An Act concerning the transfer of development rights, and amending and supplementing P.L.2004, c.2, and amending P.L.1983, c.32 and P.L.1993, c.339.

Be It Enacted by the Senate and General Assembly of the State of New Jersey:

1. Section 2 of P.L.2004, c.2 (C.40:55D-138) is amended to read as follows:

2. The Legislature finds and declares that as the most densely populated state in the nation, the State of New Jersey is faced with the challenge of accommodating vital growth while maintaining the environmental integrity, preserving the natural resources, and strengthening the agricultural industry and cultural heritage of the Garden State; that the responsibility for meeting this challenge falls most heavily upon local government to appropriately shape the land use patterns so that growth and preservation become compatible goals; that until now municipalities in most areas of the State have lacked effective and equitable means by which potential development may be transferred from areas where preservation is most appropriate to areas where growth can be better accommodated and maximized; and that the tools necessary to meet the challenge of balanced growth in an equitable manner in New Jersey must be made available to local government as the architects of New Jersey's future.

The Legislature further finds and declares that while new residential and commercial development is vital to the State's overall economic health and fiscal integrity, a disproportionate share of the tax burden associated with providing the necessary public infrastructure to service such development falls on municipal government; that the public is increasingly resistant to encouraging and accommodating additional development because of the negative property tax impacts it can have on local taxes; and that because the State desires to encourage the implementation of transfer of development rights programs to achieve the State's overall goals for both economic development and land and resource conservation, it is necessary and appropriate to assist municipalities in off-setting a portion of the costs of these public infrastructure improvements through the assessment of development impact fees when the transfer of development rights is employed.

The Legislature further finds and declares that the "Burlington County Transfer of Development Rights Demonstration Act," P.L.1989, c.86 (C.40:55D-113 et al.), was enacted in 1989 as a pilot transfer of development rights (TDR) program to demonstrate the

feasibility of TDR as a land use planning tool; and that the Burlington County pilot program has been a success and should now be expanded to the remainder of the State of New Jersey in a manner that is fair and equitable to all landowners.

The Legislature therefore determines that it is in the public interest to authorize all municipalities in the State to establish and implement TDR programs.

(cf: P.L.2004, c.2, s.2)

2. Section 3 of P.L.2004, c.2 (C.40:55D-139) is amended to read as follows:

3. a. [The] Notwithstanding any provision of the "Pinelands Protection Act," P.L.1979, c.111 (C.13:18A-1 et seq.) or the "Highlands Water Protection and Planning Act," P.L.2004, c.120 (C.13:20-1 et al.), or any rules or regulations adopted pursuant thereto, to the contrary, the governing body of any municipality that fulfills the criteria set forth in section 4 of P.L.2004, c.2 (C.40:55D-140) may, by ordinance approved by the county planning board, provide for the transfer of development potential within its jurisdiction. The governing bodies of two or more municipalities that fulfill the criteria set forth in section 4 of P.L.2004, c.2 (C.40:55D-140) may, by substantially similar ordinances approved by their respective county planning boards, provide for a joint program for the transfer of development potential, including transfers from sending zones in one municipality to receiving zones in the other, regardless of whether or not those municipalities are situated within the same county. Any such program shall be carried out by the municipal planning board or boards.

A program may include the designation of one or more sending or receiving zones.

b. The Office of Smart Growth, in consultation with all appropriate State departments, agencies, and regional planning entities, including but not limited to the Department of Agriculture, the Department of Environmental Protection, the Department of Education, the Department of Transportation, the New Jersey Commerce, Economic Growth and Tourism Commission, and the New Jersey Economic Development Authority shall provide such technical assistance as may be requested by municipalities or a county planning board, and as may be reasonably within the capacity of the office to provide, in the preparation, implementation [or], and review, as the case may be, of the master plan elements required to have been adopted by the municipality as a condition for adopting a development transfer ordinance pursuant to section 4 of P.L.2004, c.2 (C.40:55D-140), capital improvement program or development transfer ordinance.

(cf: P.L.2004, c.2, s.3)

3. Section 4 of P.L.2004, c.2 (C.40:55D-140) is amended to read as follows:

4. Prior to the adoption or amendment of any development transfer ordinance, a municipality shall:

a. Adopt a development transfer plan element of its master plan pursuant to paragraph (14) of subsection b. of section 19 of P.L.1975, c.291 (C.40:55D-28) in accordance with the requirements of section 5 of P.L.2004, c.2 (C.40:55D-141). Prior to adoption of a development transfer plan element, a map of the proposed receiving zone in Geographic Information System format shall be submitted to the Office of Smart Growth and appropriate State agencies for review and comment. The State agencies shall, within 90 days after receipt thereof, provide a preliminary feasibility assessment of the proposed receiving zone based on factors such as existing and proposed infrastructure availability and capacity, environmental and agricultural resource value, and transportation capacity;

b. Adopt a capital improvement program pursuant to section 20 of P.L.1975, c.291 (C.40:55D-29) for the receiving zone, which includes the location and cost of all infrastructure and a method of cost sharing if any portion of the cost is to be assessed against developers pursuant to section 30 of P.L.1975, c.291 (C.40:55D-42);

