For the first time in Loudoun County, a developer has submitted a proposal expected to put to the test what has been, until now, an unused and controversial policy aimed at preserving farm land.

The policy, called "density transfer," is a plan that sets up landowners' right to subdivide as a commodity that can be sold, without actually selling the land.

Designed to direct growth toward urban areas and away from rural land, the plan would allow a developer buying the right to subdivide some farm land to increase the number of lots on his urban land, while the farmer selling the rights would receive money with which to continue farming. The farmer's land would no longer be subject to development.

Now, two years after the county included density transfer in one of its planning documents, James M. DeFrancia, regional manager of 437 Land Co., is seeking approval for his plan to acquire the subdivision rights on 350 acres in western Loudoun land owned by Donald T. Virts and his partner, Thomas Blankenship. With the rights, DeFrancia proposes to build an additional 112 town houses at Countryside, a planned community in eastern Loudoun.

Although it is routine for developers to seek additional density by offering to provide school sites, road improvements or other proffers, this is the first time a developer has proposed to buy subdivision rights to farm land and transfer them.

The county staff arrived at the figure 112 after subtracting certain flood plain areas from the 350 acres, zoned A-3, which allows one house per three acres.

If approved, DeFrancia's request would add only about 4 percent to the currently planned 2,540 houses at Countryside, the largest development under construction in Loudoun County.

But it is, as Milton Herd, Loudoun's chief of comprehensive planning, said, the first, "real live" indication that there are "willing buyers and sellers, which we've never been sure of" for density transfer, a concept that some county residents say is difficult to understand and could prove difficult to enforce, particularly regarding long-term protection of easements placed on farm land from which development rights have been sold.

The density transfer program is similar to a proposed "transferable development rights" program for which the county plans to seek implementation authority from the 1984 General Assembly.

A major difference between the two plans is that density transfer would be regulated under the county's rezoning process, with the usual review of proffers and board approval if the requested density increase met county standards.

Transferable development rights, known as the TDR program, would be what Herd called "more of an automatic process," and be governed by county ordinance. The TDR program would specify what areas could sell development rights and where they could be used to increase density. It also would be a required process for developers seeking certain higher density ranges, and the county would have to approve a developer's request if the request met the program requirements.

The county staff currently is reviewing the 437 Land Co. application in regard to terms of the easements placed on the 350 acres of farm land, as well as potential impact of the increased density on the Countryside development.

The report is due by Oct. 5, and the county plans to hold a public hearing on DeFrancia's application Oct. 10. The Board of Supervisors is expected to take action later this year on the application.

Donald Virts, whose cattle farm near Hillsboro includes part of the 350 acres under discussion, said he and 437 Land Co. have not yet completed negotiations. But if the proposal goes through, he said, it will help preserve some of the county's richest farm land.