Land Development Incentives (DRAFT).pdf

Land development incentives in North Carolina include density bonuses, density transfers, and transfers of development rights. Density bonuses allow developers to increase the maximum allowable development on a site in exchange for public policy goals. Density transfers involve compacting density to maintain open spaces, historic, or sensitive areas. Transfers of development rights enable landowners to sell development rights to developers, who can then use these rights to increase density at another location.

North Carolina statutes, such as § 136-66.10 and § 136-66.11, govern these incentives. Required right-of-way dedication creates density credits useful solely in a localized area, while voluntary dedication creates credits that can be used locally or transferred to designated receiving districts.

Development finance tools, including Tax Increment Financing (TIF) and Municipal Service Districts (MSDs), can also encourage sustainable development. TIF involves project development bonds financed by additional property tax revenue, while MSDs levy additional property taxes to provide projects or services benefiting properties in a defined area.

Examples of incentive programs include inclusionary housing, flexible setback allowances, reduced parking standards, and relaxed Floor Area Ratio (FAR) requirements. These incentives can apply to residential or nonresidential districts and can benefit both developers and local governments by promoting affordable housing and community benefits without incurring direct costs.