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Transfer of Development Rights (TDR) is a land use tool that permits a community to utilize market forces to encourage the transfer of development potential from areas that the community wants to preserve (called sending zones) to areas that are more appropriate to accommodate increased growth (called receiving zones). Landowners in the sending zones receive compensation for restricting development on their property. As a market-based system, payment for this lost development potential comes from purchasers who buy credits representing the lost development potential in the sending zones. The credits then entitle the purchaser to build in a receiving zone at a density greater than that permitted in the underlying zoning.

TDR has become an increasingly important tool in the preservation of lands with sensitive resources, whether those resources are environmental, agricultural, or historical. In New Jersey, TDR programs have been established to preserve large contiguous parcels of farmland to maintain agricultural viability, such as the programs in Chesterfield and Lumberton Townships in Burlington County, while in the New Jersey Pinelands TDR is used to preserve tracts of ecologically important lands to maintain ecosystem health and high water quality.

The Highlands Water Protection and Planning Act, N.J.S.A. 13:20-1 et seq., charged the Highlands Council with developing a TDR program for the Highlands Region and the seven Highlands counties. The Highlands Council adopted the TDR Program as part of the Highlands Region Master Plan. In June 2008, the Council established the Highlands Development Credit Bank (HDCB). The Council, along with the HDCB, is currently implementing the TDR Program throughout the seven Highlands Region counties. This program serves as one mechanism to address some of the equity concerns of property owners in the Preservation Area that have been affected by implementation of the Highlands Act.

The Highlands TDR Program allocates TDR credits called Highlands Development Credits or HDCs to sending zone property owners, which HDCs may be sold to developers for use in appropriate voluntary receiving zones. Use of HDCs by developers in the receiving zones that have been established by participating municipalities will permit developers to increase the density or intensity of proposed projects in those zones. Under the Highlands Act, participation as a receiving zone is voluntary.

Please see the following links for more specific information regarding the Highlands TDR Program:

TDR Feasibility

In support of the Transfer of Development Rights (TDR) program, the Highlands Council created a TDR Receiving Zone Feasibility Grant Program that provides both financial and technical assistance to those municipalities that wish to explore the possibility of designating a TDR receiving zone in their community. Any municipality in the State is eligible to serve as a voluntary TDR receiving zone. Participation in the grant program requires a commitment by a municipality to fully evaluate the feasibility and desirability of designating a receiving zone, but does not obligate a municipality to establish such a zone.