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Measure 49 Transfer of Development Credits (TDC) Program

Introduction

Landowners with Measure 49 (M49) dwelling authorizations now have a way to obtain value from these authorizations without building on-site, by transferring them to other locations. In 2007, Oregon voters approved M49, which authorized certain property owners to develop additional home sites. M49 and ORS 94.531 authorize counties to establish a system for transferring these home site authorizations to locations that would have fewer impacts on resource lands. The Land Conservation and Development Commission adopted administrative rules that provide a framework for interested counties to adopt local ordinances to establish these systems. Landowners may then, on a voluntary basis, transfer their development interests in accordance with the local ordinance. Transfer of development credit systems are anticipated to reduce the adverse impacts of scattered M49 residential development on lands designated farm, forest, environmentally sensitive or subject to natural hazards.

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Summary of Program Elements

The four key elements of local TDC systems will be: sending properties, bonus credits, receiving areas and a database and maps to track these elements.

  • Sending Properties – The source of transferable development credits (TDCs). Eligible sending properties must have unused approvals for new dwellings authorized under M49. In addition, they must have lawful access and either be zoned for farm, forest or other resource use or have special attributes that make them high-priority for protection (e.g. natural hazard areas, sensitive wildlife habitat, groundwater limited areas). Many M49 properties will qualify for transfer development credits.

  • Bonus Credits – Because some sending properties are higher priority for protection, counties may choose to award bonus credits to increase the incentive for transferring M49 dwellings to another location.  Bonus credits may be awarded to M49 properties that have special attributes and are zoned for resource use where property owners agree to permanently protect the land through restrictive covenants or conservation easements. 

  • Receiving Areas – The land to which M49 TDCs will be transferred. Receiving areas will be designated within existing Rural Residential exception areas in which new lots as small as two acres may be created for dwellings. For example, a Rural Residential zone with a current minimum lot size of five or ten acres may be designated to receive TDCs to reduce the minimum lot size to two acres. Receiving areas may consist of entire parcels or portions of parcels that meet the criteria in the TDC rules. Counties may select and designate appropriate receiving areas up front or on application by a landowner or developer. In addition, receiving areas may include substantially-developed pre-acknowledgment subdivisions in resource zones, based on a new type of reasons exception under OAR division 4.

  • Tracking Database and Maps - The department maintains a database of M49 properties that will be used to track creation and use of TDCs. The department will post online tables and maps of M49 property attributes to enable landowners, counties and others to determine if a property is eligible for TDCs and to calculate potential bonus credits.
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Enabling Legislation & New Rules

On March 12, 2015, LCDC adopted the following new and amended rules, which became effective on April 27, 2015:

These rules do three things. First, they create a new division 29, which includes most of the standards applicable to the new local M49 TDC systems. Second, they include amendments to division 4 (Exceptions), which authorize a new type of reasons exception for certain receiving areas and which allow new lots as small as two acres to be created in existing rural residential zones that are receiving areas. Third, rule amendments to division 27 extend this authorization for smaller lots to rural residential zones in receiving areas that are located within Rural Reserves.

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Counties

Counties interested in enabling landowners with M49 authorizations to transfer their development credits to other locations must develop a local TDC ordinance. Counties may choose to enter into agreements with other counties within defined regions to allow credits to be moved between counties. In this case, all participating counties would need to adopt local TDC ordinances. Transfer of credits between regions is not allowed because of significant disparities in land values in different regions of the state.

Counties may designate receiving areas either upfront in a legislative process or in response to a specific developer or landowner request to develop. These areas must be chosen to avoid development on lands with important natural or cultural resource values or significant development constraints and to minimize impacts to surrounding farm and forest operations. These areas should also be attractive to developers and acceptable to the public. Counties with TDC systems need to ensure that there are sufficient designated receiving areas at all times to accommodate the TDCs that are generated within the county.

When counties receive applications for conversion of M49 authorizations to TDCs, they determine the eligibility of these properties as well as the number of qualifying TDCs. This may be accomplished by consulting the department’s M49 online tables of authorizations and maps showing special attributes (see links below), and by using any additional county standards for buildability and access.

When a landowner seeks bonus credits for which a restrictive covenant or conservation easement is required, the department reviews and approves these documents. After consultation with the department, the county issues an Amended M49 Final Order and certificates of TDCs to the applicant.

