Transcript Max Bell Foundation BHI

Exploring Incentive Based Policy
Instruments for Achieving
Conservation Objectives in the
Beaver Hills.
Presentation to BHI Board
June 13, 2007
Marian Weber
Alberta Research Council
Objectives of the Study
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Evaluate incentive based policies available to
local government to achieve ecological
objectives in the BHI
Build partnerships to further explore key policy
initiatives
Municipal Planning Issues
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How much development to allow and where to
allow it to occur
How to accommodate growth without
increasing the amount of developed land or
overextending the infrastructure within their
jurisdictions.
Municipal Planning Tools
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Zoning
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Density Limits
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Limits on Types of Activity
Thresholds
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number and size of subdivision units;
number of buildings per ha.
Total number of upgraders
Total number of emissions
No Net Loss of wetlands
Conservation Easements, Environmental Reserves
Problems
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Rent Seeking
High Administrative Costs
Fairness
Inefficient
Market Based Tools
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Used to support planning tools
Price Based Tools
Development Fees
 Tax Credits
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Quantity Based Tools
Transferable Development Credits
 Mitigation Banking
 Easements/Purchase of Development Rights
(PDRs)
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Transferable Development
Rights/Credits
Allow private landowners in areas
designated for conservation to sell
development credits to developers in areas
designated for more intensive development
 Private landowners receive the financial
benefit of development of their land while
preserving it in its desired state
 TDC programs are completely voluntary
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TDC Requirements
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Identification of sending area(s) to be protected,
Identification of receiving area(s) to be
developed,
Transferable credits that symbolize and quantify
the development rights being sold
An administrative procedure for carrying out the
transaction.
Identification of Sending and
Receiving Areas
Needs to be tied to program objectives
 More than one goal can be accomplished
by a single TDR program
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Farmland, Timberland, and Open Space
Preservation
 Corridor Preservation
 Environmental Protection
 Historic Preservation
 Affordable Housing
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Examples
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Historic Preservation
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undeveloped land along major habitat corridors designated as sending areas;
Environmental Protection
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Sending area could be AR zones.
Corridor Preservation
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Density bonuses can be designed so that builders of affordable rental or owner-occupied housing
units receive additional density in exchange for some enforceable mechanism to ensure the built
housing is affordable
Farmland, Timberland, and Open Space Preservation
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TDCs awarded to historic properties
Affordable Housing
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(Dorfman et al. 2005)
Environmentally sensitive areas or area covered by regulations such as stream buffer requirements
Receiving areas
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Selected by any criteria while abiding by other regulatory requirements (e.g. runoff management)
Typically include commercial and residential zones, including CR zones
Potential Sending and Receiving Areas for Preservation of
Open Space and agricultural landscapes
Environmentally Sensitive Areas – potential
sending areas and credit allocation
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Sending areas based on Ecological Functional Zones
(EFZs) based on: air quality, surface water, groundwater,
biodiversity (core biodiversity area), and habitat
connectivity;
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Credit allocation based on ecological Best Practices
specific to each EFZ that will permit the identification of
appropriate decisions and management actions at a
strategic level and at specific
Calculating Credits, Prices, and
Bonuses
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Credit
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Transfer rate
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number of TDCs allocated to land owners to sell in the
sending area
Based on zoning (1-1 ratio or higher)
number of TDCs required to build an additional unit of
development in the receiving area
Bonus
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additional development that can be achieved at a receiving
site through purchasing TDCs
Bonus Calculations
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Examples
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floor area ratio
height
parking
landscaping
subdivision limits
minimum lot area
open space requirements
frontage regulations.
This flexibility is an important aspect of TDCs
Balancing Demand and Supply
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Allocate sufficient TDCs in the sending area to
keep TDCs affordable for receiving area
developers while also offering sufficient
compensation for sending area landowners.
Potential market for TDCs linked to number of
building permits required in a year
 Willingness to pay for TDCs – how much are
developers willing to pay for an additional single
family unit of housing? Or for a multi-family unit?