c. Adopt a utility service plan element of the master plan pursuant to section 19 of P.L.1975, c.291 (C.40:55D-28) that specifically addresses providing necessary utility services within any designated receiving zone within a specified time period so that no development seeking to utilize development potential transfer is unreasonably delayed because utility services are not available;

d. Prepare a real estate market analysis pursuant to section 12 of P.L.2004, c.2 (C.40:55D-148) which examines the relationship between the development rights anticipated to be generated in the sending zones and the capacity of designated receiving zones to accommodate the necessary development;

e. Adopt an impact fee ordinance if the municipality decides to impose impact fees pursuant to section 11 of P.L. , c. (C. ) (pending before the Legislature as this bill) to generate revenue to off-set the costs of public infrastructure improvements necessitated by new development in the receiving zone; and

[e. Either receive approval of: (1) its initial petition for] f. Receive either: (1) certification of eligibility for plan endorsement [of its master plan] and approval of the development transfer plan element and supporting documentation by the State Planning Commission pursuant to P.L.1985, c.398 (C.52:18A-196 et [seq.] al. ) and regulations adopted pursuant thereto [either individually, or as part of a county or regional plan, provided that the petition included the development transfer ordinance and supporting documentation], or (2) approval of the development transfer ordinance and supporting documentation as an amendment to a previously approved petition for [master] plan endorsement by the State Planning Commission pursuant to P.L.1985, c.398 (C.52:18A-196 et [seq.] al. ) and regulations adopted pursuant thereto.

(cf: P.L.2004, c.2, s.4)

4. Section 9 of P.L.2004, c.2 (C.40:55D-145) is amended to read as follows:

9. a. [A] Except for those receiving zones participating in the pinelands development credit program established pursuant to the "Pinelands Protection Act," P.L.1979, c.111 (C.13:18A-1 et seq.), and any rules or regulations adopted pursuant thereto, or in the transfer of development rights program established pursuant to section 13 of the "Highlands Water Protection and Planning Act," P.L.2004, c.120 (C.13:20-13), and any rules or regulations adopted pursuant thereto, a receiving zone shall be appropriate and suitable for development and shall be at least sufficient in size and zoning capacity to accommodate all of the development potential of the sending zone, and at all times there shall be a reasonable likelihood that a balance is maintained between sending zone land values and the value of the transferable development potential.

b. The development potential of the receiving zone shall be realistically achievable, considering: (1) the availability and capacity of all necessary infrastructure; (2) all of the provisions of the zoning ordinance including those related to density, lot size and bulk requirements; and (3) given local land market conditions as of the date of the adoption of the development transfer ordinance.

c. The development potential of the receiving zone shall be consistent with the criteria established pursuant to subsection b. of section 13 of P.L.2004, c.2 (C.40:55D-149).

d. All infrastructure necessary to support the development of the receiving zone as set forth in the zoning ordinance shall either exist or be scheduled to be provided so that no development requiring the purchase of transferable development potential shall be unreasonably delayed because the necessary infrastructure will not be available due to any action or inaction by the municipality.

e. No [density] increases in development potential beyond that specified in an adopted development transfer ordinance may be achieved in a receiving zone without the use of appropriate instruments of transfer.

(cf: P.L.2004, c.2, s.9)

5. Section 12 of P.L.2004, c.2 (C.40:55D-148) is amended to read as follows:

12. a. Prior to the final adoption of a development transfer ordinance or any significant amendment to an existing development transfer ordinance, the planning board shall conduct a real estate market analysis of the current and future land market which examines the relationship between the development rights anticipated to be generated in the sending zone and the likelihood of their utilization in the designated receiving zone. The analysis shall include thorough consideration of the extent of development projected for the receiving zone and the likelihood of its achievement given current and projected market conditions, including costs associated with any impact fees proposed to be imposed pursuant to section 11 of P.L. , c. (C. ) (pending before the Legislature as this bill), in order to assure that the designated receiving zone has the capacity to accommodate the development rights anticipated to be generated in the sending zone. The real estate market analysis shall conform to rules and regulations adopted pursuant to subsection c. of this section.

b. Upon completion of the real estate market analysis and at a meeting of the planning board held prior to the meeting at which the development transfer ordinance receives first reading, the planning board shall hold a hearing on the real estate market analysis.

The hearing shall be held in accordance with the provisions of subsections a. through f. of section 6 of P.L.1975, c.291 (C.40:55D-10).

c. The Commissioner of Community Affairs, in consultation with the board of directors of the State Transfer of Development Rights Bank established pursuant to section 3 of P.L.1993, c.339 (C.4:1C-51), shall within 180 days of the enactment of P.L.2004, c.2 (C.40:55D-137 et al.), adopt rules and regulations which set forth the required contents of the real estate market analysis.

(cf: P.L.2004, c.2, s.12)

6. Section 13 of P.L.2004, c.2 (C.40:55D-149) is amended to read as follows:

13. a. Prior to adoption of a development transfer ordinance or of any amendment of an existing development transfer ordinance, the municipality shall submit a copy of the proposed ordinance, copies of the development transfer and utility service plan elements of the master plan adopted pursuant to section 19 of P.L.1975, c.291 (C.40:55D-28) and capital improvement program adopted pursuant to section 20 of P.L.1975, c.291 (C.40:55D-29), proposed municipal master plan changes necessary for the enactment of the development transfer ordinance, the proposed impact fee ordinance, if the municipality decides to impose impact fees pursuant to section 11 of P.L. , c. (C. ) (pending before the Legislature as this bill), and the real estate market analysis to the county planning board. If the ordinance and master plan changes involve agricultural land, then the county agriculture development board shall also be provided information identical to that provided to the county planning board.

b. The county planning board, upon receiving the proposed development transfer ordinance and accompanying documentation, shall conduct a review of the proposed ordinance with regard to the following criteria:

(1) consistency with the adopted master plan of the county;

(2) support of regional objectives for agricultural land preservation, natural resource management and protection, historic or architectural conservation, or the preservation of other public values as enumerated in subsection a. of section 8 of P.L.2004, c.2 (C.40:55D-144);

(3) consistency with reasonable population and economic forecasts for the county; and

(4) sufficiency of the receiving zone to accommodate the development potential that may be transferred from sending zones and a reasonable assurance of marketability of any instruments of transfer that may be created.

(cf: P.L.2004, c.2, s.13)

7. Section 18 of P.L.2004, c.2 (C.40:55D-154) is amended to read as follows:

18. [The absence of either] Either of the following shall constitute a rebuttable presumption that a development transfer ordinance is no longer reasonable:

a. [plan endorsement pursuant to P.L.1985, c.398 (C.52:18A-196 et seq.) or regulations adopted pursuant thereto is no longer in effect for that municipality] revocation of the certification of eligibility for municipal plan endorsement by the State Planning Commission pursuant to the "State Planning Act," P.L.1985, c.398 (C.52:18A-196 et al.), and any rules or regulations adopted pursuant thereto; or

b. a sufficient percentage of the development potential has not been transferred in that municipality as provided in section 20 of P.L.2004, c.2 (C.40:55D-156).

If the ordinance of a municipality that is a participant of a joint program pursuant to section 3 of P.L.2004, c.2 (C.40:55D-139) is presumed to be no longer reasonable pursuant to this section, then the ordinances of all participating municipalities also shall be presumed to be no longer reasonable.

(cf: P.L.2004, c.2, s.18)

8. Section 22 of P.L.2004, c.2 (C.40:55D-158) is amended to read as follows:

22. a. The governing body of any municipality that has adopted a development transfer ordinance, or the governing body of any county in which at least one municipality has adopted a development transfer ordinance, may provide for the purchase, sale, or exchange of the development potential that is available for transfer from a sending zone by the establishment of a development transfer bank. Alternatively, the governing body of any municipality which has adopted a development transfer ordinance and has not established a municipal development transfer bank may either utilize the State TDR Bank or a county development transfer bank for these purposes, provided that the county in which the municipality is situated has established such a bank.

b. Any development transfer bank established by a municipality or county shall be governed by a board of directors comprising five members appointed by the governing body of the municipality or county, as the case may be. The members shall have expertise in either banking, law, land use planning, natural resource protection, historic site preservation or agriculture. For the purposes of P.L.2004, c.2 (C.40:55D-137 et al.) and the "Local Bond Law," N.J.S.40A:2-1 et seq., a purchase by the bank shall be considered an acquisition of lands for public purposes.

c. Any development transfer bank established by the Highlands Water Protection and Planning Council pursuant to subsection i. of section 13 of P.L.2004, c.120 (C.13:20-13) may provide a financial guarantee with respect to any loan to be extended to any person that is secured using development potential as collateral for the loan. Any financial guarantee authorized by this subsection shall be in accordance with the procedures, terms and conditions, and requirements, including rights and obligations in the event of a default on any loan secured in whole or in part using development potential as collateral, that are adopted by the Highlands Water Protection and Planning Council established pursuant to section 4 of P.L.2004, c.120 (C.13:20-4).

(cf: P.L.2004, c.2, s.22)

9. Section 23 of P.L.2004, c.2 (C.40:55D-159) is amended to read as follows:

23. a. A development transfer bank may purchase property or development potential in a sending zone if adequate funds have been provided for these purposes and the person from whom the property or development potential is to be purchased demonstrates possession of marketable title to the property, is legally empowered to restrict the use of the property in conformance with P.L.2004, c.2 (C.40:55D-137 et al.), and certifies that the property is not otherwise encumbered or transferred.

b. The development transfer bank may, for the purposes of its own development potential transactions, establish [a municipal] an average of the value of the development potential of all property in a sending zone [of a municipality] within its jurisdiction, which value shall generally reflect market value prior to the effective date of the development transfer ordinance. The establishment of this [municipal] average shall not prohibit the purchase of development potential for any price by private sale or transfer, but shall be used only when the development transfer bank itself is purchasing the development potential of property in the sending zone. Several average values in any sending zone may be established for greater accuracy of valuation.

