Preserving agricultural and forest land: a TDR approach

Bill Mundy and Theodore Lane

Journal of Property Investment & Finance, 2011, vol. 29, issue 4/5, 566-574

Abstract: Purpose - The purpose of this paper is to explore the demand and supply relationship between urban and non‐urban land, the latter's diminishing supply, arguments for and against its preservation, methods in which preservation might be achieved and one method in particular, with which the authors have considerable experience, that involves the purchase of development rights and density credits. Design/methodology/approach - The research design involved meetings with farmers, city and county officials and members of several land conservation organizations, bringing together several hundred agricultural and residential real estate transactions, quantitative analysis of the transaction data using descriptive and hedonic methods, developing property attribute values and thereby determining the value of agricultural development rights and urban density credits. Findings - Agricultural development rights were valued, on average, at $9,000 per acre. Commercial development rights were valued, on average, at $9.00 per square foot of floor area (FAR). Practical implications - By acquiring agricultural development rights the process of agricultural land being converted to urban purposes can be slowed or halted. Valuing and selling development rights is a straightforward means of permitting urban density that is understood by developers and easily, objectively and transparently quantified. It is also a good method of raising funds for the acquisition of agricultural development rights. Originality/value - The valuation process developed and employed does away with the need for individual appraisals of rights to be acquired and sold. Therefore this is a very efficient process. Also, it shows how farmers, preservationists and planners can be brought together to solve a common problem.

Keywords: Floor area ratio; Agricultural development rights; Urban density credits; Farmland preservation; Urban growth boundaries; Agriculture; Forests; Development; United States of America (search for similar items in EconPapers)
Date: 2011
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Persistent link: https://EconPapers.repec.org/RePEc:eme:jpifpp:v:29:y:2011:i:4/5:p:566-574

DOI: 10.1108/14635781111150402

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