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3.4.2 Transferable Development Rights

To avoid or reduce the adverse economic impact on a landowner from sharply restricting development, some localities have adopted transferable development rights (TDR) policies.[312] In their simplest forms, these policies divide a jurisdiction into a sending area (where development is discouraged) and a receiving area (where development is encouraged).[313] The receiving area is zoned for relatively high-density development, while the sending area is zoned for agriculture and very low-density housing, e.g., 1 home per 10 acres. Under traditional zoning, landowners in the 10-acre zoning area have often complained that the zoning harmed them economically relative to owners in the high-density area,[314] and that the eventual 10-acre home lots did not preserve agricultural land as intended. Under a TDR policy, owners would be compensated for the downzoning, for example, with development rights to build 10 housing units in the receiving area (beyond what the zoning allows) for every 10 acres of land placed off-limits to development.[315] Provided that there is demand for additional units in the receiving area,[316] most owners would prefer to sell their development rights rather than build one home on 10 acres.

TDR policies can be used to decrease the hazards from sea level rise by designating a coastal retreat zone as the sending area:

• A locality may decide to concentrate coastal growth in a coastal protection zone while discouraging it in a coastal retreat zone.[317]In that case, the retreat zone would be a sending area and the protection zone would be the receiving area for transferable development rights. The greater density in the receiving area would also improve the economics of shore protection there.
• A locality may decide to discourage development in the coastal retreat zone but attempt to channel it inland rather than into a coastal protection zone.

In the ordinary TDR scheme, the land in the sending area where development is foregone remains undeveloped. In a coastal TDR scheme, however, the sending area may already have some development; and the policy could be designed to prevent additional investment that would make shore protection more likely. For example, a barrier island with moderate-density small cottages may be in the midst of a conversion to high-end housing. A TDR scheme could provide transferable development rights in return for placing the property under a rolling easement and avoiding any increases in the building footprint (or usable floor area). Another possibility is for owners to exchange rolling easements for a transferable development rights that will not take effect until their homes are lost to the rising sea. On a migrating barrier island, the receiving area could be the bay side of the island, so that the development right effectuates the relocation of oceanfront residents.

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