Can Transfer of Development Rights (TDR) Programs Work in Washington State?
The City of Issaquah recently announced a complex agreement involving a transfer of development rights (TDR) transaction that will preserve more than 140 acres of forested land in and around the City, including the entire Park Pointe area at the base of Tiger Mountain. Several years ago, a developer had proposed to build hundreds of homes at Park Pointe. The TDR agreement shifts new development away from Park Pointe and into the area around the Issaquah Highlands master-planned community.
This project, like many other TDR success stories in Washington State, was the result of fairly unique and fortuitous circumstances. Land conservation efforts always require vision and dedication, and in this case, local officials, planners, and other partners worked for years to preserve Park Pointe. However, as reported in the Issaquah Press, a key factor in the ultimate success of the project was the recession: between early 2009 and late 2010, the property’s value dropped from $18.9 million to around $6 million.
TDR is an intriguing concept that has been studied and debated at length. It has been used in a variety of one-off, opportunistic projects in Washington (ranging from historic preservation and affordable housing to conservation of working forests and farms). But it remains to be seen whether TDR can be used on a broader scale for more strategic and proactive conservation.
TDR’s biggest stumbling block in Washington relates to the timing of growth management legislation. In some states, TDR programs were closely linked to growth management efforts involving the down-zoning of rural and resource lands. For example, in Montgomery County, Maryland (whose TDR program is routinely cited as the most successful in the county), the express purpose of the program was “to compensate farmers for the land equity they lost through the 1981 down-zoning that created the Agricultural Reserve.” In Washington, however, most rural and resource lands were down-zoned and urban lands were up-zoned over the past twenty years, after the adoption of the Growth Management Act (GMA) in 1990. Because TDR programs were not integrated into these growth management actions, TDR is still working to catch up with the GMA.
There is an inherent tension between the GMA’s policy of requiring greater density in urban areas through land use planning and regulation and the goal of TDR programs to encourage greater density in urban areas through voluntary, market-based incentives. If the GMA already requires high levels of density in urban areas, some have asked, then why do we need market-based incentives that encourage greater density? Perhaps the primary role of TDR is to encourage even more density in urban areas than what the GMA framework has already required. According to a recent Crosscut article, “most efforts to trade development rights across the rural-urban divide run into a problem: People who live in cities don't want to take the higher density.” The trick, especially in Washington, is to create a framework for overcoming this resistance to higher density and fueling demand for even higher-density development in urban areas.
For years, land conservation organizations like the Cascade Land Conservancy have been promoting legislation aimed at making TDR a more viable tool for landscape-scale conservation. The focus of these efforts has been to allow regional transfers and to create incentives for participation in TDR programs. These efforts have resulted in legislative action. In 2007 and 2009, the Legislature adopted bills authorizing a regional TDR program in central Puget Sound.
This year, the Legislature is considering another bill (HB 1469) intended to incentivize participation in the regional program by providing funding for infrastructure needed to serve additional density in urban areas. HB 1469 would authorize Puget Sound cities to create Local Infrastructure Project Areas (LIPAs) within their boundaries. Those cities could then finance public improvements in LIPAs through property taxes imposed by the city and the county in which the LIPA is located. HB 1469 would strengthen at least two of the factors that have been identified as key “success factors” for TDR programs: market incentives and customized receiving areas for density.
If HB 1469 passes (and survives constitutional scrutiny), we’ll get a chance to see whether the bill’s incentives can help overcome the resistance to greater urban density and make TDR really work in Washington.