The suggestions for the possible exchanges of rights presuppose the existence of a system of performance zoning in a jurisdiction. Implementation would involve both the enforcement of the system of performance zoning and the development of appropriate provisions to govern and manage the exchange system.
Implementing the Performance Standards
While the primary contribution of this paper is intended to be the proposal for allowing the exchanges of rights within a system of performance zoning, some basic observations will be offered on the implementation of the performance zoning itself. Upon hearing about performance-based land regulation, many fear that this would involve the complex measurement and monitoring of impacts after a development has been constructed. While such activities might be required for some performance standards, compliance with many standards can be established by assessing the nature of the proposed development and its construction.
Systems of performance zoning invariably establish a permit process for new development in which compliance with the standards is assessed prior to the granting of the permit. The assessment is based upon the nature of the proposed development and on the plans submitted for that development in a manner very similar to the process for the implementation of subdivision regulations. The nature of the assessment and the ultimate enforcement of the performance standards will vary for different standards.
Some of the performance standards will require that the physical development of the site meet certain requirements. For example, performance standards might set a maximum impervious surface ratio or might specify the provision of certain types of buffering. Assessment of the development proposal would be based upon the extent to which the plan for the proposed development was consistent with these standards. The ultimate enforcement would depend upon the inspection of the development after completion to determine that it was consistent with the approved plan. This is no different from the enforcement of the requirements of subdivision regulations. In fact, the enforcement of such performance standards is not fundamentally different from the enforcement of height, setback, or side yard requirements of traditional zoning ordinances: One would look at the development as built and determine whether it met the requirements.
Compliance with other performance standards would be based upon the assessment of the proposed development by using specified handbooks or formulas to determine the impacts of the development. For example, trip generation could be assessed by determining the trips associated with the proposed use by using a handbook of trip generation rates. Compliance with the standard would depend upon the user of the development maintaining the proposed use. There would not necessarily be any attempt made after completion of the development to measure the actual trip generation. Rather, as long as the proposed use were not changed, the property owner would be deemed to be in compliance with the trip generation standards. Thus, enforcement would not be any different from the enforcement of the use requirements in a traditional zoning ordinance. (Obviously, those jurisdictions imposing requirements for trip reductions below those normally associated with a given use would need to undertake subsequent monitoring of actual trip generation.)
Performance standards associated with the adequacy of existing public facilities would be assessed at the time the permit was being issued. No issue would arise with respect to continuing compliance based upon possible future changes in the provision of those public facilities.
Finally, there might be some performance standards that might require the subsequent measurement of impacts after the use has been established. A maximum noise standard might be one example. In most cases, the need for such measurement and any subsequent enforcement actions would likely be required only in a small minority of cases and would most likely be undertaken in response to public complaints.
One of the objectives in establishing a system of performance zoning would be the identification of standards that would minimize problems in enforcement. Standards associated with the nature of the development as built or with handbook or formula-based determinations of impacts would in general be preferred to those requiring subsequent measurement and monitoring, to the extent they are able to achieve the desired public objectives.
Implementing the Exchange System
Statutory provisions would be required to authorize and recognize the exchanges of the rights established under the performance standards. These provisions would need to specify those standards for which the exchanges of rights would be allowed, which parties could be involved in such transfers, and any limitations associated with the exchanges. Procedures would also need to be established for the recording of rights exchanges and for the interpretation of such exchanges in the event of modifications to the performance standards.
For the exchange of rights involving the protection of nearby property owners, the performance standards affecting only nearby property owners would have to be identified. This would involve a judgment that the benefits produced by a standard accrue primarily to the owners of nearby properties and not to others in the community. The determination would not necessarily have to be that the total effect of a standard is on those nearby property owners. The decision could be reached that the effect on others farther removed from the property is sufficiently small that it is reasonable to allow the nearby property owners the rights of exchange.
Which nearby property owners are deemed to hold the rights that would have to be acquired would have to be defined. Presumably this would be a distance-based criterion, specifying either owners of adjacent properties or owners of all properties within so many feet of the affected property. A determination would be required as to whether rights would have to be acquired from property owners in all directions or, in cases where the impacts involved properties only in certain directions, whether rights would need to be acquired only from property owners to that side of the property. For example, could the owners of property along one lot line of the affected property sell their rights to be protected by a buffer, obviating the requirement to develop the buffer along that property line only?
The decision regarding the nearby property owners to be included involves a tradeoff. The more parties that are included, the less is the chance that someone who felt affected by the standard would not be a party to any exchange or subsequent modification in the nature of the allowed uses. On the other hand, the inclusion of more parties makes the possibility of arranging the exchanges more difficulty and less likely. In particular, the greater the number of nearby property owners from whom rights have to be acquired, the greater will be the likelihood of one of the property owners causing problems by holding out, as discussed earlier.
It is possible that the judgment as to the affected nearby property owners could differ for various performance standards, with some standards involving impacts with effects on more remote property owners than others. A judgment would have to be made as to whether the advantages of having differentiated definitions of nearby, affected property owners outweighs the additional complexity created.
For certain of the performance standards made subject to exchange, limits might be placed upon the extent of the rights that could be transferred. These limits could involve determinations that exchanges (and hence land development and use) above some level might create negative impacts that extended beyond the nearby property owners or otherwise might not be in the public interest. A standard involving noise impacts would present an obvious example. A restriction might be placed on the level of the rights to be transferred to noise up to some maximum level. Two reasons might serve to justify such a limit: Greater noise levels would have negative effects on others beyond the "nearby owners" (however defined). Also, noise levels above a certain level might be deemed inappropriate given considerations of public health.
