Scott Bayens: Pitkin County’s Robin Hood program
October 13, 2018
There is an innovative little program unique to Pitkin County, one the general public is mostly unaware of.
It is one part conservation effort — effectively limiting and controlling development in rural and remote areas. On the other hand, it promotes growth and is mainly responsible for the massive homes one might see on Red Mountain, in Starwood, on McLain Flats or up Castle Creek. It's a clever legal scheme that involves local land owners, attorneys, developers, land-use planners, architects and real estate brokers. It fuels multi-million dollar residential development projects and provides benefits and opportunity for historical ranching families and owners of backcountry mining claims. The market for Transferable Development Rights (TDRs) may be little known but hides a valuable and thriving local commodity.
The TDR program was introduced in the mid-1990s as county planners rolled out a new zoning category known as rural and remote. Without getting into all the nuances and details of local zoning law, the category was added to more familiar designations such as commercial, residential and agricultural. One of the things rural and remote did was limit the development rights for those who owned land in these mostly undeveloped places. As you might imagine, that change was highly controversial at the time, especially for those who didn't pull permits to build prior to its implementation or were "land banking" looking for future return on their investment.
But as the new TDR experiment came on-line, land owners quickly understood the program might actually add significant value to land that may have been difficult to develop in the first place. According to Suzanne Wolff, assistant director for Pitkin County Community Development, "Our goal was to encourage those in rural and remote not to develop and provide an incentive not to do so."
It could be argued that some lost out before the local land-use code was amended, but many parcels in rural and remote are in out-of-the-way places, "constrained" by steep slopes and environmental hazards, lacked road access or were better suited for conversation easements, which can offer significant tax incentives.
So depending on the circumstances, the size of the parcels, their location and viability for future development, the county offered those owners the ability to transfer or sterilize their right to build. They'd still own the land and could use it to hunt, camp or play on, but agree never again to add any improvements. With that transferable development right in hand, owners had what amounted to a form of currency: legal tender that could be used only in Pitkin County. That currency, or TDR certificate, could then be used to increase the square footage of homes to be built in Pitkin County, located much closer to the town of Aspen, where substantial development already existed.
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As the maximum allowable square footage for a new home in Pitkin County is 5,750 square feet, if a developer or land owner wants to build a 7,500-square-foot home or even go as high as 15,000 square feet, they would be required to submit the appropriate number of TDRs to obtain the green light from Community Development. As each TDR allows an additional 2,500 square feet, for a 15,000-square-foot house, they'd need to have secured and tender four TDRs.
The only real caveat for the TDR user is to be sure their project's building site is an approved "landing site" within the specific boundary Pitkin County has designated for big development.
Here's where the going gets good for the owner in rural and remote who has taken the time to convert his development right to a single TDR or, in many cases, dozens. Since the program was started the price of a TDR has fluctuated from a low of $115,000 to as high as $318,000.
Today, TDRs are currently selling for around $250,000 each. So, imagine the owner whose family left a 360-acre parcel of land way up the Pan with limited or no road access, that was used to raise sheep or cattle 100 years ago. Yes, they might have found a way to build in a spectacular and private setting, but at what cost and over what period of time? Thanks to TDRs, in today's market, instead they might have millions in certificates to sell.
Since the inception of the innovative program, 380 TDRs have been issued and 224 of those have been used or "extinguished." According to county documents, approximately 8,606 acres of land have been deed restricted against development as a result of the severance of those development rights. From there, the majority of TDRs were "landed" or used for additional square footage.
"It's been successful," Wolff said. "We've preserved those primitive and pristine areas and absorbed the development impact in a win-win scenario for everybody."
Interestingly, despite its success, similar programs have not been adopted or copied in areas like the Vail Valley or Telluride.
The program itself is subject to change as it did a few years back when the number of TDRs per acre or parcel was reduced. Grafton Smith, a land-use planner with nearly 30 years of experience who's been helping clients play the TDR game from the beginning sees the future this way: "I think it is too valuable a tool right now to see it affected in a major way any time soon."
However, Smith said he see the possibility county commissioners might lower max square footage, which would have implications for parties on either side. He'd also like to see the ability for buyers to use a portion or a part of a TDR so as to limit the size of development from current maximum levels.
For now, the TDR is here to stay, as long as development rights exist in the backcountry as well as what seems like an insatiable and never-ending appetite for trophy homes here.
Scott Bayens (GRI, ABR, CNE) is a Realtor with Aspen Snowmass Sotheby's International Realty with more than a decade of experience. He can be reached at firstname.lastname@example.org.
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