Transferable Development Rights, John Costonis, and his "Chicago Plan"

One of the first major proponents of Transferable Development Rights plans was John Costonis, who published a number of articles in the early 1970s on the topic:

• Costonis, The Chicago Plan, Incentive Zoning and The Preservation of Urban Landmarks, 85 Harv. L. Rev. 574
• Costonis, Development Rights Transfer, An Exploratory Essay, 83 Yale L.J. 75

At that time in American history, particularly in urban America, the historical preservationist movement was just beginning. Penn Station in New York, once a beautiful structure designed by the renowned firm of McKim, Mead and White, had been demolished and replaced by a modern monstrosity. (As an aside, this lead to one of my favorite quotes of all time: “One once entered the city like a god; one scuttles in now like a rat” by Yale architect Vincent Scully). Urban areas around the country could not afford the cost of upkeep needed for architecturally significant buildings, and the city of Chicago was no exception.

Costonis proposed a TDR scheme to help alleviate some of these problems. At the time incentive zoning - which offered bonus density to developers in exchange for a public improvement – was widespread in Chicago. Costonis looked for a method to combine the granting of the bonus density with a mechanism to protect historic buildings. What developed was a trading scheme for density: developers looking for extra density would buy it from nearby historic buildings, providing them with two things they needed: permanent protection of the sight from additional building, and a cash flow to pay for the maintenance that these historic structures needed.

The first article above describes the challenges presented to urban landmarks at this time, then examines New York City’s TDR program for historic landmarks. Last, it examines some of the legal issues that TDR programs present. One thing that is interesting to note is the aftermath of this article. Costonis views NYC’s plan as having major deficiencies and develops his plan for Chicago in light of them. However, over the next few decades, NYC’s plan developed into a moderate success, resulting in the preservation of Grand Central Station and one of the foremost cases on TDRs (Penn Central v. New York City, 438 U.S. 104). Chicago, on the other had, failed to develop a TDR plan, in large part because of the political opposition that developed against the concept of transferable development rights.

Transferable Development Rights programs remain highly controversial in many regards, though there have been a number of successful ones around the country. Some of the controversy has been legal: both Penn Central and a later case, Suitam v. Tahoe Regional Planning Authority, failed to address the constitutionality of TDR programs and the question remains unresolved. Additional challenges result from programs that fail to develop adequate markets for development rights, decisions to make the program voluntary or mandatory, and a general distrust of plans that allow such flexibility and discretion. However, I happen to think they are a really interesting theoretical idea, and when they do work, they can ameliorate some of the inherent difficulties with land use planning. As a full disclosure, I wrote a term paper on TDR programs last year in a Land Use Law class.