Tacoma, Washington (Profiled 2-17-21)

Tacoma, population 212,869 (2019), lies at the southern end of Puget Sound, 35 miles south of Seattle, Washington. It is the county seat of Pierce County, which previously adopted a TDR program to preserve farmland, forest land, public trails, or the habitat of endangered species.

The State of Washington, with encouragement from Forterra (formerly the Cascade Land Conservancy), strongly promotes the use of TDR. In addition to legislation creating a Puget Sound regional TDR exchange system, the State of Washington adopted a law allowing qualified jurisdictions in four Puget Sound counties to use tax increment financing for targeted infrastructure improvements, a mechanism not available to other jurisdictions in Washington. This was a key factor prompting the federal Environmental Protection Agency to award Tacoma a $109,000-grant to develop and implement a TDR program. The City contributed another $20,000 to ensure that the study addressed open space and historic preservation within the City as well as regional farmland and resource lands.

A year-long evaluation, which included a market feasibility study, concluded that Tacoma had sufficient long-term demand to produce a successful TDR program and meet the State requirements to qualify for tax increment financing. Consequently, in September 2012, the City adopted a TDR ordinance aimed at preserving farmland and forestland under Pierce County jurisdiction as well as habitat and historic landmarks within the City limits. By adopting this ordinance, Tacoma also joined the Puget Sound Regional TDR Alliance.

The TDR ordinance, Chapter 1.37 of the Tacoma Municipal Code, establishes five categories of sending areas:

• Farmland under Pierce County jurisdiction in the Puyallup Valley;
• Forest land designated as FL in unincorporated Pierce County;
• Resource lands in King and Snohomish counties;
• Habitat corridors within the City of Tacoma; and
• City structures designated as landmarks in the Tacoma Register of Historic Places.

The ordinance also allows additions and changes to be made to sending areas in unincorporated Pierce, King and Snohomish using interlocal agreements.

Pierce and King counties establish the TDR allocation ratios for participating sending sites in those two counties. Participating owners of habitat sending sites within the City of Tacoma receive one TDR for each potential residential dwelling foregone or for every potential 8,000 square feet of non-residential floor area foregone. The transferable floor area for Tacoma landmarks is the difference between the floor area of the existing structure and the maximum floor area permitted by zoning. Within this sending area category, one TDR is granted for each 600 square feet of potential floor area foregone in two downtown zoning districts or for each 1,200 square feet of potential floor area foregone outside of those two districts.

Receiving area zoning districts specify the base development potential and the ability to use TDRs to achieve maximum development potential. (As discussed below, the City is considering increasing the capacity for bonus TDR floor area using a Downtown sub-area plan currently in development.) The TDR ordinance creates bonus development potential using formulas that differ depending on the origin of the TDRs being used, as follows:

A) When sending areas are in unincorporated Pierce County, one TDR allows 3,750 bonus square feet of floor area.

B) When sending areas are in unincorporated King County, one TDR allows 10,000 bonus square feet of floor area.

C) For TDRs from Tacoma habitat sending areas, one TDR allows 15,000 bonus square feet of floor area.

D) For TDRs from Tacoma landmarks, one TDR allows 10,000 bonus square feet of floor area.

As an alternative to actual TDRs, developers may achieve one bonus square foot of floor area for each $2 deposit to the City’s open space fund, a fund which the City must use exclusively for the preservation of sending sites. The TDR Manager must recommend adjustments to these bonus formulas as market conditions change in a significant way.

Receiving site developers do not have to retire TDRs until prior to building permit issuance. The serial numbers of all TDRs used in a receiving site project must be recorded on the building permit for that project.

The ordinance also requires the TDR Manager to prepare administrative procedures, including a system in which TDRs are issued serial numbers, transferred via TDR certificates, and tracked using a TDR registry. In addition, the TDR Manager must prepare an annual TDR report summarizing all TDR activity for the year. In the annual report, the TDR Manager may recommend establishing limits on the number of TDRs transferred from certain sending areas in order to achieve City goals, including compliance with the requirements of a TDR-Based Tax Increment Financing District.

In 2016, the Tacoma TDR program completed its first inter-jurisdictional transfer, resulting in the preservation of farmland under the jurisdiction of Pierce County and an increase of 21 units at an apartment complex in the city.