Note that a land trust, soil and water conservation district or state agency will hold and monitor conservation easements. However, a county must be willing to be a party to and enforce restrictive covenants. The department is willing to be a co-party to restrictive covenants.

The department encourages counties to process development and partition or subdivision applications utilizing TDCs within receiving areas using a ministerial or administrative review process. See the Step-by-Step Guide below for more detail.

Local ordinances must be consistent with the new rule requirements. The department has developed a sample local ordinance and restrictive covenant (see links below) that may be used or adapted by counties.

  • Sample local TDC ordinance
  • Sample local TDC restrictive covenant
  • Statewide map of M49 authorizations


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Sending Property Landowners

Interested landowners may consult the M49 database and map links below for a preliminary determination of whether their M49 authorizations are eligible to be converted into TDCs and a preliminary estimate of the number of credits that may result. If landowners believe they are eligible, they may then apply to the county to convert one or more of their M49 authorizations into TDCs. The county will evaluate the application and, if consistent with the local ordinance, issue a preliminary approval. At the same time, any vacant parcels that were created to site dwelling approvals that have been converted to TDCs will be vacated by the county.

The county will then submit the preliminary approval to the department and request TDC certificates and an Amended Final Order vacating all or some of the M49 authorizations. The county will record the amended Final Order in the county deed records. Any undeveloped M49 property from which M49 development rights are severed may still potentially qualify for any use authorized in the applicable zone, provided no bonus credits are sought.

A sending property may qualify for bonus credits if it meets the zoning requirements in 660-029-0040 (2)(a) and no dwellings authorized by M49 have been developed. If applicants seek bonus credits, they must sign a restrictive covenant or conservation easement and record it in the county deed records. Bonus credits come in increments of 0.2 for five categories of special attributes, potentially generating as much as one extra development credit for each M49 dwelling authorization. As a further incentive, properties 80 acres or larger can qualify for fractional credits to a maximum of one additional credit per M49 tract. Where bonus credits are sought and a restrictive covenant or conservation easement is recorded for a property, its use thereafter and in perpetuity will be restricted to farm, forest and other similar natural resource uses.

When TDCs are released by a county to an applicant, they may be used immediately, held for future use, or sold to a willing buyer. See the Step-by-Step Guide below for more detail.

The following links will enable landowners to estimate the number of potential credits their M49 authorizations could generate:

  • Measure 49 database of dwelling authorizations
  • Measure 49 map links showing special attributes
  • Examples of bonus credit calculations
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Developers and Receiving Area Landowners

Interested developers and receiving area landowners may consult the online M49 tables and maps to locate TDCs available for purchase or to identify M49 properties for which landowners may be interested in applying for TDCs. Anyone may acquire TDCs from a willing seller(s) and either use, hold or sell the TDCs. The department must receive notice of any transfer of ownership of TDCs. A TDC holder may apply to a county to develop within a qualifying receiving area at a higher density than is otherwise allowable. TDCs must be used within 10 years of acquisition, unless held by the owner of the original M49 authorization.  See the Step-by-Step Guide below for more detail.
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Land Trusts, Soil and Water Conservation Districts and State Agencies

When a conservation easement is required to enable a landowner to obtain bonus credits, a holder of that easement must be identified. This could be a land trust, state agency, soil and water conservation district, county or similar public or not-for-profit conservation entity. These entities may simply hold easements on property from which TDCs have already been separated and sold, or, like developers, they may acquire TDCs through purchase, donation or otherwise, and may use, hold or sell the TDCs. These entities may consult the M49 tables and maps showing special attributes to identify potential properties of interest (see above links). Income that is generated from the sale of TDCs could be used in a revolving fund to acquire conservation easements on additional M49 properties. The department encourages land trusts, soil and water conservation districts and other state agencies to consider acquiring and holding easements on M49 properties, particularly larger properties of 20 acres and more. The department is willing to be a secondary holder of such easements. See the Step-by-Step Guide below for more detail.
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Step-by-step Guide

The department has developed a Step-by-Step Guide for transferring M49 dwelling authorizations that will be useful for landowners, counties, developers, land trusts and others:

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Additional Information

Contact Tim Murphy at 503-934-0048 or by email at timothy.murphy@state.or.us with questions on the new M49 TDC program generally. Contact Sarah Marvin at 503-934-0001 or by email at sarah.marvin@state.or.us for questions on the M49 database or mapping of special attributes.
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