TRANSFER OF DEVELOPMENT RIGHTS

Transcription

1 Photo by Leah Bray CONSERVATION STRATEGY FOR THE MISSISSIPPI GULF COAST TRANSFER OF DEVELOPMENT RIGHTS FEASIBILITY STUDY November 2011

2 CONSERVATION STRATEGY FOR THE MISSISSIPPI GULF COAST This report is funded with qualified outer continental shelf oil and gas revenues by the Coastal Impact Assistance Program, United States Fish and Wildlife Service, U.S. Department of the Interior through a grant award to the Mississippi Department of Marine Resources.

3 TABLE OF CONTENTS 1 INTRODUCTION TO TRANFER OF DEVELOMENT RIGHTS Fundamental Concepts TDR Terms Conservation Easements How Transfer of Development Right Works QUESTIONS BEFORE SETTING UP A TDR PROGRAM What Land Should Be Included In Sending Areas? How Much Development Can Be Transferred? Should Baseline Zoning in Sending Areas Be Changed Should Partial Sale of TDRs Be Allowed? Should Sale of TDRs be Mandatory? Should Receiving Areas Be in Partially Developed Ares or in Underdeveloped Areas? Should Baseline Zoning in Receiving Areas Be Changed? Can Developers Obtain Density Bonuses Without Purchasing TDRs Should Use of TDRs Be Allowed by Right? Should the Local Government Participate in the TDR Market? MOTIVATIONS AND BARRIERS IN TRANSFER OF DEVELOPMENT RIGHTS Lack of Zoning Reasons to Support TDR Higher Density, Higher Costs, and Reasons to Tolerate Them The Need for Restrictions and Enforcement Equity and Constitutionality EXISTING TDR PROGRAMS Selection of Program to Profile Program Not Profiled Tahoe Regional Planning Agency CONSERVATION STRATEGY FOR THE MISSISSIPPI GULF COAST i

4 5 FEASIBILITY OF TDR IN THE MISSISSIPPI COASTAL REGION Size of Government Relative Importance of Preservation and Development Housing Density and Cost Other Ways to Increase Development Density ALTERNATIVES TO TRANSFER OF DEVELOPMENT RIGHTS Conventional Zoning Purchase of Development Rights Density Fees Open Space Impact Fee Donation of Conservation Easements Federal Tax Benefits Mississippi Tax Benefits Pluses and Minuses Noncontiguous Planned Unit Taxation Based on Use Value Rather than Market Value CONSERVATION STRATEGY FOR THE MISSISSIPPI GULF COAST ii

5 1 INTRODUCTION TO TRANSFER OF DEVELOPMENT RIGHTS Conservation Lands, it is an opportune time to explore TDR in Mississippi. Transfer of development rights (TDR) is a conservation tool that the Land Trust for the Mississippi Coastal Plain (LTMCP) has long regarded as having potential to advance conservation in the region. This Conservation Legacy report is a feasibility study and analysis of the use of TDR in Mississippi. As the LTMCP moves toward a more pointed strategy for conservation, this component of the project provides a resource and starting point for discussion and possible action on the introduction to Mississippi of an innovative conservation tool. TDR is one of many approaches that have been used to preserve land in its natural or traditional state. TDR is intended to preserve land without substantial investment of public funds and without financial loss to the landowner. TDR has also been used to preserve historic structures, but this report focuses on the use of TDR to preserve natural land. The Map of Potential Conservation Lands developed as part of this program identified areas in the six county coastal region of Mississippi that can be targeted as top priorities for conservation. TDR is a conservation tool that functions by transferring development from areas that are suitable for conservation to areas that are suitable for development, making TDR a program that could be readily informed by an analysis such as that which was conducted in the Conservation Legacy project. Knowing where to build and where to conserve is the fundamental first step in establishing a TDR program, and now that this information has begun through the Map of Potential 1.1 Fundamental Concepts TDR programs give private landowners an option they would not otherwise have: the option to sell their development rights without selling their land. When development rights are sold, they are transferred from the seller s land to the buyer s land. In a typical TDR program, the sellers retains title to their land and can continue living on it and using it as before, but their right to develop it is reduced or extinguished. In Mississippi and the majority of other states, the only powers local governments have are the powers explicitly granted to them by the state government. TDR cannot be implemented until state legislation authorizes it. Legislation that creates an option that would not otherwise exist is called enabling legislation. Once state enabling legislation is in place, local governments may create TDR programs by ordinance. In this report, local refers to both counties and municipalities TDR Terms Transferable development rights are called TDRs. TDR programs allow landowners in areas targeted for preservation to sell development rights to other landowners typically developers in areas that can accommodate development. Common terms used in describing TDR programs include the following: Sending area The area from which TDRs may be transferred (sold). The sending area is the area targeted for preservation. TDR allocation rate The number of TDRs granted to landowners in the sending area, CONSERVATION STRATEGY FOR THE MISSISSIPPI GULF COAST 1

