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Transfer of Development Rights (TDRs) Model and Commentary

Model Code

A TDR program should be tailored to the needs of the individual community and reflect local planning goals. Key features found in TDR programs include:

  • Purpose
  • Applicability
  • Designation of Sending and Receiving Areas
  • Determination and Allocation of Development Rights
  • Requirements for Sending and Receiving Sites
  • Program Monitoring
  • TDR Bank (optional)

The following sections provide example language for each of the common elements. Model language is in beige shading. Commentary is located in the column at the right. The model language used in this document is based on existing ordinances from several communities around the state with effective TDR programs, including municipalities and counties. The language is illustrative only; consult local counsel to tailor language for your jurisdiction.

Commentary

Local Examples: In Colorado, two of the more longstanding TDR programs are in Boulder County and Summit County. See “Where It’s Been Done” for more detail.

Purpose

The purpose of the transfer of development rights program is to help implement the goals and objectives of the community’s comprehensive plan and to:

  1. Preserve and protect environmentally sensitive lands or land with development constraints;
  2. Protect public and private property from natural hazards, including but not limited to floods, geologic hazards, and wildfire;
  3. Assist in the orderly development of urban and rural lands;
  4. Encourage new development in areas with adequate existing infrastructure and services;
  5. Provide a mechanism for willing landowners in sending areas to protect environmentally sensitive lands and land with development constraints and make reasonable use of their property rights by transferring some or all of their development rights to receiving areas; and
  6. Provide an opportunity for landowners in receiving areas to obtain a higher return on investment through development at an increased density through the purchase of development rights from sending areas; and  
  7. Establish a system whereby development rights may be reliably transferred.

Purpose: TDR programs are typically designed to address multiple goals. Typically TDR programs strive to preserve open space and environmental features in exchange for allowing more development in areas with planned or existing infrastructure and services capable of accommodating additional growth and development. The list of purposes may be tailored to the community’s planning goals or may include a broad range of purposes to allow expansion of the program based on adjustments to planning goals. 

Applicability

  1. The TDR program regulations are applicable only in designated sending and receiving areas as described in this ordinance.
  2. The applicable provisions of this section shall be met by any development project, receiving site, or sending site that seeks to utilize the TDR program.
  3. Additional density (in residential receiving areas) or square footage (in commercial receiving areas) must be approved as part of the required permit process for the type of development proposed and shall comply with all other applicable requirements of the zone district of the receiving area. 

Applicability: The purchase of a development right does not guarantee approval of a project.

The TDR program establishes the units that will be traded, which in residential areas might be dwelling units, but in nonresidential areas, could be a range of things like square footage, height, or access to utilities.

Designation of Sending Areas and Receiving Areas

  1. Official Transferable Development Rights Map: The properties designated as Sending Areas and Receiving Areas are depicted on a map designated the “Official Transferable Development Rights Map.” This map is included as part of this ordinance by reference and shall be kept on file in the Planning Department and available for public inspection. The [approval body] may amend these maps from time-to-time based on the criteria for designating Sending Areas and Receiving Areas.
  2. Comprehensive Plan: Sending and Receiving Areas designated on the Official Transferable Development Rights Map shall be consistent with the comprehensive plan.

Designation of Sending and Receiving Areas: Some TDR programs use overlay zone districts to show TDR sending and receiving areas. Others establish specific zone districts as eligible sending areas or receiving areas and list them in the TDR section of the land development code. Whatever method is used, it is important to clearly define sending and receiving areas (or “optional areas,” as used in Summit County).

Determination and Allocation of Development Rights

The transfer of development rights program establishes a framework to match landowners that are eligible to transfer (sell) development rights with land developers that desire to acquire (purchase) development rights as follows:

  1. Calculation of Transferable Development Rights in Sending Area
    1. Properties located in a residential zone district in a Sending Area:  Each residential unit permitted by the existing zone district shall be considered one development right.
    2. Properties located in a non-residential zone district in a Sending Area:  Each [unit] of non-residential development shall be considered one development right.
    3. A subdivision plat and/or site plan may be required to determine the number of dwelling units or amount of non-residential square footage that could be established on the property in the Sending Area.
  2. Allocation of Purchased Development Rights in Receiving Area
    1. Development rights purchased from a Sending Area shall be used only in a designated Receiving Area.
    2. Each purchased development right entitles a receiving site to increase the density allowed under the receiving site’s zone district as follows:
      1. [One] additional residential unit; or
      2. [Unit] of non-residential space.
  3. Uses Allowed: Only the uses allowed by the receiving site’s existing zone district are allowed under the TDR program.

Determination and Allocation of Development Rights: TDR programs need to gear the calculation of TDRs to the local market conditions, infrastructure capacity, and desired character for receiving areas. In some markets a TDR may need to be calculated at a higher “value” (e.g., one allowed residential unit in the sending area provides 1.5 residential units in a receiving area) to make TDRs desirable to developers. A local TDR program can also establish different density ratios for different Sending and Receiving Areas. A market study is critical to establish market demand in receiving areas and realistic TDR values.

Nonresidential: For nonresidential properties, an appropriate unit must be established, such as 15,000 square feet.  

