TDRs, a Step in the Right Direction

The 2006 session of the General Assembly hasn’t been a total bust: The Senate and the House of Delegates managed to agree on legislation permitting local governments to implement Transfer Development Rights. The Mainstream Media hasn’t bothered to explain the issues in any detail, but Bob Burke gives the low-down in his story, “A Quiet Victory.”

In my personal estimation, the TDR legislation represents no more than a single step down a long road of reform. The real significance may not be the legislation itself but the recognition on the part of lawmakers that land use, infrastructure and transportation issues are inextricably entwined.

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5 responses to “TDRs, a Step in the Right Direction”

  1. Ray Hyde Avatar

    I’ve said before that I think TDR’s and PPR’s have serious problems, which have not been widely addressed. Nationally we can’t yet say that the history of existing programs is all that stellar.

    That said, they are still a tiny step in the right direction. Now that we recognize TDR’s have value, the first TDR’s that should occur are from the counties that previously took them without recompense back to the (now recognized) owners.

  2. Toomanytaxes Avatar

    Ray Hyde: How does this work between/among counties? Does this transfer rights from one part of a county to another, or are we seeing the protection of outlying counties by super-sizing Fairfax County? It’s bad enough that we have to fund the state; do we also need to increase the decline in our quality of life to save rural lifestyles for others?

  3. Ray Hyde Avatar
    Ray Hyde

    I’ve never seen a plan that worked outside the county. In fact, most of them don’t work because the market isn’t large enough or fluid enough. Usually the county has to work as an intermediary, and that means they set the price, not the market.

    With PDR’s the county buys development rights and gives them away to VOF or someone. Imagine if the county bought police cruisers and then gave them away to the non-profit police cruiser museum. If TDR’s are allowed, it is going to cut in on VOF’s supply of free land.

    Super sizing Fairfax is more insidious. I know of one nice young couple that I had to look in the eye and tell they could not have their dream home: I am not allowed to sell it to you.

    They now live in Fairfax. That was after I got three separate letters from the county saying I had the right to sell the land, and after I spent several thousand dollars on the survey. So much for transparency.

    “Saving rural lifestyles” is both a conundrum and a rat’s nest. Every person that moves here destroys a little of the lifestyle they came for. There is a recent case of an 800 acre farm that was subdivided into 100, 50 and 5 acre lots, according to the by-right development plan that was expressly designed to preserve our rural character.

    The homeowners association put covenants on the property that prohibit any kind of farming, animals, etc. I heard second hand that one new resident told a local long-time farmer “Oh, no. we don’t want any of that. We are suburban people.”

    These are the kind of people that become my customers. I took my equipment to mow another property. While I was there I spotted a brand new, very expensive John Deere tractor, in the four car garage. I told the owner I lusted after his equipment, compared to the junk I was driving. “Why don’t you mow your own?”, I asked, “You’ve got better and faster equipment.”

    ” Oh, I’m scared of that thing, and I don’t have time.” ….

    At the same time, the homeowners association contracted with a pasture management firm (allegedly owned by the developer) to cut hay on the propery in order that they could get the lower land use taxation. That subterfuge is probably costing the rest of the county $50,000 a year, and the pasture management company gets paid for farming, then they get paid for the hay.

    Is this a great country, or what?

    “Saving rural lifestyle” means different things to different people. For some it means they are sentenced to a rural lifestyle, for some it means they can pretend to have a rural lifestyle, for some it means they can support a rural lifestyle at a loss, for some it means they can have a rural lifestyle largely at government expense.

    As a result of multple iteratons of zoning whiplash in Loudoun County there will now be multiple enclaves of relatively dense housing surrounded by (more or less) rural areas. To hear the rural residents tell it, those enclaves have lowered their property values. To hear those that sold out tell it, they a) had no choice, or b) finally got their property rights. To hear the new owner tell it, they love the pastoral views provided by the reamainig rural owners, who are now cut out.

    Some years from now, some descendant of one of those people who are now complaining that the new developments ruined their property values will fall on hard times. He is going to want to sell part of his property and discover that he cannot, or he can only sell it in 50 acre lots. Eventually you have a bunch of people with fifty acre lots, and some of them fall on hard times, or their children do.

    Then you hear the calls for auxiliary homes, which has recently been an issue in Fauquier. A man wanted to put up a home for his son on his (large lot). Auxiliary homes were limited to 900 sq. ft. During the amount of time the permit process draggged on the son suddenly had three children. the new plan was for the parents to move into the smaller home so the kids would have a place to live.

