Boulder City Council Member on County TDR Program

I normally do not agree with Steve on many things but on this we are in complete agreement!


Pomerance: Expanded Transfer of Development Rights -- the wrong approach
Steve PomeranceSunday, March 2, 2008
When the Boulder County commissioners meet this week, they should abandon the ill-conceived Expanded Transfer of Development Rights proposal. The program has fundamental flaws that are not amenable to correction, would accomplish little to benefit the citizens of the county, and potentially could put the county at risk from "takings" and TABOR lawsuits.
The proposed ETDR scheme envisions setting "thresholds" for the square footage of development on a parcel, with the thresholds being lower in the mountains and higher in the plains. In general terms, and ignoring many of the details, if a property owner wants to build more than the threshold allows, he or she would have to purchase the requisite amount of square footage of "development credits" from another property owner at market price. The seller's development potential would then be restricted by an equivalent amount below their threshold.
This action in effect transfers development potential between the property owners. It also reduces the average floor area of new development, since one development's going above the threshold requires another to be below. Unfortunately, as the county Planning Commission noted, the thresholds are inevitably somewhat arbitrary.
The ETDR approach does not appear to distinguish areas the county would like to protect from areas where the commissioners have less concern. In other words, an owner in an area where the county wants less development could purchase development credits, leading to more, not less, development in those areas.
A technical difficulty with ETDR is that some properties can never be developed up to their thresholds because of the stringent nature of the Site Plan Review process. So it appears that these owners could sell credits for development that would, in fact, not be permitted under the county's review process. Thus they would be the prime sellers of development credits -- their prices would be lowest because they are giving up the least. This would remove most of the disincentive for building larger homes.
On the other hand, some property owners do not have significant Site Plan Review constraints. If such an owner sells credits, he or she can sell only the amount of square footage below their ETDR threshold. But in the process, they also apparently lose what they might have been able to build above their threshold. However, a similarly situated purchaser only needs to buy what is needed to go above their threshold. Thus the cost of these credits will be prohibitive, because the seller is giving up far more than the buyer is getting.
In Nollan vs. California Coastal Commission, the U.S. Supreme Court determined that exactions from property owners need to have an essential nexus with the action being permitted. In layman's terms, the fix being exacted must be tied to the problem being created. But there is no real connection between, for example, the impact from building an overly large house near Niwot and the benefit from buying down development rights on properties near Ward or Raymond.
Some people will claim that the commissioners are, in effect, taxing people who build big houses to pay for a county effort to buy out development rights. This would then arguably be a county excise tax imposed without a TABOR vote, which would make it illegal on two counts. And further legal issues might be raised about the arbitrary thresholds.
The commissioners have better alternatives: They could impose a Floor Area Ratio requirement that would limit houses to, say, 3500 square feet, with each extra 100 square feet requiring the lot to be one additional acre over 35 acres. They could also set visual standards, increase set-back requirements, and so on.
In politics, many times an ill-defined problem and a "good idea" solution get so stuck together that alternatives are never examined. The commissioners have done some very good work recently on building codes and on making the whole development process more "green." They need to bring a similar level of reality-check to this process.
Steve Pomerance is a former Boulder city council member and can be reached at stevepomerance@yahoo.com