Synchronous TDR Credits

The New Centrality Masterplan for a 900-hectare area in the city of Gramado, state of Rio Grande do Sul, Brazil, has recently laid the foundation for an innovative strategy in Brazil, combining Land Readjustment and Land Value Capture, through the synchronous implementation of Transfer of Development Rights (TDR) policies along with Payment for Ecosystem Services (PES).

While TDR mechanisms are already widespread in the Brazilian context applied asynchronously to individual plots, generally in very large and consolidated parts of cities, PES policies are usually applied in rural areas. Gramado’s case marks the first time in Brazil that TDR has been integrated to ecosystemic services payment as to simultaneously finance both basic infrastructure and to support the preservation and regeneration of ecosystemic services in a small but highly successful tourist resort.

This work paper presents the strategies adopted in the Gramado’s New Centrality Area (NCA) Master Plan to create, capture, and redistribute land value, transforming a previously rural area into a vibrant and multifunctional urban environment. The paper is structured in three parts:

Part I outlines the geo-economic context of the city and the strategy for value creation through the zoning of a 90-hectare area (10% of the total site), where the Floor Area Ratio (FAR) was increased from 0.7 to 2.8 under the provisions of a 2022 municipal law enabling special land use regulations in designated areas (Relevant Urban Projects, RUP).

Part II introduces the juridical concepts behind the idea of synchronous TDR strategy directly binding buyers of development rights and sellers of environmental services.

Part Ill details the negotiation mechanisms between buyers and sellers of TDR and technical aspects involving the biophysical value and the concept of EBA (Equivalent Biodiversity Area) to establish a correlation between the loss of ecosystem services and the increase in development rights, the technical basis for compensation measures.