6 expressed in relation to acreage (for example, 1 TDR per 5 acres) Receiving area The area in which purchased TDRs may be used to increase development density. Receiving areas should be areas where relatively dense development is appropriate and can be accommodated. Baseline zoning The maximum density allowed in the receiving area without purchasing TDRs. Purchasing TDRs allows the purchaser to develop a site in the receiving area at greater density than the baseline zoning allows. Baseline zoning may also refer to the amount of development allowed in the sending area, which is often less than the amount of development that can be transferred to the receiving area. trust to restrict development of the landowner s property. The agreement becomes part of the chain of title of the land, and runs with the land. This means the restriction on development passes to the new owner when the land is sold. For this reason, conservation easements are sometimes called deed restrictions. In a TDR program, the TDR ordinance could require that a landowner who sells TDRs enter into a conservation easement agreement with the county or municipality, or with a land trust, referred to as the easement holder. Density bonus The increase in development density that can be obtained in the receiving area by purchasing TDRs Conservation easements generally do not provide for public access to the property. TDR is primarily a program to preserve land not to provide additional recreational opportunities to the public. However, the easement holder must have sufficient access to the property to monitor the landowner s compliance with the terms of the easement. A TDR program cannot work unless developers need to purchase TDRs to build at the density that maximizes the developers profit. In the receiving area, a baseline density must be established and enforced that is lower than the density that maximizes profit. This gives developers an incentive to purchase TDRs to increase density to the most profitable level. Baseline density is normally established and enforced through zoning. As a practical matter, a zoning ordinance is a prerequisite to TDR. Conservation easements do not remove all possibility of development. Conservation easements and other forms of deed restrictions may be extinguished by eminent domain if the public value of a proposed project is deemed greater than the value of preserving the restricted property. For example, if in the future it is considered essential to build a road through deed restricted land, the deed restrictions can be modified to the extent necessary to build the road Conservation Easements Selling TDRs does not transfer title to land, but results in a legal restriction on development of the seller s land, usually in the form of a conservation easement. A conservation easement is an agreement between a landowner and a government agency or land 1.2 How Transfer of Development Rights Works The first step in implementing TDR is enactment of state enabling legislation authorizing local governments to create TDR programs. Because TDR programs are intended to alter land use patterns, the enabling legislation should also CONSERVATION STRATEGY FOR THE MISSISSIPPI GULF COAST 2

7 require that county or municipal comprehensive plans be amended to incorporate TDR before TDR is implemented. the parcel s development constraints. Local ordinances create TDR programs. A TDR ordinance should establish the following: Boundaries of sending areas to be preserved, or criteria for qualifying as a sending area Boundaries of receiving areas to receive the development transferred from the sending areas, or criteria for qualifying as a receiving area Any changes to be made in the baseline zoning of the sending and receiving areas How many TDRs a landowner in a sending area is permitted to sell, commonly referred to as the TDR allocation rate, and usually expressed as one TDR per a specified number of acres. The allocation rate for a specific parcel may be adjusted based on The additional density above baseline zoning that will be allowed on receiving parcels, commonly called the density bonus The number of TDRs required to build an additional unit on a receiving parcel To give developers an incentive to purchase development rights, the value of the density bonus must be greater than the price of the TDRs required to qualify for the density bonus. For a TDR program to work, landowners in sending areas must be willing and able to sell development rights, and developers in receiving areas must be willing and able to buy those rights. The price at which development rights are sold is not established in the TDR ordinance, however. Rather, the price goes up and down with the rest of the real estate market. CONSERVATION STRATEGY FOR THE MISSISSIPPI GULF COAST 3

8 2 QUESTIONS BEFORE SETTING UP A TDR PROGRAM Many questions should be considered in deciding whether to establish a TDR program, and in designing the program if TDR seems advantageous. This section addresses some of those questions. 2.1 What Land Should Be Included in Sending Areas? It might seem that sending areas should include the private land with the greatest environmental value. However, some private land with high environmental value is unlikely to be developed with or without TDR. Development of high quality coastal wetlands, floodways, and remote areas may be unlikely. Allowing landowners to sell development rights from land where development is unlikely could exhaust the development capacity of the receiving area without preserving land that would otherwise have been developed. This approach could cause more development to occur than would have occurred in the absence of the TDR program. A local government may want to confine sending areas to land where development is reasonably likely. On the other hand, laws protecting privately owned environmentally sensitive land generally allow some development. Laws can also change, and even a temporary change in the law could result in development that has a permanent effect on the land. In addition, remote land often becomes less remote over time. Transferring development rights from remote and environmentally sensitive land makes its preservation more certain. How much land to include in sending areas depends in part on the primary goal of the TDR program. If the goal is to preserve pockets of open space in developing rural areas, a large sending area may be appropriate. The goal of preserving pockets of open space would be served by spreading the demand for TDRs over a large area. However, if the primary goal of the program is to preserve a specific natural area, it may be better to limit the sending area to the area to be preserved. Concentrating the demand for TDRs in a relatively small area increases the likelihood that significant contiguous tracts will be preserved. 2.2 How Much Development Can Be Transferred? With respect to sending areas, the ideal is to grant just enough TDRs to induce landowners to sell the TDRs rather than developing the land. If too few TDRs are granted, landowners will be able to make more money by developing the land than by selling the TDRs. If too many TDRs are granted, less land will be preserved before the demand for TDRs in the receiving areas is met. Existing TDR programs have taken a wide range of approaches to TDR allocation. The majority of TDR programs base the allocation solely on gross acreage. Some programs base the allocation on acreage, but exclude wetland acreage. Chesterfield Township, New Jersey, bases TDR allocation on the number of homes that could realistically be built on the property, based on the suitability of the soils for septic systems. Another possibility is to allocate TDRs based on development pressure, with a higher allocation rate where development pressure is higher. Such an allocation system could be based on distance from the urban center from which development is spreading. San Luis Obispo CONSERVATION STRATEGY FOR THE MISSISSIPPI GULF COAST 4

