Transfer of Development Rights (TDR) is a land use tool that allows a community to use 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.
Please see the following link for more information about the development of the Highlands TDR Program: