From New West Blog

Transfer Development Credits in Gallatin County’s Growth Managment

By Lucia Stewart, 9-30-08

Gallatin County Planners are working closely with rural neighborhoods to draft neighborhood plans – recognizing that each neighborhood knows what they want more than an overlying Countywide Growth Plan.

This allows unincorporated towns to have a plan that acts as a guideline for growth in lieu of a community government.

In areas like Four Corners, where it was selected to receive a higher density baseline and developers purchase Transfer Development Credits (TDC’s) from large rural landowners, neighbors are not pleased with growth concentrated in their neighborhood due to the potential strain on infrastructure.

The use of voluntary, market-based mechanisms, such as TDC’s, is a growth management tool that Gallatin County is using in order to direct growth in concentrated areas with existing municipalities instead of rural sprawl.

“TDCs aren’t the end-all, be-all,” said County planning director Greg Sullivan, reports the Belgrade News. “The strong part here is the planning process. That hasn’t happened before where people can strengthen what they like about their neighborhood and what they want to change.”

Amsterdam and Churchill are currently writing their zoning regulations for rural landowners, while Gallatin Gateway’s is close to complete.

[End of article]

Sorry, but TDR's or TDC's are a flaming rip-off.
Basically, it works as follows: One area is designated a "sending" area and it has an associated "receiving" area. The sending area is de-densified and a credit is allocated, right? So the developer in the receiving area buys the credits he or she needs to make the density desired for the subdivision.
Sounds groovy, let the "free market" work, right? No.
Government basically takes rights away from one group and gives it to another--the very same evil developers who are fully capable of monopolizing and cornering the market and sticking it to the seller in the sending area who now has no other option. I thought the Left hates monopolies.
The problem is that if developers in the R area don't buy up all the TDRs, then you have stranded rights that aren't worth anything. That in turn flies in the face of buying and holding property in order to have it appreciate for your retirement or some other unworthy, greedy reason, like college or something. Instead, the incentive is to liquidate the credits by any means possible in order to avoid being stranded.
Of course, those stranded will be comparatively few in number and unable to finance a takings lawsuit against case law precedent that requires near-condemnation for any "just compensation." So they're utterly hosed.
Shameful.

The other thing I find so stupid about TDRs is how on one hand I keeping hearing all this smart-growth yap about density and infill and sprawl -- yet the density "bonus" situation puts fewer homes on more ground. And so much for the idea of "affordable" housing where every lot requires a "credit" purchase.