Sending Site Requirements

  1. Separation of Development Rights:  Transferable development rights (TDRs) may only be transferred from specified Sending Areas to specified Receiving Areas. A landowner in a Sending Area may voluntarily sell development rights to a buyer at a market value established by the landowner and the buyer. Prior to the time of the sale, a deed restriction shall be recorded with the County Clerk’s Office limiting the future development potential of the Sending Site. A TDR Certificate shall then be issued by [name of local government] identifying the number of transferred development rights and the book and page numbers of the recorded Declaration of Restriction of Development and Easement.
  2. Future Development of a Sending Site: Development of the unrestricted portion of the sending site shall comply with the standards of the sending site’s zone district and is limited to the remaining development rights not extinguished through conversion to a TDR. No rezoning of the sending site to a higher density shall be permitted by [name of local government].
  3. Transferable Development Right Certificate:  A certificate specifying the number of development rights to be transferred is required to sell and transfer development rights. The [Planning Director or designee] shall be responsible for:
    1. Determining the development rights that may be transferred from an eligible sending site;
    2. Issuing a transfer of development rights certificate specifying the number of development rights being transferred in either dwelling units or square feet of non-residential floor area eligible for transfer; and
    3. Calculating the number of remaining development rights on a sending site, if any.
  4. Declaration of Restriction of Development and Easement: The owner of the sending site shall execute an easement in perpetuity restricting development in accordance with the requirements of this section and in a form acceptable to the Planning Department, approved by the [name of local government] Attorney and signed by the owner of record. Such easement shall be recorded in the Clerk’s Office prior to issuance of a TDR certificate and approval of any development application on an eligible receiving site.
  5. Recordation of Easement: Upon recordation of an easement restricting development based on issuance of a TDR Certificate, the number of development rights specified by the TDR Certificate shall be considered severed from the sending site and available for purchase and use on a receiving site or for purchase by a conservation organization and permanently retired or held for future purchase.
  6. Use of TDRs Voluntary:  An owner of record in a Sending Area choosing not to participate in the TDR Program shall retain the option to develop the property as provided by the property’s existing zone district and applicable requirements of this code. 

Sending Site Easements: The form of the easement should be tailored of the local community’s goals and private landowner’s needs. A standard easement agreement should be developed for ease of administration. The easement should detail what areas of the sending site are to be restricted from any future development to fully address natural hazard mitigation. The local government can work with local conservation agencies to accept an easement and take responsibility for working with sending site property owners to monitor the easement.

Restriction on Sending Site: A crucial part of the overall tradeoff behind the TDR system is the restriction placed on the sending site, here accomplished through a prohibition on future rezoning to higher density.

Mandatory TDR Programs: Most TDR programs are voluntary, but a handful, such as the large Pinelands program in New Jersey, are mandatory. 

Receiving Site Requirements

  1. Official Map: TDR Certificates proposed for use on a receiving site shall originate only from a Sending Area identified on the [name of local government] Official Transfer of Development Rights Map.
  2. Pre-Application Meeting:  Prior to making an application to purchase or use TDRs, an owner of record of a receiving site or their representative shall meet with [name of local government agency] to discuss:
    1. Program requirements;
    2. Availability of TDRs;
    3. Potential density increase with the use of TDRs for the specific receiving site; and
    4. Zoning and site development requirements for the receiving site.
  3. Application to Use Transferable Development Rights:  An application for use of transferable development rights on a property in a Receiving Area shall be submitted in conjunction with an application for a development permit. In addition to the information required for the development permit, the following shall be submitted:
    1. Affidavit of intent to transfer development rights to the receiving property;
    2. Certified copy of the Transfer of Development Rights Certificate for the sending site; and
    3. Certified copy of the recorded Declaration of Restriction of Development and Easement.
  4. Use of TDRs Voluntary: An owner of record in a Receiving Area choosing not to participate in the TDR Program shall retain the option to develop the property as provided by the property’s existing zone district and applicable requirements of this code.

Mapping Receiving Areas: Mapping the receiving areas provides assurance to property owners and is often done, but not always. Boulder County, for example, does not map TDR receiving areas so as to influence land values and encourage speculation. Property owners are given flexibility to propose their land as a receiving site and show it meets the criteria for approval. Surrounding property owners and the public are given the chance to comment on proposed receiving areas.

Monitoring TDR Certificates

The [name of local government] Planning Department Director or designee shall be responsible for maintaining permanent records of all TDR Certificates issued, easements recorded, and development rights transferred to receiving sites or purchased and held by a conservation organization or otherwise extinguished. An annual summary of TDR Certificates issued shall be prepared by the Planning Department and submitted to the [name of local governing body] for information.

TDR Bank (Optional)

A TDR bank is not a requirement for a TDR program to be successful but can be a useful tool for implementing the program and ensuring effective long-term, consistent program administration. A TDR bank is a freestanding entity that may be run by the local jurisdiction or by a participating partner organization such as a trust or other nonprofit. It is intended to help bridge the gap between sellers and buyers of TDRs, stabilize TDR prices, and market the TDR program. TDR banks also can be authorized to buy and sell TDRs, as well as buy and hold development rights for future acquisition. Proceeds from the sale of “banked” TDRs may be used to buy TDRs in key areas to further the goals of the program. King County, Washington, has a successful TDR program with an active TDR bank. See link in tool profile.

An example of a purpose statement for a TDR bank is below. Typically, an ordinance creating a TDR bank also details who administers the bank, funding mechanisms for the bank, duties and authority of the bank, procedures for sale and purchase of TDRs, and monitoring and reporting of transactions.

  • Purpose:  The TDR bank is intended to facilitate the implementation of the TDR Program and the purchase and sale of transferable development rights as allowed in this section. The TDR bank may acquire development rights from Sending Areas and sell development rights for use in Receiving Areas as designated on the Official Transferable Development Rights Map. 

Monitoring TDR Certificates: Tracking development rights severed from a sending site is critical to a TDR program’s success. The details of the tracking system do not need to be in the ordinance, but requiring it is a critical part of the program and identifying who is responsible ensures it will be done. Planners will need to consult the records when reviewing applications for development in sending and receiving areas.

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