9 County, California, allocates TDRs based on site specific assessments of market value, which reflect development pressure. This approach is expensive; a less costly alternative would be to allocate TDRs based on property tax assessments. The value of TDRs depends on the demand for housing in the receiving area, and is not affected by the value of land in the sending area. If TDRs are allocated to sending area properties based on acreage alone, landowners with properties of equal size will receive the same number of TDRs even if some of the properties are much more valuable than others. Because all TDRs have the same market value, owners of low value properties will have more incentive to sell TDRs than owners of high value properties, and the preserved land will have relatively low market value. This is not necessarily bad, because properties with low market value, such as wetlands, may have high environmental value. On the other hand, a land preservation program should generally aim to preserve a variety of land types, and wetlands are relatively inexpensive to acquire using tools other than TDR. Development cannot be transferred unless it has a place to be transferred to. TDR is limited not only by the willingness of landowners in sending areas to sell development rights, but by the availability of receiving areas where developers can make money by using purchased TDRs. If such receiving areas are lacking, landowners in sending areas will not be able to sell their development rights at a satisfactory price, and will be pushed toward developing their land. From a developer s point of view, each property has an optimum density. Below that density, the higher market value of each unit is not enough to make up for the low number of units. Above the optimum density, the larger number of units is not enough to make up for the lower market value of each unit. Developers will purchase TDRs to raise density toward the optimum level, but not to raise density above the optimum level. 2.3 Should Baseline Zoning in Sending Areas Be Changed? The local government may keep baseline zoning in sending areas the same as it was without TDR. If zoning is not changed, the TDR ordinance normally grants transferable development rights corresponding to the zoning. For example, if zoning in a sending area allows one single family home per acre on a 40 acre parcel and the TDR allocation rate is one TDR per acre, the right to build 40 single family homes could be transferred to a receiving area. This approach may not create an economic incentive to transfer development rights, because the landowner in the sending area may be able to make as much money developing 40 homes on the land as by selling 40 TDRs to a developer in a receiving area. Another option is to change the baseline zoning of the sending area to reduce the allowable density, but grant TDRs to sending area landowners that correspond to the original density. For example, the 40 acre parcel in the previous paragraph could be downzoned from one unit per acre to one unit per 5 acres, but the landowner could be granted one TDR per acre. This approach is likely to create an economic incentive to transfer development rights, because the landowner could probably not make as much money developing 8 homes on her land as by selling 40 TDRs to a developer in a receiving area. CONSERVATION STRATEGY FOR THE MISSISSIPPI GULF COAST 5

10 2.4 Should Partial Sale of TDRs Be Allowed? because a principal purpose of each program is to protect a sole source aquifer. Some TDR programs prohibit development of an entire parcel when the first TDR is sold. This approach aims at preserving tracts of completely undeveloped land. Other TDR programs allow landowners to sell a portion of the TDRs allocated to their property and retain the right to develop the property at low density or very low density. This approach reduces the density of development in the sending area, but is less likely to preserve large tracts of completely undeveloped land. In Montgomery County, Maryland, sending area landowners are granted 1 TDR per 5 acres and may sell a portion of them and keep the rest. The sending area is zoned at 1 unit per 25 acres. This has encouraged landowners to sell four of every five TDRs, then sell their land to developers of 25 acre estates. Median incomes in Montgomery County are among the highest in the United States, and the demand for 25 acre estates is strong. Twenty acres of each 25 acre estate are counted as preserved open space. An alternative to creating 25 acre estates is to cluster the allowable homes in a portion of a large property and leave the rest entirely undeveloped. This allows farming to continue on most of the property, but decreases the total market value of the homes. 2.5 Should Sale of TDRs be Mandatory? Landowners in sending areas can be required to sell their development rights. This is similar to using the power of eminent domain to force landowners to sell their land to serve a public purpose. The state imposed TDR programs in the New Jersey Pinelands and the Long Island Pine Barrens are mandatory programs, in part Most TDR programs are voluntary. The primary advantage of making participation in TDR mandatory is that more land is likely to be preserved. The primary disadvantage is that landowners in sending areas are deprived of the opportunity to develop their land. Making participation mandatory is likely to generate opposition to a TDR program. 2.6 Should Receiving Areas Be in Partially Developed Areas or in Undeveloped Areas? TDR programs cannot work without increasing development density somewhere. The added development must be directed to partially developed areas, undeveloped areas, or a combination of the two. Designating partially developed areas as receiving areas could cause these areas to become densely developed, because parcels that are currently undeveloped could be developed at greater than the density allowed by baseline zoning. On the other hand, designating undeveloped areas as receiving areas could encourage dense development in outlying areas. This may be inappropriate because of distance to services, lack of infrastructure, or aesthetic and environmental impact. In existing TDR programs, most undeveloped receiving areas are relatively close to developed areas, services, and infrastructure. 2.7 Should Baseline Zoning in Receiving Areas Be Changed? If baseline zoning is not changed in receiving areas, TDR could increase density above the density allowed by baseline zoning. This means receiving areas could be developed to a density greater than was contemplated when the zoning ordinance was developed. Increased CONSERVATION STRATEGY FOR THE MISSISSIPPI GULF COAST 6

