Bellingham, Washington, population 92,314 (2019), is located on a bay in the Straight of Georgia, 20 miles south of the U.S. border with Canada. It is the largest city in Whatcom County and the county seat. Whatcom County has a TDR program designed in part to protect the watershed of Lake Whatcom, a lake that is partly within the City and partly within the County which provides drinking water to much of the city and county. Bellingham allows developers bonus development through transferable development rights as described below.
Historic City Hall presides over the Old Town Overlay District, a receiving area for one of Bellingham’s TDR mechanisms.
Bellingham’s Old Town District is roughly a half square mile area in the city center which includes a park, Whatcom Creek, and numerous historic structures including the historic City Hall. The Old Town Overlay District Development Regulations limit floor area ratio (FAR) to 3.5 square feet of floor area for each square foot of lot area. However, a maximum limit of FAR 5.0 is possible when developers use floor area transfer and bonuses. Floor area transfer can be approved by the Planning Director when two sites are part of a single development, when the plans for the sending and receiving sites are reviewed concurrently and when the amount of transferred floor area is recorded on the deeds of the sending and receiving sites. FAR can be transferred from sites within the Old Town Overlay that provide public plazas and open space, affordable housing, and buildings certified as LEED Silver or better.
In addition, bonus density can be achieved by contributions to the Lake Whatcom Watershed Property Acquisition Program (LWWPAP). The city benefits from the protection of this watershed since it gets its drinking water from Lake Whatcom. Because most of the watershed is in Whatcom County, this option is essentially an inter-jurisdictional transfer program. Under the LWWPAP Bonus Option, developments are awarded one square foot of bonus floor area in return for securing the preservation of one square foot of land in the watershed. Compliance must be made via in-lieu payment of an amount established by City Council resolution. A 2007 study determined that $12 per square foot would be a reasonable ratio. A maximum bonus of 0.5 FAR can be achieved by the LWWPAP bonus program although the maximum bonus achievable through all four options is 1.5 FAR. Of significance is the fact that developers who want to use the LWWPAP option in Old Town must make the in-lieu payment. At least two other programs do not offer developers a non-cash-in-lieu compliance option: Gorham, Maine and Hatfield, Massachusetts. In most other TDR programs known to use cash-in-lieu payments, the developer at least has a nominal choice of complying with cash or actual TDRs.
In addition to Old Town, additional districts also allow density to exceed baseline via participation in the LWWPAP including King Mountain and the Samish Way Urban Village. For example, in the King Mountain District, developers can exceed the baseline density of one unit per 4,800 square feet of lot area and achieve a maximum density of one unit per 1,800 square feet by making cash in lieu contribution to the LWWPAP.
According to a 2018 analysis conducted by Whatcom County, transfers from sending sites in Whatcom County into Bellingham have been hampered because most development in Bellingham occurs within the densities allowed as a matter of right (Whatcom County 2018).
A 2009 study for Bellingham concurred that demand for TDRs was likely to remain low for the next decade because developers are not building up to the baseline densities allowed in the receiving areas without the use of TDR. Specifically, the study looked at 11 developments and found that developers were building only 43 percent of the number of houses allowed without using TDR. Many developers were unable to achieve even baseline density because of environmental constraints that make portions of their land unsuitable for development. Nevertheless, the report concludes that a TDR mechanism should still be adopted for areas annexed to the City because future changes in the availability of developable land could increase demand for TDRs eventually. The study claims that most receiving area developers currently believe that TDRs have little or no value. Consequently, the study suggests that the City could make TDRs more attractive with a ten-to-one transfer ratio, meaning allowing ten TDRs to be used at a receiving site for each TDR transferred from a sending site. Under this formula, a market might be created if sending area property owners are willing to accept $30,000 for each sending area development right foregone and receiving area developers are willing to pay $3,000 for each additional receiving area development right.
Whatcom County. 2018. TDR/PDR Multi-Stakeholder Work Group Final Report. Accessed 9-6-20 at https://www.whatcomcounty.us/DocumentCenter/View/37505/TDR-PDR-Work-Group—Final-Report-Oct-2018