Buying Air: How Transferable Development Rights (TDR) Work in NJ

Zoning usually ties development rights to the land itself. If you own a lot zoned for 4 stories, you can build 4 stories. But what if you could buy the "right" to build 2 more stories from a farmer who agrees not to build on their land? That is the essence of Transferable Development Rights (TDR).

The Concept: Sending vs. Receiving Zones

TDR programs are designed to preserve open space (farmland, forests, historic sites) by shifting density to areas that can handle it (town centers, transit hubs).

• Sending Zone: The area to be preserved. Landowners here sell their "development credits" and place a conservation easement on their property.
• Receiving Zone: The area designated for growth. Developers here purchase credits to exceed the baseline zoning density.

Where Does TDR Exist in NJ?

New Jersey has the most aggressive TDR legislation in the country, but it is only active in specific municipalities. The most famous example is the Pinelands Development Credit (PDC) program, which has preserved thousands of acres in the Pinelands while facilitating growth in regional growth areas.

Other municipalities have their own local TDR ordinances (e.g., Chesterfield, Woolwich). If you are developing in these towns, understanding TDR is mandatory.

The "Density Bonus" Alternative

Outside of formal TDR programs, many towns offer ad-hoc density bonuses. For example, a Redevelopment Plan might say:

"Base density is 40 units/acre. Developer may achieve 60 units/acre by contributing $25,000 per bonus unit to the Affordable Housing Trust Fund."

This functions similarly to TDR but cuts out the third-party seller. You are essentially buying density directly from the town.