The sending area refers to the portion of the municipality from which properties may sell their developments rights. These are areas determined to be incompatible with increased development. A receiving site on the other hand includes properties to which development rights can be transferred. The municipality has determined this area suitable for increased development density.
How are sending areas selected?
A sending area is selected based on the attribute the municipality wishes to preserve. Often these areas include prime agricultural lands, environmentally sensitive properties or historic districts.
How are receiving areas selected?
A municipality will select a receiving area based on the availability of infrastructure (roads, public transportation, water and sewer capacity, etc.) necessary to support increased development density. The New Jersey State TDR Act requires that receiving areas be large enough to accommodate all the credits allocated in the sending area. This means that the development density of the receiving area will determine its size.
How is the value of a TDR credit determined?
The cost of a TDR credit is determined by how TDR credits are allocated in the sending area, what those credits allow a purchaser to do in a receiving zone, and the number of opportunities for credit use. The price someone will be willing to pay for a credit will depend upon the demand for increased density in the receiving area and the number of available credits from the sending area. Initially a municipality may choose to set minimum credit value but ultimately a functional TDR program will have credit costs that reflect their value in the open market.
Who may purchase TDR credits?
Anyone can purchase development credits. Most credits are bought by receiving area developers to enable increased development density but they can also be held as investments or purchased and retired.
If I enroll credits must I sell them all at once?
Credits are interests in real property and can be used as the owner desires. Once credits are enrolled they may be sold individually, sold as a group or retained. Although owners are not required to sell all credits at any one time, once any portion of a property’s credits are enrolled for sale, a deed restriction is placed on the entire property.
If I sell credits do I still own my property?
In selling credits you are transferring the ability to develop the property. The ability to develop land is but one of the many rights landowners hold. When credits are transferred the property owner maintains all remaining property rights.
Is the public granted access to properties that have transferred credits?
No. A property preserved through TDR remains private. The public does not gain any right of access or use.
Must a landowner in a designated sending area or a receiving area participate in TDR?
Property owner participation in TDR is not required. Landowners in both the sending and receiving area participate in TDR only if they wish to capitalize on the development potential of their property. If you do not wish to develop your property or sell your allocated credits you will not need TDR.
How does a voluntary TDR program differ from a mandatory one?
In a voluntary TDR, sending and receiving area landowners have the ability to maintain their property as is, sell development credits or develop the property at the current base density. In a mandatory TDR scenario, owners can also maintain their property as is or sell development credits allocated based on the current base density. The difference occurs, however, if the owner wishes to develop their property. In this case, they may develop but the base zoning at which they can develop is severely restricted. Mandatory programs are enacted to encourage TDR transfers when development pressure in the sending area is extreme or when sending area resources are so fragile that even minimal development is not acceptable.
Does establishment of a municipal TDR program limit opportunities for traditional preservation?
No, it does not. TDR is simply another landowner option for preservation. In fact, given the planning municipalities are required to perform for TDR, applications in these towns may rank higher in traditional preservation programs.