Basically, they’re talking about trying to shift development patterns without actually banning development in unsafe locations:

One common approach, called transfer of development rights, allows owners of high-risk land to sell their development rights to owners of land in safer locations, who can then exceed the typical housing density on the property they own.

Another is density bonuses, which let developers construct more homes or taller buildings than normally permitted, as long as they provide public benefits — in this case, by building on higher, drier ground.