c. The development transfer bank may sell, exchange, or otherwise convey the development potential of property that it has purchased or otherwise acquired pursuant to the provisions of P.L.2004, c.2 (C.40:55D-137 et al.), but only in a manner that does not substantially impair the private sale or transfer of development potential.

d. When a sending zone includes agricultural land, a development transfer bank shall, when considering the purchase of development potential based upon values derived by municipal averaging, submit the [municipal] average arrived at pursuant to subsection b. of this section for review and comment to the CADB. The development transfer bank shall coordinate the development transfer program with the farmland preservation programs established pursuant to the "Agriculture Retention and Development Act," P.L.1983, c.32 (C.4:1C-11 et al.) and the "Garden State Preservation Trust Act," sections 1 through 42 of P.L.1999, c.152 (C.13:8C-1 et seq.) to the maximum extent practicable and feasible.

e. A development transfer bank may apply for funds for the purchase of development potential under the provisions of sections 1 through 42 of P.L.1999, c.152 (C.13:8C-1 et seq.), or any other act providing funds for the purpose of acquiring and developing land for recreation and conservation purposes consistent with the provisions and conditions of those acts.

f. A development transfer bank may apply for matching funds for the purchase of development potential under the provisions of the "Garden State Preservation Trust Act," sections 1 through 42 of P.L.1999, c.152 (C.13:8C-1 et seq.) for the purpose of farmland preservation and agricultural development consistent with the provisions and conditions of that act and the "Agriculture Retention and Development Act," P.L.1983, c.32 (C.4:1C-11 et al.). In addition, a development transfer bank may apply to the State Transfer of Development Rights Bank established pursuant to section 3 of P.L.1993, c.339 (C.4:1C-51) for either planning or development potential purchasing funds, or both, as provided pursuant to section 4 of P.L.1993, c.339 (C.4:1C-52).

(cf: P.L.2004, c.2, s.23)

10. Section 27 of P.L.2004, c.2 (C.40:55D-163) is amended to read as follows:

27. a. Except as provided otherwise pursuant to subsections b. and c. of this section, the provisions of P.L.2004, c.2 (C.40:55D-137 et al.) shall not apply or be construed to nullify any development transfer ordinance adopted by a municipality in Burlington County pursuant to P.L.1989, c.86 (C.40:55D-113 et al.) prior to the effective date of [P.L.2004, c.2 (C.40:55D-137 et al.)] P.L. , c. (C. ) (pending before the Legislature as this bill) .

b. On or after the effective date of [P.L.2004, c.2 (C.40:55D-137 et al.)] P.L. , c. (C. ) (pending before the Legislature as this bill) , any municipality in Burlington County [may adopt] that adopts a development transfer ordinance [either] shall adopt that ordinance pursuant to [P.L.1989, c.86 (C.40:55D-113 et al.) or] P.L.2004, c.2 (C.40:55D-137 et al.).

c. Any municipality in Burlington County may utilize a development transfer bank established by the municipality or county pursuant to P.L.2004, c.2 (C.40:55D-137 et al.), by the municipality or Burlington County pursuant to P.L.1989, c.86 (C.40:55D-113 et al.), or by the State pursuant to P.L.1993, c.339 (C.4:1C-49 et seq.) or P.L.2004, c.2 (C.40:55D-137 et al.).

(cf: P.L.2004, c.2, s.27)

11. (New section) a. A municipality that establishes a receiving zone for the transfer of development rights from a sending zone pursuant to P.L.2004, c.2 (C.40:55D-137 et seq.) may impose, in accordance with this section, impact fees for public capital improvements necessitated by new development in a receiving zone that are not otherwise authorized to be imposed pursuant to law.

b. An impact fee may be imposed by a municipality pursuant to this section only to generate revenue for funding or recouping the costs of new public capital improvements or facility expansions necessitated by new development occurring within the receiving zone, to be paid by the developer as defined pursuant to section 3.1 of P.L.1975, c.291 (C.40:55D-4). Improvements and expansions for which an impact fee is to be imposed shall be justified by, and bear a reasonable relationship to, the needs created by the new development to be constructed within the receiving zone, as set forth herein.

(1) A municipality authorized to impose impact fees under this section shall exercise that authority by ordinance.

(2) Any impact fee ordinance adopted pursuant to this section shall include detailed standards and guidelines regarding:

(a) the definition of a service unit, including specific measures of consumption, use, generation or discharge attributable to particular land uses, densities and characteristics of development; and

(b) the specific purposes for which the impact fee revenues may be expended.

(3) Pursuant to subsections c. and d. of this section, an impact fee ordinance shall also include a delineation of service areas for each capital improvement whose upgrading or expansion is to be funded out of impact fee revenues, a fee schedule which clearly sets forth the amount of the fee to be charged for each service unit, and a payment schedule.

(4) No impact fee shall be assessed pursuant to this section against any low or moderate income housing unit within an inclusionary development as defined under P.L.1985, c.222 (C.52:27D-301 et al.).

