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TRANSFERRING DENSITY AND DEVELOPMENT RIGHTS

TRANSFERRING DENSITY AND DEVELOPMENT RIGHTS. OVERVIEW. Creating an effective TDR Program Steps involved in setting up a TDR Program. AN EFFECTIVE TDR PROGRAM. Separates the development value of land from the residual or farm value of land Uses private sector funds to preserve land

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TRANSFERRING DENSITY AND DEVELOPMENT RIGHTS

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  1. TRANSFERRING DENSITY AND DEVELOPMENT RIGHTS

  2. OVERVIEW • Creating an effective TDR Program • Steps involved in setting up a TDR Program

  3. AN EFFECTIVE TDR PROGRAM • Separates the development value of land from the residual or farm value of land • Uses private sector funds to preserve land • Redirects growth to places more suited to growth • Helps protect critical farms and open space. • Low density zoning doesn’t preserve land!

  4. TDR PROGRAM • Establishing a TDR Program involves the following steps: • Designate Sending and Receiving Areas • Prepare a Market Study • Designate Transfer Ratios • Establish mechanisms for transferring development rights • Establish administrative procedures to track TDRs • Write implementing legislation

  5. SENDING AREAS • Sending Area Size • If Sending Area is too large, there will be insufficient Receiving Areas to use the TDRs. • If Sending Area is too small, Receiving Area developers may be discouraged from purchasing TDRs.

  6. RECEIVING AREAS • Receiving Area Location and Size • Adequately sized to create an active market • Must have development potential • Additional density must be compatible with neighborhood character • Demand for higher density development

  7. MARKET STUDY • Determines the value that TDRs will likely have, given local conditions and real estate markets • Helps to determine viability of the program • Gives direction for establishing Sending and Receiving Areas

  8. MARKET VALUE • Raw Land Value vs Lot Value • RAW LAND value is a fraction of total Lot value • Lot value includes engineering costs, development costs, carrying costs, risks and profits.

  9. TRANSFER RATIOS • Transfer ratio is the amount of development that may occur on a Receiving Area site based on the purchase of a Development Right. • Example: 1 development right per 5 acres in Sending Area increases density in Receiving Area by 1 dwelling unit per acre. Development Right

  10. DESIGNATE TRANSFER RATIOS • A 1:1 ratio is the simplest. • It is also leasteffective. • Most successful programs allow rights to transfer at a ratio greater than 1:1 to create an incentive in the Sending Areas.

  11. TRANSFER MECHANISMS • Private Transactions • Simultaneous sale and purchase of rights. • Commodity-based TDR Systems • County issues TDR certificates. Developers purchase at negotiated price. • TDR Bank with Public Purchases of TDR • County establishes bank. Bank provides a reliable market, simplifies developer’s task of finding transferable density. Creates revolving fund for future development right purchases.

  12. Another Mechanism • Density Transfer Charges. Sending Area landowners pay a fee in lieu of transferring development rights. • Fee is held in a separate fund and is used to purchase development rights in the Rural Tier. • Technique provides flexibility but involves up front work to calculate fee amounts.

  13. PROGRAM ADMNISTRATION • Administration includes tracking and recording TDR sales, Sending Area restrictions and Receiving Area rights. • MD law requires the County to designate zoning districts where TDRs can be used.

  14. TDR ORDINANCE • Final step is drafting and adopting a TDR Ordinance. The Ordinance will set forth: • Procedures to be used to accomplish density transfers, including recordation requirements; • Allowable use of lands subject to conservation easements; • Conversion ratios for residential and non-residential uses; and • Other development standards as deemed appropriate.

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