discrete ....................... 182
6.3.7 Contractual solidarity: more relational than discrete ....... 182
6.3.8 The linking norms: restitution, reliance and expectation
interests: more discrete than relational ......................... 183
6.3.9 Creation and restraint of power: equally discrete and
relational ................................................................ 183
6.3.10 Propriety of means: equally discrete and relational .......... 183