Transfer of Development Rights: A Program to Redirect Development

Review of: “Transfer of Development Rights Programs: Using the Market for Compensation and Preservation.”
By Jason Hanly-Forde, George Homsy, Katherine Liberknecht, and Remington Stone. Department of City and Regional Planning, Cornell Cooperative Extension, Cornell University. 28 January 2005.

Written by: Ross Dudzik

The idea of controlling how a person uses his/her land has historically been a touchy subject. Traditionally, governments have used zoning ordinances, subdivision regulations, and other measures to control the development and use of private land. But the question always arises as to how much regulation is too much? I mean, how would you like it if you were not allowed to use your property as planned when you purchased it?

This article describes a technique local governments can use to control the development of private land. In some cases, local governments wish to restrict development in rural areas because of the land’s unique agricultural, historical, or natural resource value. How might a community go about achieving protection for this land without “taking” the owners rights to his land away from him? One potential answer is through establishing a Transfer of Developments Rights program (TDR).

TDR’s, as described by Hanly-Ford et. al, rests on the inherent “bundle of rights” that an individual receives when he/she purchases a parcel of land. Some of these rights include the ability of the owner to develop the land, restrict access to it, utilize its natural resources, or sell it outright. TDR’s allow an owner to separate the development rights from the rest of the rights, and sell just this “right to build” to a purchaser.

For example, lets say farmer Bob wants to make some money from his farm without selling any of his land. Bob could opt to sell the development rights of all or a portion of his property. He would still be allowed to farm and use his land as he is currently; the only stipulation is that farmer Bob cannot build any additional structures on his property. In addition, this protection from development is tied to the property indefinitely, even if it changes owners. In the end, Bob receives a substantial sum of money, keeps his land, and can continue to farm.

The purchaser, usually a land developer, benefits from the transaction as well. For example, if developer Jan buys 40 acres of development rights from farmer Bob, she will receive a set amount of “credits”. These credits can be “cashed-in” to allow her to build more houses in her upcoming development project than is allowed by zoning. Note that this development occurs in a designated region the municipality has selected as suitable for this increased density. Jan figures she can make more money selling these additional houses than she will spend on purchasing the development rights. In the long run, she is making more money.

As you can see, the benefit is two-fold. This transaction not only benefits both parties involved, it also can be used to protect valuable farmland or environmentally sensitive areas from future development. Additionally, a county or municipality can achieve this goal without spending virtually any public money. This is perhaps my favorite aspect of the TDR program- the fact that the public does not bear the burden of protecting these areas. This, however, has some drawbacks tied to it as well. Since the property does not come under public ownership, the protected lands may not be accessible to the general public.

If metropolitan areas in the U.S. continue with their destructive habits of suburban sprawl, we will eventually find ourselves with few quality land resources left. I hate to be a “doom and gloom” proponent, but the reality is that we are headed down an unsustainable path. Despite their low cost to the public, Hanly-Ford et. al describes that TDR’s are not that common in the U.S. I feel that through effective social marketing many communities could realize the benefits of TDR’s and act proactively about this growing problem.