Transfer of Development Rights
What is it?
Transfer of Development Rights (TDR) is a voluntary, market-based implementation tool that promotes the conservation of high-value agricultural land, environmentally sensitive areas and strategic open space by shifting development to areas communities deem appropriate for development.
The development rights of areas to be protected (referred to as “sending areas”) are transferred to appropriate, community-designated areas (“receiving areas”) that can accommodate growth through existing and/or planned provision of infrastructure.
In the context of farmland protection, TDR is often used to shift development from agricultural land to designated growth zones located closer to municipal services. TDR is also known as transfer of development credits (TDC) and transferable development units (TDU).
Establishing a TDR program includes:
At the sending end:
- The priority sending area(s) is defined, and a clear set of preservation goals articulated;
- A basic formula establishes the amount of transferable development credits allotted to properties in the sending areas based upon the number of acres;
- Allowable density is adjusted to a range of one dwelling per 25-50 acres to protect the lands and provide incentive for the landowners to sell development rights.
At the receiving end:
- The receiving area is identified and defined;
- A maximum density that exceeds current allowable density is established for the TDR program, based upon existing and planned infrastructure;
- Developers who wish to build at an increased density in the receiving areas are required to purchase a certain number of development credits from landowners in the sending areas.
TDR programs offer a unique balance of land preservation, financial compensation, incentives and opportunity, and regional strategic growth and development using little or no public funding:
- Most TDR programs protect farmland permanently, while keeping it in private ownership.
- Participation in TDR programs is voluntary—landowners are never required to sell their development rights.
- TDR can promote orderly growth by concentrating development in areas with adequate public services.
- TDR programs allow landowners in agricultural protection zones to retain their equity without developing their land.
- TDR programs are market-driven—private parties pay to protect farmland, and more land is protected when development pressure is high.
- TDR programs can accomplish multiple goals, including farmland protection, protection of environmentally sensitive areas, the development of compact urban areas, the promotion of downtown commercial growth and the preservation of historic landmarks.
- TDR programs are technically complicated and require a significant investment of time and staff resources to implement.
- TDR is an unfamiliar concept. A lengthy and extensive public education campaign is generally required to explain TDR to citizens.
- The pace of transactions depends on the private market for development rights. If the real estate market is depressed, few rights will be sold, and little land will be protected.
TDR light version: A Density Transfer Charge
The community can enact an ordinance that identifies an overlay zone on the growth area, where densities may be increased in exchange for the payment of a density transfer charge (DTC). The DTC would then be used to acquire (either directly or through leveraging other dollars) easements on farmland the community has designated in its comprehensive plan. The amount of the charge and the density credit would be calculated based on a methodology established in the ordinance.
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