Ocean City, Maryland, population 6,972 (2019), is a coastal resort town on a barrier island along Maryland’s Atlantic shore. With proximity to Philadelphia, Wilmington, Baltimore, and Washington, D.C., Ocean City welcomes eight million visitors annually, supporting a built environment of $8.6 billion and $1.4 billion in annual tourism revenue (Ocean City 2017; Schechtman and Brady 2013).
According to Ocean City’s 2017 Hazard Mitigation Plan, the town is in a high vulnerability category for the impacts of sea level rise, including increased flooding and storm damage plus erosion of beaches. Numerous storms have caused damage throughout the town’s history. The Ocean City Beach Replenishment Project, launched in 1988 by the State of Maryland, Worcester County, Ocean City, and the U.S. Army Corps of Engineers (USACE), is the town’s most significant hazard mitigation measure to date. These four governmental entities have a 50-year agreement committing the USACE to renourish the beach as needed, with USACE designing and managing the process as well as paying for 53 percent of the cost. This project was estimated to have prevented $600 million in storm damage as of 2017. The town’s 2017 Hazard Mitigation Plan cites sea level rise as a primary reason for the town to continue this project and the plan identifies it as a high priority mitigation strategy. As detailed below, TDR was used to help implement Ocean City’s beach nourishment/dune system project (Ocean City 2017; Schechtman and Brady 2013).
In 1972, Ocean City adopted a build-to, or Construction Control Line (CLL) that prevented development on beachfront lots between that line and the ocean. The town did not have the money to acquire the property or easements east of that line in the 1970s. However, the federal government required a property interest in this land as a precondition for the beach nourishment/dune system program to proceed (Schechtman and Brady 2013).
In 1993, the town adopted a TDR ordinance to secure these easements at minimal public cost. Owners of property east of the CLL, the Beach Transfer-Sending (BT-S) overlay district, had to register and transfer ownership to Ocean City or the State of Maryland by July 1994 in order to gain the benefits of beach nourishment and dune construction. In return, these owners were issued one TDR per 500 square feet. However, no time limit was placed on the transfer of these TDRs
The sending site owners are able to sell these TDRs to developers wanting a 25 percent density bonus in the town’s Beach Transfer Receiving (BT-R) district, an overlay zone covering inland areas designated for higher density development in the town’s comprehensive plan. Here, receiving site developers can exceed baseline density by up to 25 percent by buying one TDR for each bonus hotel room or two TDRs for each extra multiple-family residential dwelling unit.
Ocean City is a highly-desirable real estate market and the town’s zoning code produced a baseline that developers want to exceed. As of 2013, over 400 TDRs were transferred and only 70 development rights remained. The TDR program produced the beachfront control required by the federal government and saved the town millions of dollars in land acquisition expenses. The town kept the TDR program extremely simple and, other than administration, it cost the city almost nothing (Schechtman and Brady 2013).
Ocean City. 2017. 2017 Hazard Mitigation Plan.
http://oceancitymd.gov/pdf/OCHazardMitigation.pdf. Accessed 2-13-21.
Schechtman, J. and Brady, M. 2013. Cost-Efficient Climate Change Adaptation in the North Atlantic. https://www.regions.noaa.gov/north-atlantic/wp-content/uploads/2013/07/CEANA-Final-V11.pdf. Accessed 20 July 2019.