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Density Transfers?

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Ryan Bailey

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Arizona
Is anyone appraising density transfers or have any good resources regarding the valuation of them?
 

Howard Klahr

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Florida
It is a local issue, you need to contact the planning department in your area for information on what projects have acquired or sold transfer development rights.
 

The Warrior Monk

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New York
Ditto Howard.

The issue is very local. In fact, it can be so local that there could be regulations when transferring from one area to another within a single municipality.
 

Vernon Martin

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California
You might find articles by using the search term "air rights".

Not only is it a localized phenomenon, but the value can quickly change in today's declining markets. For instance, I can imagine that the value of air rights in downtown Manhattan has probably declined noticeably during the last half of 2008.
 

Howard Klahr

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Florida
Transfer development rights are not the same as air rights, at least in this part of the country. Air rights grant permission to develop, occupy or otherwise use that part of the property over/above another use.

Transfer development rights is the assignment of development density from one property to another. For example, under current zoining a property owner is permitted to build 10 units per acre or has an allowable FAR of 10:1 Under certain conditions, a property owner may sell or transfer their right to develop part of thier density to another property owner on an entirely different site. Let's say that Owner A sold TDRs to Owner B of 5 units per acrel or an FAR of 5:1. Now Owner A despite an allowable density under zoning of 10 units per acre or FAR of 10:1is limited to only 5 units per acre or FAR of 5:1while Owner B can now develop up to 15 units per acre or to an FAR of 15:1.

Comment - don't get confused by units per acre and FAR. They don't necessarily equate it is just another form of density use in the example.
 

Vernon Martin

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I've generally seen the terms used synonymously, but the term "air rights" will show up more frequently in internet searches. This is a definition that I've seen and used:

Air rights--the Floor to Air Ratio, or FAR, not being used by a building that can be transferred
 

Howard Klahr

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Florida
here is a definition of TDRs as I understand them

TDR is the exchange of zoning privileges from areas with low population needs, such as farmland, to areas of high population needs, such as downtown areas. These transfers allow for the preservation of open spaces and historic landmarks, while giving urban areas a chance to expand and experience continued growth.

The difference between TDRs and air rights is that air rights remain with the original property just the ownership is transferred. TDRs actually transfer to another property.

Also FAR is Floor to Area Ratio not Floor to Air Ratio


Here is a link to some further information that might be of use for the OP

http://www.realtor.org/library/library/fg804
 
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Kali the Boston Terrier

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Michigan
Conservation easements also deal with this issue specifically. You may want to try the ASFMRA, Lum Library at the AI. Common terms are PDR (Property Development Rights)and FDR (Future Development Rights). A lot of townships and municipalities have passed millages around here to buy up development rights with tax dollars. The place with the largest in my State is Old Mission Penisula (aka Penisula Twp.)

But most conservation easements deal in the valuation of the development rights, seeing that is essentially donating. If you are doing this for a State agency, County or Gov't entity you must follow Yellowbook. If you are doing this for Federal Income tax reporting, you may want to take the COnservation Easement class through the AI/ASA/ASFMRA before you proceed...IRS requires this class to do conservation easements in Federal Income Tax cases.
 

timd354

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Maryland
Montgomery County Maryland has one of the oldest TDR programs around, it was established in 1980 and has been used extensively. When the the TDR's are utilized in Montgomery County, they must be recorded (and several hundred are recorded in most years, with over 1,000 in some years), so valuing a TDR in Montgomery County would involve searching the land records and looking the consideration paid for recent TDRs recorded.

Even though TDR programs are local, I would think that the TDR's would have to be recorded in most jurisdictions and that the land records would be the place to start when looking at the values of TDR's. You may also want to talk to some commercial land brokers as they may be able to help you out by providing information on the TDR market in your jurisdiction. Hopefully, the TDR that you are trying to appraise is in a jurisdiction with a large enough program to have an active market of TDR's.....good luck with your assignment.

The TDR program is a complete scam which has enriched land owners to a ridiculous extent. When land in certain areas was downzoned from 5 acre zoning to 25 acre zoning, the owners were granted the right to sell 1 TDR per every 5 acres of land they owned. Seeing how the average price of a TDR was $42,000 IN 2006 (the latest year I found for which figures are easily available), the owner of a 200 acre farm could have sold his TDR's that year for $1,680,000. Seeing how many so-called farms in this area are not traditional farms, but are horse properties owned by the very wealthy elites, including people like Saudi sheiks, foreign diplomats, foreign and American businesspeople, wealthy politicos, etc. (Montgomery County borders Washington, DC). The really smart land owners sell 16 of the 20 available TDR's per each hundred acre parcel and then use the 4 unsold TDR's to subdivide the 100 acres into four 25 acre lots which are then sold off as buildable lots to wealthy wannabe horse people.....this is the way to for the property owner to max out amount of money he receives for selling the TDR's and the land, while at the same time doing nothing to actually preserve "real" farms, but, instead just accelerates turning famrland into small, 25 acre horse properties for the super wealthy. In the meantime, the people in the less wealthy areas of the county (which of course where most TDR receiving areas are located) get crapped on by having their areas developed at a much higher density than otherwise allowable and get to deal with the inadequate infrastructure for such high density development.....what a beautiful program.
 
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andy ruffner

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Virginia
IMO the TDR system is pretty good. As posted above varies by municipality. Clarke and Fauquier Counties in northern VA use the system and as above Montgomery County, md.
 
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