(5) No impact fee authorized under this section shall include a contribution for any transportation improvement necessitated by a new development in a county which is covered by a transportation development district created pursuant to the "New Jersey Transportation Development District Act of 1989," P.L.1989, c.100 (C.27:1C-1 et al.).

c. The percentage of the total new dwelling units, or the equivalent amount of development, against which an impact fee can be assessed shall be determined by the ratio between the amount of new development constructed in the receiving zone through the use of transferable development rights and the total amount of new development in the receiving zone.

(1) For an inter-municipal transfer of development rights program, the percentage of the total of the number of new dwelling units, or equivalent amount of development, against which impact fees may be assessed is equal to the following:

(number of new equivalent dwelling units constructed through use of transferable development rights)

(total number of new equivalent dwelling units to be constructed in receiving zone)

X 3 X 100%

(2) For an intra-municipal transfer of development rights program, the percentage of the total number of new dwelling units, or equivalent amount of development, against which impact fees may be assessed is equal to the following:

(number of new equivalent dwelling units constructed through use of transferable development rights)

(total number of new equivalent dwelling units to be constructed in receiving zone)

X 2 X 100%

(3) This subsection shall not apply to any municipality participating in the transfer of development rights program established pursuant to section 13 of the "Highlands Water Protection and Planning Act," P.L.2004, c.120 (C.13:20-13).

d. The total amount of impact fees that may be imposed pursuant to this section must be reasonable and justified in relation to the needs created by the new development to be constructed in the receiving zone, and in no case shall an impact fee imposed pursuant to this section exceed the following:

(1) for a receiving zone that accepts development from designated sending zones pursuant to the "Pinelands Protection Act," P.L.1979, c.111 (C.13:18A-1 et seq.) or the "Highlands Water Protection and Planning Act," P.L.2004, c.120 (C.13:20-1 et al.), and any rules and regulations adopted pursuant thereto, the maximum impact fee that may be imposed shall be $30,000 per dwelling unit, or equivalent unit of development;

(2) for any other receiving zone, the maximum impact fee that may be imposed shall be $15,000 per dwelling unit, or equivalent unit of development; and

(3) the cost of the public capital improvements necessitated by the new development in the receiving zone.

e. An impact fee may be imposed no sooner than the time at which a building permit for that dwelling unit, or equivalent unit of development, is issued, and no later than the time at which the certificate of occupancy is issued for that dwelling unit, or equivalent unit of development.

f. As used in this section:

"Inter-municipal transfer of development rights program" means a transfer of development rights program where development potential originating in a sending zone in a certain municipality is permitted to be transferred to a receiving zone located within a different municipality.

"Intra-municipal transfer of development rights program" means a transfer of development rights program where development potential originating in a sending zone in a certain municipality is permitted to be transferred to a receiving zone located within the same municipality.

12. (New section) Notwithstanding the provisions of P.L.2004, c.2 (C.40:55D-137 et seq.) to the contrary, any municipality in the State located in whole or in part outside of the pinelands area, as defined pursuant to section 3 of P.L.1979, c.111 (C.13:18A-3), may, by ordinance, establish a receiving zone for the transfer of development rights from a sending zone in the pinelands area.

(1) A municipality shall notify the Pinelands Commission of its intent to adopt a development transfer plan element that allows the transfer of development rights from a sending zone in the pinelands area. A municipality shall consult with, and may request technical assistance or advice from, the Pinelands Commission on the preparation or implementation of its ordinance establishing a receiving zone for the transfer of development rights.

(2) Upon adoption of an ordinance establishing a receiving zone for the transfer of development rights, the municipality shall so notify the Pinelands Commission.

(3) An impact fee may be imposed by a municipality pursuant to section 11 of P.L. , c. (C. ) (pending before the Legislature as this bill).

13. (New section) Notwithstanding the provisions of section 13 of P.L.2004, c.120 (C.13:20-13) to the contrary, any municipality in the State outside of the Highlands Region, as defined pursuant to section 3 of P.L.2004, c.120 (C.13:20-3), may, by ordinance, establish a receiving zone for the transfer of development rights from a sending zone in the Highlands Region.

(1) A municipality shall notify the Highlands Water Protection and Planning Council established pursuant to section 4 of P.L.2004, c.120 (C.13:20-4) of its intent to adopt a development transfer plan element that allows the transfer of development rights from a sending zone in the Highlands Region, and shall consult with, and may request technical assistance or advice from, the Highlands Water Protection and Planning Council on the preparation or implementation of its ordinance establishing a receiving zone for the transfer of development rights.

(2) Upon adoption of an ordinance establishing a receiving zone for the transfer of development rights, the municipality shall so notify the Highlands Water Protection and Planning Council.

(3) An impact fee may be imposed by a municipality pursuant to pursuant to section 11 of P.L. , c. (C. ) (pending before the Legislature as this bill).

