Transfer of Development Rights

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Transfer of Development Rights TDR
Smart Growth / Smart Energy Toolkit
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Development patterns based on conventional zoning
create less than optimal conditions
Overdeveloped Residential Sprawl
Underdeveloped Commercial Centers
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Transfer of Developments Rights Two-Fold
Objective
Preserve Existing Open Space
Concentrate Development in Growth Centers
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TDR Definitions
Development Rights
The amount of development that could take place
on a tract of land under Zoning Bylaw provisions.
Sending Areas
Areas identified as priorities for preservation
or significant decreases in development potential.
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TDR Definitions (continued)
Receiving Area
Areas that have potential to support more
development than what is allowed by existing
bylaws and/or regulations.
TDR Credit Bank
A third party entity that can store and
administer the sale of development rights.
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Transfer of Developments Rights The Concept
Owner of sending parcel sells development
rights in exchange for permanent conservation
easement.
growth area
preservation area
Owner of receiving parcel buys development
rights to build at densities higher than allowed
under base zoning.
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Potential Sending Areas

• Prime Agricultural Lands
• Chapter 61 parcels
• Large Tracts of Unprotected Open Space
• Aquifer Protection Overlays
• Areas of Critical Environmental Concern
• Habitat for Rare and Endangered Species
• Watersheds to Sensitive Surface Waters
• Historic Districts or Structures

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Potential Receiving Areas

• Village Centers
• Transportation Nodes
• Commercial or Industrial Districts
• Areas Served by Infrastructure
• Centralized Water Supply
• Centralized Sewer System
• Public Transportation Routes

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Sending and Receiving Areas Should Be Identified
Through A Comprehensive Planning Process
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TDR Alternative Futures
?
The future with conventional zoning
The future
The future with TDR zoning
The present
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Implementing TDRThe Basic Questions

• Clearly Defined Sending and Receiving Areas
• What are the resources we need to protect?
• Where can we handle increases in development
  capacity?
• Adequate Administrative Capacity
• Do we have a permitting body that clearly
  understands the program?
• Do we need a TDR Credit Bank?
• Will the City/Town play a role in establishing
  the value of development rights or will the
  market be used to establish value?

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Implementing TDRUnderstanding the Market

• Market Analysis
• Is the market for development in the Receiving
  Areas strong enough to draw investment in higher
  densities?
• How do property values compare between Sending
  and Receiving Areas?
• USE A QUALIFIED PROFESSIONAL TO DEVELOP AN
  UNDERSTANDING OF THE EXISTING MARKET.

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Implementing TDRValuation of Development Rights

• Common methods of TDR valuation
• Maximum developable area
• TDR valuation ultimately negotiated by the buyer
  and seller unless a Credit Bank is in place.

Number of buildable lots (Yield Plan)
Development appraisal of lots
100K
150K
300K
300K
100K
10 lots x 1 dev right/lot 10 dev rights
2m x 1 dev right/100k 20 dev rights
50 acres x 1 dev right/10 acres 5 dev rights
150K
250K
200K
250K
200K
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Implementing TDRDisincentives in the Sending
Area

• Reduce development potential in Sending Areas
  through increased minimum lot size.
• NOTE ALLOW TDR AT ORIGINAL DENSITY TO PROVIDE
  INCENTIVE AND PROTECT LAND OWNERS INVESTMENT

Example Sending Area Overlay Original Minimum
Lot Size 1 acre Revised Minimum Lot Size 10
acres
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Implementing TDRDisincentives in the Sending
Area

• Increase Permit Scrutiny in Sensitive Areas
• THE LEVEL OF EFFORT REQUIRED TO DEVELOP THE
  PROPERTY IN THE SENDING AREA BECOMES CONSISTENT
  WITH PERFORMING A TDR

Example Sending Area Overlay Subdivisions of
five or more lots in a designated Sending Area
shall require an Environmental Impact Report as
described in the Planning Board Rules and
Regulations
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Implementing TDRIncentives in the Receiving Area

