Transfer of Development Rights

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Transfer of Development Rights (TDR), also Transferable Development Rights or Tradeable Development Rights (“transferable” or “tradable building rights”) are an instrument for the control of development, which market mechanisms in addition to or instead of classic urban planning by setting upper limits for development (e.g. land-use planning ). In particular, it enables property owners to sell unused building rights, which can then be used elsewhere.

Typically, two areas are defined by the municipality for the use of TDR: an "emitting" and a "receiving" area. A maximum construction height and density is specified for both areas. The surrendering area is usually an area in which the existing development is to be protected from further densification or increase in terms of monument preservation or environmental aspects. Property owners in the surrendering area can subsequently sell unused building rights (volumes, floors, etc.), which can be used by owners in the receiving area in order to exceed the maximum amount of development specified there. In this way, a price is formed for unused building rights, which property owners in the relinquishing area compensate for the non-use. The municipality can thus potentially achieve the protection goal for the relinquishing area without detailed planning measures or complex and expensive expropriation procedures .

Instead of two areas, the municipality can also define just one TDR area within which a uniform height restriction applies, which can, however, be exceeded if property owners buy building rights from other owners in the area who, in return, permanently undertake to fall below the height restriction accordingly.

The landowners trade the building rights either directly with each other or as an intermediary using a bank. The instrument is in parts similar to the “ cap and trade ” approach in environmental economics, in which a maximum amount is set for certain pollutants for which the polluters must purchase emission certificates (e.g. Co2 certificates).

The challenges of the instrument lie on the one hand in limiting transaction costs and in creating a balance between owners willing to sell and buy, since otherwise the building rights are worthless.

Examples

TDR is used primarily in various parishes and community associations in the United States. The best known example and first use case (1916) is New York City. The well-known skyline with its stepped Hcoh houses is also due to the legally created need to purchase appropriate shading rights for the neighboring properties in order to exhaust the building volume.

See also

Individual evidence

  1. Skuzinski, Thomas & Evangeline R. Linkous (2018): Tradable development rights in the US - Making zoning flexible through market mechanisms. In: Gerber, Jean-David; Hartmann, Thomas; Hengstermann, Andreas (ed.) Instruments of Land Policy - Dealing with Scarcity of Land. Abingdon: Routledge. Pp. 223-237
  2. ^ Giordano, M. (1987): Over-stuffing the envelope: The problems with creative transfer of development rights. In: Fordham Urban Law Journal, 16, 43.