Larimer County, Colorado, population 356,899 (2019), lies 50 miles north of Denver, bordering Wyoming. To curb sprawl, Larimer County and the City of Fort Collins adopted the Fossil Creek Reservoir Area Plan in 1998. This plan aims to enhance critical environmental resources, minimize hazards, retain rural character and maintain community separation between the cities of Fort Collins and Loveland in an area that in 1998 was under county jurisdiction but immediately adjacent to the city limits of Fort Collins.
To prevent development from encroaching into a sensitive natural area, the plan established a ¼ mile natural resource buffer around the edges of the Fossil Creek Reservoir. The plan included a transfer of density units (TDU) mechanism that hinged on intergovernmental cooperation and incorporated motivational features like a cash in lieu option and density incentives for receiving site projects that used the transfer provisions early.
The TDU program was a success, transferring roughly 1,760 TDUs into the 900-acre receiving area. By 2019, the receiving area had been primarily annexed and only one 20-acre property with limited development potential remained undeveloped. Both the city and county acknowledged that the program had reached completion and the TDU components were removed from the Fossil Creek Reservoir Area Plan.
In this program, the mapped sending area included the Fossil Creek Reservoir and the surrounding land. The standard allocation was 114.5 percent of the density allowed by the underlying zoning. However, this standard allocation could be increased for sending sites with extra community benefits such as environmental resources, wildlife corridors, trail routes, agriculture, park sites, historic landmarks, or scenic views. Similarly, the standard allocation could be decreased if sending sites had existing development, poor location, or development constraints.
The receiving sites were under county jurisdiction but destined for annexation to Fort Collins. Baseline density was one unit per two acres. Developers could use TDUs to exceed that baseline and achieve a density within the range designated in the plan and ultimately determined by the Board of County Commissioners. The TDU program exempted affordable housing units. Developers who chose to use TDU had to use TDU for the entire receiving site. If a site was developed in phases, the TDU could also be acquired in phases.
The TDU requirement was the total number of units proposed, minus the number of units allowed by the baseline density, and divided by 1.5. The reduction achieved by the 1.5 division was adopted as a way of motivating developers to use TDU at program start up. This early-adopter incentive was initially supposed to be phased out after two years. However, it was ultimately made a permanent feature of the program when developers argued that transactions would not be feasible without this 1.5 -to-1 transfer ratio.
By inter-governmental agreement, Fort Collins and Larimer County created a program that produced the benefits of an inter-jurisdictional transfer program without actually having to transfer density between jurisdictions. The county and the city jointly planned the receiving areas using city development standards with the understanding that the receiving sites, although in the county, would be annexed to Fort Collins following approval of projects that utilized the TDU option. In fact, the program required receiving site projects to apply for annexation prior to recordation of plats and these properties were annexed as soon as possible following transfer of the TDUs. Even though the receiving site projects were approved by Larimer County, Fort Collins served as a referral agency and conducted its own review of receiving site projects and associated infrastructure improvements.
The program was also an early example of density transfer charges (DTC), allowing receiving site developers to comply by paying cash in lieu of actual TDUs if they meet the following three conditions. 1) The receiving site project needed no more than ten TDUs or the receiving site was no larger than 25 acres. 2) A good-faith effort had to be demonstrated that the developer attempted to secure actual TDUs. 3) The developer had to agree to the DTC amount proposed by the county board.
Initially, the formula for calculating the DTC made cash in lieu more expensive than the acquisition of TDUs. That original formula was later changed, making the payment in lieu of one TDU the price estimated for a similar interest in open space times 1.5. Revenues from these in-lieu payments were reserved exclusively for acquiring open space in the sending area.