Development
Arlington's TDR program misses Montgomery's high standard
Arlington recently created a Transfer of Development Rights" (TDR) program. It's a good start, but so far, it leaves out some of the most valuable components which have made Montgomery County's a model successful program, protecting the county's rural and historic land in a way that works for farmers and developers.
Butler's Orchard in Montgomery County. Photo by [ecpark] on Flickr.
Though they have existed for nearly 50 years, TDR programs have recently gotten far more publicity and taken on a more integral role in urban planning. Normally, zoning allows each specific plot of land a certain amount of density. In a TDR program, that density becomes essentially disconnected from the land. It can be traded, usually on an open market, to landowners in other areas.
To use a simple example, take a farmer at one end of a county who owns some farmland (let's call it "Greenacre"). He has the right under agricultural zoning to subdivide his property into ten residential lots. But instead, he could choose to sell those ten TDR "density credits" to a developer at the other end of the county who owns land zoned for apartments (call it "Condoacre"). Condoacre might only be zoned for 20 units total. But after purchasing the TDR credits, that developer could legally add an additional ten residential units to an apartment building he'd like to construct on that property. With the purchase of the TDR credits, he may now build a 30-unit condo building on Condoacre, while Greenacre is forever restricted to agriculture.
TDR programs bring multifaceted benefits. They can protect historic properties situated on land zoned for high intensities whose owners might otherwise be inclined to demolish the historic structure to build a larger building. They can protect agricultural farmland at distant corners of a region. They can work to focus growth on particular highly transit-served neighborhoods. And they can do all this with a less heavy-handed approach than merely downzoning distant property to less intense uses, a politically (and possibly legally) charged decision that leaves many landowners angry at their land losing value. This way, the farmer's land can stay undeveloped and he can recover the investment return he has grown to expect.
In fact, a TDR program made it possible to save New York's Grand Central Terminal from the wrecking ball that buried the crosstown Penn Station.
Designers of a TDR program need to make two primary choices. First, will the program encourage TDRs in some way, or just allow them as a possible option? Second, will it create a TDR "bank" to which landowners can sell their density, or must each sale go directly to a particular receiving project? If the sales take place directly, must the buyers and sellers consult the government for approval each time? Arlington and Montgomery have answered these questions in different ways.
Grand Central Terminal. Photo by JHerrick79 on Flickr.
To encourage or not? In Montgomery County, landowners in an "agricultural preserve" area may build on their lots at one unit per 25 acres, or they may keep the land agricultural and sell their density credits at the rate of one unit per every five acres. Landowners, therefore, get a fivefold increase in density by selling to developers elsewhere. This program created dense neighborhoods like Bethesda and Silver Spring. Nearly every farmer would find it economically unwise to subdivide his land when he could sell its density for such a windfall. In other programs, however, such as Arlington's new and little-used one, landowners can only transfer density at most one-for-one. In practice, Arlington's program is structured such that a property's transferable density is often less than what would be available if an owner actually built on the original property, changing the entire economics of the arrangement.
To bank or not? In some localities, a landowner with density to sell may simply unload his TDR credits into a "TDR bank". Later, a developer can simply buy the number of credits he needs from the bank at his leisure. Some of these programs set up a specific price for the density, and the seller gets paid immediately. Elsewhere, the density might sit in the bank until a buyer and seller can agree on a price. Either way, a bank assures a selling landowner of his right to trade his density.
In non-bank programs, as in Arlington, individual sellers and buyers must come together individually to negotiate a sale, then get approval from the governing body for every transfer for every parcel. In practice, a landowner can't know if he may sell his density unless the time is exactly right for a receiving parcel to acquire that exact amount of TDR credit.
Montgomery County initiated one of the earliest and most successful TDR programs many years ago. Virginia only recently amended its state code to authorize such programs. Arlington County was the first jurisdiction in Virginia to use new state enabling authority to develop TDR guidelines. Unfortunately, Arlington's system seems to miss the point.
A TDR system is not the right tool to use where the jurisdiction merely wants additional density on a receiving parcel. If that's the case, they should simply increase the by-right density or height available on that site. Instead, TDRs are most useful when the locality wants to protect the sending parcel in its current form.
Unfortunately, when the Arlington Board discussed the new TDR proposal in November, nearly all of the discussion focused on the wrong point. Currently, while nearly every zoning district in Arlington maintains a height restriction, the Board can raise it where the "community benefits", like affordable dwellings or historic preservation, outweigh community costs. Any developer who cares about his bottom line will take advantage of the cheapest option to achieve the density he wants. If including affordable dwelling units or contributing to a public arts fund is cheaper and easier than buying density from a nearby parcel, that's what he'll do.
