Transfer of Development Rights (TDR)

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Transfer of Development Rights(TDR)
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Transfer of Development Rights

• A way of dealing with rights instead of land

• possession
• exclusion
• transfer
• compensation
• economic gain

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Transfer of Development Rights

• TDR creates an incentive-based approach to land
  conservation
• Conserving farmland and / or open space
• Sensitive areas
• Green belts
• No mandates for implementation
• A framework for a market-based approach to
  protecting land from excess development

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Transfer of Development Rights

• Requires enabling legislation of some sort in
  most states
• State delegating power to localities
• Localities then create a market
• The market consists of rights to develop
• These rights are transferred from seller to buyer
• The market is managed either by the locality or
  by a broker designated by the locality

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Transfer of Development Rights

• Basic Elements Sending and Receiving Areas
• Sending Areas
• Areas intended to be preserved
• Area may or may not be restricted through zoning
  or other development regulation
• Owners in sending areas sell all or some of their
  rights to develop
• The economic gain from sale compensates owner for
  restricted land use regulation
• A deed restriction prohibits development on
  subject property permanently

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Transfer of Development Rights

• Basic Elements Sending and Receiving Areas
• Receiving Areas
• Areas in which purchased development rights are
  exercised
• Intended to focus development in critical areas
  (redevelopment, growth centers)
• Development rights allow purchasers to go beyond
  existing land use regulations

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Transfer of Development Rights
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Transfer of Development Rights

• What makes a TDR program effective?
• Ease of Understanding
• Managed Growth
• Adequate Incentives
• Careful Management

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Transfer of Development Rights

• Ease of Understanding
• Simple for everyone to understand
• Buyers, sellers, citizens at-large all
  participants
• Creates strong political commitment
• Takes time to become successful
• Must be mandatory rather than voluntary

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Transfer of Development Rights

• Managed Growth
• Must be part of an overall comprehensive planning
  process
• Vision of future
• Strong (some say inflexible) zoning ordinance
• Fit TDRs into publics expectations
• Plan must include rational areas for sending and
  receiving development rights (to include not only
  patterns of development, but infrastructural
  support for that development)

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Transfer of Development Rights

• Adequate Incentives
• Incentives for senders to sell their rights
• Value should be predictable
• Incentives for receivers to buy rights
• Development rights should be easier to obtain
  than variances or special use permits

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Transfer of Development Rights

• Careful Management
• Transactions
• TDR Bank
• Setting floors during slow economic periods
• Providing a broker through which unsophisticated
  sellers and buyers can do business
• Land use terrain
• Public Relations

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TDRs in Practice

• Pinelands, NJ
• Regional authority
• Pinelands Commission

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TDRs in Practice

• The Pinelands

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TDRs in Practice

• Pinelands Commission
• Regional Agency in S.E. New Jersey
• Jurisdiction over 52 municipalities and 7
  counties
• Required a Comprehensive Management Plan (CMP)
• Developed an inter-municipality density exchange
• 1996 amendment to Municipal Land Use Law

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TDRs in Practice

• Pinelands, NJ
• Allows developers to meet minimum lot size
  density requirements
• Uses off-site lands as sending areas (out lots)
• Density sent to receiving areas (mother lots)
• Used in place of variances
• Used within and between zones in the commissions
  jurisdiction

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TDRs in Practice

• Pinelands, NJ
• Receiving areas
• Should be next to or within already developed
  areas
• Should be near existing infrastructure
• Should not be located in environmentally
  sensitive areas

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TDRs in Practice

• Pinelands, NJ
• Sending Areas
• Localities determine what they want preserved
• Scattered preservation not advised
• Encourage diversity of sending property owners

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TDRs in Practice

• Pinelands, NJ
• Maintenance of out parcel
• Use on lots is diminished / limited but not
  banned completely via TDRs
• Agriculture, forestry passive recreation
  encouraged
• May need to link sending and receiving lots via
  ownership (by deed)

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TDRs in Practice

• Pinelands, NJ
• Tax Complications
• How liable is the owner of the mother lot?
• Who acts as steward for out lot?
• Neighbor
• Neighborhood
• Conservancy group
• Satellite parcels may be linked by tax office

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TDRs in Practice

• Pinelands, NJ
• Easement vs. Fee Simple Purchase
• Fee Simple ownership is outright ownership
• Good for parcels owned by individuals
• Bad for parcels owned by groups (POAs, HOAs)
• Easements
• Difficult to manage, because rights are split
  between legal entities