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Fiscal Impact
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Tax base follows the credit
Decrease in development value in sending areas
but increase in development value for the
receiving area
Property value increases in receiving areas (e.g.
10% - Dorfman et al. 2005)
Impacts on Affordable Housing
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Policies such as TDR programs do not generally help or
hurt housing affordability.
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Bonuses can be designed to have a positive impact on the
supply of affordable housing.
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E.g. a TDC could be worth two units of extra housing rather than 1
if the units are “affordable,”
Enforcement issues
Research shows that only exclusionary zoning type policies
such as large minimum lot sizes have negative impacts on the
affordability of housing in a community (Dorfman et al.
2005).
Regional Impacts
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Leapfrogging a problem with some TDR programs
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Historically not a problem with mitigation banking and
development impact fees
Mitigation banks instituted over larger regions than TDRs
Cross county TDC programs
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May enhance demand/supply
E.g. New Jersey Pinelands program spans 56 municipalities and is
managed by the regional Pinelands Commission made up of
representatives of the jurisdictions.
E.g. Boulder County, Colorado allows transfers between Boulder
County and its cities.
Administrative Requirements
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Calculation method for sending areas/
Issuance of TDR certificates
Recording TDR Transactions
Deed of Transfer
TDC Banks
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Governmental or non-profit entities created to facilitate
the exchange of TDCs
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central clearinghouse with information about all available
TDRs
May be given authority to purchase and hold TDCs
Benefits
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Smooth the trading of TDCs
Stabilize the price, and provide additional liquidity to the
market
Can speed land preservation by buying substantial numbers
of TDCs shortly after initiation of the program
Lessons Learned
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Programs that are Successful
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when demand for development is high and market
participants are motivated to participate.
creation of adequate receiving areas (beware of NIMBY)
Not used to save areas that are under immediate threat of
development
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E.g. land bordering urbanizing areas
Land with high development value forces the allocation of high
numbers of TDCs to this land to motivate owner participation.
Lessons Learned
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Programs that have less success
developers are satisfied with development densities
allowed by the existing zoning code
 variances allowing greater density are easily obtained
making the use of TDCs unnecessary
 developers use other methods for achieving density
such as clustering/conservation subdivisions
 Statutory requirements to hold public hearings for
transfers
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Other Instruments
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Purchases or Development
Rights/Purchases of Conservation
Easements
Conservation Easement Tax Incentive Program
(Federal pilot program in US)
 New York State Income tax program
 Used in conjunction with TDR programs
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Other Instruments
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Mitigation Banking
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Developers obligation to mitigate the negative impacts of
development (wetlands and endangered species habitat)
When a developer restores a degraded wetland or
permanently protects an intact wetland, these compensation
wetlands are referred to as credits.
In some regions private entrepreneurs have started creating
wetlands credits that they then sell to developers in need of
mitigation credits
Transactions are administered through mitigation banks
Other Instruments
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Development Impact Fees
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Upfront charges applied to new developments to cover the
cost of providing public services such as roads, sewers and
schools.
Purpose: reduce incentives for development and cover full
social costs
Can be used in conjunction with TDCs - developers who
seek additional development density are simply required to
pay a “sending” fee which would go to a government agency
or another intermediary to purchase TDCs
Other Instruments
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Tax Incentives
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Use-value assessments typically used to slow rates of agricultural
land conversion to non-agricultural uses by assessing
farmland at lower tax rates
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Mixed views on whether property tax relief is effective (Simpson
2002; Nickerson and Lynch 2001)
Income tax incentives thought to be more effective (Simpson 2002)
Potential loss of revenue for municipal governments is a barrier to
implementation.
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Provincial grants in lieu to municipalities.
Income tax incentives
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E.g. Conservation Easement Tax Incentive Program
Municipalities have no control over income taxes in Canada, this
mechanism could not be relied on to achieve the land use objectives
of the BHI.