Meanwhile, this overlooks the small-time landowner in the county with an historic resource on his hands. Unless someone can offer him cash to buy his on-site density, he might simply knock down his historic building to construct a condo project. To avoid this type of destruction, he needs to be able to sell his density to a developer who can use it somewhere, and get at least as much money as he could by redeveloping his property.
One ideal place for this extra density is Rosslyn. It's the tallest and most dense section of the County, with arguably the best transportation infrastructure in the region. But Rosslyn has an absolute 10.0 Floor-Area Ratio cap, which Arlington's Board has no discretion to increase without changing to the underlying zoning, even if the excess would only be density transferred from elsewhere. And, any transfer of density needs to be approved, project-by-project, by the Arlington Board, depriving sellers of the confidence that they could sell their development rights.
If a developer can attain a 10.0 maximum FAR in Rosslyn merely from contributing to County "community benefits" funds, and he can't exceed 10.0 FAR through TDRs, why would he go through the expensive and time-consuming proposition of locating and buying density from our historic resource owner? Arlington should borrow some of the strengths of other programs. It's unclear whether the Virginia Code authorizes TDR banks right now, but the current arrangement has left the program virtually unused.
In the future, it would also be great if the program could allow transfers not only within Arlington, but from more rural parts of the region into Arlington. Of course, to make that work, counties would have to work out ways to handle shifting the tax and density burden between counties. But such a system would really let Virginia use TDRs to protect its rural land, as Montgomery has done between its Agricultural Reserve and urbanizing downcounty communities.
 | Joey Katzen is an entrepreneur and attorney living in Arlington, Virginia. A native of the Commonwealth, he hopes our public and private sectors can work together to continue transforming each of our neighborhoods into attractive places we can be proud of.   |
Comments
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This is a little nitpicky, but Silver Spring was developed in the early 20th Century, long before TDR. It was a the end of the Georgia Avenue streetcar line. The current 70's bus line is meant to replicate the old streetcar line's service. However, TDR credits were definitely instrumental in the development of Bethesda as a walkable human-scale transit oriented place. They will be in White Flint, Shady Grove, and Glenmont, too.
by Cavan on Jan 13, 2009 3:33 pm • link • report
But I wonder if Montgomery County and Arlington are good places to compare. After all, while approximately a third of Montgomery County has been set aside as part of the Agricultural Reserve, it is a much larger and more diverse (in terms of development patterns) than Arlington.
Arlington County is only 26 square miles. Montgomery, on the other hand, is 496 square miles--over 19 times larger. While Arlington County lies entirely within the Beltway, Montgomery County's rural sections are miles beyond it. In fact, one drives over 23 miles on I-270 through Montgomery before reaching Frederick County.
That does not change the fact that Arlington may have areas worth preserving at a certain density, but for the most part, it is a county worth generating density in. Perhaps a TDR program is just not the best type of growth management program for Arlington. And it probably won't ever match up to Montgomery's, but that doesn't mean there isn't a place for one.
And to put it all in perspective, let's look at Metro in the two counties. The Orange Line runs 6.3 miles from the Potomac to the Arlington County line. Along that stretch it includes 6 stations (Rosslyn-East Falls Church), 5 of which are all nationally recognized for their TOD. The Yellow Line extends 3.6 miles from the Potomac to Four Mile Run, at the Alexandria city limits. Along the way, it passes through 4 stations (Pentagon-Nat'l Airport), 2 of which have decent TOD.
*note, I don't count the suburb-suburb section of the Blue Line because there's no corresponding link in Montgomery. Besides, it shares with the Yellow Line on the southern side of Arlington anyway.
If we apply the same mileages to Montgomery County, 6.3 miles of Red Line on the Shady Grove end gets you from Friendship Heights at the District line to White Flint. Along the way, you pass 5 stations, 2 of which have TOD (Friendship Heights and Bethesda). On the other branch of the Red Line, 3.6 miles gets you to halfway between Forest Glen and Wheaton. That stretch includes only 2 stops (Silver Spring and Forest Glen) and only 1 TOD area.
At least within the part of Montgomery that is analogous to Arlington, development is pretty similar, and none of that section is part of a TOD donor area.
A better policy might be to get rural parts of Fairfax County to be donor areas for increased density in Arlington, but I won't hold my breath.