11 demand for services in receiving areas could exceed capacity. If the density allowed under baseline zoning is decreased in receiving areas, TDR could bring it back to the previous level rather than raising it above the previous level. This would make it less likely that the demand for services in the receiving area would exceed capacity. As the density of a development increases, the market value of each unit decreases. Up to a point, however, the total market value of the units increases faster than the total cost to build them. For the developer, the optimum density is the density for which the difference between total market value and total cost is greatest. Past that point, each additional unit adds more to total cost than it adds to total market value, so the developer has no incentive to add more units. TDR will not work unless developers in the receiving area need to purchase TDRs to bring development density up to the optimum level. Therefore, baseline density in receiving areas must be set below the optimum density. If baseline density is close to or above the optimum density, there will be no market demand for TDRs. 2.8 Can Developers Obtain Density Bonuses Without Purchasing TDRs? A TDR program cannot work if developers in receiving areas have a cheaper or more profitable way to increase development density. If local government is sufficiently lenient, developers may be able to have their land rezoned for less than the cost of TDRs. On the Mississippi Gulf Coast, rezoning seems to be relatively easy to obtain in undeveloped areas, but more difficult in developed areas, where existing residents resist increases in density. Many zoning ordinances allow a larger number of homes to be built on a parcel if the homes are clustered in part of the parcel and the remainder is preserved as open space. This type of development is often called a planned unit development (PUD). Developers may prefer clustering to TDR. Some zoning ordinances allow greater density if additional infrastructure is provided within a development. For example, the Harrison County Zoning Ordinance allows a reduction in lot size from 43,560 square feet (1 acre) to 20,000 square feet in the R 1, R 2, and R 3 zones if a water system is provided, and a further reduction to 6,000 square feet if curbs and gutters, underground storm drainage, and sewage collection and disposal are also provided (Section 416). 2.9 Should Use of TDRs Be Allowed by Right? A TDR ordinance may require a public hearing and/or local government approval before TDRs can be used to increase development density. If no public hearing or government approval is required prior to use of TDRs, use of TDRs is said to be by right. The overall development is still subject to normal government review, but no special permission is required to use TDRs in the manner prescribed in the zoning ordinance. Requiring a hearing and government approval gives residents of receiving areas a way to oppose development at relatively high density in their neighborhoods, but adds to the cost of using TDRs for both the developer and the local government, and also adds to the uncertainty of the development process. This reduces the price developers are willing to pay for TDRs, and therefore reduces the willingness of landowners in sending areas to sell TDRs. This effect could CONSERVATION STRATEGY FOR THE MISSISSIPPI GULF COAST 7

12 be counteracted by increasing the density bonus granted to purchasers of TDRs, but this could increase public resistance, making TDRs still more difficult to use. Increasing the density bonus also reduces the amount of land in the sending area that can be preserved before the development capacity of the receiving area is exhausted. The State of Georgia enacted TDR legislation in 1998 that required local governments to hold a public hearing every time TDRs were used (Dorfman et al. 2005). Local governments apparently felt this burden was too great, and few TDR programs were established. The TDR legislation was amended in 2003 to remove the public hearing requirement Should the Local Government Participate in the TDR Market? In general, TDR programs are in sync with the real estate market. When the market is weak, less development occurs and the threat to land targeted for preservation is relatively weak. The value of TDRs is relatively low, reflecting the state of the market. When the market is strong, more development occurs and the threat to land targeted for preservation is greater. The demand for TDRs in receiving areas is relatively high, so the value of TDRs is greater, giving landowners in sending areas an incentive to sell their TDRs. In general, more land is permanently preserved through TDR when the threat to land targeted for preservation is greater. The local government may wish to participate in the TDR market by establishing a TDR bank. In general, a TDR bank seeks to buy TDRs when the price is low and either sell them when the price is high or retire them. A TDR bank can strengthen the TDR market when the overall real estate market is weak, which benefits landowners trying to sell their TDRs in a weak market. In general, however, TDR banks try to avoid influencing the TDR market. CONSERVATION STRATEGY FOR THE MISSISSIPPI GULF COAST 8