Review of EGS Programs in Alberta
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Ernie Ewaschuk (Land Stewardship Centre)
Reviewed 7 programs
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CWS Basin Easement Program (1967-70)
Red Deer Habitat Retention Program (1978-80)
Landowner Habitat Program (1986-91)
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North American Waterfowl Management Plan (1986+)
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Purchase/lease of development rights/payments
Barrhead Partners in Conservation (1989+)
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Minburn, Red Deer, Bow River, EID (AFWS)
Incentive contracts to curb habitat loss
Tax rebate on habitat lands
MD Rockyview Municipal Tax Incentive Program (1993-1996)
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Tax incentive for conservation tillage
Review of EGS Programs in Alberta
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Lessons Learned
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Flexibility important (Landowner Habitat Program)
Emphasize multiple benefits/objectives (Landowner Habitat Program)
Random selection of habitat reduces performance of program (Red Deer
Habitat Retention Program)
Incentive payments need to be high enough to change behavior (Red
Deer Habitat Retention Program)
Education and awareness increases success (NAWMP)
Tax base losses in Barrhead program minimal (Barrhead program)
Landowner support/changes in behavior (Barrhead program)
Conflicts with other incentives/programs for agricultural development
(Basin Easement Program)
Unanticipated consequences of pre-emptive destruction from payment
programs (Basin Easement Program)
Agricultural incentive payments for BMPs work (Rockyview Program)
Price Based Tools
Quantity Based Tools
Development
Charges/In
lieu fees
Tax Credits
TDCs
Mitigation
Banking
Easements and
PDRs
Voluntary vs
Involuntary
Involuntary
Voluntary
Voluntary
Involuntary
Voluntary
Municipal
Fiscal Impact
Positive
Negative
- Municipal
grants in lieu
Low
Positive
Negative
Threshold
Based
No
No
Yes
Yes
No
Flexibility
Differentiate by
activity and
impact
Differentiate by
land use
Multiple
objectives for
conservation and
development
Usually single
objective
(wetlands)
Multiple
objective for
conservation
Administrative
Requirements
Monitor land
use
Monitor land
use
TDC Registry
Zoning
Bonus/Credit
calculator
Offset Registry
Offset calculator
Certification
Impact on
Growth
Negative
Negative (low?)
Transfer of
growth versus
limit
Negative
Negative (low?)
Next Steps for TDCs
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Detailed evaluation of potential goals and identification
of sending/receiving area options based on BHI Phase
2 plan and public input
Economic analysis and potential design issues related to
market size, supply, and demand;
Process for seeking public input and recommendations
on design from landowners and developers
Evaluation of legal and administrative options
Education and awareness
Conclusions
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Many jurisdictions struggling with these issues in Alberta
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Opportunities
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Partners/Shared Experience and Learning
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Landuse Framework
Review of MGA
Institute for Agriculture, Forestry and the Environment to identify marketbased solutions to increase environmentally sound practices in the renewable
resource sectors
Red Deer County/Mistakis Institute
Southern Alberta Land Trust/ALTA/NGOs
Watershed groups/Basin councils
Foundations
Threats
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Pace of development, affordability
Key References
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Dorfman, Jeffrey, et al. 2005. The feasibitliy of a
transferable development rights program for Athens
Clarke County Georgia, Alliance for Quality Growth,
University of Georgia.
University of Georgia Land Use Clinic
http://www.law.uga.edu/landuseclinic/index.html
Fulton, William, Jan Mazurek, Rick Pruetz, and Chris
Williamson. 2004. TDRs and other market-based land
mechanisms: How they work and their role in shaping
metropolitan growth. Washington, DC: The Brookings
Institution
Thank you
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Max Bell Foundation, DUC, BHI
Contact
Marian Weber
Alberta Research Council
250 Karl Clark Road
Edmonton, Alberta T6N 1E4
780-450-5193