Chapter 10 - § 10.6 • TRANSFERABLE DEVELOPMENT RIGHTS AS AN AID TO HISTORIC PRESERVATION

• Jurisdiction: Colorado

§ 10.6 • TRANSFERABLE DEVELOPMENT RIGHTS AS AN AID TO HISTORIC PRESERVATION

One challenge for local governments that adopt historic preservation ordinances is the need to provide alternative methods for the owner of a historic structure to realize a reasonable economic return on the property. Historic structures often tend to be in areas where higher density development can give greater economic return, but where allowing higher density development may also destroy the historic character of the area. A transfer of development rights (TDR) program can potentially provide an opportunity for owners of historic properties to transfer unused development rights for their property to another property that is not governed by the historic preservation ordinance, thereby recouping some lost economic value.⁴⁹

The TDR concept has experienced some success in New York City. In Penn Central Transportation Co. v. City of New York,⁵⁰ the U.S. Supreme Court implied that Penn Central Transportation Company could transfer the development rights of the terminal to one of the other properties it owned within the city. The Court found that the TDR option could mitigate a taking claim by reducing the financial burden that the landmark designation imposed. But since no taking was found, the TDR program was otherwise given little emphasis.⁵¹ TDR has also been used in Washington, D.C., where the D.C. Court of Appeals held a TDR program that considered matters of historic preservation in the context of a planned unit development zoning approval was proper under general welfare objectives.⁵² Denver and other Colorado municipalities have also adopted TDR statutes that can be used for historic preservation purposes. Although the U.S. Supreme Court was faced with a property rights dispute involving TDRs in a 1997 case, it did not rule on the validity of the TDRs as either a property right or a form of compensation. In that case, the regional planning agency denied a landowner the right to develop her land due to environmental concerns and offered her TDRs instead. On appeal, the Court held that the landowner could bring a lawsuit challenging the TDR system on its face without first trying to sell the TDRs. The Court did not reach the merits of the TDR program itself.⁵³

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