13 3.3 Higher Density, Higher Cost, and Reasons to Tolerate Them 3 MOTIVATIONS AND BARRIERS IN TRANSFER OF DEVELOPMENT RIGHTS 3.1 Lack of Zoning TDR programs are built on zoning, but many counties in Mississippi do not have zoning. Within the coastal region, zoning ordinances are in place in the three counties directly on the coast Hancock, Harrison, and Jackson as well as in the cities in those counties. The next tier of counties north of the Gulf Pearl River, Stone, and George do not have county zoning, although the City of Picayune in Pearl River County and the City of Wiggins in Stone County have zoning. 3.2 Reasons to Support TDR The essence of TDR is concentrating development in certain areas (receiving areas) to avoid development in others (sending areas). Because this pattern of development runs counter to the general desire of people in the United States to spread out, it will not be accepted unless it has strong, widespread support for other reasons. Reasons to support TDR include the following: An aesthetic preference for natural or agricultural land A desire to preserve landscapes and patterns of activity to which one has become accustomed A desire to preserve nature A need to protect drinking water supplies A desire to make new residents pay for open space preservation, rather than existing residents In the receiving areas, TDR generally must either increase housing density or increase housing cost. If receiving areas are not downzoned for the TDR program, use of TDRs will increase density in the receiving areas. If receiving areas are downzoned so that TDRs are required to build at the same density allowed prior to the TDR program, the cost of building homes in the receiving area will increase. This is because the cost of purchasing TDRs is simply added to the cost of development prior to TDR. Because TDR must increase density or cost, or both, TDR tends to work better in places where people are willing to live at higher density or where people with money want to live or where both of these things are true. Since personal automobiles became affordable in the United States, people have been spreading out. Although few Americans prefer high density housing, many put up with it to reduce housing cost or to reduce travel time especially the time required to reach higher paying jobs. Where the cost of low density housing is relatively low and travel is relatively rapid, as in the Mississippi Coastal Region, the market for high density housing is usually weak. TDR is more difficult to implement when the demand for high density housing is weak. Even in areas where the demand for high density housing is generally weak, demand may be strong for three categories of high density housing: affordable housing, senior housing, and housing in particularly desirable spots, such as along the shores of water bodies. Developers of affordable housing cannot afford to pay much to increase density, because the units must remain affordable. Some TDR programs allow affordable units to be added to CONSERVATION STRATEGY FOR THE MISSISSIPPI GULF COAST 9

14 developments in receiving areas without purchasing additional TDRs. In comparison to younger people, many senior citizens like to live close to each other and to public and commercial services, and do not want to have property to take care of. For these reasons, the density of senior developments is relatively high. Senior housing or mixed use developments sometimes serve as receiving sites for TDRs. The more seniors are willing and able to pay to live in a senior development, the more the developer can pay for TDRs, and the better the development functions as a receiving site. Affordable senior housing developments do not make good receiving sites. In general, many people want to live on the coast, and many are willing to live at high density to reduce the cost of living on the coast. In Florida, high density developments near the coast serve as receiving sites for TDRs from the interior. Several differences between Florida and Mississippi make this less likely in Mississippi. First, although Florida is frequently hit by hurricanes, Florida does not experience storm surges of the magnitude experienced on the Mississippi coast. People have been moving away from the Mississippi coast to avoid storm surges. Second, the Florida Gulf Coast has developable barrier islands with roads connecting to the mainland. Third, the Mississippi coast is not as popular with retirees as the Florida coast. 3.4 The Need for Restrictions and Enforcement To make TDR work, zoning in sending areas must be restrictive and local officials must consistently enforce the restriction. Experience with TDR indicates that sending areas generally must be zoned no denser than 1 unit per 5 acres, and much more restrictive zoning may be necessary to preserve substantial quantities of land. Whatever the zoning, local officials must not grant zoning changes or variances, because this could cause the development value of a sending area property to equal or exceed the value of the TDRs allocated to that property. If development value equals or exceeds the value of the TDRs, the sending area landowner has no incentive to sell TDRs, and no land will be preserved. TDR also depends on strong resistance by local officials to spot rezoning in receiving areas. A developer will not purchase TDRs if the land to be developed can be rezoned to a higher density. In undeveloped areas of the coastal Mississippi counties, resistance to rezoning does not seem strong enough to support a TDR program. In developed areas, current residents resist rezoning, but they do it to limit development rather than to pressure developers into purchasing TDRs. Residents of developed areas are likely to resist use of TDRs in their neighborhoods. 3.5 Equity and Constitutionality As explained in Section 2.7, developers will not purchase TDRs to increase density above the optimum density for the local housing market. This means the baseline density in receiving areas must be below the optimum market density, so developers must purchase TDRs to reach or approach the optimum density. In a successful TDR program, therefore, new, relatively dense development pays for land preservation. It has been argued that this is fundamentally unfair and potentially unconstitutional (Bruening 2008). Low density development not high density development is primarily responsible for consuming open space. High density CONSERVATION STRATEGY FOR THE MISSISSIPPI GULF COAST 10

