Transfer of Development Rights
Tyler Adams (author), Jonathan Rosenbloom & Christopher Duerksen (editors)INTRODUCTION
Transfer of Development Rights programs essentially allow “sending area” landowners to sever and sell their development rights to developers in “receiving areas.”[1] Sending areas are frequently locations that have been identified by local governments as in need of preservation and can include environmentally sensitive lands or historic sites.[2] As most programs are optional, owners of properties in these areas may choose to sever and receive transferable development rights (TDRs) that they then transfer or sell.[3] In exchange for the TDRs, local governments typically require that the sending property owner record a restrictive covenant or easement, limiting further development. Receiving areas are typically locations where growth is desired and can accommodate the increased density. Developers in these areas may purchase TDRs and apply them to developments. Although most communities use increased residential density as the incentive for developer to buy TDRs, some allow the developer to exceed other development thresholds, such as floor area or building height limits.[4]
The number of available TDRs on a sending property are often calculated by factoring in the development potential of the property. The transfer ratio then establishes what the TDRs are worth on receiving properties, such as one additional dwelling unit per TDR. The process of buying and selling TDRs varies from jurisdiction-to-jurisdiction. Some are not at all involved in the transaction itself, allowing buyers and sellers to operate in the private market. Others have established TDR banks. In these jurisdictions, the bank is an entity authorized to buy, hold, and sell TDRs.[5] A TDR program can be a powerful land use tool, however, local governments should be aware that the success of a program can depend on the following factors: demand for bonus development, customized receiving areas, strict-sending area regulations, few alternatives to increase density without TDRs, and market incentives.[6] In addition, identification of the receiving areas may prove to be the most difficult and politically explosive determination a local government must make in adopting a TDR. Existing residents, particularly those living in single-family houses, may oppose the increase in density, height, or other bonus granted through the TDR program.
EFFECTS
TDR programs can be used to accomplish a variety of local land use goals “including environmental protection, farmland preservation, historic preservation, community revitalization, and economic development.”[7] These programs allow local governments to impose land use regulations that direct development and growth to specified locations while providing compensation to sending-area landowners.[8] Communities can choose to target open space and natural areas for preservation as a whole or target more localized areas such as, wildlife habitats, wetlands, or water resources.[9] Either way, certain plant and animal species depend on these undeveloped areas for food, shelter, and protection.[10] By encouraging development away from these areas, local governments can promote stable natural habitats and increased biodiversity.[11] Furthermore, open spaces can help maintain water and air quality in a community.[12] Vegetated riparian areas can filter runoff while trees absorb air pollutants and reduce the areas’ carbon footprint.[13]
Economically, TDR programs can benefit a community as well. Developers can increase profit when building at higher densities.[14] In addition, because receiving areas are often already serviced by existing infrastructure, development cost may be decreased, and local governments may save money by not extending services such as roads, water, sewer, etc. TDR programs also provide private funding mechanisms for the protection of sensitive areas allowing local governments to achieve their preservation and development goals without relying on taxes or fees.[15] These programs also provide for more permanent protection as opposed to traditional zoning due to the presence of deed restrictions and conservation easements.[16] Preserved open space in the form of farms and other agricultural land can ensure their continued operation and tourism from preserved historic and scenic sites can further be a source of revenue.[17] However, local governments should keep in mind that TDR programs may be harder to implement than traditional zoning and result in increased administrative cost.[18]
EXAMPLES
Pima County, AZ
Pima County adopted a TDR program to provide property owners in sending areas additional economic use of their land in order to encourage development in receiving areas.[19] Lots or parcels contained in the sending areas qualify as certain types of land, including “important riparian area, biological core management area, special species management area, or critical landscape connection.”[20] Each of these also qualifies as a natural habitat.[21] Upon petition by a property owner, the County will calculate the number of available TDRs using whichever of the following methods generates the most: one TDR for each dwelling unit that could be potentially constructed, one TDR per 180,000 square feet of commercial, institutional, or industrial gross floor area that could be constructed, or if both residential and non-residential uses could be constructed on the sending property, the calculation is a mix of the former methods, maximized to generate the highest number of TDRs.[22]
Pursuant to the procedures contained in the ordinance, property owners of sending properties may choose to sever one or more TDRs and sell them to any person, at any agreed upon price.[23] However, in order to validate the sale a restrictive covenant on the sending property must be recorded.[24] Land subject to the restrictive covenant must be maintained as undisturbed open space, unless at the time of severance it was being used as agricultural or grazing land.[25] The County has designated receiving areas, and owners of eligible properties may purchase these TDRs and use them to construct one additional residential dwelling unit per TDR.[26]
To view the provision, see Pima County, AZ- Code of Ordinances § 18.92 (2007).
