Transfer Development Rights

Following our discussion in class, I found some information about Transfer Development Rights (TDRs). TDRs are used to promote natural and open space areas while at the same time encouraging smart growth in developing areas of a community.

In a TDR program, a community identifies an area which it would like to protect from development (the sending zone) and another area in which the community would like more urban development (the receiving zone). Landowners in the sending zone are given a number of development credits that can be sold to individuals such as developers or sold to the community itself. The landowners in the sending zone who sell the credits agree to place a permanent conservation easement on their land. The purchaser of the development credits can apply them to develop at a higher density than would otherwise be allowed on property in the receiving zone. There are four main elements of a TDR that must exist in all successful programs: (1) a designated preservation zone (the sending area), (2) A designated growth area (the receiving area), (3) a pool of development rights that are legally severable from the land, and (4) a procedure by which development rights are transferred from one property to another.

The advantages TDR programs include use of the free market to create funding for protection of natural resources. Studies of TDR programs indicate that they are most effective in urban areas. Some of the disadvantages of these programs are that many people find them confusing and administratively complex. The programs require the government to make a commitment to administering the program and educating citizens and developers. There must be strong planning and local control in order for the TDR programs to be successful. In addition, the government must ensure that landowners have adequate incentives to sell development rights and that developers have adequate incentives to purchase these rights.

TDR programs have been successful in many areas. For example, in Montgomery Count, Maryland, a TDR program was established in 1980. By the end of the 1997 fiscal year, the program had protected 39,180 acres out of a total sending area of 89,000 acres. In the decade after the implementation of the TDR program, development dropped 92%. In the New Jersey Pinelands, a TDR program protected 5,300 acres of environmentally unique land over a period of 11 years.

Field Guide to Transfer of Development Rights

http://www.realtor.org/libweb.nsf/pages/fg804