Transfer of Development Rights Program

Case Study:


Overview:

A Transfer of Development Right (TDR) Program is a voluntary, market-based program that can be used to direct development away from environmentally sensitive areas such as high-risk erosion zones. A TDR Program allows specific development rights to the land within an erosion hazard area, also referred to as a "sending" area, to be transferred to land within a "receiving" area. As a result, development within the sending area is restricted while development that exceeds the zoning limits within the receiving area is allowed. Because TDRs are market-based, they enable the property with the highest development value to purchase development rights to create denser developments but still control the overall amount of development within the sending area. Zoning overlays are used to establish "sending" and "receiving" areas for the TDR. Conservation easements are used to ensure land that had its development rights purchased will no longer be developed.

TDRs can vary in complexity. Some TDRs can be an equal exchange between sending and receiving areas. Other TDRs can establish higher development credits for more environmentally valuable land (areas of highest erosion risk) and less credits for less environmentally significant land (less erosion risk). This type of weighted TDR program, while more complex, provides added incentive for preserving the most environmentally valuable land first because more development credits can be purchased.

Basic Elements of a TDR Program

There are several essential elements to crafting an effective TDR program:

Benefits: Helps limit development in high-risk erosion areas since the property's development rights can be sold to enable higher density development elsewhere. As a result, TDRs could minimize the need for shoreline stabilization structures and redirect development away from erosion-sensitive shorelines.

Drawbacks: Unclear how well program will be able to influence shoreline stabilization. A TDR is a complicated program to establish. It requires establishing a trading system and collecting significant property assessment data to be able to determine an acceptable development quota. A TDR Program can also have substantial administrative costs, especially in the short-term to set up program. A TDR could lead to monopoly ownership where only a few individuals control all development rights. The program is only effective where the shoreline is relatively undeveloped.


Case Study:

Collier County, Florida's TDR Program

To preserve coastal areas and inland wetlands, Collier County, Florida, along Florida's southwest coast, implemented a Transfer of Development Rights (TDR) Program in 1974. They established a Special Treatment Overlay Zone across 80% of the county requiring stricter environmental standards for development permits. The overlay zone also created the TDR program stipulating that one dwelling unit per two acres within the zone could be transferred outside of the zone as long as the receiving parcel was at least two acres. When the property owner sells their development rights in the sending area, they either have to place a conservation easement on the property to ensure that the land will remain undeveloped or deed the land over to the County for management. Minor development such as nature trails or boardwalks are still permitted. To prevent unchecked growth outside of the overlay zone, the TDR Program placed a cap on the maximum density of the receiving parcel; the density could not exceed 20% of the zoned density.

Collier County's program has been moderately successful over the years. Since its inception, the development rights for 325 acres of land within the overlay zone, have been transferred, thus preserving this acreage in its natural state. However, one of the weaknesses of Collier County's program is that zoning outside of the Overlay Zone was not restrictive enough. Because it provided sufficient development density, there was no strong incentive to transfer development rights from one area to another to achieve a denser development.

Despite the shortfalls of its original TDR program, Collier County has created several additional TDRs to protect environmentally important land in other areas of the county.