Transfer of development rights and urban land markets: Fid-Bau Portal

Transfer of development rights and urban land markets

Linkous, Evangeline R

Transfer of development rights (TDR) is seen as an important tool for land use planning, in large part because it leverages market mechanisms. TDR extends market concepts used primarily in emissions trading programs to the arena of land use. However, with the exception of a handful of success stories, TDR programs generate few transfers. Although researchers generally attribute the weak performance of TDR to program design flaws, this study demonstrates that the unique conditions presented by urban land markets explain, in part, why TDR programs often underperform. I present a case study of a TDR program in Sarasota, Florida, to address two questions. First, what attributes of urban land markets may impact TDR program design and outcomes? Second, is TDR a planning tool that can achieve desired planning goals, given the conditions of land markets? I find that the unique features of land markets—specifically (1) the sensitivity of development to timing; (2) imperfect information, uncertainty, and speculative activity; (3) unique features of land; (4) the limited number of buyers and sellers; and (5) the development orientation of urban political and planning institutions—distort the market for transferable development rights. The Sarasota case demonstrates how local land market characteristics contributed to a set of incremental program design and implementation decisions that, in sum, amounted to significant departures from fundamental program principles and mechanisms. These resulted in imperfect market conditions and rendered the TDR program ineffective.