TDR Mechanisms

There are two basic types of TDR Mechanisms: Traditional TDR and Density Transfer Charge. Municipalities can implement either type of mechanism in order to incentivize property owners to transfer development rights to preserve land in Sending Districts and encourage more efficient development in Receiving Districts. In some cases, municipalities may elect to create a TDR program that includes elements of both types of mechanisms.

Diagram demonstrating Traditional TDR, transferring development rights from a Sending District to a Receiving District in exchange for payment.
 

Traditional TDR

Traditional TDR involves a private transaction between two property owners. In this version of TDR, the owner of property in the receiving zone negotiates and purchases development rights from the owner in the sending zone. In exchange, the property in the receiving zone is allowed additional development rights based on the transfer formula. Meanwhile, a deed restriction is attached to title of the property in the sending zone creating a conservation easement.

 
Diagram showing the Density Transfer Charge form of TDR, in which the Sending District sends development rights to a Land Bank in exchange for payment. Meanwhile, the Receiving District can pay into the Land Bank in exchange for additional developme…
 

Density Transfer Charge

An alternative type of TDR is known as Density Transfer Charge. In this version, a property owner in the receiving zone may pay a fee to the municipality in exchange for an incremental increase in development rights. The municipality uses the revenue generated to establish a development land bank which can purchase development rights in a designated sending zone.