Purchase of Development Rights

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Purchase of Development Rights

 

Overview

In a purchase of development rights (PDR) program, a landowner voluntarily sells his development rights to a government agency or land trust.  The agency/trust pays the landowner the difference between the value of the land in its current use and the land’s potential development value.

 

Example:  if a farmer’s land is worth $2000 per acre for agricultural use and $5000 an acre for development, the farmer can sell his development rights for $3000 per acre.  When the sale occurs, a legal document called a conservation easement is created.  This easement restricts, in perpetuity, the use of the land to farming, open space and wildlife habitat.  The farmer retains private ownership of the land and can sell it, hold it or pass it on to heirs.

 

Background

The concept of selling development rights is tied to private property rights.  Landowners in the US own a bundle of rights: water rights, air rights, mineral rights, the right to sell land, the right to develop it, the right to pass it on to heirs and the right to use the land in different ways.  A landowner can choose to separate individual property rights, and can sell donate or otherwise encumber these rights.  In addition, property rights may be limited by the government through its power of eminent domain, right to zone and use police power and right to tax.

 

Important Conservation Easement Concepts:

  • It is a voluntary program.  No one is forced to sell their development rights.
  • The land remains private property.  The landowner is only selling the right to develop the land.

The land is protected from development in perpetuity through a legal document known as a conservation easement.

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