Home > Planning Board > Transfer of Development Rights (TDR)

On March 29, 2004 Governor James E. McGreevey signed into law the nation’s first statewide Transfer of Development Rights (TDR) Act. With a TDR program development potential in a specified preservation area can be purchased by private investors for use in a targeted growth area. TDR preserves open space and farmland while still accommodating growth, and eliminates sudden increases and decreases in property values that have been associated with zoning changes.

Read About Communities with TDR Programs

Overview
A TDR program provides municipalities with a powerful tool for redirecting growth from one area of a community to another. At its heart, TDR is a planning technique for controlling development density. With a TDR program a municipality regulates site densities by allowing higher densities on some parcels in exchange for lower densities on others.

Necessary Steps
The first step in developing a TDR program is to delineate specific areas in the community where more intense development than currently permitted by zoning regulations would be acceptable. This area is known as the "transfer" or "receiving" zone.

The second step is for the community to identify areas where zoning regulations currently allow more development than is deemed acceptable. This "preservation" and “sending” zone could include, for example, prime agricultural lands, woodlands, scenic vistas, or historic buildings or districts.

Once the sending and receiving zones have been identified, the community allocates "development rights" to property owners within the sending zone. The number of property rights distributed to each landowner should reflect either the number of residential lots they could build on their property or, in some other manner, the relative value of their property as compared to all other properties in the sending area.

Required Plans and Approvals

  • TDR Plan
  • Capital Improvement Plan
  • Utility Service Plan
  • Real Estate Market Analysis
  • Development Transfer Ordinance
  • County Approval
  • Initial Plan Endorsement from the State Planning Commission
  • Required fifth year review

Available Planning Grants

Incentives
Municipalities have highlighted the following reasons, among others, for establishing a TDR program:

  • To increase the attractiveness of a bankrupt site to developers.
  • To put a vacant site back on the tax rolls.
  • To drive the redevelopment of an existing business district or other underutilized area.
  • To establish a mixed-use district.
  • To convert residential units to commercial uses.
  • To provide the municipality with more control over development plans.
  • To add strength to a municipal master plan.
  • To preserve a town greenbelt and/or other open space.
  • To maintain rural character.
  • To protect historic and cultural resources.
  • To obtain planning assistance, including planning grants.
Important Considerations
Municipalities need to use real estate market analyses and other planning studies to ensure that sending and receiving areas are properly balanced. The receiving area needs to contain a sufficient amount of developable land in order to sustain a demand for development credits. Similarly, there needs to be an adequate supply of development credits in the sending zone for use in developing the receiving areas.

In order to ensure that receiving area boundaries are maintained in the future, municipalities should preserve greenbelts at the early stages of the planning process or at the very latest, concurrent to the development of the receiving zone.

The Highlands Regional Master Plan, once adopted, will identify TDR sending zones in the Highlands Preservation Area and receiving zones in the Highlands Planning Area. Although the Highlands Water Protection and Planning Act states that the sending zones are mandatory and the receiving zones are voluntary, municipalities should stay fully apprised of and involved in the development of the Highlands Plan in order to ensure that local and regional visions are consistent with one another.

Municipalities should keep in mind that a TDR program does not restrict overall growth. Without the inclusion of density bonuses the amount of total growth remains unchanged, although a TDR program can accelerate growth in a receiving zone since the area of developable land has been significantly decreased. Furthermore, if a receiving zone is located in an area with high development pressures, the opportunity to develop the land at a higher density may spur growth.

In order to implement a successful TDR program, municipalities need to be dedicated to long-term planning. Early TDR planning efforts have highlighted a link between well-planned and well-designed receiving zones and equity protection for sending area landowners.

Latest Webpage Update
Provided by the Hunterdon County Planning Board on April 1, 2005.