TDC 101 - The Basics
TDC Program Components
A Transfer of Development Credits (TDC) program seeks to move intensive development from landscapes at risk from such activities to landscapes better suited to those land uses. It does so by facilitating a market-based transfer of that development potential (through credits bought and sold), and conservation-based land use controls on the at-risk landscape (through title restrictions).
Every example of the Transfer of Development Credits tool is different, but they share some common elements, including four basic program components:• TDC Conservation Area (aka sending area) - designation of the area which is targeted for increased conservation
• TDC Development Area (aka receiving area) - designation of the area which targeted for increased development
• Credit Transfer system - development of a system which facilitates the valuation and transfer of development potential from one parcel to another
• Program administrator – an oversight body that develops and maintains the principles of the program and use of the tool
TDC Conservation Area
Generally, the motivation behind the establishment of a Transfer of Development Credits (TDC) program is concern over a valued landscape which is facing significant demand for conversion due to development pressures in the area. Those landscapes are included in a TDC program as 'conservation' areas, or areas from where the development potential will be transferred. There may be several such areas associated with a single TDC program. The core 'value' of these parcels or regions may be ecological, agricultural, historical, industrial, recreational, or other (or some mix). This determination is made by the community, generally through a municipal planning process, and supported by a deliberate and credible process of assessment. Typically, conservation area parcels are at risk because of their depressed economic power. They may have a degree of economic weight (agricultural production, sustainable timber harvest, cultural tourism, etc.), but to a much lesser degree than the economic opportunities that are inciting land conversion (residential development, commercial/industrial activity, etc.).
TDC Conservation Area parcels are generally assigned development 'credits' based on some standardized process and/or criteria. Through the TDC program, conservation area landowners are voluntarily able to sell their development credits to landowners/developers in the TDC Development Area. A legal instrument (generally a conservation easement) is used to perpetually preclude the intensive development of the parcel after the development credit has been transferred away. Generally, sending area landowners also have the ability to use their development credit and build on their property subject to the zoning restrictions in the area.
Thus, a sending area parcel can increase its economic weight by virtue of its conservation value.
TDC Development Areas
The corollary to the TDC Conservation Area is, of course, the TDC Development Area; the area to which the development potential taken from conservation areas is assigned. TDC Development Areas have a base allowable development potential, but have the additional opportunity of increased development potential (i.e., more lots per parcel, more stories per building, special approval considerations, etc.) by acquiring development credits from sending areas. The results are not necessarily (e.g.) 'high-density' developments, but rather higher density than would otherwise be allowed. In general, TDC Development Areas are much smaller in spatial extent than sending areas, and potentially some distance away.
Similar to conservation areas, development areas' suitability is determined by the community through a municipal planning process, one supported by a deliberate and credible process of assessment. TDC Development Areas may be deemed appropriate by virtue of their proximity to existing development, ease of servicing, limited conservation value, or other related factors. In many cases, development areas become ideal because of an opportunity (development proposal, visionary local developer, etc.), but it must still fit into the overall vision and plan for the community.
Contrary to conservation areas, these development areas have a significant economic weight, and are generally characterized by high value development such as residential construction, industrial operations, etc. For this reason, they have the ability to absorb the cost of acquiring development credits into their cost structure with limited impact.
Whereas conservation area landscapes are the motivation for a TDC program, development areas are the driver; only communities with a significant level of development pressure will have the opportunity for conservation activity through a TDC program.
Credit Transfer System
At the core of a Transfer of Development Credits (TDC) program is the ability to transfer – and provide compensation for – the development potential from one parcel/landowner to another via an open market mechanism. Although each program has its unique flavour, every program includes a process for establishing the relative value for the development credits versus the development bonus, and for facilitating the exchange between the sending and receiving parties.
Many programs use a simple one-to-one credit transfer ratio when outlining how many credits are available on a parcel of sending area land, and how many credits are required for each additional receiving area development unit. However, many use a differential (one-to-many or many-to-one) ratio. In either case, the transfer system needs to establish the protocols for calculating these ratios in individual cases.
Transfers are not always simple market transactions, and the transfer system may provide opportunities to assist in the development credit transfer. Possibilities include the establishment of a credit 'bank' and the promotion of third-party brokers.
Program Administrator
Transfer of Development Credits programs are not self-organizing. Once a program is created, it needs on-going administration, and perhaps more importantly, the ability to adapt. This body oversees such functions as coordinating the program with the overall planning program, recording transactions, registering restrictive legal instruments on the land title, tracking the success of the program, promoting the program, etc.
These functions are most often executed by some arm of the local government, generally the local planning department, local agricultural services department, historical resources society, or other. In the case of multi-jurisdictional programs, it may be a higher level (provincial/state) agency, and in these cases may have been established solely for this purpose.
