Transfer of Development Rights (TDR)

Sounds like perplexing magic if you are not a land use aficionado. Let’s try to get to the basics.  The Florida Keys has been classified as an “Area of Critical State Concern” for decades now.  And, as such, we have regulations and limitations that don’t apply to other areas of Florida 

BPAS Allocations

Perhaps the most significant limitation that the State of Florida has applied here is related to new development.  As an island community with highly treasured environmental features and extremely limited infrastructure, the state created the critical concern designation to assure environmental protection by limiting growth.  We must not exceed our “carrying capacity” as to appropriate supply of water, wastewater facilities, highway capacity, schools, environmental protection, etc. 

Therefore, based on state requirements, Islamorada implemented the Building Permit Allocation System (BPAS) and the state dictated how many total new residential dwellings could be accommodated.  Only a few “allocations” in the BPAS system are still available.  Hundreds of vacant lots remain.  

For non-residential development, the BPAS allocations are determined by the size of new structures or expansion of existing structures. 

Building Rights

These BPAS allocations equate to “building rights” once constructed.  Any structure, residential or non-residential, that was permitted prior to the allocation system has building rights based on the number of dwelling units permitted for residential or the square footage for non-residential.

Transferring Building Rights

When Village regulations were written after incorporation, everyone knew that potentially there would be hundreds of people who own vacant lots who would not be able to get one of the limited BPAS allocations to build. So, another mechanism was put in place as an alternative – the Transfer of Development Rights or TDRs. 

If a property within Islamorada has building rights or “development rights” through BPAS or prior permits from the County or Village, the development right can be transferred under specific circumstances to another property.  It is referred to as a “TDR.”

As long as there are allocations available to property owners through the BPAS system, the TDR process would rarely be used, though some TDRs have been used by property owners who don’t want to have to wait for allocations or if they know allocations will be gone before their number comes up.

But now, as we have more property owners hoping to build, than we have allocations left before total buildout, there is a real market developing for TDRs.  As the demand is expected to grow tremendously while the supply does not, the price for a TDR is likely to increase dramatically.  

Conditions for TDRs 

When the TDR ordinance was originally thought out, there were quite a few specific requirements.  Some have been changed, typically to make the ordinance “easier” for those wanting building rights.  

One requirement is that if the development right comes from a non-waterfront property, the associated TDR can only be transferred to a non-waterfront receiving site. Some in the Village believe this limitation should be eliminated. However, just imagine the jeopardy it would create for every “affordable” non-waterfront home or trailer – aka housing for our workforce.

To transfer a building right, the improvement, residential or nonresidential, must be removed and never replaced on the original site (sending site).  

As we approach the total “buildout” scheduled for July 2023, when no more residential allocations will be available, we believe a serious review of the TDR ordinance is critical.  The 2023 buildout is a critical issue as some property owners with vacant land may have “takings” claims – a circumstance when action of the government “takes” or eliminates use of a property through the regulations enacted. 

In a takings lawsuit the government can prevail, and the property owner is deprived of his or her building rights; or the property owner prevails and either receives a settlement (compensation), or the right to build.  Since we have limited allocations, it is likely that winning a “takings” claim will result in compensation from the government (and that’s right – we the taxpayers are the government).

Some people think the dollar amounts for this compensation from taxpayers will be hundreds of millions of dollars.  And will the Village get help from the State who required the building limits?

We have lots of ideas about the TDR situation, takings, and more. Hang tight. This is complicated but we are keeping track and will keep you posted.  

Examples of TDR use

Matecumbe Sandy Cove: When Hurricane Irma paid us a visit in 2017, a small waterfront condo complex on Lower Matecumbe collapsed.  Most of you probably remember the photos.  The building had 12 small apartments (12 building rights). A duplex was built back on the condo land and 10 development rights were available to be transferred elsewhere as TDRs.

Coral Cove: There used to be a mobile home park adjoining Woody’s bar at MM81.8.  There were 18 little trailers on the narrow bayfront property.  Nine were redeveloped as four bedroom 3 bath vacation rentals squeezed onto the same site, each with its own swimming pool, advertised as 5 night minimum rentals. The other 9 development rights (TDRs) were transferred to an oceanfront lot where a similar project is underway – nine more 4 bedroom homes with pools on a single mixed use lot, creating a mini-vacation rental resort.