14. (New section) a. Any municipality who provides for the establishment of a receiving zone for the transfer of development rights from a sending zone pursuant to P.L.2004, c.2 (C.40:55D-137 et seq.) shall qualify for State aid, planning assistance, technical assistance, and other benefits and incentives that may be awarded or provided by the State to municipalities and counties which have received plan endorsement by the State Planning Commission pursuant to the "State Planning Act," P.L.1985, c.398 (C.52:18A-196 et al.) or which otherwise practice or implement smart growth strategies and principles. In the absence of having yet received plan endorsement from the State Planning Commission, such benefits shall be limited to only those directly related to the implementation of a transfer of development rights program. Any such receiving zone within a municipality shall also qualify for any State aid that may be provided for smart growth projects.

b. The State shall make available grants and other financial and technical assistance to municipalities to help off-set the costs for any revision of their master plans, development regulations, or other regulations for implementation of a transfer of development rights program pursuant to P.L.2004, c.2 (C.40:55D-137 et seq.). The State shall make the grants and other financial assistance from any State, federal, or other funds that shall be appropriated or otherwise made available to it for that purpose.

c. The State, and all departments and agencies thereof, shall specifically and efficiently provide any such assistance, funding priority, and overall program support as possible within their respective authorities to the effective and complete implementation of a transfer of development rights program, including prioritizing for review any permit applications necessary for development in a designated receiving zone.

15. Section 24 of P.L.1983, c.32 (C.4:1C-31) is amended to read as follows:

24. a. Any landowner applying to the board to sell a development easement pursuant to section 17 of P.L.1983, c.32 (C.4:1C-24) shall offer to sell the development easement at a price which, in the opinion of the landowner, represents a fair value of the development potential of the land for nonagricultural purposes, as determined in accordance with the provisions of P.L.1983, c.32.

b. Any offer shall be reviewed and evaluated by the board and the committee in order to determine the suitability of the land for development easement purchase. Decisions regarding suitability shall be based on the following criteria:

(1) Priority consideration shall be given, in any one county, to offers with higher numerical values obtained by applying the following formula:

nonagricultural - agricultural - landowner's

developmental value value asking price

---------------------------------------------------------------

nonagricultural - agricultural

development value value

(2) The degree to which the purchase would encourage the survivability of the municipally approved program in productive agriculture; and

(3) The degree of imminence of change of the land from productive agriculture to nonagricultural use.

The board and the committee shall reject any offer for the sale of development easements which is unsuitable according to the above criteria and which has not been approved by the board and the municipality.

c. Two independent appraisals paid for by the board shall be conducted for each parcel of land so offered and deemed suitable. The appraisals shall be conducted by independent, professional appraisers selected by the board and the committee from among members of recognized organizations of real estate appraisers. The appraisals shall determine the current overall value of the parcel for nonagricultural purposes, as well as the current market value of the parcel for agricultural purposes. The difference between the two values shall represent an appraisal of the value of the development easement. If Burlington County or a municipality therein has established a development transfer bank pursuant to the provisions of P.L.1989, c.86 (C.40:55D-113 et seq.) or if any county or any municipality in any county has established a development transfer bank pursuant to section 22 of P.L.2004, c.2 (C.40:55D-158) or the Highlands Water Protection and Planning Council has established a development transfer bank pursuant to section 13 of P.L.2004, c.120 (C.13:20-13), the [municipal] average of the value of the development potential of property in a sending zone established by the bank may be the value used by the board in determining the value of the development easement. If a development easement is purchased using moneys appropriated from the fund, the State shall provide no more than 80%, except 100% under emergency conditions specified by the committee pursuant to rules or regulations, of the cost of the appraisals conducted pursuant to this section.

d. Upon receiving the results of the appraisals, or in Burlington county or a municipality therein or elsewhere where [a municipal] an average has been established under subsection c. of this section, upon receiving an application from the landowners, the board and the committee shall compare the appraised value, or the [municipal] average, as the case may be, and the landowner's offer and, pursuant to the suitability criteria established in subsection b. of this section:

(1) Approve the application to sell the development easement and rank the application in accordance with the criteria established in subsection b. of this section; or

(2) Disapprove the application, stating the reasons therefor.

e. Upon approval by the committee and the board, the secretary is authorized to provide the board, within the limits of funds appropriated therefor, an amount equal to no more than 80%, except 100% under emergency conditions specified by the committee pursuant to rules or regulations, of the purchase price of the development easement, as determined pursuant to the provisions of this section. The board shall provide its required share and accept the landowner's offer to sell the development easement. The acceptance shall cite the specific terms, contingencies and conditions of the purchase.

f. The landowner shall accept or reject the offer within 30 days of receipt thereof. Any offer not accepted within that time shall be deemed rejected.

g. Any landowner whose application to sell a development easement has been rejected for any reason other than insufficient funds may not reapply to sell a development easement on the same land within two years of the original application.

h. No development easement shall be purchased at a price greater than [the appraised value determined pursuant to subsection c. of this section or the municipal average] that supported by an appraisal conducted at the time of acquisition of the easement or the average established pursuant to a transfer of development rights program adopted pursuant to P.L.2004, c.2 (C.40:55D-137 et seq.) , as the case may be. An appraisal performed pursuant to this subsection shall be conducted by an appraiser included in the committee's approved list of appraisers at the time the appraisal is conducted, and in accordance with generally accepted appraisal practices.

i. The appraisals conducted pursuant to this section or the fair market value of land restricted to agricultural use shall not be used to increase the assessment and taxation of agricultural land pursuant to the "Farmland Assessment Act of 1964," P.L.1964, c.48 (C.54:4-23.1 et seq.).

j. (1) In determining the suitability of land for development easement purchase, the board and the committee may also include as additional factors for consideration the presence of a historic building or structure on the land and the willingness of the landowner to preserve that building or structure, but only if the committee first adopts, pursuant to the "Administrative Procedure Act," P.L.1968, c.410 (C.52:14B-1 et seq.), rules and regulations implementing this subsection. The committee may, by rule or regulation adopted pursuant to the "Administrative Procedure Act," assign any such weight it deems appropriate to be given to these factors.

