Transfer of Development Rights TDR

1. Transfer of Development Rights TDR Smart Growth / Smart Energy Toolkit

2. Development patterns based on conventional zoning create less than optimal conditions Underdeveloped Commercial Centers Overdeveloped Residential Sprawl

3. Transfer of Developments Rights Two-Fold Objective Concentrate Development in Growth Centers Preserve Existing Open Space

4. TDR Definitions Development Rights The amount of development that could take place on a tract of land under Zoning Bylaw provisions. Sending Areas Areas identified as priorities for preservation or significant decreases in development potential.

5. TDR Definitions (continued) Receiving Area Areas that have potential to support more development than what is allowed by existing bylaws and/or regulations. TDR Credit Bank A third party entity that can store and administer the sale of development rights.

6. Transfer of Developments Rights The Concept Owner of “sending” parcel sells development rights in exchange for permanent conservation easement. growth area preservation area Owner of “receiving” parcel buys development rights to build at densities higher than allowed under base zoning.

7. Potential Sending Areas • Prime Agricultural Lands • Chapter 61 parcels • Large Tracts of Unprotected Open Space • Aquifer Protection Overlays • Areas of Critical Environmental Concern • Habitat for Rare and Endangered Species • Watersheds to Sensitive Surface Waters • Historic Districts or Structures

8. Potential Receiving Areas • Village Centers • Transportation Nodes • Commercial or Industrial Districts • Areas Served by Infrastructure • Centralized Water Supply • Centralized Sewer System • Public Transportation Routes

9. Sending and Receiving Areas Should Be Identified Through A Comprehensive Planning Process

10. TDR: Alternative Futures ? The future with conventional zoning The future The present The future with TDR zoning

11. Implementing TDRThe Basic Questions • Clearly Defined Sending and Receiving Areas • “What are the resources we need to protect?” • “Where can we handle increases in development capacity?” • Adequate Administrative Capacity • “Do we have a permitting body that clearly understands the program?” • “Do we need a TDR Credit Bank?” • “Will the City/Town play a role in establishing the value of development rights or will the market be used to establish value?”

12. Implementing TDRUnderstanding the Market Market Analysis • Is the market for development in the Receiving Areas strong enough to draw investment in higher densities? • How do property values compare between Sending and Receiving Areas? USE A QUALIFIED PROFESSIONAL TO DEVELOP AN UNDERSTANDING OF THE EXISTING MARKET.

13. Implementing TDRValuation of Development Rights • Common methods of TDR valuation Maximum developable area • TDR valuation ultimately negotiated by the buyer and seller unless a Credit Bank is in place. • Number of buildable lots (Yield Plan) Development appraisal of lots $300K $150K $100K $300K $100K 10 lots x 1 dev right/lot = 10 dev rights $2m x 1 dev right/$100k = 20 dev rights 50 acres x 1 dev right/10 acres = 5 dev rights $150K $250K $200K $250K $200K

14. Implementing TDRDisincentives in the Sending Area Reduce development potential in Sending Areas through increased minimum lot size. NOTE: ALLOW TDR AT ORIGINAL DENSITY TO PROVIDE INCENTIVE AND PROTECT LAND OWNER’S INVESTMENT Example: Sending Area Overlay Original Minimum Lot Size = 1 acre Revised Minimum Lot Size = 10 acres

15. Implementing TDRDisincentives in the Sending Area Increase Permit Scrutiny in Sensitive Areas THE LEVEL OF EFFORT REQUIRED TO DEVELOP THE PROPERTY IN THE SENDING AREA BECOMES CONSISTENT WITH PERFORMING A TDR Example: Sending Area Overlay “Subdivisions of five or more lots in a designated Sending Area shall require an Environmental Impact Report as described in the Planning Board Rules and Regulations”

16. Implementing TDRIncentives in the Receiving Area Density Bonuses generally provide a fixed percentage increase of development rights over and above the Sending Area yield CAUTION: DENSITY BONUSES CAN MORE THAN DOUBLE THE DEVELOPMENT POTENTIAL OF THE RECEIVING DISTRICT Example: “The number of Development Rights that can be transferred from the Preservation District shall be 1.5 times the amount of Development Rights determined from a Yield Plan”

17. Implementing TDRTDR Credit Bank TDR Credit Banks can provide a holding place for development rights that are purchased before they can be transferred. PURPOSE: ALLOWS GREATER FLEXIBILITY RELATIVE TO THE TIMING OF A MULTI-LAYERED, COMPLEX TRANSACTION Issue: Banks should be established as an independent third party (non-profit corporation, enterprise fund, etc.) to ensure that development rights are readily available when Receiving Area opportunities arise.

18. CASE STUDY Montgomery County, Maryland Sending Area identified as 90,000 acres of undeveloped agricultural land. Area down-zoned from 5-acre minimum lot size to 25-acre minimum. Development rights can be traded at the original density. Receiving areas identified by proximity to existing infrastructure. Density bonuses awarded at varied scaled depending on the location of the Receiving Area.

19. Paramount Theater Restoration CASE STUDY Seattle, Washington YMCA Building Restoration • Complex urban TDR Program relies heavily on a TDR Credit Bank to facilitate transactions. • Primary goals: • Preserve Historic Structures • Preserve Existing Affordable • Housing • Incentives for Varied Building • Scale • Infill Development of Compatible • Character W Hotel Development

20. CASE STUDY Falmouth, MA • Sending Areas Identified through • Careful Planning Process: • Water Resource Protection District • Chapter 61A Parcels • Areas of Critical Environmental Concern • Coastal Resource Overlay District Receiving Areas are eligible for Density Bonuses that vary between 20% to 40% depending on the underlying zoning

21. USEFUL LINKS: government.cce.cornell.edu/doc/html/Transfer%20of%20Development%20Rights%20Programs.htm TDR Programs: Using the Market for Compensation and Preservation, a paper written by Jason Hanly-Forde, George Homsy, Katherine Lieberknecht, Remington Stone that gives a good overview of this technique. www.dem.ri.gov/programs/bpoladm/suswshed/pdfs/tdrreprt.pdf Transfer of Development Rights Report‘, a study produced for the South County Watershed Technical Planning Assistance Project by the Rhode Island Department of Environmental Management. It is one of several reports about creative land use techniques to accommodate growth while minimizing impacts to the environment and community character. www.farmlandinfo.org/documents/27746/FS_TDR_1-01.pdf A Fact Sheet from the Farmland Information Center, a public/private partnership between the American Farmland Trust and the USDA Natural Resources Conservation Service.

22. USEFUL LINKS: www.lincolninst.edu/pubs/pub-detail.asp?id=424 Transfer of Development Rights for Balanced Development, an article (author Robert Lane, 1998) from the Lincoln Institute of Land Policy providing conceptual overview as well as some details regarding TDR case law. www.state.nj.us/dca/osg/resources/tdr/index.shtml TDR: How Does It Work?, a webpage from the NJ Department of Community Affairs' Office of Smart Growth, provides a good overview of the technique. www.nj.gov/agriculture/sadc/tdr.htm New Jersey State Transfer of Development Rights Bank webpage from the NJ Department of Agriculture. www.state.nj.us/dobi/pinelands/pinelandsbank.htm Pinelands Development Credit Bank webpage from the NJ Department of Banking and Credit gives information about a program begun in 1985 which has helped increase the value of development rights and assisted owners in selling their land.