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59 Zoning Dig. 3 (2007)
Transfer of Development Rights Turns 40

handle is hein.journals/planevirw59 and id is 151 raw text is: American Planning Association Planning & Environmental Law June 2007 Vol. 59, No. 6 1 p.3 Commentary Transfer of Development Rights Turns 40 Rick PruetZ, FAICP, and Erica Pruetz Transfer of development rights, or TDR, allows increased development in places where a community wants more growth in return for reduced develop- ment in places where it wants less. TDR is described as creative, innova- tive, and even experimental. In fact, this new technique has been used since 1968 when New York City in- cluded a density transfer mechanism in its landmarks preservation law. As TDR approaches its 40th birthday, it seems appropriate to look back and ask the following questions: How does TDR work? What goes into a success- ful TDR program? How is TDR evolv- ing? And what do the courts have to say about this aging innovation? TDR 101 In TDR jargon, the areas where com- munities want less (or no) develop- ment are called sending areas. Sending areas can include environmentally sen- sitive places, farmland, historic land- marks, open space, or any other re- sources that a community wants to - preserve. The areas appropriate for growth are called receiving areas. Receiving areas are suitable for devel- opment, typically because they are close to jobs, shopping, schools, infra- structure, public services, and other urban amenities. TDR operates within a community's zoning code or similar land use regula- tion. It offers options to the owners of sending and receiving sites. Sending area landowners do not have to use the TDR option, but when they choose to ,participate, they record easements that restrict future development. When the easement is recorded, the property owners are allowed to sell transferable development rights, or TDRs. The compensation provided by the sale of these TDRs motivates sending area landowners to participate. In receiving areas, the zoning code establishes a baseline density. No TDRs are needed to build at or below baseline density. However, developers who buy TDRs can exceed baseline density and build up to the maximum densities established in the zoning code. The extra profit made possible by increased density motivates these developers. Most TDR programs use increased density as the incentive for developers to buy TDRs. But some communities let developers who buy TDRs exceed other development thresholds such as floor area, lot coverage, and building height limits. Likewise, communities with building permit quotas can give higher priority to projects using TDRs or exempt these projects from quotas en- tirely. These and other alternative incen- tives are discussed in detail below. TDR is similar to PDR, the pur- chase of development rights. As with TDR, PDR allows landowners to sell their development rights in return for recording an easement on their prop- erty. In a PDR program, these develop- ment rights are retired and additional funding must be secured in order to preserve additional land. But with TDR, the development rights are not retired. Rather, TDRs are sold to de- velopers and the proceeds from TDR sales can be used to buy additional TDRs, creating an ongoing revolving fund. When TDR works, property owners in the sending areas continue to own their land and receive nondevelopment income while liquidating their prop- erty's unused development potential. In a sense, these owners tap into the development value of their property without having to undergo the expense and uncertainty of the development process. Similarly, developers in the re- ceiving areas are able to achieve the in- creased profit made possible by extra development despite the cost of TDRs. And most importantly, commu- nities are able to achieve their develop- ment and preservation goals without reliance on taxes. TWO SUCCESS STORIES We know of 181 TDR programs in 33 states that have preserved at least 300,000 acres of farmland, natural areas, and open space to date. Many of Rick Pruetz, FlcP, is a planning consultant and the author of Beyond Takings and GMngw Saving Natural Areas, Farmnand and Historic Landmarks With Transfer of Development Rights and Density Transfer Charges. He can be reached at arje@attglobal.net and maintains a webate on TDR at www.beyondtakingsandgivings.com. Erica Pruetz Is a partner In Pruetz Law Group LLP. A portion of her ltigation practice Is devoted to dis- putes invoMng land use and real property Issues. She can be reached at ejpruetz@pruettlaw.cora and www.pruetzlaw.com. I