Grand Central Station (NTHP)

In 1968, the Penn Central Railroad wanted to add a 53-story addition to Grand Central Station, but the City of New York nixed the idea on the grounds it would change the station's historical value. Grand Central Station couldn't be altered, so instead, the railroad transferred its development rights to nearby buildings, starting in 1979. The move let the station keep its original configuration while the railroad profited, with about 1.5 million square feet of unused development rights still in inventory.

Transfer of development rights, or TDRs, a land-use technique normally associated with farmland, have quietly seeped into the realm of historic preservation—often with mixed results.

TDRs work like this: Take a one-story historic building in a zoning area that allows other buildings the same size to be five stories high. The historic building has four floors of what is known as "air space," the area above the building where additional floors would be if it was an ordinary structure. Since it's historic, though, the owner usually can't change it. If TDRs are allowed, the owner of the historic building can sell the air space, which is basically the right to build four more floors on another building, to a developer.

Not everyone is crazy about this idea. One problem with urban TDRs, such as the ones used by Penn Central, is that a building zoned for 30 stories could buy a local landmark's 20 stories and zoom up to a total of 50 floors. Of course, when development rights are transferred, it doesn't mean building codes fall by the wayside. They still have to be met, and government approval is usually required.

Yet the transfer of development rights can play a big role in landmark preservation. "TDRs definitely encourage historic preservation, but communities are all over the map in terms of [regulations]," says Rick Pruetz, FAICP, author of Beyond Takings and Givings (2003) and an expert on TDRs.

Ask Pruetz which cities have a good preservation track record with TDRs and he points to San Francisco, a city that made them part of its blueprint for the historic downtown area. Used as an incentive, TDRs have helped the downtown keep its unique flavor. Other places, like Seattle, Washington, D.C., and New York City, have also gone with TDRs to both safeguard landmarks and help their owners with financial incentives. So far, 15 U.S. cities have TDR programs.

One of Seattle's most celebrated TDR projects is the renovation of the old Paramount Theater. TDR sale proceeds combined with other funding to update the beautiful and historic building, originally constructed in 1928 by Paramount Pictures studio executive Adolph Zukor.

Other cities have also transferred these rights, but some—like Atlanta and Dallas—have a spotty record. Both cities allow contractors to combine very tall buildings with smaller footage on the ground floor. With these generous floor-to-story ratios, there's not a whole lot of enticement to buy TDRs to add floors.

New York City also has several active TDR programs, but not all have won universal praise. One that received a lot of press attention was directed at the Broadway theater district and its subdistrict. While theater owners could sell their air rights, there were lots of strings attached. They couldn't change their business—to, say, turn the theater into a flea market—had to prove they have the money and customers to stay open, and then pony up a portion of the TDR sales to a fund that helped the theater district.

Simeon Bankoff, executive director of the Historic Districts Council in New York City, says his group isn't a fan of all of the city's historic preservation plans using TDRs. Some rules have led to high buildings or "mega developments dwarfing neighboring protected landmarks," he says. "They could work, and on paper they make sense, but in the New York City environment, the concept is easily abused."

For proof, he points to the Congregation Shearith Israel on the Upper West Side, the Theater for the New City in the East Village, and Amster Yard in Midtown, which are or soon will be overshadowed by towering buildings, a result of air rights being restricted to the same small geographic area.

Transferring development rights may not work everywhere, but the book on them is still being written. One historic Florida church, for example, recently sold its TDRs and used the money to improve its church school, saving it from having to do extensive fund-raising or borrowing a lot of money. It was definitely a win-win for the church.

But TDR programs aren't simple to write or put in place. Law Prof. John R. Nolon, counsel to the Land Use Law Center at Pace University School of Law, says land-use plans involving TDRs are complicated but workable. This is particularly true in the case of historic preservation, but the advantage, as Nolon sees it, is that TDRs can play on both sides of the street.

By using TDRs wisely, Nolon says preservationists can make a real difference in their communities. First, they must determine areas where they want to support development, then developers in those same areas can purchase the rights from the owners of historic property. The result, when done correctly, should be a balanced and careful approach that benefit everyone, now and in the future.

Carole Moore is a freelance writer based in North Carolina.

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