Using Market Forces
and Master Planning
to Manage Growth and
Environmental Quality
EPA NEW ENGLAND
FEBUARY 2001
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Transferable Development Rights (TDR)
is a local zoning technique to preserve environmentally
sensitive areas/ open space/ farmland, historic
landmarks or other community assets without using
public funds. UsingTDRs/ land owners in designated
preservation areas are given the option of preserving
their property by selling their development rights.
These transferable rights are purchased (usually by
developers) to increase the amount of development
allowed in designated areas suitable for higher growth.
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Many communities facing growth pressure want
to preserve their community character, farmland
and open spaces/ and air and water quality. Increas-
ingly, however, many are finding that their one, two
or even five acre residential zoning doesn't accom-
plish this. Over time, communities can get covered
with sprawling, large lot subdivisions while losing
the more traditional New England pattern of
compact village centers surrounded by rural areas.
This low density development can increase munici-
pal service costs (schools, roads, water, sewer, fire
and police, etc.) and reliance on the automobile
while being more consumptive of land and natural
resources. Transferable Development Rights (TDRs)
are one tool for shifting growth towards suitable
areas while preserving open space and rural prop-
erty values.
ATDR program is an alternative development
approach that addresses both growth and preserva-
tion. Through a municipality's zoning ordinance, a
TDR program provides the option to transfer some
or all of the development that would ordinarily
occur in outlying or rural areas to areas where
infrastructure is in place to better accommodate
growth.The program allows farmers or other rural
landowners to sell the development rights to their
land - as opposed to the land itself - to developers
for projects in designated growth areas. As a result,
landowners retain ownership and use of their land
(but are restricted from developing it further) while
developers are allowed to increase the density and
profit of development projects in growth areas.The
public benefits by gaining a pattern of development
that matches the overall vision of the community
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master plan. EPA New England supportsTDRs
since they serve as market-based pollution preven-
tion programs.
The right to develop one's property is just one of
many rights that come with land ownership. In a
TDR program, as an alternative to developing or
selling their land, landowners in designated preser-
vation areas are allowed to sever this development
right and sell it to developers who are building in
designated growth areas. Note that these growth
and preservation areas generally go by other
names; this brochure uses these terms for simplic-
ity. Some examples are shown below:
nervation Af^
Watershed District
Conservation Land
Historic Buildings
Farmland
Transferred
Development Rights
Village Center
Urban Center
Transportation Node
Brownfeilds
Area*
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In contrast to public purchase of open land or
the purchase of development rights through conser-
vation easements, a successful TDR program allows
important resources and rural areas to be pre-
served using market forces rather than public
funds. And since New England TDR programs
would be embedded within local plans and zoning
codes, they can be tailored to meet local needs.
On the positive side,TDRs are one way to enable
long term growth and preservation that is consis-
tent with a community's master plan. A TDR
program gives rural land owners the choice of
selling development rights instead of developing or
selling their land to raise money. And with develop-
ment restricted, many taxes are then reduced. In
addition, the more compact development in the
designated growth areas can minimize municipal
service costs (schools, roads, water, sewer, etc.) and
promote alternatives to auto-dependent travel
(walking, cycling, mass transit, etc.).The resulting
decrease in car use contributes to cleaner air and
water.TDRs also help preserve open space,
biodiversity, and natural resource-based business,
such as farming and forestry, as well as reduce
polluted stormwater runoff. Again, if successful a
TDR program uses market forces and incentives
rather than public funds to preserve natural
resources and rural countryside.
On the other hand, gaining support for the
designated growth areas can be challenging, due to
the increased density and infrastructure required.
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Not everyone wants to live on a smaller (quarter-
acre to half-acre) lot although recent market
research in Maine shows strong demand for tradi-
tional neighborhoods like those fostered byTDRs.
Some people also may believe thatTDRs are too
complex to understand or implement effectively, or
be concerned about the potential for legal chal-
lenges. (One way to guard against su«h challenges
is to ensure a logical connection between the lower
building density in the preservation area and the
higher density in the growth area). A market
analysis may also be needed to obtain a realistic
assessment of whether TDRs would work in your
community. In some situations, aTDR bank with
initial public funding may be needed to act as a
clearinghouse or as a buyer of last resort.
TDRs help to preserve open space/ biodiversity, and
natural resource-based business/ such as
farming and forestry, as well as reduce polluted
stormwater runoff.
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Although TDR programs can be enacted in all six
New England states, they will not necessarily work
everywhere.To be successful, a community that
wants to useTDRs must:
• be experiencing growth pressure, so there is
sufficient demand for new development
• have public support for increasing density and
providing infrastructure for the designated
growth area(s)
• have a united community vision and under-
standing of TDRs via thorough master planning
and public participation
• set up a streamlined program to administer
the TDR program
A community must have a united community vision
and understanding of TDRs via thorough master
planning and public participation
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While dozens of municipalities across New
England have enacted TDR ordinances, the follow-
ing towns and cities are those that have accom-
plished actual (or pending) TDR transactions:
Stowe, Vermont
has usedTDRs to preserve the rural character of
Mountain Road between the village and ski
resort.TDRs helped compensate landowners in
the preservation area where lot sizes were
increased (i.e., not as many homes can be built
on a given property due to the TDR program),
and a land trust gained funds by selling the
development rights from a preservation area
property. (For more information contact Brian
Frazier at 802/253-6130.)
South Burlington, Vermont
allows TDRs to be established in preservation
areas at a rate of 1.2 dwelling units per acre;
they can then be used in designated development
areas to increase density from 1.2 to 4 units per
acres. A 45-acre hayfield has been preserved as
a result of the program. (For more information
contact Ray Belair at 802/846-4106.)
