Over-Stuffing the Envelope: The Problems with Creative Transfer of Development Rights

Transferable development rights (TDR) are transactions in which the owner of a small building or landmark severs, sells, and transfers his unused development rights to another parcel of land.[1]

TDR can be applied to landmark buildings to allow survival of cultural institutions.[2] TDR allows the landmark owner to realize the potential development value for his landmark by selling air rights or unused development rights to a purchaser who will gain additional floor area for development.[3] The arrangement allows the public to continue to enjoy historic buildings and sites and the city to receive new tax revenue.[4] However, critics are concerned about the potential for TDR to result in increased bulk on city blocks, the loss of light and air on the streets, congestion on public transportation, and strain on neighborhood services.[5]

The use of TDR in New York City has evolved since 1916 when the 1916 Zoning Ordinance first allowed adjacent lots to combine their air rights to erect a tower exceeding height regulations.[6] Over time, the City Planning Commission began to allow creative interpretations of zoning regulations for the benefit of non-profit institutions.[7] In 1968 the city allowed the owner of Grand Central Station, which was suffering economically because of the decline of the railroads, to transfer its development rights to locations further away than previously allowed, and to transfer all rights to one receiving lot (rather than limiting transfer to a 20% increase for the receiving lot).[8] The city also sought to promote redevelopment in the South Street Seaport area where landmark buildings were in a state of severe disrepair.[9] The city expanded the way TDR may be utilized by creating a district of transferor lots and receiving lots that allowed for transfer of rights to preserve historic structures and allow for new commercial development.[10]

Critics note that such creative interpretations of zoning regulations set precedent for future imaginative transactions.[11] These changes are made to achieve short-range financial objectives at the possible expense of the traditional urban planning objectives on which the zoning laws were based.[12] New York’s zoning goals include controlling population density, building, size, and land use[13]; maintaining property values; and preserving light and air on city streets through height, area, and public use regulations.[14] Critics of the creative use of TDR point to increased bulk in new development beyond that permitted by the original zoning laws, the risk of overdevelopment resulting in increased population density and use of neighborhood resources[15], the altered character of neighborhoods, and the marring of landmarks by the adjacent construction of large buildings.[16]

[1] Margaret Giordano, Over-Stuffing the Envelope: The Problems with Creative Transfer of Development Rights, 16 Fordham Urb. L.J. 43 (1987-88).
[2] Id. at 46.
[3] Id. at 55.
[4] Id.
[5] Id. at 46.
[6] Id. at 47.
[7] Id. at 57.
[8] Id. at 60.
[9] Id. at 61.
[10] Id.
[11] Id. at 65-66.
[12] Id. at 66.
[13] Id. at 47.
[14] Id. at 48.
[15] Id. at 55.
[16] Id. at 67.