Key takeaways
- Lake County, Florida, is considering a Transfer of Development Rights program to preserve rural land.
- These so-called TDRs allow owners of sensitive land to sell their rights to developers, who can use them to increase density on projects in more urban areas.
- The arrangement has preserved hundreds of thousands of acres in the United States.
A Central Florida county that has struggled with explosive growth is thinking of introducing a somewhat rare tool to combat urban sprawl.
Leaders in Lake County, western neighbor to Orlando’s Orange County, discussed the possibility of creating a Transfer of Development Rights program, or TDRs, at a public workshop in February.
If enacted, the program would allow landowners to sell the development rights to their property to developers without conveying the land. Developers can then use those rights to add more units to other developments elsewhere.
“We’re incentivizing a landowner to preserve their land,” said Victoria Bruce, founder and CEO of The Mitigation Banking Group. “Now, can you sell [the rights]? That’s the question. It all depends on the market.”
How do TDRs work?
The basic idea is this: If a parcel of land is considered worthy of preservation, the owner can apply for TDRs from the county, which would essentially grant the number of units that could have been built on the land if it were sold for development. The landowner can then sell the rights to a developer who has land in an area the county is looking to build up. The rights will allow the developer to add density to its current project, usually by a set amount.
The property is then covered by an easement. It can still be sold again, but without the ability to develop on it, so landowners often sell only a portion of the rights in order to maintain some of the land at full value.
Bruce said landowners participate because they want to preserve their property in perpetuity and would rather receive some compensation than simply putting it into an easement.
“The underlying goal is to have a mechanism to combat sprawl while preserving open space and rural areas and establish conservation areas,” a spokesperson for Lake County told Homes.com in an email.
Lake County has had an influx of new residents since the pandemic; four municipalities have seen more than 30% growth in that time, according to the U.S. Census Bureau.
Craig Chown is a development consultant in Florida who helped develop a TDR program in Indian River County on Florida’s east coast. There, the county allowed for a 20% increase in density or a 50% increase if the TDRs were purchased from an adjacent property to the one being developed.
“So if you’re building 100 units, you can go to 120,” Chown said. “Developers like that because all the costs — the land, the infrastructure, storm water, utilities — are typically absorbed within the first 100 [units], so the last 20 is very inexpensive.”
Developers would still have to go through normal permitting procedures for the units they plan to add.
'Sending districts' and 'receiving districts'
Counties can designate the areas they will offer TDRs for, known as "sending districts." Usually these are environmentally sensitive wildlands or, in the case of Lake County, agricultural.
“In [Indian River County], we preserved a mile of waterfront along the Indian River Lagoon basin,” Chown said.
The areas targeted for the new growth, usually close to urban downtowns or other developments, are called "receiving districts."
The idea, which isn't new, has preserved hundreds of thousands of sensitive acreage. A 2022 paper in the Journal of Environmental Planning and Management counted 375 such programs.
In Maryland, the Montgomery County Agricultural Reserve has preserved 93,000 acres of farmland since 1980, according to the county’s website. Other programs include the Long Island Central Pine Barrens Maritime Reserve in New York; King County, Washington, and Palm Beach County Florida.
To create a program, all a municipality needs is to develop the “policies and procedures,” Chown said.
Lake County is still debating whether to go forward.
“The TDR idea is in the very early stages of discussion, and no decisions have been finalized,” the county spokesperson said. “If the county and the municipalities move forward, a feasibility study would be done to outline the details of a TDR program, how the program would be set up and how it would be managed in the long term."
But developers are already interested.
Bruce, who brokers TDRs for developers in several counties in Florida, said she received an inquiry from PulteGroup about TDRs in Lake County.
Pulte did not respond to a request for comment for this story.