Atlanta, GA
Atlanta permits the transfer of development rights in order to preserve natural, environmental, historical, and cultural resources.[27] To receive TDRs, a property must first be in a sending area, and second qualify as a sending property. Sending areas consist of one or more parcels or lots that may qualify as a sending property.[28] They may be categorized as: residential sending areas, any properties designated as historic or landmark buildings/sites, parcels that may be donated to the City for use as green space, and parcels providing affordable workforce housing.[29] A sending property is a parcel or lot in a sending area that has special characteristics, including, but not limited to, woodlands, natural habitats, wetlands, and recreational areas or parkland.[30] Landowners of these types of properties may petition for the severance or direct transfer of development rights.[31] Development rights may be quantified in three ways: density as expressed by floor ratio, total open space, and usable open space.[32]
Receiving areas are any areas whose zoning permits multi-family residential uses or mixed use, provided that the residential component is at least 50%.[33] Receiving properties must be found suitable and appropriate for increased development rights which is done by deciding that there are no substantial adverse economic, environmental, or social impacts.[34] Although anyone may purchase TDRs, they may only be applied to receiving properties.[35] Development rights from residential sending areas may only be transferred to another residential use while rights from landmark or historic buildings/sites may be applied to any permitted use allowed by the sending property.[36]
To view the provision, see Atlanta, GA- Code of Ordinances § 16-28.023 (2017).
ADDITIONAL EXAMPLES
North Kingstown, RI, Code of Ordinances § 21-620 (2011) (establishing a TDR program to preserve sensitive resources, such as groundwater reserves, wildlife habitat, and agricultural lands).
Township of Chesterfield, NJ, Code of Ordinances §§ 130-128-134 (1998 TDR voluntary program to protect farmland and concentrate development).
King County, WA, Code of Ordinances § 21A.37 (2008) (establishing a TDR program aimed at transferring residential density from eligible sending site to eligible receiving sites in order to permanently preserve rural, resource, and urban separator lands).
San Antonio, TX, Unified Development Code § 35-361 (Current through 2018) (establishing a TDR program with a sending area including natural resources and environmentally sensitive areas).
Montgomery County Code § 4.9.17 (ordinances have protected tens of thousands of farmland in the county through TDR program).
Kent County, DE, Code of Ordinances § 187-90.1 (2004) (establishing a TDR program with the sending areas being all areas located outside the Growth Zone Overlay district).
ADDITIONAL RESOURCES
Arthur C. Nelson et al., The TDR Handbook: Designing and Implementing Transfer of Development Rights Programs (2011).
New Jersey Pinelands Commission, New Jersey Pinelands Development Credit Program (2018), https://www.nj.gov/pinelands/infor/fact/PDCfacts.pdf [https://perma.cc/X6GW-NCCF] (last visited May 13, 2019).
Rick Pruetz & Noah Standridge, What Makes Transfer of Development Rights Work? Success Factors from Research and Practice, 75:1 J. Am. Plan. Ass’n 78, 85 (Winter 2009).
TDR Updates, SmartPreservation, http://smartpreservation.net/tdr-updates/ [https://perma.cc/6JMD-KK92] (last visited July 26, 2018).