For more info on the Montgomery County AgReserve: http://www.mc-mncppc.org/gis/documents/ag_preserve_area_letter.pdf
by Matt' on Jan 13, 2009 3:49 pm • link • report
It seems that if saving greenspace is the desire, we can buy easements, give tax incentives, or just plain not allow subdivision. Unlike cap-and-trade polution credits, we really do care who "pollutes" (to carry forward the analogy). Density isn't fungible and we shouldn't rely on market solutions to produce a desired end.
by Reid on Jan 13, 2009 4:50 pm • link • report
DC also has a combined lot development process for the downtown that works in some ways like a non-banking TDR process.
The DC system has been in place for over two decades.
by Dave on Jan 13, 2009 5:50 pm • link • report
Imagine a situation in, say, Clarendon, where there could be an historic church on a block that's got an incredibly high land market value, because it's near metro. As a community, we might decide we'd like to provide an opportunity for that church to (a) stay put, and (b) be protected as an historic resource. Without a TDR available, if a developer offers that church millions upon millions of dollars for the land (demolishing the building), it might be inclined to take it, because the cash would be too hard to turn down. On the other hand, if the church could sell its air-right density to a devloper three blocks away, it could recover the density value, stay in place, AND protect the historic resource.
This does, undoubtedly, rely on there being some sort of density cap already being in place, above which a bought TDR credit could take a landowner. But those caps are already in place.
The other option is, of course, piecemeal downzoning the single historic property so that it could never be changed. But that's most certainly unconstitutional, and even if it weren't, it would smack of unfairness. To avoid it being an unconstitutional taking, the county would have to, as you suggest, buy easements, etc. But in Arlington, that's prohibitively expensive. A TDR program, especially if used *within* a neighborhood (unlike Montgomery's far-flung transfers), wouldn't change the overall growth/density, and so the financial impact to the County would be nearly nil.
by Joey on Jan 13, 2009 6:26 pm • link • report
Obama's energy sec. appointee had over the summer said the high gas prices were good because they spurred interest for alternative energy (yes) and now that he's on the Hill he's changed his mind (?) to the company line that we need low gas prices (ugh)
http://thecaucus.blogs.nytimes.com/2009/01/13/steven-chu-eases-up-on-the-gas-price-pedal/?hp
I still think at the end of the day Obama will be the most friendly transit president we've had in a while, but between the heavy road construction as part of the stimulus and now this, can you understand why we might be worried?
by BloggerAndBiker on Jan 13, 2009 6:58 pm • link • report
Virginia is considering an amendment to their TDR enabling statute that would only allow one-to-one transfers. As this article points out, that would be a disaster.
Brookings has a good article on TDRs- http://www.brookings.edu/reports/2004/06metropolitanpolicy_fulton.aspx
by Jesse Richardson on Jan 14, 2009 6:52 am • link • report
by jenny on Jan 14, 2009 8:14 am • link • report
Does anyone know whether Tysons Corner/Fairfax County has considered doing anything like this? It could be a great way to prevent sprawl and focus density in areas where the county would like density.
by Nick on Jan 14, 2009 8:59 am • link • report
by Vik on Jan 14, 2009 9:39 am • link • report
I can see your point where the "sender" is in a spot that is zoned (wisely) for high density, like an historic church. Although I don't think it's unconstitutional or even a taking. The law is a little unclear on this, but you can significantly change a property's zoning without it being considered a taking.
That aside, I still don't think this is the best way to save open spaces since it still inherently relies on there being undesirable zoning vis-a-vis the green space in the first place. When you're talking about huge swaths of western Montgomery County, you're not talking about an historic church surrounded by condos. The subdivision rules on the books should be whatver we'd like there to be in reality.
And besides, even if the zoning rules are set at a desirable level, isn't there a chance that the owner of Green Acres buys the rights from the downtown historic church?
TDRs seem like a clever answer to a problem without actually removing the problem.
by Reid on Jan 14, 2009 3:03 pm • link • report
by Daniel Nairn on Jan 15, 2009 8:24 am • link • report
"And besides, even if the zoning rules are set at a desirable level, isn't there a chance that the owner of Green Acres buys the rights from the downtown historic church? "
And you're saying the guy out in the sticks would then build more stuff on the fringe? No, that's not how it works. The rights from the downtown church would not be transferable to anyplace, they can only be applied to a receiving zone.
And spot zoning to reduce the allowed density on a single area like a downtown church would most definitely be on questionable constitutional grounds.
by Alex B. on Jan 15, 2009 9:22 am • link • report
BloggerAndBiker: Do you have any more info? It doesn't necessarily look like he's reversing his statement or even calling for lower gas prices. It seems like he's just saying there were some negative consequences and that the case for alternative energy is stronger than ever.
by BeyondDC on Jan 15, 2009 11:05 am • link • report
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