Frequently Asked Questions

Q. What is a transfer of development rights (TDR) program?

A. Transfer of development rights (TDR) programs use market forces to promote conservation in high-value natural, agricultural, and open space areas while encouraging smart growth in developed and developing sections of a community. Communities identify areas that they would like to see protected from development (referred to as sending areas). Local governments are also responsible for identifying receiving areas that can adequately support development. Landowners within sending zones can sell their rights to develop the land to developers. Once the rights have been sold, a permanent conservation easement is recorded onto the deed for the property in the sending area. The purchaser of development rights is granted a variance and can then transfer them to the receiving area to develop at a higher density than allowed within the receiving area and contrary to zoning regulations.

Q. What is the purpose of a TDR program?

A. TDR programs were created to produce a voluntary approach to preserving lands that provide a public benefit. It also allows landowners the opportunity to financially benefit from their property without having to sell or develop it. TDR programs also allow communities to focus development in areas capable of handling additional growth, minimizing impacts on the environment and public services.

Q. How does the TDR program work?

A. The term “transfer of development rights” refers to the ability to transfer specific building rights between sites. In certain urban situations, cities have established a procedure where property owners can buy and sell development rights between properties. The intent of such regulations is typically to protect historic properties (called sending areas) and to allow more intense developments within central business districts (called receiving areas).

In cases where the transfer of development rights are authorized, the owner of a historic building may elect to use that procedure to sell the access entitlement that accrues to their property to a neighboring development rather than risk the loss of the historic structure to new development. Similarly, a developer seeking to build a structure that would normally need a zoning variance can look to properties that house older buildings, and seek to purchase excess rights and transfer them to increase the entitlement on his or her property.

Q. What are development rights?

A. Development rights are a property’s unused development potential.

Q. What is the difference between a sending and receiving zone?

A. A receiving site is the property where the development rights are transferred whereas the sending area refers to the property of which all or part of the developments rights were sold.

Q. How can TDR programs permanently protect open space, agricultural land, and historic sites?

A. Transaction and transfer of TDR deeds from sending to receiving areas are publicly recorded and are not subject to changes in zoning regulation, permanently preserving the land on which the rights were sold.

Q. Do local governments have the authority to enact TDR ordinances?

A. Yes, several local governments have implemented TDR programs without express authority from a state enabling statute by relying on their general authority to regulate the type and density of land use. However, state enabling legislation that expressly authorizes TDR programs is important to help local governments create successful TDR programs. State enabling statutes help avert claims that local governments don’t have the authority to enact TDR ordinances. The content of state enabling statutes varies. Some statutes grant general authorization for enacting TDR ordinances without standards, conditions, or regulations on their content. Other states (see state activity section) provide more detail.

Q. Will TDR programs increase takings claims?

A. Under TDR programs, property owners yield some or all of the right to develop or use part of their parcel of land. Those development rights are then transferred to another portion of the same parcel of land or another parcel of land so that it can be more intensely developed. Even in the most extreme case where all reasonable use of a parcel of land is effectively precluded, the owner has not suffered a taking because he or she has not lost any rights of ownership. Instead, one component of ownership – the right to develop the land – has been transferred from one parcel to another. It should be noted that many state statutes require voluntary TDR programs; consensual transactions effectively preclude takings challenges. The Supreme Court has heard two cases concerning TDR and takings claims, and ruled there was no taking in either instance. Numerous state courts have also upheld TDR ordinances.(1)