How TDR Works
When people buy property, they often get more than just the land. The owners also get rights over how the land is used, which might include mineral rights, development rights and water rights. Those rights can be sold or transferred independent of the land itself – in other words, the owner can continue to own the land yet sell certain rights. Just as water rights attached to a parcel of land may be bought and sold, the right to subdivide and develop a piece of property can also be bought and sold.
Under a Transfer of Development Rights program, the owner of working lands (for example, a farmer) can sell the development rights from the land to somebody in an urban area (typically a developer). The rights are sold in the form of credits, and the buyer can use those credits to develop land at a different density than local zoning would normally allow. (Zoning requirements can include both minimum and maximum densities.)
TDR programs help preserve working lands, because the landowners can benefit from the true market value of their development rights, without having to sell the land altogether to a developer. Meanwhile, the buyer of those rights has greater flexibility in developing land within certain zoning areas. It's a way to shift development away from rural areas and into urban areas.
The receiving urban areas must have a provision in their own zoning ordinances that allows for the planned use of development credits. For example, Thurston County code requires people who own land in urban growth areas to use credits if they fail to meet the minimum or maximum densities required in a residential area zoned 4-8 units per acre.
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