Groton, Massachusetts
uses a form of TDR with two options. For every
buildable lot preserved, a developer can either:
a) increase density elsewhere in his or her
project or b) obtain relief from the town's
annual building permit limit. Over 400 acres
have been preserved to date, including a shore-
line greenway along the Nashua River, due
largely to use of the second option. (For more
information contact Michelle Collette at 978/
448-1105.)
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Open the fold-out to see howTDR zoning could compare
to conventional zoning.
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l.The Present:
An existing hamlet is surrounded by open farmland.
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2.The Future with Conventional Zoning:
The farmland around the hamlet is developed using 1 to 5 acre
lots. No open land or farmland is left.
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3.The Future withTDR Zoning:
The farmland is permanently preserved from development. New
development is concentrated near the hamlet in a new village.
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Unfold Here
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Sunderland, Massachusetts
has aTDR program wherein development rights
from either agricultural or watershed districts
can be sold to increase density by up to a factor
of two in designated growth areas. That is,
residential lot sizes in designated growth areas
can be half the size normally allowed, provided
that sufficient TDRs have been purchased from
the preservation area(s). (For more information
contact Town Clerk Wendy Houle at 413/ 665-
1442.)
New Bedford, Massachusetts
has aTDR program (with two pending transac-
tions) designed to maintain the marine-indus-
trial vitality of its historic working waterfront
while allowing other uses as well. (For more
information contact Mathew J.Thomas, Esq. at
508/994-1500.)
Outside of New England
TDR's have been used to save thousands of acres
of open space in areas like the Long Island Pine
Barrens, the New Jersey Pinelands and Mont-
gomery County, MD.
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As an incentive to encourage preservation area
landowners to sell TDRs rather than develop their
land, someTDR programs have increased the
minimum buildable lot size in preservation areas -
say from 5 acres to 25 acres, as done in Maryland -
but based theTDR credits on the original (5 acre)
zoning.Thus an owner of 100 acres may either sell
20TDR credits or build on four 25- acre lots.
As an incentive for developers to buyTDR
credits, some programs have allowed up to two
dwelling units in growth areas for eachTDR pur-
chased in preservation areas. An overall maximum
density can then be established to address concerns
about overcrowding. Alternatively, some communi-
ties design their TDR programs to only relocate and
not increase residential development.
In an effort to build support for growth areas,
many practitioners recommend targeting these
areas for elderly, affordable or assisted-living
housing and allowing a mix of residential and
commercial land uses to maximize the benefit of
compact, walkable developments.
TDR programs tend to be highly location-specific
rather than one-size-fits-all. Groton, MA (see
previous section), for example, has developed a
TDR variation which allows developers to double
their annual building limit per subdivision (from six
to twelve) by buying TDRs. Other towns considering
TDRs have assessed their existing development
pattern for areas that could act as vibrant village
centers within a TDR format. Nationally, TDRs have
also been used to address regional growth concerns
by allowing development credits to be transferred
across municipal boundaries.
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From a commercial standpoint, someTDR
programs allow development credits purchased
from residential areas to be used for additional
commercial space in growth areas. Some communi-
ties prefer this option since it allows growth that
doesn't necessarily overburden schools. In this
approach, each TDR allows a certain amount (say
1,000 square feet) of extra commercial space
above the amount normally allowed.
Finally, to be successful,TDR programs should
be as simple and streamlined as possible. In some
instances local TDR ordinances have been boiled
down to four or five pages.
Nationally,TDRs have been used to address
regional growth concerns by allowing development
credits to be transferred across municipal
boundaries.
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As an introduction toTDRs, this brochure does
not fully address many of the implementation issues
that would surface should your community decide to
start a TDR program. Among others, questions
regarding market viability and expected TDR
values, incentives, taxation, administration and
permanency would need to be resolved. Some
sources for more information are listed below:
EPA New England:
David Dickerson 617/918-1329
dickerson.dave@epa.gov
Rona Gregory (legal issues) 617/918-1096
gregory.rona@epa.gov
Connecticut:
C.James Gibbons, U.Conn Extension System,
860/345-4511, cgibbons@canrl.cag.uconn.edu
Massachusetts:
Kurt Gaertner, Exec. Office of Env. Affairs, 617/
626-1154, kgaertner@state.ma.us
Maine:
Beth Delia Valle, State Planning Office, 207/
287-2851, beth.delia.valle@state.me.us
New Hampshire:
Carolyn Russell, Dept. of Environmental Ser-
vices, 603/271-3010, crussell@des.state.nh.us
Rhode Island:
Derwent Riding, Statewide Planning Program,
401/222-3949, driding@doa.state.ri.us
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Vermont:
Gina Campoli, Agency of Nat. Resources, 802/
241-3618, gina.campoli@anrmail.anr.state.vt.us
EPA New England is willing to meet with local
officials with a strong interest in developing TDR
programs to provide further information and advice.
Contact Mr. Dickerson at EPA (see above).
Saved by Development - Preserving Environmental
Areas, Farmlands and Historic Landmarks with
Transfer of Development Rights by Rick Pruetz.
Arje Press, Burbank, CA. September 1997.
Transferable Development Rights Programs by
Richard J. Roddewig and Cheryl A. Inghram.
American Planning Association, Planning Advisory
Service, Report Number 401. November 1998.
Banking on TDRs: the Government's Role as
Banker of Transferable Development Rights by
Sarah J. Stevenson. New York University Law
Review, 73 NYULR 1329. October 1998.
Many thanks to the Montgomery County, PA
Planning Commission for their text and illustrations.
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Notes:
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