Legal Briefs

Preserving Property

Transfer of development rights saves natural and historic sites.

By Kenneth R. Costello |

Transfer of development rights programs allow property owners to buy and sell development rights without actually exchanging any land. The basic TDR concept is to compensate landowners who give up potential development rights in environmentally sensitive areas or preservation districts as designated by communities. The goal is to direct development away from sensitive lands, known as "sending" areas, toward more suitable areas, called "receiving" areas. The forms of compensation may be money from a developer or development credits from the county.

TDRs have been used to preserve historic buildings, agricultural land, forest land, and open space. For example, in 1978, the city of New York allowed Penn Central Transportation Co. to transfer unused development rights for Grand Central Station to the company's other properties to preserve the historic landmark. In 1997, development rights also were transferred near Lake Tahoe, Nev., from lands that carried runoff water into the Lake Tahoe watershed to other designated areas.

TDRs in Action

More recently TDRs have become an issue in Collier County, Fla., where, in an effort to preserve wetlands and a natural habitat, the county has designated certain areas as rural fringe areas and rural land stewardship areas. The first developer to take advantage of the program is the Barron Collier Co., which is developing the new town of Ave Maria in Collier County. The land where Ave Maria is to be located has been designated a RLSA/TDR area. To get county approval for the project, which will have a density of 11,000 residential units and 1.2 million square feet of commercial space, the Barron Collier Co. placed conservation easements on more than 16,000 acres, according to Blake Gable, Ave Maria's project manager.

Collier County's RLSA program issues credits depending on the environmental sensitivity of the lands to be preserved. For example, eight credits are needed to develop 1 acre of land, Gable says. The county allots the maximum number of credits to the most sensitive lands, so developers are motivated to preserve the most environmentally valuable land. The credits are the county's inducement to the private sector to partner with them to conserve the wetlands. Since Ave Maria is the first project to utilize the TDR program, the process was especially complicated and time-consuming, taking about three years to complete. But the results are worth it: The efforts will preserve 90 percent of the uplands and wetlands as well as 91 percent of wildlife habitat within the RLSA, according to WilsonMiller, a Naples, Fla., engineering and planning company.

The Value of TDRs

More than 20 states have implemented TDR programs, allowing property owners in historically or environmentally sensitive areas around the country to sell the development rights, deed the property to the county, or develop property themselves in receiving areas with existing infrastructure.

One of TDRs' main benefits is that they allow environmentally sensitive land to be voluntarily set aside with no cost to the public, says Dolly Roberts, spokeswoman for Ave Maria Development. "This benefits both the community and the landowner," Roberts says. After the development right is sold or exchanged for credits, the land may be reassessed and taxed at a lower rate, should an owner wish to retain title rather than deed it to the county.

Purchasing a TDR, or receiving a credit, allows a developer to build or increase the density of a project. Additional units, known as bonus density TDRs, may be purchased from a landowner if the owner has met certain criteria specified by the county. These bonus densities are granted for restoring the property being preserved and/or creating a conservation easement over the property.

All landowners in the sending areas have the opportunity to create bonus TDRs and then negotiate the price with a developer. The creation of bonus density TDRs allows the land to be restored, placed in a land mitigation bank, deeded to the county, or have a conservation easement placed upon it. Each of these actions preserves natural habitat and wetlands while at the same time directing development away from these areas.

Implementing the Program

Several basic elements need to be in place for a successful TDR program. These include the existence of a valid public purpose, a clear designation of the sending and receiving areas, and the recording of the development rights as a conservation easement, says John B. Bredin, JD, in an American Planning Association report.

From a financial standpoint, there must be development pressure in an area. Developers must not be allowed extra density via variances or other methods outside the TDR program; otherwise there will be little incentive for them to purchase TDRs. There also must be a comprehensive plan and proper zoning if the program is to achieve the stated objectives of preserving designated areas. Zoning in the area must protect against variances. For example, the comprehensive plan should prevent developers from obtaining variances to increase density. If they are able to do this they do not need to purchase TDRs, therefore undermining the program.

TDRs currently are valued by the market, meaning the price the seller is willing to accept and the buyer is willing to pay. Some planners suggest the county establish, fund, and operate a TDR bank, buying from landowners and selling to land developers. This would establish a predictable value for the TDR. While government agencies cannot force landholders to sell their land interests, TDR programs can be seen as mandatory in that a TDR must be purchased in order to develop a piece of land. Even though there is no law mandating the sale of a TDR, the zoning and master plan have the effect of forcing a purchase by developers.