| TDR
Rules
TDR
Rules [pdf 197k]
Adopted 12/07/05 |
On
March 29, 2004, P.L.
2004, c.2
[pdf 89k], the State Transfer of Development
Rights (TDR) Act, authorizing the transfer of development
rights by municipalities, was signed into law. This bill makes
New Jersey the first state in the nation to authorize TDR
on a statewide level.
Transfer
of development rights is a realty transfer system where development
potential in a specified preservation area can be purchased
by private investors for use in a targeted growth area. In
exchange for a cash payment, landowners in the preservation
area place a restrictive easement on the property that will
maintain the resource into perpetuity. The land in the designated
receiving area can then be developed at a higher density than
allowed under the baseline zoning. This process reduces the
consumption of our critical resources, while still accommodating
growth, and eliminates the "windfalls and wipeouts" in property
values normally associated with zoning changes. |
Transfer
of Development Rights (TDR)
How
does TDR work?
Land
Value
First,
it is important to understand
the mechanics of land value.
Every property has a certain
"bundle of rights", which enable
the owner to use, sell, mortgage,
lease, devise, subdivide and
develop according to local land
use regulations. Some properties
may have certain other rights
such as air and mineral. A landowner
can decide to sever some rights
from the property by putting
an easement on the property
that restricts that "right"
for some set period of time--normally
into perpetuity. In most cases,
the landowner retains ownership
of the property because the
property retains all of its
other inherent rights-that is
to use, mortgage, lease, devise
and sell.
When
a transfer of development rights
occurs, therefore, the landowner
is severing the right to develop
the land any further. The landowner
is paid for those rights that
have been severed, yet retain
the residual value of the land.
If one adds the amount, the
landowner was paid to sever
the "development rights" (easement
value) to the amount that would
be paid on the open market for
the land with only the "residual
rights" (after value); the value
would equal what the land was
worth on the open market prior
to the severing of the development
rights (before value). The landowner,
thus, is not losing any net
value in the land by selling
the development rights.
 |
Transferring
Development Rights
Development
rights are equal to the amount
of development that is legally
allowed to occur on a particular
piece of property. For example,
a six-acre property with 1-acre
zoning (1du/acre) could potentially
yield six residences. If the
property had a resource that
has been deemed suitable for
preservation, it could transfer
(sell) its 6 development rights
(credits) to a property more
suitable for development.
At
a small scale, TDR seems much
like clustering. Planning for
and implementing TDR, however,
is much more comprehensive than
the typical cluster ordinance.
Rather than merely allowing
a cluster option that still
leads to at least the partial
consumption of the critical
resource, a TDR program sets
preservation goals and targets
growth on a town-wide (or even
regional) basis.
The
transfer of development rights
is only allowed where a municipality
has implemented a TDR program.
The participating municipality
(or municipalities in a regional
program) designates sending
and receiving areas based on
their preservation and growth
goals, respectively. Planning
and implementation documents
are created by the municipality
that governs where and how development
rights can be transferred.
Statutory
Requirements
| Implementing
a transfer of development
rights program requires
a major planning initiative
on the part of the participating
municipality. Before any
credits can transfer from
landowner to developer,
certain planning and implementation
documents must be adopted.
The State TDR Act requires
at least the following: |
| Development
Transfer Plan Element |
Capital
Improvement Plan |
| This
element of the municipal
master plan provides the
framework of the municipality's
TDR program. This element
must:
•
Include an estimate of
anticipated population
and economic growth for
the next 10 years
• Identify and describe
all prospective sending
and receiving zones
• Analyze how the
anticipated population
growth is to be accommodated
in the municipality and
in the receiving zones
• Include an estimate
of existing and proposed
infrastructure of the
receiving zone
• Provide a procedure
and method to transfer
development rights from
sending to receiving zones
• Provide explicit
planning objectives and
design standards to govern
the review of applications
for development in the
receiving zone. |
The
Capital Improvement Program
must be adopted pursuant
to the guidelines in the
Municipal Land Use Law.
With regard to transfer
of development rights,
it must also that includes
the location and cost
of all infrastructure
for the receiving zone
and a method of cost sharing
if any portion of the
costs are to be assessed
against developers. |
| Utility
Service Plan |
Real Estate Market Analysis |
| The
utility service plan element
of the master plan specifically
addresses providing necessary
utility services within
receiving zones within a
specified period, so that
no development using TDR
is unreasonably delayed
because infrastructure is
not available. |
The
real estate market analysis
examines the relationship
between the development
rights generated in the
sending area and the capacity
of the receiving zone
to accommodate the necessary
development. The purpose
of the analysis is to
validate the transfer
system proposed in the
development transfer plan
element prior to the adoption
of the implementing ordinance. |
| Transfer
Ordinance |
Plan Endorsement |
| The
transfer ordinance implements
the TDR program. It codifies
the location of the sending
and receiving zones located,
credit allocation schema,
and administrative transfer
procedures. |
A
municipality must have
received Initial Plan
Endorsement from the State
Planning Commission, or
must have amended a current
endorsed plan to include
the TDR program. The first
step for the municipality
is to request a pre-petition
meeting from the Office
of Smart Growth. Plan
Endorsement guidelines
are available on the OSG
website. |
| Approvals |
Periodic Review of Program |
A
municipality must submit
the documents outlined
in above to the County
Planning Board, and when
farmland is involved,
to the County Agricultural
Development Board, for
review.
That
review will be based upon:
• Consistency with
the county master plan.
• Whether the plan
supports regional objectives
for land preservation.
• Consistency with
county population projections.
• Sufficiency of
the receiving zone to
accommodate the transferred
development.
If
the county comments disagree
with the municipal plan,
and they cannot resolve
their differences with
the municipality, then
the Office of Smart Growth
can make a final determination. |
The
act establishes a system
for monitoring the implementation
of TDR programs. After
the first three years
following adoption of
the TDR ordinance, the
municipal planning board
and governing body, must
prepare an assessment
of the TDR program and
submit that to the county
planning board, the Office
of Smart Growth, and the
County Agriculture Development
Board, when farmland is
involved. The assessment
will look at the transfer
of credits, current economic
situation, capital improvement
plan and the goals of
the TDR plan.
The
municipal planning board
and governing body must
prepare another assessment
five years after adoption,
and then every five years
after that. If at least
25% of the development
potential has not been
transferred within five
years, the program may
be discontinued, unless
the municipality can demonstrate
reasons, pursuant to the
legislation, as to why
the development potential
was not transferred. |
| Planning
Funds |
| The
State Transfer of Development Rights Act authorizes the State
TDR Bank to provide planning assistance grants up to $40,000,
with a 50% local match, for the purpose of preparing the documents
required by the legislation: utility service plan and development
transfer plan elements of the master plan; real estate market
analysis; and capital improvement plan.
For more
information, visit the State TDR Bank website. |
|
