Can Conditions of Approval turn a Project into a Public Private Partnership?

In a recent California Daily Journal article ("Builders win big with San Jose Jury Verdict,"  CDJ, June 11, 2012), Jason Armstrong reports on a $6.1 million jury verdict in favor of a developer against the City of San Jose.  The jury found that that the city had failed to timely rezone a 200 acre parcel causing harm to the developer, and that the city had promised to fast-track the approval process in exchange for the developer's agreement to pay for certain infrastructure improvements. 

The developers contended they put up more than $8 million and committed $250 million more to fund city infrasturcter at the site with the understanding San Jose would expedite their application, but the approvals never happened and the project never materialized. 

Shiraz Tangri, a partner with Alston & Bird LLP who handles development and infrasturcture issues and isn't involved in the litigation, said the issues in the case are important for developers because cash strapped municaplietes are increasingly forging agreements with with developers to help fund sidewalks, curbs, street lights, parks, and other improvements for building projects.  He said the case could give some developers pause about risking money in such an agreement but that it could also give companies some comfort knowing that a court forced a city to uphold its end of the bargain. 

"Cities are increasingly looking to the private sector for help" Tangri said ... "The jury in this case is saying, 'Wait a minute.  The municipality is asking the private sector to step in and go above and beyond.  The partnership deal has to be upheld.'" 

In this case, the developers had agreed to upgrade nearby freeway offramps, and construction of a school.  The city contended, in part, that approvals were not given due to staffing shortages which delayed the review. 

The case raises the question, when does the normal extraction of conditions for approval ("build this sidewalk, install that traffic light, fund this school, or build this ballfield, and we'll approve your project") become a binding public private partnership?  At which point does a public entity move from a regulatory approval role to a partnership role? 

The city has promised to appeal.