CITATIONS
[1] Douglas Miskowiak & Linda Stoll , Planning Implementation Tools: Transfer of Development Rights (TDR), Center for Land Use Education- University of Wisconsin, Stevens Point (2006), https://www.uwsp.edu/cnr-ap/clue/Documents/PlanImplementation/Transfer_of_Development_Rights.pdf [https://perma.cc/T33S-VRGY].
[2] Rick Pruetz & Erica Pruetz, Transfer of Development Rights Turns 40, 59:6 Plan. & Envtl. Law: Issues and Decisions that Impact the Built and Natural Environments 3, 3 (June 2007).
[3] Lauren A. Beetle, Are Transferable Development Rights a Viable Solution to New Jersey’s Land Use Problems? An Evaluation of TDR Programs within the Garden State, 34 Rutgers L.J. 513, 516 (2003).
[4] Pruetz & Pruetz, supra note 2, at 6.
[5] Rick Pruetz & Noah Standridge, What Makes Transfer of Development Rights Work? Success Factors from Research and Practice, 75:1 J. Am. Plan. Ass’n 78, 85 (Winter 2009).
[6] Id. at 78-79.
[7] Pruetz & Pruetz, supra note 2, at 6.
[8] Transferable Development Rights and Density Transfers, University of Florida-College of Law, https://www.law.ufl.edu/_pdf/academics/centers-clinics/clinics/conservation/resources/tdrs.pdf [https://perma.cc/UD7R-P4KU].
[9] Pruetz & Pruetz, supra note 2.
[10] Chicago Metropolitan Agency for Planning, Environmental Benefits, Parks and Open Lands (Sep. 26, 2013), http://www.cmap.illinois.gov/about/2040/supporting-materials/process-archive/strategy-papers/parks-and-open-lands/environmental-benefits#Improved_Air_Quality [https://perma.cc/NH49-X3QL].
[11] See The Nature of Open Space Programs: Linking Land Protection and Biodiversity Conservation, Environmental Law Institute (Dec. 2006), https://www.eli.org/sites/default/files/eli-pubs/d17_01.pdf [https://perma.cc/933U-KJKA].
[12] Janice C. Griffith, Green Infrastructure: The Imperative of Open Space Preservation, 42/43 Urb. Law. 259, 263 (Fall/Winter 2011).
[13] Id.
[14] Pruetz & Pruetz, supra note 2.
[15]Id.
[16] Jason Hanly-Forde et al., Transfer of Development Rights Programs: Using the Market for Compensation and Preservation, Restructuring Local Government, http://www.mildredwarner.org/gov-restructuring/privatization/tdr [http://perma.cc/G95D-UUCW] (last visited on Aug. 1, 2018).
[17] Robert L. Ryan & Arthur P. Bergeron, Natural Land: Preserving and Funding Open Space, in Elisabeth M. Hamin et al., Preserving and Enhancing Communities: A Guide for Citizens, Planners, and Policy Makers 133, 138 (2007).
[18] Hanly-Forde, supra note 16.
[19] Pima County, AZ Code of Ordinances § 18.92.010.
[20] Id. at § 18.92.020(A)(4)(a).
[21] Id.
[22] Id. at § 18.92.040(B).
[23] Id. at § 18.92.060(A).
[24] Id. at § 18.92.060(C).
[25] Id. at § 18.92.050(B)(1)(d).
[26] Id. at § 18.92.060(G).
[27] Atlanta, Georgia Code of Ordinances § 16-28.023(1).
[28] Id. at § 16-28.023(2)(c).
[29] Id.
[30] Id. at § 16-28.023(2)(d).
[31] Id. at § 16-28.023(5)(a).
[32] Id. at § 16-28.023(2)(b).
[33] Id. at § 16-28.023(2)(e).
[34] Id. at § 16-28.023(2)(f).
[35] Id. at § 16-28.023(8).
[36] Id. at § 16-28.023(4).