This is actually a fairly common arrangement. Developers don't want to spend a lot of time, and investors don't want to put money into, a project only to discover that there's no infrastructure to support it.
Thank being said, simply because it is legal to do something in general, does not necessarilly mean that there are not other considerations. There are transactions that are not allowed, whether by reasons of self-dealing or whatever. If you feel something untoward is occuring, you should speak to an attorney.
This site is not designed to address your issue nor is it appropriate for a complex issue like this. If there is significant citizen opposition, then they should hire an experienced lawyer.
DISCLAIMER: This is not specific legal advice and does not establish an attorney/client relationship.