THE STATE OF THE STATE TDR ACT

On March 29th, 2004, Governor McGreevey signed the long over do State Transfer of Development Rights (TDR) Act into law (N.J.S.A. 40:55D-137 et seq.). The law was the result of a collaboration between planners and policy wonks, as well as, environmental, farmer and developer advocates. Its passage was lauded by many as the savior of NJ’s rural landscape. To mark the four-year anniversary of this momentous law, this issue of Plan This! is dedicated to the success, failure and promise of TDR in New Jersey.

As planners, we could not help but be excited by the promise of the State TDR Act, which gives communities control over the pattern and design of development. TDR is a sustainable planning technique that balances growth and development, and provides private dollars for preservation. TDR is the antithesis of the sprawl pattern so prevalent in NJ.

Recognizing the importance of this balanced growth tool, the State dedicated significant technical and financial resources to assist municipalities in implementing TDR. So why, nearly four years later, has not a single municipality adopted a TDR ordinance pursuant to the Act? Moreover, why have several municipalities tried to circumvent the Act with “almost” TDR ordinances (discussed in further detail in a subsequent article)? Having worked tirelessly over the past four years to implement TDR, I am intimately aware of the issues facing TDR, and the incentives needed to make it a more viable tool.

One of the most common complaints about TDR is that it is complicated. The concept in itself is baffling to many, and the intricacies required in the Act do not make it any simpler. I personally feel that the requirements of the law are necessary to ensure a viable and equitable TDR program. It is the responsibility of professional planners to know the requirements of the Act, and relay them to their clients in a manner that makes sense. Meanwhile, the public misconceptions and misunderstandings about TDR can be remedied through public outreach that occurs early and often. Frequently, the very people TDR is meant to help—the landowners—are the most vocal opponents. Including landowners and other key stakeholders throughout the process is critical to achieving success. Communicating the TDR message is probably the easiest challenge to overcome if the community is willing to have an open, collaborative planning process.

Harder to overcome than communication is the cost of TDR. For a rural municipality without access to infrastructure, the cost to plan for TDR can be upwards of a half a million dollars. The cost goes down proportionally for suburban and urban communities. When weighed against the cost to the municipality to purchase development rights, the cost to plan for TDR is cheap. However, in this time of budget caps and plummeting bond ratings, it may still be a jagged pill to swallow. Unfortunately, the Act only allows for a $40,000 cost-share grant through the State TDR Bank, and the competitive grants from the Office of Smart Growth still cannot cover the difference. A community wishing to pursue TDR has go into it with eyes open, and think about the long-term return on investment, both in attracting appropriate ratables and maintaining quality of life.

In addition to the planning costs, are those costs associated with the bricks and mortar implementation of TDR. Again, this burden is heavier for rural communities without access to sewer and/or water, and with limited transportation infrastructure. Moreover, in most cases, development occurs at a faster rate in TDR communities because of desirable densities and the relative ease of local approval for those densities. This faster paced development will mean a more rapid expansion of resident needs like education, emergency services and recreational facilities. Compared to sprawl development, the municipality can be more prepared and expect savings over the long run for these services and infrastructure, but that is hardly a relief when you have to explain the coming years’ budgets to the taxpayers.

Finally, communities (and developers) wishing to pursue TDR still have to make their way through the bureaucratic red tape at the State for permits and infrastructure improvements. State Plan Endorsement*, a requirement of the State TDR Act, gives the community a nod of approval for their efforts and affords them greater access to the State agencies. Still, TDR communities need even more assistance to make the TDR program become a reality.

All of the above are the main reasons why only one community, Woolwich Township, is approaching the TDR finish line after four years. This diatribe is not to say that TDR is unattainable or impractical. Perseverance and strong community leadership can overcome these challenges (as was the case in Chesterfield and Woolwich, both discussed in detail in subsequent articles). Nevertheless, why should these challenges be born largely by the community and its leaders? The State agencies have done their best to provide assistance, but are limited by financial, statutory and/or regulatory obstacles that even the best intentioned cannot overcome. I know this well, having been one of those "best intentioned" for the past four years. Real institutional change needs to occur to make TDR and other smart growth principles easier to implement than sprawl.

