The City of Parma, population 187,000, is located in the Emilia-Romagna region of northern Italy about 60 miles southeast of Milan. Like at least nine other Italian cities, Parma uses a form of TDR as a way of equitably distributing development potential and thereby mitigating some of the land value inequities created by tradition zoning. As a second but important benefit, these programs allow governments to acquire land for public infrastructure at little or no cost (Micelli and Faggiani, 2001).
The Parma TDR program was initially approved in 2001 as a means of implementing the 1998 general plan (Falco, 2012). In its original form, this program was described as using the components found in several Italian TDR programs developed in this era. It applied the same density, referred to as building index, to all property within a land category even though this development potential could not be used on sending sites, meaning properties planned for public infrastructure. The development potential could only be used by transferring it to a receiving site, a private property planned for private uses with a baseline equal to that of the sending area. Some Italian TDR programs allow transfers only within a single land classification. Other cities balance economic, legal and other criteria and ultimately identify more than one classification of land that ought to have comparable value based on concepts of fairness and perhaps common sense. Parma, established three classes with the following building indices: areas inside the built center – 0.50 square meters of development potential per one square meter of land area; areas outside the built center – 0.15 square meters of development potential per one square meter of land area; previously restricted areas of the built center 0.25 square meters of development potential per one square meter of land area (Micelli, 2002).
New regional requirements caused the original program to change almost immediately in 2002 and again in 2007, 2009, 2010 and 2011. The new TDR or perequazione, program aims to create green areas, avoid the need to condemn property for public purposes and thereby also reduce the cost of providing public infrastructure and recapture betterment value by linking developer windfalls with developer contributions. There are still three land classifications but with new names: built up, developable and rural. The baseline in the receiving sites is half of the total development that can be achieved through three mechanisms. 1) Up to 20 percent of the total maximum development limit of the receiving site can be achieved by transferring development potential from sending sites after the sites have been dedicated to the city. 2) Another 20 percent is granted when the developer makes a financial contribution to the city for the building of public infrastructure. 3) Another 10 percent is granted for sustainability features such as energy conservation. And development can exceed the maximum density by 20 percent in return for installation of certain technological features such as a photovoltaic system. As of 2011, about 50 agreements to use the bonus system had been executed with approximately half of these involving contribution to public infrastructure (Falco, 2012).
Falco, P. (2012) Dealing with Betterment Value: Different Trends between Italy and England. Dissertation prepared for Sapienza University of Rome.
Micelli, E., and Faggiani, (2001) A. New Tools for Land Policy in Italy. Paper presented at the 8th European Real Estate Society Conference. Alicante 26-29 June 2001.
Micelli, E. (2002) Development rights markets to manage urban plans in Italy. Urban Studies. Vol. 39. No. 1.