The Transferable Development Rights (TDR) program allows property owners to sell unused development capacity to other landowners or developers in other, noncontiguous development districts. This unused capacity typically is measured in terms Floor Area Ratio (FAR) increases, which can allow for higher density development in areas that would otherwise have lower-density limits. (Seton Hall University, 2013)
The concept of TDRs began with NYC’s first zoning ordinance in 1916, which allowed landowners to sell unused land to adjacent lots in the form of zoning lot mergers. The law was relaxed more with the 1968 enactment of NYC’s Landmark Preservation Law, which allowed cross-street transfers of rights, and then became substantially more lenient after a series of court rulings in the 1970s which concluded that landmark and conservation sites could transfer development rights to other land parcels “in the vicinity” of those zones. (dos.ny.gov, 2015)
In short, TDRs provide economic incentives for owners of properties in conservation or landmark zones to sell their development rights to other residential, commercial, or manufacturing districts, thus preserving the historical environmental character of these spaces and increasing the density of other areas.
For example, say land in a conservation zone is allowed one dwelling unit per acre of land. Under TDR, the rights to develop 20 residential units on 20 acres of land could be transferred to a higher-density zone that allows one dwelling unit per quarter acre. So instead of that residential zone having 60 units on a 15-acre parcel, it could then have 80. In this scenario, the land in the conservation or landmark zone would be considered economically used, and no further development could take place. (dos.ny.gov, 2015)