Sign up for our newsletter.

Atlanta TDR Margaret Mitchell House 9490 WestLampeter San-Diego-Receiving-Zone South-Street-Seaport-154 San-Francisco-Actual-Certified-Sending-Site-635-Pine jefferson West_Hempfield HistoricDowntown

New Jersey Highlands

The New Jersey Highlands Region includes 859,358 acres of land in northwestern New Jersey, incorporating 88 municipalities and parts of seven counties: Bergen, Hunterdon, Morris, Passaic, Somerset, Sussex and Warren. This region features scenic beauty and a wealth of significant environmental resources, most prominently a source of drinking water for over half of the residents of New Jersey.

To safeguard these resources, the Legislature adopted the 2004 Highlands Water Protection and Planning Act which created a Highlands Council responsible for the development of the Highlands Regional Master Plan, (RMP), adopted in 2008. The RMP includes provisions for a transfer of development rights program consistent with the State TDR Act. Unlike the TDR program in the New Jersey Pinelands, the state’s other regional TDR program, under the Highlands TDR program, municipalities can decide whether or not they will create TDR receiving areas on a purely voluntary basis. Even though the Highlands Region is slightly smaller than the Pinelands, it has many more communities than the 53 municipalities in the Pinelands. In addition to the 88 municipalities within the Highlands, an additional 130 municipalities outside the region may voluntarily provide TDR receiving areas, creating the potential for a TDR program with as many as 218 municipalities.

The Highland RMP distinguishes between a Preservation Area where compliance is mandatory and a Planning Area where compliance is voluntary. Sending zones include all land in the Region’s designated Preservation Area with the exception of Existing Community Zones and Highlands Redevelopment Areas identified by the RMP. Upon conformance with the RMP, land within the Planning Area of a municipality, except Existing Community Zones and Redevelopment Areas, are also eligible to become sending areas.

To qualify as sending sites, residentially-zoned parcels must meet at least one of the following three criteria:

  • At least five acres in size; or
  • At least three times the minimum lot size in effect in 2004; or
  • The parcel is undeveloped and the owner chooses not to develop it pursuant to the exemptions under section 28 of the Act.

Land values vary significantly in the Region, prompting the Highlands program to allocate Highlands Development Credits (HDCs) to residentially-zoned land based on the following formula: Net Yield X Zoning Factor X Location Factor = HDCs. The Highlands web site offers a Highlands Development Credit Estimator that estimates a range of HDCs that might be allocated to a specific parcel given its size, zoning and location.

Allocation of HDCs to non-residentially-zoned land is accomplished under a formula that accounts for the square-foot value of floor area in various non-residential categories such as office, industrial and retail. Based on an economic analysis, the Highlands Council established the initial price of $16,000 per HDC. This price was judged to be high enough to provide economic return to sending area owners who sell HDCs yet low enough for receiving area developers to use HDCs profitably.

Since the creation of receiving areas is voluntary, the RMP offer municipalities various optional ways to establish receiving areas, including:

  • Land within Existing Community Zones and Redevelopment Areas;
  • Land in the Conservation Zone where receiving zones would be consistent with the RMP and not detrimental to agriculture; and
  • Land outside the boundaries of the Highlands Region but within the seven counties that are partially included in the Region.

Municipalities wishing to create receiving zones must receive approval from the Highlands Council based on consistency with the RMP. Then the municipality must prepare a TDR ordinance for review and approval by the Highlands Council. To motivate municipalities to voluntarily provide receiving zones, New Jersey offers the following incentives:

  • The ability to charge impact fees of up to $15,000 per dwelling unit within the voluntary receiving zone;
  • Grants of up to $250,000 to offset the costs of planning these receiving zones; and
  • Grants for reimbursement of the cost of changing development regulations to accommodate receiving zones.

Municipalities within the Planning Area that create receiving zones receive legal representation from the state in challenges to the receiving zones and also get priority for state infrastructure programs. In 2007, the Highlands Council also approved a program, not to exceed $1 million annually, awarding municipalities $25,000 each to perform TDR feasibility studies.

The Highland’s program established a Highlands Development Credit Bank responsible for:

  • Serving as a regional HDC clearinghouse;
  • Administering and documenting transfers; and
  • Buying and selling HDCs.

In 2008, $10 million was appropriated to fund an initial purchase of HDCs through the Highlands Development Credit Bank. The Bank’s initial HDC purchases, scheduled to begin in 2010, will be from landowners facing extraordinary financial hardship including bankruptcy, job loss or catastrophic medical expenses. On its web site, the Highlands Development Credit Bank acknowledges that it will serve as the primary purchaser of HDCs in the program’s initial phase since time will be needed for municipalities to voluntarily seek approval of receiving zones. As of August 2009, no municipality had agreed to accept transferred HDCs.