Transferable Development Rights (TDR)
Transferable Development Rights (TDR) programs are highly effective tools for green infrastructure preservation. Like more traditional programs for transfer of air or mineral rights, TDRs allow property owners to sever and sell certain rights to their property while retaining fee simple ownership of the tract. These programs can be used to protect lands with agricultural or environmental benefits to the community. TDR programs typically operate by quantifying existing development rights based on the requirements of a community’s zoning and/or development regulations. The develop rights of a “sending area” is then transferred to other locations (receiving areas); the sending property owner is compensated for the right to develop and the entity acquiring the development rights can build to a higher density or development standard within the receiving area.
Consideration should also be given to a purchase of development rights (PDR) program, which is similar to a TDR program, with the exception that rights are purchased – often by a local government or nonprofit agency – and retired, rather than being used for increased development capacity.
RATIONALE
The philosophy behind TDR programs is very attractive to conservation-minded community members seeking creative ways to preserve green infrastructure, such as agricultural or environmentally sensitive land. In some areas, TDR programs have been quite successful, but many programs face opposition from development advocates. TDR programs should be considered a tool in a community planning tool kit because they are an innovative way of balancing the demands of various citizens and stakeholder interests within a community, but implementation will only be successful if there is community buy-in and a market for the development rights.
EFFORT REQUIRED
Transferable Development Rights are established through state enabling legislation and enacted by local governments. Prior to implementing an ordinance, a local government should conduct a feasibility study to gauge the support for a TDR program. Typically, the feasibility study is conducted by an outside professional or consulting firm with specialized experience in TDR programs. Citizen and community stakeholder support is essential to the success of a TDR program.
BENEFITS
TDR programs allow property owners to be compensated for some of the value of their land without actually having to sell their land. In areas with high demand for development, TDR programs can eliminate sprawl by encouraging higher density in areas where growth is desirable. The community still receives the tax benefits of having the land privately held while the property owner may realize a tax savings as a result of the diminution of the land’s value.
RISKS
TDR programs are administratively very complex to implement and require significant investment and resources from the local government to track development rights for the purposes of development and taxation. The success of TDR programs depends on having a critical mass of private interests (i.e., property owners and purchasers) who are willing to exchange development rights as a commodity. If zoning standards already allow higher density developments, there is essentially no market for a TDR program. Establishing sending and receiving areas can be politically divisive within a community, as some residents may be unwilling to accept the location of proposed receiving areas.
ACTION AGENT(S)
Local government officials, citizens and community stakeholders, private consultants.
COSTS
The primary cost drivers for a TDR program include the preliminary feasibility study; establishing an oversight component within the local government, which may require the creation of new staff resources or departments; and establishment of a TDR bank. The exchange rate for development rights should be determined based on market principles.
Any party with an interest in an initiative.The system of land, natural resources, and natural habitats that collectively comprise a community's underlying ecosystem. Green Infrastructure is present in every city, although its size, diversity, and strength vary greatly. Importantly, green infrastructure can be used to help offset negative environmental impacts, for example stormwater runoff and urban heat island effect.
