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Transfer of Development Rights (TDR)
Case Study
The City of Seattle, Washington boasts a population of well over a half million people and is one of the most well-known landmarks on the Pacific Coast. In 1985, the City began a comprehensive Downtown Restoration effort that focused on optimizing the economic vitality of the district while maintaining the existing cultural and social resources. The four central goals to the effort are: 1) retain low-income housing; 2) preserve historic landmarks; 3) encourage infill development in historic districts that is compatible with the district character; and 4) create incentives for varying building scale. Existing resources that were targeted for preservation include historic buildings, arts institutions and structures containing units of affordable housing. As part of the overall revitalization effort, Seattle developed an intricate TDR program that has successfully preserved several landmark structures and hundreds of units of affordable housing.
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| The Paramount Theater was redeveloped as part of a tdr transaction and now includes a performing arts center and 40 units of single-occupancy housing. |
The Seattle downtown revitalization program created a complex schema of sending and receiving areas based on specific planning objectives for particular areas of the downtown. As a result, the mechanisms and guidelines used to transfer development rights in Seattle's downtown area vary between different districts. For example, in a few of the districts established by the program, such as the Harborfront areas and Pike Market Mixed zone, density cannot be transferred to receiving districts. These districts are static relative to the TDR program and rely on other aspects of the overall revitalization plan for improvements. In the Downtown Retail Core, transfers can only take place between buildings on the same block. The provisions of these districts are aesthetically driven and are specifically designed to maintain a mixed building height appearance in these areas for retail use. Still other districts can send and receive with fewer restrictions with development rights potentially passing from sites with historic institutions to sites with modern day office space.
A base density was determined for each district (generally lower that what was allowed prior to the program) and a list of incentives were created for developers who wish to develop beyond that density. Incentives are provided in two general categories: use incentives and design incentives. Some of the use incentives available to developers include the provision and/or maintenance of affordable housing, adding day-care facilities to commercial/office space development, creating theater space, and setting aside ground floor space for retail use. Design incentives can include pedestrian or bicycle amenities, atriums, green rooftops, and art display areas.
Calculating Development Rights
Perhaps the most innovative and complex aspect of the Seattle TDR program is the method for calculating development rights. Since a highly urbanized setting provides the backdrop for this program, the City chose to frame the valuation process more on the bulk of prospective development than the specific use. Although the specific use determines eligibility for sending areas (affordable housing, historic landmarks, etc.) and receiving areas, the value of rights is determined on square footage alone. This framework allows buildings that are primarily residential to transfer rights to buildings with other primary uses such as office space.
The process of calculating development rights on individual sites can be intricate and varies from one district to another. In general, transferable area is determined by calculating the floor area that would be developable on a site and subtracting areas that would not be useable as a primary use such as utility space, wall area and space for mechanical equipment. Incentives can be added to the equation for development space that would include amenities such as ground floor retail or day care facilities. A more complete explanation of these calculations can be found in Jane J. Voget's Making Transfer of Development Rights Work for Downtown Preservation and Redevelopment (American Planning Association, 1999 APA Conference Proceedings).
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| Restoration of the historic ymca building was acoompished with funds generated from the Seattle TDR bank. |
The TDR Bank
At the outset of the downtown revitalization effort, the City of Seattle correctly anticipated that the development community would not play the lead role in implementing a complex urban TDR program. Officials recognized that the City itself would need to provide a mechanism that makes it easier for developers to purchase TDRs without going through the complicated process of determining the number of development rights for individual sites. The answer to this problem, a TDR bank, has come to be the most successful aspect of the TDR program and demonstrates both a clear vision of what the program needed for success and a clear commitment to full implementation on the part of local officials.
During the first 12 years of implementation, the City served as the sole purchaser of TDRs, acquiring nearly four million dollars worth of development rights from eight separate sites in the sending districts. These purchases effectively preserved 372 units of affordable housing and facilitated the restoration of two performing arts centers. More importantly to the long term viability of the program, these purchase placed several million dollars worth of development rights within easy grasp of the development community.
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| Approximately one-half of the floor area within the W Hotel in Seattle was made possible through the purchase of development rights from the tdr bank. |
Once the City had accrued a large amount of development rights, the development community began to take interest and private purchases began in 1997. This first purchase involved selling approximately 130,000 square feet of space for nearly 1.5 million dollars. These TDRs represent approximately one-half the total area of the W Hotel in downtown Seattle. Another notable example occurred in 1999 when proceeds from the sale of nearly 120,000 square feet of TDR space were set aside for the restoration of the landmark YMCA building. Provisions specific to the development of Performing Arts Centers within the TDR program were also used toward the construction of the Benaroya Symphony Hall.
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