15 development is a potential solution to residential sprawl, not its cause, and yet TDR programs have the effect of making high density development pay to mitigate the effects of sprawl. Arguably, TDR programs impose a tax or fee on new high density development for the purpose of preserving open space. A court could rule that the tax or fee is not reasonably related to the impacts of the activity on which it is imposed, and is therefore unconstitutional. The strongest counterarguments are that developers can avoid the fee by building at the baseline density, and home buyers can go elsewhere rather than pay a higher price to compensate a developer for the cost of TDRs. This issue has not been resolved in the courts. A more familiar issue is whether a TDR program results in a taking of land in the sending area without just compensation. This issue has not been resolved in the federal courts, but two general statements can be made. First, courts are unlikely to find that a taking has occurred if participation by sending area landowners is voluntary and minimal development of the sending area is allowed, such as 1 unit per 30 acres. Second, federal courts have not ruled one way or the other on the question of whether TDRs can compensate for a complete prohibition on development in the sending area. CONSERVATION STRATEGY FOR THE MISSISSIPPI GULF COAST 11

16 4.1 Selection of Programs to Profile 4 EXISTING TDR PROGRAMS This section contains detailed information on 15 existing TDR programs. The program profiles in this section are based primarily on the TDR literature, which generally focuses on the active, successful programs. Therefore, the programs in this section are not a representative sample of TDR programs in the United States. The purpose of this section is to provide specific examples of how TDR programs work and to describe the context in which they work. As a group, the profiles in this section demonstrate the factors common to all successful TDR programs: Development in the sending area is strictly limited. The demand for increased density in the receiving area is strong. It is difficult to increase development density in the receiving area without purchasing TDRs. Other factors play an important part in individual programs, as illustrated by the profiles, but these appear to be the core requirements for a successful TDR program. Most TDR programs are not as successful as most of the programs profiled in this section. In 2003, Rick Pruetz identified 111 TDR programs designed for land preservation. Of the 111 programs, 41 percent had preserved less than 5 acres of land, 69 percent had preserved less than 100 acres, and 91 percent all but 10 of the programs had preserved less than 1,000 acres (Bruening 2008). By 2008, however, Pruetz and Standridge had identified 20 programs that had preserved more than 2,000 acres. The programs profiled in this section include many of those 20 programs. From among the programs for which sufficient information is available, the following types of programs were chosen for profiling: Programs that are considered particularly successful Programs established for different types of jurisdictions, including municipalities, counties, and regions Programs that represent different parts of the country, including the Gulf Coast Programs that are not too complex to be readily understood Program in counties with characteristics in common with the Mississippi Coastal Region counties The metropolitan Atlanta TDR program and the New Jersey Highlands TDR program were not profiled because they were established in 2008 and have not generated a sufficient record of performance to allow meaningful evaluation. The Atlanta program is probably more relevant to Mississippi, and would be appropriate for future monitoring and evaluation. The Tahoe Regional Planning Agency TDR progam was not profiled because it is too complex to be captured in a summary of reasonable length. However, information on one aspect of the Tahoe program is provided in Section 4.2 below. Most areas where TDR has succeeded have median incomes above the national median. The six Mississippi Coastal Region counties have median household incomes from 7 to 25 percent below the national median and median family incomes 11 to 27 percent below the national median. In Payette County, Idaho, median household income is 13.5 percent CONSERVATION STRATEGY FOR THE MISSISSIPPI GULF COAST 12

17 below the national median and median family income is 19 percent below the national median. This is the primary reason the Payette County program was profiled. The Bay County, Florida, TDR program was not established until 2006 and has not been successful so far. A profile of the Bay County program is included because Bay County has much in common with the Mississippi Gulf Coast counties. Like the Mississippi Gulf Coast counties, it is on the northern Gulf Coast, it has median incomes significantly below the national medians, and has similar cultural and regional characteristics 4.2 Program Not Profiled Tahoe Regional Planning Agency The Tahoe Regional Planning Agency (TRPA) covers six counties in California and Nevada around Lake Tahoe. TRPA has an active TDR program that is too complex for use as an example in this report. This section describes one aspect of the TRPA program that is particularly worthy of note. The TRPA TDR program is designed to transfer development from land with relatively low development capacity and relatively high environmental sensitivity to land with relatively high development capacity and relatively low environmental sensitivity. Based on soil characteristics, the Tahoe region has been mapped in land capability districts numbered 1 through 7. This is a similar concept as the Map of Potential Conservation lands developed by the Land Trust for the Mississippi Coastal Plain. Higher numbers correspond to soils more suitable for development. TRPA has also established an Individual Parcel Evaluation System (IPES) under which each parcel proposed as a sending site or a receiving site for TDRs is evaluated and given an IPES score. The following scoring criteria are used: Resistance to erosion Capacity to retard stormwater runoff Accessibility Potential for development without disturbing streams Potential for development without contributing nutrients and sediments to Lake Tahoe Revegetation potential Potential for development without installation of stormwater management improvements Distance from Lake Tahoe Submission of water quality improvement plan by owner In general, development may be transferred from land with low soil suitability and a low IPES score to land with high soil suitability and a high IPES score. (TRPA Code of Ordinances, chapters 2, 34, and 37, tabid=172) The TRPA regulations specify procedures for assigning a numerical score to each site for each criterion. The IPES criteria are designed to reflect both the environmental sensitivity of the site and the potential for development to have negative effects downstream. Note that greater distance from Lake Tahoe is considered positive with respect to development. The IPES criteria used by TRPA are appropriate for the Tahoe Basin, which has steep slopes and CONSERVATION STRATEGY FOR THE MISSISSIPPI GULF COAST 13

