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Property Rights for Trade Part II: How TDRs may be used in the Donut Hole in Maple Valley
Transfer of development rights are likely to be a part of future growth in Maple Valley.
While TDRs have not been used in the past decade, when Maple Valley’s population increased by 59 percent, a similar King County program called the 4-to-1 program was used during the development of the 150 acre Maple Ridge Highlands in the 1990s.
According to Maple Valley Community Development Director Ty Peterson, the development acted as a receiving site by transferring the density from the surroundings rural areas, where either conservation easements were placed on the property or the titles were dedicated to King County. As a result, Peterson stated, roughly 500 acres of land around the Highlands development have been preserved. The Highlands development was ultimately annexed into the city of Maple Valley in 2009.
HOW THE CITY AND COUNTY PROGRAMS DIFFER
In September of last year, Maple Valley adopted its own TDR program as a part of the Regional Transfer of Development Rights Program, which deals exclusively with sending and receiving sites within their own city limits.
According to King County TDR Director Darren Greve, the difference between a county and city program is that, “a county program provides for development right transfers from rural sending sites into unincorporated urban area and incorporated city receiving sites,” while “a city TDR program is focused on in-city sending and receiving sites to protect in-city open space and historic buildings etc.”
“However, there is a growing number of cities that have both in-city TDR programs and provisions that allow for regional TDR component with their respective county to protect rural lands that are of compelling interest to a city,” Greve wrote in an email interview. “Two separate programs are needed because each jurisdiction has land use control over its receiving areas and sending areas.”
For cities in King County that do not have a TDR program, such as Bellevue, Greve said, they incorporate the regional TDR program into the city’s zoning code which allows city developers to use TDRs to increase development capacity.
There is also a significant difference between county and city TDRs in terms of base density.
Brian Ross, managing partner for Kirkland-based YarrowBay, stated in a phone interview that it used TDRs as a part of the Kentlake Highlands development, which is located in unincorporated King County near Black Diamond. The base density was four units per one acre, but after transferring several dozens of TDRs, YarrowBay was allowed to build six units per acre.
Greve explained that there are two different types of zoning densities. One is the base density which for urban county-controlled areas is four units per acre. Then there is maximum density which in King County is six units per acre. Base density is the standard unit per acre ratio. In order to reach the maximum density, TDRs must be used.
“If they want more units, up to the maximum allowed, then they need to use the county’s residential density incentive options, which TDR is one,” Greve wrote. “So, if a developer has one acre of totally unconstrained land he/she can build four houses by-right. If he wants to build up to the max of six houses he needs to buy TDRs from the rural area.”
While Ross said he believed the TDR program can be beneficial he added that it can get complicated when the sending site and receiving site are located in two different jurisdictions.
“I think it’s a great idea to preserve rural lands and find an economic incentive to do that and at the same time keep growth within the urban growth boundary,” he said. “It’s not a simple program by any means because most TDRs are generated from the rural areas and most development sites are in cities that don’t want rural TDRs brought in to increase density. So, there’s ongoing tension. Most cities will come up with their own program and zone property on how they want to develop. There’s a difference between the practice and the concept, so, it’s kind of a confusing process. But there are times when it comes together.”
THE DONUT HOLE
One example of this is the Donut Hole, a 156-acre property owned by King County that Maple Valley is attempting to annex into the city limits.
Because the land is owned by King County it falls within the jurisdiction of the county’s TDR program. The county originally desired the eventual developer of the site to use TDRs as a way to reach the required base density of four units per acre, according to Greve.
“The County’s potential sale of the Summit Place property included an open space component based on this general four to one (unit per acre) approach,” he wrote. “And TDR was just a part of the open space component.”
The county also wanted the TDRs to be purchased from rural landowners in King County or from its TDR bank.
A TDR bank works similar to a regular bank by holding TDR certificates for the county until a developer is willing to buy them. The county uses the bank to buy the TDRs up front from willing private landowners and then attempts to sell them.