Similar considerations would have to be addressed for the exchange of rights involving capacity constraints. First would be the identification of the performance standards for which such exchanges would be appropriate. This would involve the determination that the exchange would have sufficiently minimal negative impact with respect to the objectives sought.
The extent of the areas within which such exchange could take place would have to be defined. For certain capacity standards, the definition of the area may be clearly established by the nature of the physical systems involved. Rights involving drainage standards, for example, might reasonably be exchanged within watersheds. For other standards, such as a trip generation standard, the determination of appropriate areas might be more difficult. Exchange areas either could be defined as a fixed set of areas within which exchanges would be allowed or could be based upon distance (within so many feet or miles of the property).
The larger are the exchange areas, the more opportunities would be provided for such exchanges to take place. However, the larger the areas, the greater the possibility that the exchange could result in an outcome less desirable than provided for under the original standards. The tradeoff is similar to that involving the definition of the nearby property owners.
Maximum limits would likely be desired regarding the magnitude of the rights that could be acquired and exercised for any property. This might well be expressed as some maximum percentage above the initial impacts allowed under the performance standard. Thus, for trip generation, a trip generation level per acre would be allowed that is no greater than some percentage above the level provided for in the performance standard. This would avoid "excess" accumulation and exercise of rights at one location that could have negative effects and be detrimental to the public interest.
The proper recording of exchanges of rights would be required so that the information would be available for use by the agency administering the performance zoning and to provide notice to prospective purchasers of properties as to any such exchanges that affect those properties. The actual exchanges of the rights and the recording of those exchanges might most appropriately be done using standardized forms that would be provided by the planning department or other agency administering the zoning.
It would be appropriate that the exchanges of rights be recorded with the agency so that they would have that information available for making the required decisions for the granting of permissions for land development and use under the performance zoning. To further assist them in administering the standards, it would be reasonable to require that an applicant for such permission note any applicable rights exchanges in the request. Having the rights exchanges recorded with the planning department would also allow the analysis of the extent and patterns of such transfers to allow assessment of the broader implications.
The question exists as to whether the recording of the information with the planning department or comparable agency is sufficient to provide adequate notification to potential purchasers of properties and other interested parties. The information would be a matter of public record, and the agency could provide such information to any party making a request. This is generally where variances to zoning ordinances are now recorded. However, if the rights exchanges became commonplace, the provision of this information on a routine basis to the public might become a substantial burden on the department. Also, some potential purchasers of property might not be aware of the need to seek such information from the department.
As they are being viewed here, the rights exchanges involve transfers of specific interests associated with real property. A rights exchange could be viewed as being similar to such actions as the granting of easements allowing access across a piece of property. As such, rights exchanges might be recorded in the office responsible for all such land records. In this manner, they could be consulted and would be presented in any title search involving any piece of property.
Some might argue that such recording--in the planning department or the land records office--might constitute insufficient notice to potential purchasers of property. Especially for unsophisticated purchasers, such as many homebuyers, the inclusion of such information in a long and complicated title search, presented at the time of closing, might be considered less than adequate. There is also the concern that transfers involving nearby properties but which might not be included within a title search, might have significant ramifications for the property under consideration.
One factor would tend to mitigate such concerns in many circumstances, however. The rights transfers would most frequently be sought shortly before planned development of a piece of property. For example, the developer of a parcel might obtain rights that would allow a reduction in the provision of buffers or permit more intensive development with greater trip generation. In most instances, development of the property is likely to take place within a reasonable period of time after the exchange of rights. Once the development has taken place, the consequences of the exchanges of rights are likely to be visible and obvious at the site. A prospective purchaser of a nearby property would see the amount of buffering that had or had not been provided and would see the intensity of the development that had been undertaken. The prospective purchaser would take that into consideration in the determination of the value of the property in question. The "notification" would come through the observation of the conditions in the area, so that reference to the formal exchange of rights would have lesser import. Likewise, if the exchange of rights diminished the development that could take place on a piece of property, the prospective purchaser would see the consequences in terms of reduced development. Only when vacant land were involved--when either the parcel under consideration for purchase or a nearby parcel are vacant--would reference to recorded transfers be the sole source of information. And any purchaser in such situations should be reasonably expected to pay attention to the conditions for development on the parcel in question and on nearby parcels, just as they now should reasonably determine the zoning of the properties in question.
The issue also arises as to how exchanges of rights are to be interpreted when changes are made to the original performance standards. Should exchanges be made in absolute terms or in terms relative to whatever is the prevailing standard? For example, in allowing more noise, how should an increase of 10 decibels above a current standard of 60 decibels be viewed? It could be a relative transfer--the right to generate 10 decibels more noise than the prevailing standard--or an absolute transfer--the right to generate 70 decibels of noise. These alternatives have significantly different implications in the event that the noise standard is raised or lowered from its current level. The decision regarding the nature of the transfer and the associated assumption of risks in the event of changes in the performance standard could be left to the parties to the transaction. Alternatively, provisions might be made to require one or the other approach if that were felt to serve the public interest and to protect the interests of the parties to exchanges.