18 little precipitation during the warm months. If this approach to selecting sending and receiving areas were used in the Mississippi Coastal Region, the parcel evaluation criteria would be different. 4.3 TDR Program Profiles The same table was used to profile each program. An annotation of the table precedes the program profiles. The annotation explains the significance of each specific item in the table. The annotation begins on the second following page. Profiles of the following TDR programs are provided: Bay County, Florida Boulder County, Colorado Calvert County, Maryland Chesterfield Township, New Jersey Collier County, Florida King County, Washington Long Island Central Pine Barrens, New York Lumberton Township, New Jersey Montgomery County, Maryland New Jersey Pinelands Palm Beach County, Florida Payette County, Idaho Pitkin County, Colorado Sarasota County, Florida St. Mary s County, Maryland CONSERVATION STRATEGY FOR THE MISSISSIPPI GULF COAST 14

19 Explanation of Table Used to Profile TDR Programs BACKGROUND Government that created program This item was included primarily to clarify which government created each regional TDR program. Town, county, or other area covered This item was also included primarily for regional programs. For municipal or county programs, this is generally the entire municipality or county, but may be a smaller area. Location This item was included primarily to identify characteristics pertinent to housing demand and open space in the program area. Size (square miles) This helps put the acreage preserved through TDR in perspective. Population Median household income These are measures of the resources available in the area served by the TDR program. Median family income DESCRIPTION OF TDR PROGRAM Year TDR program established This helps put the acreage preserved through TDR in perspective. Purpose of TDR program The general purpose of all of the profiled TDR programs is to preserve undeveloped land. The primary purpose of this item is to indicate whether preserving farmland is a principal purpose of the program. Acres in current sending area This provides examples of the magnitude of sending areas and facilitates comparison of the sizes of sending areas and receiving areas. Acres preserved as of [date] This indicates how much the TDR program has accomplished. Description of sending area (e.g., farmland, forest, mountainside) This indicates the types of land targeted for preservation. Zoning of sending area before TDR (acres/unit) Together with the next item, this item is intended to indicate if zoning of the sending area was made more restrictive when the TDR program was established. This information is often not available. Zoning of sending area under TDR (acres/unit) This indicates how much development is allowed in the sending area. TDRs granted to sending area landowners (units/acre) This indicates how many development rights landowners in the sending area can sell. This is often greater than the number of development rights the landowner could exercise in the sending area. CONSERVATION STRATEGY FOR THE MISSISSIPPI GULF COAST 15

20 Acres in receiving area This provides examples of the magnitude of receiving areas and facilitates comparison of the sizes of receiving areas and sending areas. Description of receiving area (e.g., undeveloped, partially developed, town center) This indicates the types of areas to which development is transferred. Nature and magnitude of density bonus allowed in receiving area This is the additional development density granted to developers who purchase TDRs. The bonus is usually expressed in units per acre. Was receiving area zoning changed for TDR program? If so, how? The purpose of this item is to indicate whether zoning in the receiving area was changed to give developers additional incentive to purchase TDRs. This information is often not available. May purchased TDRs be used by right? By right means approval of a government body such as a planning board is not required. If use of TDRs is by right, the planning board will still have to approve the overall development plan, but not the density bonus provided by the TDRs. Does government participate in the TDR market? If so, how. The primary purpose of this item is to indicate whether government buys and sells TDRs. Problems Encountered, Solutions Implemented, and Lessons Learned Other Significant Information Sources CONSERVATION STRATEGY FOR THE MISSISSIPPI GULF COAST 16

21 Bay County, Florida BACKGROUND Government that created program Bay County, Florida Town, county, or other area covered Bay County, Florida Location Bay County is on the Gulf of Mexico in the Florida Panhandle between Mobile, Alabama, and Tallahassee, Florida. The county surrounds a multifaceted water body connected to the Gulf by a channel 1,400 feet wide. Size (square miles) 661,300, including 172,500 acres of water Population in ,852 Median household income in 2009 (estimated) $46,240 (U.S. $51,425) Median family income in 2009 (estimated) $54,774 (U.S. $62,363) DESCRIPTION OF TDR PROGRAM Year TDR program established 2006 Purpose of TDR program To compensate landowners on a barrier island for rezoning that prohibited development Acres in current sending area and total acres targeted for preservation Roughly 60 Acres preserved None as of February 2010 Description of sending area (e.g., farmland, forest, mountainside) The sending area is a paper subdivision in the middle section of Shell Island, a barrier island consisting of sand and low vegetation. Shell Island separates the Gulf of Mexico from St. Andrews Bay and is part of unit P31 of the federal Coastal Barrier Resources System. The western section of Shell Island is in St. Andrews State Recreation Area and the eastern section is part of Tyndall Air Force Base, although it is undeveloped. The sending area is known as the Spanish Ante subdivision. It was platted with streets and approximately 300 lots. Most of the lots are 50 feet by 100 feet, but some of the bayfront lots are deeper, up to 280 feet. Only one home has been built, and no streets. CONSERVATION STRATEGY FOR THE MISSISSIPPI GULF COAST 17

