january 2005

How New Jersey’s recently enacted Transfer of Development Rights Act (TDR) affects developers and property owners

BACKGROUND

TDR, innovative in its concept, permits a municipality to attract developers to make improvements within the municipality’s developed areas and at the same time permits the municipality to preserve its undeveloped areas by keeping them free from further development.

A municipal TRD ordinance permits a developer of property in the municipality to purchase development rights from an owner of undeveloped property in the municipality. Through the purchase of rights, the developer benefits by being able to increase the density of his property. Through the sale of rights, the owner of undeveloped property benefits by realizing income while retaining ownership of the property. The municipality benefits by the improvements made to its developed areas and by the preservation of its undeveloped areas.

It is anticipated that TRD will enable municipalities to control sprawl by directing development to the best suited development areas and to preserve open space in surrounding areas less suitable for development. As a result, property values may increase substantially and many pro-development and anti-development concerns will be reconciled.

WE RECOMMEND

If you are interested in selling or purchasing rights as an owner of open vacant property or as a developer, you should

Find out if the municipality in which your property is located is considering the adoption of a TRD ordinance.

If it is, make certain that you are involved in the adoption process to protect your interests.

If you have any questions concerning TRD issues, please contact Jack Fersko.