
The transfer of development rights, or TDR, are very similar to the more common “purchase of development rights” programs. Otherwise called PDR programs. These programs require that a land trust or government agency purchase the development rights. The development rights on the piece of property are then “retired” through deed restriction.
The main difference between purchase of development rights and the transfer of development rights is that the TDR is done in more of a controlled, defined setting where areas are predetermined as “sending” or “receiving” areas. On the other hand, purchase of development rights are purchased but not transferred and are not typically in designated zones.
Voluntary vs. Mandatory Programs
The costs of purchasing the easements are recovered from the developers who
receive the building bonus. The value of the development easement is the difference
between the agricultural or open space value and the development value. Some
planners believe that in order to succeed, TDR programs must be mandatory. Not simply voluntary for landowners in the sending area and for the higher-density building in the receiving areas. If the program is mandatory, it is essentially an upzoning of the entire receiving area for which a developer now has to pay a fee to develop. If you have any questions about the transfer of development rights, then our law office can help.
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Land Use and Design
Similarly, if the properties in the sending area are “required” to sell their development rights, this could be perceived as a taking. For these reasons, it is preferable to treat transfer of development rights programs as incentive programs, and they should always be voluntary.
About Receiving Areas
In order for this program to be attractive to developers, the receiving zone properties will need to receive a density bonus that is worth the price of the fee. Developers who buy development rights are acquiring the capacity to build higher density in a receiving area, which can mean one of three things:
- different types of the same use (apartments in addition to single family homes)
- higher densities of the same use (single family homes on ¼ acre lots instead of 1 acre)
- different higher intensity uses (commercial or industrial use in addition to residential)
About Sending Areas
In return for the purchase, landowners in the sending area place a deed restriction on their property. Restrictions limit the level of potential development, the type of development, or some combination of both. When credits are transferred, the property owner maintains all remaining property rights.

Local Programs
The most common transfer development rights program approach allows the landowner to sell the development rights directly to a developer. The developer then uses those development rights to increase the density of houses on another piece of property at another location within a single jurisdiction. A variation of that type of TDR would be a situation in which the developer transfers the development rights from one property to another property the developer owns.
A second method allows a local government to establish a TDR Bank to transfer development rights. Using this method, developers who wish to develop at a higher density than current zoning allows would purchase development rights from the local government. The establishment of a TDR Bank can help keep a program active during slow economic times and provide a floor for TDR prices. In addition, developers may find it easier to purchase development rights from a governmental entity, rather than from individual landowners.
Interlocal TDR Programs
Interlocal programs are when development rights are transferred from one jurisdiction to another. They are more difficult to implement than local programs because of some issues related to economic development and taxes. An interlocal program works best when there is a predominantly rural county that wants to remain rural but is experiencing development pressure. That locality may find the agreement attractive if they can transfer some development rights to a growth county.
In order for this program to be successful, the regional entity must identify the sending and receiving areas on maps based on adequate supply and demand, and create formulas for calculating the allowable increase in density associated with each purchased TDR credit.