• Density Bonuses generally provide a fixed
  percentage increase of development rights over
  and above the Sending Area yield
• CAUTION DENSITY BONUSES CAN MORE THAN DOUBLE THE
  DEVELOPMENT POTENTIAL OF THE RECEIVING DISTRICT

Example The number of Development Rights that
can be transferred from the Preservation District
shall be 1.5 times the amount of Development
Rights determined from a Yield Plan
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Implementing TDRTDR Credit Bank

• TDR Credit Banks can provide a holding place for
  development rights that are purchased before they
  can be transferred.
• PURPOSE ALLOWS GREATER FLEXIBILITY RELATIVE TO
  THE TIMING OF A MULTI-LAYERED, COMPLEX
  TRANSACTION

Issue Banks should be established as an
independent third party (non-profit corporation,
enterprise fund, etc.) to ensure that development
rights are readily available when Receiving Area
opportunities arise.
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Montgomery County, Maryland
CASE STUDY
Sending Area identified as 90,000 acres of
undeveloped agricultural land. Area down-zoned
from 5-acre minimum lot size to 25-acre minimum.
Development rights can be traded at the original
density.
Receiving areas identified by proximity to
existing infrastructure. Density bonuses awarded
at varied scaled depending on the location of the
Receiving Area.
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CASE STUDY
Seattle, Washington
YMCA Building Restoration

• Complex urban TDR Program relies heavily on a TDR
  Credit Bank to facilitate transactions.
• Primary goals
• Preserve Historic Structures
• Preserve Existing Affordable
• Housing
• Incentives for Varied Building
• Scale
• Infill Development of Compatible
• Character

W Hotel Development
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Falmouth, MA
CASE STUDY

• Sending Areas Identified through
• Careful Planning Process
• Water Resource Protection District
• Chapter 61A Parcels
• Areas of Critical Environmental Concern
• Coastal Resource Overlay District

Receiving Areas are eligible for Density Bonuses
that vary between 20 to 40 depending on the
underlying zoning
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USEFUL LINKS
government.cce.cornell.edu/doc/html/Transfer20of
20Development20Rights20Programs.htm TDR
Programs Using the Market for Compensation and
Preservation, a paper written by Jason
Hanly-Forde, George Homsy, Katherine
Lieberknecht, Remington Stone that gives a good
overview of this technique. www.dem.ri.gov/progra
ms/bpoladm/suswshed/pdfs/tdrreprt.pdf Transfer of
Development Rights Report, a study produced for
the South County Watershed Technical Planning
Assistance Project by the Rhode Island Department
of Environmental Management. It is one of several
reports about creative land use techniques to
accommodate growth while minimizing impacts to
the environment and community character. www.farml
andinfo.org/documents/27746/FS_TDR_1-01.pdf A
Fact Sheet from the Farmland Information Center,
a public/private partnership between the American
Farmland Trust and the USDA Natural Resources
Conservation Service.
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USEFUL LINKS
www.lincolninst.edu/pubs/pub-detail.asp?id424 Tra
nsfer of Development Rights for Balanced
Development, an article (author Robert Lane,
1998) from the Lincoln Institute of Land Policy
providing conceptual overview as well as some
details regarding TDR case law. www.state.nj.us/dc
a/osg/resources/tdr/index.shtml TDR How Does It
Work?, a webpage from the NJ Department of
Community Affairs' Office of Smart Growth,
provides a good overview of the technique.
www.nj.gov/agriculture/sadc/tdr.htm New Jersey
State Transfer of Development Rights Bank webpage
from the NJ Department of Agriculture. www.state.n
j.us/dobi/pinelands/pinelandsbank.htm Pinelands
Development Credit Bank webpage from the NJ
Department of Banking and Credit gives
information about a program begun in 1985 which
has helped increase the value of development
rights and assisted owners in selling their land.