(2) The provisions of paragraph (1) of this subsection may also be applied in determining the suitability of land for fee simple purchase for farmland preservation purposes as authorized by P.L.1983, c.31 (C.4:1C-1 et seq.), P.L.1983, c.32 (C.4:1C-11 et seq.), and P.L.1999, c.152 (C.13:8C-1 et seq.).

(3) (a) For the purposes of paragraph (1) of this subsection: "historic building or structure" means the same as that term is defined pursuant to subsection c. of section 2 of P.L.2001, c.405 (C.13:8C-40.2).

(b) For the purposes of paragraph (2) of this subsection, "historic building or structure" means the same as that term is defined pursuant to subsection c. of section 1 of P.L.2001, c.405 (C.13:8C-40.1).

(cf: P.L.2004, c.120, s.44)

16. Section of 4 of P.L.1993, c.339 (C.4:1C-52) is amended to read as follows:

4. The board shall have the following powers:

a. To purchase, or to provide matching funds for the purchase of 80% of, the value of development potential and to otherwise facilitate development transfers, from the owner of record of the property from which the development potential is to be transferred or from any person, or entity, public or private, holding the interest in development potential that is subject to development transfer; provided that, in the case of providing matching funds for the purchase of 80% of the value of development potential, the remaining 20% of that value is contributed by the affected municipality or county, or both, after public notice thereof in the New Jersey Register and in one newspaper of general circulation in the area affected by the purchase. The remaining 20% of the value of the development potential to be contributed by the affected municipality or county, or both, to match funds provided by the board, may be obtained by purchase from, or donation by, the owner of record of the property from which the development potential is to be transferred or from any person, or entity, public or private, holding the interest in development potential that is subject to development transfer. The value of development potential may be determined by either appraisal, municipal averaging based upon appraisal data, or by a formula supported by appraisal data. The board may also engage in development transfer by sale, exchange, or other method of conveyance, provided that in doing so, the board shall not substantially impair the private sale, exchange or other method of conveyance of development potential. The board may not, nor shall anything in this act be construed as permitting the board to, engage in development transfer from one municipality to another, which transfer is not in accordance with the ordinances of both municipalities;

b. To adopt and, from time to time, amend or repeal suitable bylaws for the management of its affairs;

c. To adopt and use an official seal and alter that seal at its pleasure;

d. To apply for, receive, and accept, from any federal, State, or other public or private source, grants or loans for, or in aid of, the board's authorized purposes;

e. To enter into any agreement or contract, execute any legal document, and perform any act or thing necessary, convenient, or desirable for the purposes of the board or to carry out any power expressly given in this act;

f. To adopt, pursuant to the "Administrative Procedure Act," P.L.1968, c.410 (C.52:14B-1 et seq.), rules and regulations necessary to implement the provisions of this act;

g. To call to its assistance and avail itself of the services of the employees of any State, county, or municipal department, board, commission, or agency as may be required and made available for these purposes;

h. To retain such staff as may be necessary in the career service and to appoint an executive director thereof. The executive director shall serve as a member of the senior executive or unclassified service and may be appointed without regard to the provisions of Title 11A of the New Jersey Statutes;

i. To review and analyze innovative techniques that may be employed to maximize the total acreage reserved through the use of perpetual easements;

j. To provide, through the State TDR Bank, a financial guarantee with respect to any loan to be extended to any person that is secured using development potential as collateral for the loan. Financial guarantees provided under this act shall be in accordance with procedures, terms and conditions, and requirements, including rights and obligations of the parties in the event of default on any loan secured in whole or in part using development potential as collateral, to be established by rule or regulation adopted by the board pursuant to the "Administrative Procedure Act";

k. To enter into agreement with the State Agriculture Development Committee for the purpose of acquiring development potential through the acquisition of development easements on farmland so that the board may utilize the existing processes, procedures, and capabilities of the State Agriculture Development Committee as necessary and appropriate to accomplish the goals and objectives of the board as provided for pursuant to this act;

l. To enter into agreements with other State agencies or entities providing services and programs authorized by law so that the board may utilize the existing processes, procedures, and capabilities of those other agencies or entities as necessary and appropriate to accomplish the goals and objectives of the board as provided for pursuant to this act;

