Transferable Development Rights (TDR) as a source of funding for Historic and Environmental Protection
One of my earlier blogs discussed the challenges of funding regarding environmental protection and historic preservation. At a time when budget-cutting and austerity measures are having a profound impact on the ability of state and local governments to set aside funds beyond essential services, along with diminishing individual donations to non-profits, the issue of funding is more important than ever. With inadequate financing how can communities and non-profits achieve their desired goals of protecting both open space and vital historic resources?
One measure these entities may consider is a very creative model called Transferable Development Rights, better known by the acronym TDR. This post will examine the history of TDRs, followed by several examples highlighting how communities have implemented it and finally, how it could be used for historic preservation. With the imminent announcement of New Jersey’s Ten Most Endangered Places scheduled for Wednesday, May 22 on the front steps of the State House in Trenton, a program like the TDR could prove to be invaluable.
TDR is a land use regulation method which can potentially ensure that open space and historic preservation requirements can be met without causing financial hardship to landowners or impeding local development. More efficient and cost-effective than conventional zoning laws, TDR’s can help to reduce potential lawsuits regarding preservation efforts; minimizes the use of shrinking municipal funds for preservation; and still allows municipalities to increase its tax base without imperiling its preservation goals.
TDR was first introduced in New York City in 1916, allowing landowners to sell their unused air rights to adjacent property owners who had far-reaching and grandiose plans. This early implementation essentially paved the way for the dominant skyscraper landscape we see today. More recently, TDR works mainly by transferring all or part of the density potential of one tract of land (known as the sending site) to a separate parcel, or even to a parcel owned by someone else (referred to as the receiving site). The development rights then become a separate article of property, which can be sold to a property owner whose land is better suited for development in greater densities. Once the rights are sold, the landowner still retains the title and other rights to his/her land. These other rights allow for more farming, forestry and recreational purposes.
Several examples in New York will help illustrate how utilizing TDR programs can have significant economic, environmental and cultural benefits to the local community. In 2005, the Town of Clifton Park passed the Open Space Incentive Zoning provision which has the potential to include in the sending sites nature preserves, woodlands, watersheds and historic resources. In this way, the town was able to protect these treasures since developers were compelled to build in the receiving areas that contain greater densities.
In 1993, the Pine Barrens on Long Island were protected from development by the Pine Barrens Protection Act. Under the Act, a joint commission was created and given broad authority to oversee land-use regulations. As a direct result of the TDR program, 1000 acres were preserved as open space for outdoor recreation.
In order to better facilitate the exchange of credits between landowners, municipalities and developers, some regions, like the Highlands in New Jersey, have established a bank to help advance the goals of protection and preservation. With the passage of the Highlands Water Protection and Planning Act of 2004 (PDF) by the state legislature, a 15 member Highlands Council was charged with the implementation of a Master Plan. In 2008, the Council created the Highlands Development Credit Bank (HDCB) and is currently implementing the TDR program throughout the seven counties that make up the Highlands region. From Ringwood in the northern Highlands, once home to iron-ore production dating back to the 1760s and site of the Long Pond Ironworks, to the borough of Washington near the Delaware River, the utilization of TDRs is promoting plans to develop a thriving eco-tourism industry that encompasses historic preservation, environmental protection and organic food production.
With declining preservation funds—especially at the federal level—and the lack of permanent funding for open space acquisition at the state level—such as the Green Acres program in New Jersey—the prospect of tapping into the pecuniary benefits of a Transferable Development Rights program looms large as an indispensable tool for communities and non-profits alike.