According to Greve, 95 percent of all TDR sales within the King County program are private.
However, according to Peterson, the city initially opposed the idea due to the lack of mutual gain.
“Quite frankly, the city didn’t see any benefit in the use of TDRs on the property that were purchased from King County or the King County Bank,” Peterson said. “The county was insisting that it be allowed.”
Eventually, Peterson stated, the city and county were able to come up with a compromise. The city would allow 200 additional housing units to be built if the necessary TDRs were purchased, but the TDRs would have to come from privately owned rural properties located within five miles of Maple Valley. Currently the zoning would allow for 1,240 units without the use of TDRs.
“At least it can be argued that there is some relationship benefit preserving land within five miles of the city,” Peterson explained. “It doesn’t really help if we have to take density while areas outside of Woodinville are being preserved.”
Greve further explained the agreement on TDRs regarding the Donut Hole.
“The developer’s purchase of 200 TDRs from rural lands…would help fulfill the four to one offset of permanently protecting other rural lands once the Summit Place property was changed from urban to rural uses,” Greve wrote. “The five mile from city limits boundary was put in place to make sure the TDR related open space benefits remain close to city of Maple Valley.”
FINDING A FEW GOOD SENDING SITES
The main challenge for using TDRs, however, will be finding property owners willing to sell them. For example, in 2006, the average King County TDR sold for $30,000. Now, however, the average one sells for around $15,000.
“There haven’t been a whole financial market for these rights,” Peterson said. “People can hardly develop property as it is, let alone buy development rights. There are lots of sites that qualify. It’s just that there haven’t been property owners who have had their sites certified.”
Additionally, cities like Maple Valley, which grew exponentially for two decades, are already struggling to provide infrastructure for the current population and aren’t keen on adding more density.
“Conceptional it’s really good,” Peterson said. “But it struggles because one, cities are having a hard time. It’s been difficult to approach cities that are already struggling with addressing the impact of growth and say, ‘Let’s take some of the county’s growth, too.’”
Before, the city considered using city-owned Lake Wilderness Golf Course as a sending site, an option which is still viable.
The idea was first conceived in 2006 when YarrowBay expressed interest in purchasing the Lake Wilderness Golf Course and developing the Donut Hole, Ross explained.
According to a Reporter article dated July 30, 2010, YarrowBay offered the city the chance to purchase it “with the idea the city would want to preserve it rather than see houses built.”
“The city said ‘We recognize there might be benefit to preservation in perpetuity the golf course property,’” Peterson said. “Instead of having the golf course property turn into residential land, maybe we can sell the development rights and use it another place.”
Ross explained his company would have then purchased the TDRs from the city and used them to meet the base density requirements in the Donut Hole site.
Another potential sending site is the 50-acre Legacy Site located on Maple Valley Highway, across from Rock Creek Elementary School and the Tahoma School District administrative offices, which has residential capacity. Theoretically, the city could also in turn place a conservation easement and move the TDRs elsewhere.
“Deciding where else to add higher density is where it’s uncertain,” Peterson explained.
According to the Maple Valley ordinance which established the TDR program, it is designed to “allow opportunities for increased density in specific designated parts of the city that are best suited to accommodate urban densities with the least impacts to the environment and public services.”
Due to the relatively recent implementation of the program, however, it has yet to be seen how the policy will ultimately influence any zoning density and in what part of the city.
“This framework is mid-process and it’s kind of in its infancy,” Peterson said.
The use of TDRs in the master planned developments in Black Diamond will be explored in Part III.
Maple Valley’s TDR program can be reviewed at http://www.maplevalleywa.gov/Modules/ShowDocument.aspx?documentid=3859
Correction: Part I stated that TDRs were used as part of the recently rescinded community facilities district in Black Diamond. TDRs were not involved in the districts. They are a part of the master planned developments.