C7Q - Engage Prof for Tdr Market Study

Resolutions - C7 Q

COMMISSION MEMORANDUM

RECOMMENDATION

The Administration recommends that the Mayor and City Commission (City Commission) adopt the attached resolution.

BACKGROUND/HISTORY

On June 26, 2024, at the request of Commissioner Alex Fernandez, the Mayor and City Commission (City Commission) referred a discussion item regarding a Transfer of Development Rights (TDR) program for Washington Avenue (C4 Y) to the Land Use and Sustainability Committee (LUSC). On November 5, 2024, the LUSC discussed and continued the item to the January 16, 2025, meeting with direction to develop a more detailed structure for a possible TDR program, including potential sending and receiving areas and a sunset provision.

On January 16, 2025, the item was deferred to a future LUSC meeting, with no discussion. On March 11, 2025, the LUSC discussed the item and recommended that the City Commission authorize the Administration to engage a qualified professional to prepare a market study that can inform the details of a future Transfer of Development Rights (TDR) program.

ANALYSIS

A TDR program allows available intensity (floor area ratio / FAR) and density (residential units per acre of land) to be moved within a specified area of the city. More specifically, a program TDR is a mechanism whereby property owners in a sending district can sell or transfer unused development rights, such as FAR and/or density, to a receiving district where there is additional demand to develop.

Although the sale or transfer of development rights is typically a private transaction, such programs usually require that a specific public benefit be provided to transfer the development rights. The public benefits can consist of a wide range of options such as improvements to public infrastructure, transit, housing, historic preservation, or environmental and sustainability efforts.

The LUSC discussed a potential TDR program specific to Washington Avenue, which could be used to incentivize the long-term resiliency of historic buildings, as well as non-transient residential uses, while at the same time encouraging new resilient development that achieves other goals.

The proposed TDR program could be predicated on the following:

1. A binding agreement to retain, preserve, restore, and enhance the resiliency of the existing structure on the proposed sending site; and

2. A binding agreement that the receiving site would meet specified development benchmarks related to use, height, distribution of volume, and a cap on the total amount of development rights that could be received.

As an additional safeguard, approval by the Historic Preservation Board (HPB) could be required through a Certificate of Eligibility process for property owners to avail themselves of the ability to sell unused floor area that may be located within a local historic district. Through this process, the HPB would be expected to place conditions to ensure that the building is restored in an appropriate and timely fashion, is well maintained in perpetuity, and is made resilient. Prior to allowing for the transfer of unused development rights to take place, City staff could ensure that the applicant has complied with all conditions of the Certificate of Eligibility through a Certificate of Transfer process.

As part of a TDR proposal, receiving districts would be established that contain zoning and land use criteria that eligible properties would have to comply with. The regulations would include outside limits on how much FAR can be received by an individual property, as well as height limits, and potential restrictions on uses. Additionally, requirements for providing other public benefits could be incorporated, such as requiring workforce or affordable housing, development of infrastructure, or resiliency enhancements. However, it is important that such requirements do not limit the economic viability of development if it is to be successful.

For a TDR program to be successful, there will need to be sufficient interest among both buyers and sellers of development rights. This will be largely dependent on a strong demand within receiving areas for additional development rights, as well as market conditions that make selling development rights profitable within sending areas.

The most effective way to evaluate the market potential of a TDR program is to conduct a formal study of market conditions. This type of study would examine property values and sale prices within both sending and receiving areas to estimate the value of development rights. Such a study would need to be performed by an experienced, qualified professional. Assuming there is sufficient market potential for a TDR program to be successful, a more detailed program can be developed.

The cost of the market study, based on the areas identified in the LUSC memorandum, is not expected to exceed $75,000, and will likely be considerably less. The Planning Department has identified funds in the current fiscal year budget that can fund the study.

FISCAL IMPACT STATEMENT

The cost of the market study is not expected to exceed $75,000. The Planning Department has available funds to cover the cost of the study.

Does this Ordinance require a Business Impact Estimate? (FOR ORDINANCES ONLY)

If applicable, the Business Impact Estimate (BIE) was published on: See BIE at: https://www.miamibeachfl.gov/city-hall/city-clerk/meeting-notices/

FINANCIAL INFORMATION

Not Applicable

CONCLUSION

The Administration recommends that the City Commission adopt the attached resolution.

Applicable Area

South Beach

Was this Agenda Item initially requested by a lobbyist which, as defined in Code Sec. 2-481, includes a principal engaged in lobbying? No

If so, specify the name of lobbyist(s) and principal(s):

Department

Planning

Sponsor(s)

Commissioner Alex Fernandez

Co-sponsor(s)

Condensed Title

Authorize Adm to Engage Professional, Prepare Market Study for Future TDR Program. (Fernandez) PL

Previous Action (For City Clerk Use Only)