22 Zoning of sending area before TDR Before 2004, sending area zoning allowed residential development. Zoning of sending area under TDR In 2004, the sending area was rezoned to public institutional, which only allows development on roads and does not allow residential development. The sending area has no roads. TDRs granted to sending area landowners Lots contiguous to other privately owned lots are granted up to 10 TDRs. Lots not contiguous to other privately owned lots are granted 5 TDRs. Two contiguous privately owned lots combined in one TDR transaction are granted 8 TDRs per lot. If more than two contiguous privately owned lots are combined in one TDR transaction, they are granted up to 10 TDRs per lot. These unusually high TDR allocations reflect the county s requirement that lots be deeded to the county once the development rights have been transferred. Acres in receiving area Roughly 50,000 Description of receiving area (e.g., undeveloped, partially developed, town center) Mixture of undeveloped and partially developed areas TDRs can be used to increase receiving site density by up to 10 dwelling units per acre over baseline zoning, but density increases must be consistent with the Bay County Comprehensive Plan and the Future Land Use map. Nature and magnitude of density bonus allowed in receiving area The TDRs from each lot of record in the sending area can be used to increase the maximum allowable building height in the receiving area by 20 feet or 50 percent of the baseline height, whichever is less. TDRs from multiple sending area lots can be used to increase building height by 70 feet or 50 percent of the baseline height, whichever is less. Was receiving area zoning changed for TDR program? If so, how? No May purchased TDRs be used by right? No, the Bay County Development Services Director must approve each application for use of TDRs based on numerous criteria, several of which involve judgment. Does government participate in the TDR market? If so, how. No CONSERVATION STRATEGY FOR THE MISSISSIPPI GULF COAST 18

23 PROBLEMS ENCOUNTERED, SOLUTIONS IMPLEMENTED, AND LESSONS LEARNED The real estate market weakened shortly after the TDR program was established, and there appears to be no demand for TDRs in the receiving areas. This means sending area landowners have not been able to sell their TDRs. Fourteen sending area landowners have sued to force the county to either purchase the sending area properties or allow them to be developed. The outcome of the lawsuit is uncertain. Other Significant Information None to report Sources Bay County, Florida, Comprehensive Plan. Bay County, Florida. Bay County Land Development Regulations, chapters 14 and toc.pdf Bay County, Florida, Bay County Zoning. Hobson, W., Transfer program little help for Shell Island landowners. News Herald, Panama City, Florida, February 23, John H. Chafee Coastal Barrier Resources System, Official CBRS Maps. St. Andrew Complex P31/P31P. LeafRef=OH%2d03%2eTIF&p_ID=259&View=%7bC341840A%2d1EDA%2d475A%2d9118%2d696D8352E499%7d& PageFirstRow=401 Pruetz, R. Beyond Takings and Givings. CONSERVATION STRATEGY FOR THE MISSISSIPPI GULF COAST 19

24 Boulder County TDR Program and Intergovernmental Agreements BACKGROUND Government that created program Boulder County Boulder County and Broomfield City and County, plus the part of the City of Longmont that is in Weld County. Town, county, or other area covered Location Cities within Boulder County that participate in the TDR program through intergovernmental agreements (IGAs) with Boulder County include the Cities of Boulder, Longmont, Lafayette, and Niwot. Broomfield, a city and county, also participates through an IGA with Boulder County. The area covered by the TDR program is in north central Colorado beginning approximately 15 miles northwest of Denver, south of Rocky Mountain National Park. Nearby rivers include the Colorado, Laramie, and South Platte. Boulder Creek, a tributary of the Colorado River, runs through the City of Boulder. Boulder County as a whole 480,640 acres City of Boulder 16,256 acres Size (acres) Longmont 13,952 acres Lafayette 5,760 acres Niwot 2,624 acres Broomfield 17,600 acres Boulder County 295,524 City of Boulder 98,737 Population in 2009 (estimated) Longmont 85,707 Lafayette 25,102 Niwot 4,051 Broomfield 52,882 Boulder County $65,040 (U.S. $51,425) City of Boulder $49,920 Median household income in 2009 (estimated) Longmont $57,397 Lafayette $65,319 Niwot $109,680 Broomfield =$76,240 CONSERVATION STRATEGY FOR THE MISSISSIPPI GULF COAST 20