Mountain Law: Restricting land use tricky in Colorado
October 22, 2014
There aren't a lot of good options for a local government wanting to preserve a certain type of land use, whether it be open space, agricultural land, historic buildings or the like. One option is simply for the government to buy the land, then restrict its use in whatever way it wants. But that takes a lot of taxpayer money that can be hard to come by.
Another option is for the government to pass regulations in furtherance of preservation goals (e.g., "downzone" the land). But, if the regulations are too weak they might not achieve the goals, and if the regulations are too severe it can lead to landowners claiming a "taking" and demanding just compensation. One possible solution is a transferable development rights (TDR) program as discussed in this article, but that approach is not without legal concerns.
The operation of a TDR program is perhaps best explained by example. Assume there is a piece of land that the government wants to protect because of its unique features. Maybe the land has wetlands, or is in a view corridor, or would require significant new infrastructure to develop. This land is called the "sending" property. Further assume there is another piece of land that is appropriate for development because it is near existing infrastructure and is not otherwise remarkable. This land is called the "receiving" property. A TDR program would downzone the sending property in a manner that might otherwise be severe enough to result in a taking. However, the program would then allow the owner of the sending property to sell development rights to the owner of the receiving property on a onetime basis. In turn, the program would require the owner of the receiving property to purchase development rights as a condition of development or in order to increase the allowable density on the receiving property. The result of this process is that the sending property is protected from development while its owner receives compensation for the downzoning, all without costing the taxpayers money.
TDR programs of the sort described above have been successful around the country and locally. The programs in Summit County are primarily concerned with preserving backcountry parcels. According to the county website, the flagship Upper Blue Basin TDR Program (which is a joint program that includes the towns of Breckenridge and Blue River) has protected 1,050 acres and generated $1,910,400 to be used for open-space purchases since 2000. The money largely comes from an administrative fee the county charges for using its "TDR Bank." The bank brings together buyers and sellers of development rights who might otherwise have trouble connecting, thereby creating a market for the development rights. The county sets the price for development rights transferred through the bank, which is currently $40,950 for a 20-acre parcel.
One possible solution is a transferable development rights (TDR) program
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Somewhat surprisingly, given their successes, the constitutional underpinnings of TDR programs are unsettled. Specifically, there is a legal debate concerning whether the existence of a TDR program can be used by the government to show that a taking has not occurred … or only to provide compensation once it is determined that a taking has occurred. The U.S. Supreme Court has hinted at the issue in two decisions, but never fully decided it. This leaves legal scholars scratching their heads. What's at stake is whether local government might potentially be on the hook for paying additional compensation to an aggrieved owner of a sending property even if there is a TDR program.
While every TDR program has unique features, they are all designed to protect land without requiring direct payment by the government. This approach has been used as an important land protection tool, but, perhaps surprisingly, its legal parameters remain an open question under constitutional law.
Noah Klug is the owner of The Klug Law Firm in Summit County. He can be reached at (970) 468-4953 or Noah@TheKlugLawFirm.com.
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