Austin consultants present TDR market analysis showing large supply of unused historic development rights, pricing gap risks

City staff and consultants presented a market analysis of a potential transfer-of-development-rights program to the Historic Landmark Commission on June 3, outlining the supply of unused development capacity on historic properties and the economic barriers to an immediately operable market.

Cara Bertrand, of the Historic Preservation Office, said staff was responding to City Council resolutions and the equity-based preservation plan that called for exploring TDRs as a tool to preserve buildings under redevelopment pressure. “If we receive direction to continue developing a program, coordination with the density bonus program will be critical,” she said.

Darren Smith of Economic & Planning Systems, the project consultant, told commissioners the analysis identified about 447 sites that could serve as sending sites (222 already designated and about 225 eligible to be designated). “Among these 447 sites, there is 37,000,000 square feet of unused development rights today under base zoning,” he said, adding that the unused capacity equals the potential for roughly 30,000 apartment units. Smith warned that only about 20% of those landmarked sites appear at immediate risk of redevelopment.

The consultants flagged a major pricing mismatch between what a property owner might demand and what a downtown developer would pay. Smith said owners could seek as much as $165 per square foot for rights if they weigh redevelopment versus preserving the building, while downtown density-bonus purchases typically run about $9–$12 per square foot. “That’s a significant mismatch between what sellers might seek and what buyers may be willing to pay,” he said.

Kevin Oliver, the project manager with the consulting team, described policy and program design choices that could address that gap: limiting eligibility to landmarked properties, using TDR banks as an early-market stabilizing mechanism, adopting clear transfer ratios (the consultants recommended a 1:1 ratio as a baseline), and setting maximum receiving-site heights to control predictability for buyers and sellers.

Commissioners focused their questions on practical implementation. Commissioner Acton asked whether the program should target buildings that are not yet landmarked to gain preservation value; staff and the consultants responded that a sending-site requirement of H (historic) zoning would create a clear eligibility floor while also allowing designation to be incentivized through the program’s benefits. Commissioners also pressed staff on tax-assessment effects and whether transfers would reduce property tax burdens for landmark owners; consultants said preliminary conversations with the Travis County Appraisal District have happened but definitive answers require further study.

Addressing concerns about speculative landmarking or “landmarking for resale,” Commissioner Taniguchi asked what would prevent owners from obtaining a designation to sell rights and then neglecting maintenance. Consultants said the program design would rely on existing maintenance standards for historic landmarks and suggested code enforcement and conservation covenants as complementary tools.

The consultants recommended a phased approach: additional research and legal review, robust public planning to define sending and receiving geographies, coordination with the citywide density-bonus work, and then a pilot TDR bank before full program rollout. "Right now is an opportune moment — the market is down and we can prepare a program to be ready when demand returns," Smith said.

Next steps staff described include more stakeholder engagement, integration with density-bonus policy work, and returning to the commission with further analysis and an implementation plan.