In 2004, Montezuma County became one of the first local governments in Colorado to incorporate Transferable Development Rights (TDR’s) into its Land Use Code (references to the “Code” are to the Montezuma County Land Use Code).   TDR’s apply only to property located in the Dolores River Valley zoning district, which includes most private property in the river corridor between the town of Dolores and the Montezuma-Dolores County boundaries.   What is a Transferable Development Right?  A TDR should be thought of as a severable, transferable and portable interest in real property.  TDR’s are analogous to a mineral interest in that they can be severed and transferred to another person who does not own the surface estate.  Unlike other interests in real property, however, TDR’s are portable and can be moved from one tract of land to another. How are TDR’s measured?  All land in the Dolores River Valley starts out with a fixed number of TDRs.   TDRs for each tract of real property consisting of 10 or more acres at the time the Code was adopted are calculated based on its degree of slope and location in a floodplain.  The Code awards 1 TDR per ten acres on slopes of less than 30 degrees that are outside the floodplane and 1.5 TDRs inside the flood plane.  Land on slopes of 30 degrees or more are not awarded TDRs.  Existing tracts of less than 10 acres have no TDRs.  The Code provides for transfer of TDRs in 1/10th units, so we presume that TDR’s will be calculated on a per acre basis. How are TDR’s established?  TDR’s are established by a “legal survey.”  To calculate and describe the TDR rights on a property will require the services of a licensed surveyor, who will take into account the degree of slope and location of the flood plane, determine the number of acres of each, and apply the Code’s formula.  It would be advisable that any TDR survey be in the form of a plat and be recorded in the county real estate records. How are TDR’s transferred?  The Code requires that TDRs be transferred by deed.  Because TDRs are an interest in real property, all the requirements to transfer any other interest in land should be satisfied in the deed.  The deed should be recorded in the county real estate records.   The legal description of the TDR deed should describe the property the TDRs are being transferred from, the survey plat used to calculate the number of TDRs, and the number of TDRs transferred.  There does not appear to be a prohibition against transferring less than all of a land owner’s TDRs.  The Code allows transfer only in 1/10th unit increments.  Once transferred, the land owner selling her TDR’s forever loses future development rights under the Code, unless she buys other TDR units.  There is no reason why TDRs could not be the subject of options to purchase, rights of first refusal, and like instruments. How does a TDR “float” and what does “landing” TDR rights mean?  The Code allows TDRs to “float” until they are used.   This means that a developer or speculator could purchase, hold and accumulate TDRs before “landing” them on a development site.  TDR’s have varying value for different types of development.  For example, a single family house requires 1 TDR unit, while a luxury resort with restaurants requires 1 TDR per 2 rooms.  A TDR is “landed” in a “receiving site” under the Code when a High Impact Permit or Subdivision application is approved for that site.  The receiving site must be in the Dolores River Valley zoning area. Once “landed”, the TDRs are not transferrable again, unless the receiving site has been restored to its “pre-development condition.” Conclusion and a word of caution.  TDRs are a unique way of allowing market forces to dictate the type of development that will occur in the Dolores River Valley, while placing an overall cap on growth at the same time.   The Code discourages development close to the river by rewarding transfer of TDRs out of floodplains and requiring more TDRs for development in floodplains.   Whether TDRs will ultimately result in high-end luxury homes and resorts inflating the cost of land in the Valley remains to be seen.  In any event, TDRs will likely achieve the Code’s stated purpose of preserving water quality by limiting the overall density of development in the Valley with the added benefit of protecting riparian wildlife habitat.   Because the TDR concept is new to the law, the purchase and sale of TDRs should be approached with the upmost caution and legal instruments dealing with TDR’s must be given careful thought.