Transfer of Development Rights (TDR) is a market-based land use tool that local governments can use to preserve agricultural land, historic landmarks, affordable housing, or environmentally sensitive sites by directing growth to locations that are more suitable for higher-density development. The owners of these preservation areas (known as 'sending areas') can transfer or sell their right to develop the property ( i.e., development rights) to developers in areas designated for higher-densities (known as 'receiving areas'), and in so doing, must record conservation easements or restrictive deeds on their property. In return, developers purchasing the development rights from a sending area can build at densities higher than would otherwise be allowed by the base zoning in the receiving area. This article will highlight two communities that have integrated affordable housing requirements within existing TDR programs to achieve the dual goals of affordable housing creation and open space conservation.

Workforce Housing Development in Palm Beach County, Florida

Palm Beach County, Florida adopted its TDR program in 1980, primarily to preserve agricultural land and environmentally sensitive sites in unincorporated areas of the county. In 2006, the county board adopted a mandatory workforce housing program, which requires that 6–20 percent of units in a development of over 10 units be designated as workforce housing units. Fifty percent of the workforce units must be affordable to households earning less than 100 percent of the area median income. In exchange for providing the workforce units, developers receive a density bonus of up to 30 percent. The following year, Palm Beach County amended its TDR program (Article 5, Chapter G of Unified Land Development Code), to require that at least 50 percent of housing units developed through the use of TDRs be set aside as workforce units. Developers can purchase TDRs from property owners in sending areas, as well as through the county's TDR bank (the county purchases TDRs from sending areas and holds them for sale at a later date). The county sells TDRs for proposed workforce units at a cost of $1.00 per TDR, as opposed to the market-rate cost of $50,000 per TDR. According to the county's chief planner, developers are making use of both the workforce housing and TDR programs to achieve bonus densities. Thus far, approximately 350 workforce units have been developed throughout the county using TDRs.

Affordable Housing Preservation in Seattle, Washington

Seattle, Washington puts its TDR program to work in preserving open space, historic landmarks, and low-income housing units in the downtown area by designating all three as eligible sending areas. Developers can achieve additional floor area above the base density by purchasing TDRs from these sites. To attain bonus floor area for commercial uses, the program requires developers to purchase the majority of TDRs from affordable housing sites (known as housing TDRs). Property owners of existing low-income housing selling housing TDRs are required to preserve the low-income units for a period of 50 years — rental units must be affordable to households earning less than 50 percent of the area median income. The city also has a TDR bank, which it uses to hold TDRs for sale at a later date. Funds from the sale of TDRs are used for preservation and rehabilitation of housing and historic landmarks. Seattle, Washington’s TDR program has been in place since 1985 and has successfully preserved over 950 low-income housing units.

Conclusion

Palm Beach County is increasing its inventory of affordable housing by incorporating workforce housing requirements within its TDR program and providing additional financial incentives. The city of Seattle is preserving existing affordable housing units by designating affordable housing sites as sending areas. Both communities show that integrating affordable housing requirements within TDR programs can create and preserve affordable housing in areas suitable for higher-density development.

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