• Below are a few recommendations that would make TDR easier for towns:
• Raise the statutory $40,000 cost-share planning grant from the State TDR Bank to at least $100,000.
• Provide an exemption to the municipal budget cap for State Plan Endorsement, which would also cover the costs associated with TDR.
• Prioritize State infrastructure funds to Plan Endorsed communities, and TDR receiving zones in particular:
  • The State Transportation Improvement Program (TIP) should prioritize projects in TDR receiving areas. The TIP currently prioritizes projects on a “need” basis, in other words, where congestion has gotten so bad that improvements are necessary. TDR communities have made the effort to head off the congestion by reducing sprawl and designing a better road network for the impending development. These proactive projects should be prioritized for funding over projects that are necessary only because of poor planning.
  • providing multi-modal transportation opportunities is critical to any center-based development. The NJ Transit should prioritize the routing of transit service to town or regional centers that accommodate TDR credits.
  • Supporting water and sewer infrastructure is critical to achieve TDR densities. Accordingly, the Environmental Infrastructure Trust (EIT) should expand the Smart Growth Financing Program to include TDR receiving areas.
• Various State entities should provide for more flexibility in the review of projects in TDR receiving areas:
  • The NJDOT Highway Access Code should more easily accommodate traffic patterns associated with center-based development by providing for a specialized and flexible access level for Plan Endorsed communities.
  • The Residential Site Improvement Standards (RSIS) should provide an easier waiver process for Plan Endorsed communities.
  • NJDEP should provide a “one-stop” permitting process for TDR receiving areas where permits can be considered regionally for the entire receiving area, rather than one project at a time. Moreover, the review of these permits should be prioritized over other permits.
• Incentive programs, similar to those associated with Urban Enterprise Zones and redevelopment areas, should be created for TDR receiving areas. These programs could provide funding for needed infrastructure and services without additionally burdening the municipality or developers.
• Property tax relief and Extraordinary Aid should be prioritized to Plan Endorsed communities.
• In recognition of the savings TDR affords the Garden State Preservation Trust (GSPT), TDR communities should have access to a dedicated pot of funding for open space acquisition and park development that supports the TDR receiving area. The funding should be automatic and be some percentage of the value of the TDR credits purchased by private interests.
• Similar to Maryland and Massachusetts, there should be a State entity that has jurisdiction over all of the State’s land use agencies to ensure that there is a real and coordinated effort to promote sustainable land use practices. The State Planning Commission (SPC), already populated with the Commissioners of these agencies, seems most appropriate. Accordingly, the SPC and the Office of Smart Growth should be empowered to coordinate any regulatory changes necessary to make the above happen.
• In recognition of the savings TDR affords the Garden State Preservation Trust (GSPT), TDR communities should have access to a dedicated pot of funding for open space acquisition and park development that supports the TDR receiving area. The funding should be automatic and be some percentage of the value of the TDR credits purchased by private interests.

Municipalities have difficult short-term fiscal and political choices to make, which despite the long-term benefits of smart growth, the up-front costs often cause municipalities to make not so sustainable decisions. As we all know, these decisions have resulted in sprawl. The above is just a small sampling of initiatives that could make smart growth land use practices easier to implement. As planners, we need to advocate for the institutional changes that will make smart growth easier than sprawl. The passage of the State TDR Act gave us the tool, now we need the support to make that tool work.

* References to State Plan Endorsement can be interchanged with Highlands Plan Conformance or Pinelands Certification, as applicable.

The President’s Corner reflects the President’s opinion and not necessarily that of the NJAPA Executive Committee or NJAPA membership. The President can be contacted at pres@njapa.org.