    The stench over this story got so bad that the county finally maganimously increased the auxiliary home size limit to 1200 sq ft.

    You can see where this is going. Eventually the kid will get divorced and his wife will demand custody of the house. But both houses are on one lot, so there will be a petition to subdivide.

    Meanwhile, Fairfax continues to get super sized, and an efficiency apartment there is around 750 sq ft. Yet EMR can’t seem to figure out why you object or why people want to move out.

    All of this is no different from what happens in Fairfax. Some family gets too big for their home or they split up or whatever. They expand the home and apply for permission to turn it into a duplex, or subdivide into smaller lots.

    The only things I can think of that will “save” rural lifestyles, is when there is enough profit in it so you don’t have to sell, or when there are enough good jobs in the country so you can afford to hire someone like me to do your work.

    Open space is a lot cheaper, because it does not imply a lifestyle. All we have to do is raise the money and buy it, if we think it is that important.

    The rural lifestyle isn’t any one thing, any more than the urban lifestyle is gays and vibrant nightlife. The idiots who think they can “save” it are likely to lead to its rapid demise. If I can’t build that one house I wanted to sell to that nice young couple, it only means I have to sell all sooner.

    Regardless of where they live, they will need infrastructure.

  4. Larry Gross Avatar
    Larry Gross

    If not mistaken, the Va version of TDRs is restricted to the county and can not cross county lines.

    One can argue this from a lot of different angles but essentially what TDRs do is allow a developer to build more dense or one parcel in exchange for permanently setting aside development rights on other parcels.

    Va’s version is willing buyer/willing seller so it’s purely up to the rural landowner if they want to “make a deal” for their land except in this case – they get to keep their land, pay less taxes, etc.

    How does this “cost” other taxpayers?

    It would seem to me that one plus is that the rural land not developed will not need infrastructure.

    Yes, the more densely developed will need additional infrastructure but wouldn’t the cost of such infrastructure be less since it would be more compact and less spread out?

  5. Ray Hyde Avatar
    Ray Hyde

    How does this “cost” other taxpayers?

    The land from which development rights was transferred is typically eligible for taxation at the land use level. A UCAL professor has figured that taxes in Fauquier are 24 to 28% higher than they would be without the land use taxation.

    The guy that sells a development right is giving up whatever appreciation he might have gained on the house he might have built. Instead he is getting a lower tax rate on land that is effectively used for nothing. Since the land is (mostly) nonproductive and nonconsumptive, it reduces the opportunity for others to make and trade products to support it.

    I doubt if the money he makes from a lower tax rate is equivalent to what he might have made on the house, so he loses money.

    When he sells a TDR, it is a capital gains event. Having sold valuable property he pays taxes on the capital gain and reduces his basis in the property. However, the property may in fact not lose value. If he sells it later he will have a lower basis, by virtue of his previous sale, and he willeffectively pay capital gains on the same property again.

    Also, if he tries to borrow against the property, the bank will view the easement as adverse possession and offer a lower amount or a highr rate.

    If rural land is developed, roads are already there, for the most part. They may not be very good roads, but they are generally underused and uncongested. The rural landowner provides his own water and sewer, and uses schools at the same or lesser rate. There are some marginal costs if school buses have to travel farther, but they operate in the countryside anyway. There is some additional costs for travel associated with police and fire.

    EMR claims the infrastructure costs are 10X for rural sites, but I don’t see it.

    The TDR process is going to cost money. In Fauquier the community development department in charge of building permits (denials mostly) is growing four times as fast as the county population.

    In rural areas it does make sense to keep true infrastructure coincident with the towns. But the efficiency the county gains by having compact water and sewer districts comes at the expense of those who are denied the right to build farther away. The county is effectively renting their land in order to hold it for future use, and not paying any rent. The efficiency they get is effectively stolen.

    But if the idea of keeping development close to the towns is based on infrastructure savings, why then are small towns being ringed with greenbelts? We are puttin out of service the very land that we might soon want based on the compact infrastructure argument.

    In non rural areas, ther isn’t much difference in marginal infrastructure costs because you will need to supply it most places anyway. You also don’t have the can/can’t build dichotomy that rural areas have.

    In Urban areas the infrastructure becomes more complex and more expensive, so the argument at some point reverses. Here, the problem with building is finding or redeveloping space, and either one is expensive. Pushing large populations to urban areas will save open space, but at an enormous (hidden) cost.

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