m. To provide planning assistance grants to municipalities for up to 50% of the cost of preparing, for development potential transfer purposes, a utility service plan element or a development transfer plan element of a master plan pursuant to section 19 of P.L.1975, c.291 (C.40:55D-28), a real estate market analysis required pursuant to section 12 of P.L.2004, c.2 (C.40:55D-148), and a capital improvement program pursuant to section 20 of P.L.1975, c.291 (C.40:55D-29) and incurred by a municipality, or [$40,000] $75,000 , whichever is less, which grants shall be made utilizing moneys deposited into the bank pursuant to section 8 of P.L.1993, c.339 , as amended by section 31 of P.L.2004, c.2;

n. To provide funding in the form of grants or loans for the purchase of development potential and administrative costs to development transfer banks established by a municipality or county pursuant to P.L.1989, c.86 (C.40:55D-113 et seq.) or section 22 of P.L.2004, c.2 (C.40:55D-158) , provided that any grant awarded for the purposes of administrative costs pursuant to this subsection shall not exceed $10,000 to any municipality or county ;

o. To serve as a development transfer bank designated by the governing body of a municipality or county pursuant to section 22 of P.L.2004, c.2 (C.40:55D-158);

p. To provide funding to (1) any development transfer bank that may be established by the Highlands Water Protection and Planning Council pursuant to section 13 of P.L.2004, c.120 (C.13:20-13), for the purchase of development potential by the Highlands development transfer bank, and (2) the council to provide planning assistance grants to municipalities in the Highlands Region that are participating in a transfer of development rights program implemented by the council pursuant to section 13 of P.L.2004, c.120 (C.13:20-13) in such amounts as the council deems appropriate to the municipalities notwithstanding any provision of subsection m. of this section or of section 8 of P.L.1993, c.339, as amended by section 31 of P.L.2004, c.2, to the contrary; and

q. To serve as a development transfer bank for the Highlands Region if requested to do so by the Highlands Water Protection and Planning Council pursuant to section 13 of P.L.2004, c.120 (C.13:20-13).

(cf: P.L.2004, c.120, s.46)

17. Section 8 of P.L.1993, c.339 is amended to read as follows:

8. a. There is appropriated to the State Transfer of Development Rights Bank from the "1989 Development Potential Transfer Bank Fund" established pursuant to section 23 of P.L.1989, c.183, the sum of $20,000,000 for deposit into the State TDR Bank, which shall be expended in accordance with the provisions of P.L.1993, c.339 (C.4:1C-49 et al.).

b. Of the monies appropriated pursuant to subsection a. of this section, not more than $1,500,000 may be expended in total for administrative costs, staff assistance or professional services, not more than $400,000 may be expended for the purposes of providing grants for administrative costs pursuant to subsection n. of section 4 of P.L.1993, c.339 (C.4:1C-52), and not more than [$1,500,000] $3,000,000 may be expended for the purposes of subsection m. of section 4 of P.L.1993, c.339 (C.4:1C-52).

(cf: P.L.2006, c.73, s.6)

18. This act shall take effect immediately.

STATEMENT

This bill amends and supplements the "State Transfer of Development Rights Act." The bill also allows the imposition of impact fees and provides for other incentives for establishment of transfer of development rights programs.

The amendments to the "State Transfer of Development Rights Act" include but are not limited to: (1) requiring a municipality to submit a map of a proposed receiving zone in Geographic Information System format to the Office of Smart Growth and other appropriate State agencies for review and comment prior to the adoption of a development transfer plan element; (2) requiring certain receiving zones be at least sufficient in size and zoning capacity to accommodate all the development potential of the sending zone; (3) specifying that no increases in development potential beyond that specified in an adopted development transfer ordinance may be achieved in a receiving zone without the use of appropriate instruments of transfer; (4) specifying that the required real estate market analysis take into consideration any impact fees that may be charged pursuant to the bill; (5) revising the criteria for establishment of a rebuttable presumption that a development transfer ordinance is no longer reasonable; (6) providing that a development transfer bank established by the Highlands Water Protection and Planning Council is authorized to provide a financial guarantee with respect to any loan to be extended to any person that is secured using development potential as collateral for the loan; and (7) requiring Burlington County municipalities going forward to adopt development transfer ordinances in accordance with the "State Transfer of Development Rights Act," rather than the existing Burlington County pilot program.

In addition, under the bill, those municipalities that establish receiving zones would be entitled to impose impact fees, pursuant to an impact fee ordinance that would be adopted by the municipality in accordance with the provisions of section 11 of the bill.

This bill would allow municipalities anywhere in the State to voluntarily agree to establish receiving zones for the transfer of development rights from sending zones in the Highlands Region or the pinelands area. Those municipalities establishing receiving zones for the transfer of development rights from sending zones in the Highlands Region or the pinelands area would be authorized to charge impact fees of up to $30,000 per dwelling unit or equivalent unit of development. For any other receiving zone, the maximum impact fee shall be $15,000 per dwelling unit or equivalent unit of development.

Further, the bill provides that those municipalities that establish receiving zones would be entitled to priority status for any State capital or infrastructure programs, and would be eligible for any other appropriate assistance, incentives, or benefits provided by the State consistent with the benefits provided to those municipalities that receive plan endorsement pursuant to the "State Planning Act" or which otherwise practice or implement smart growth strategies and principles.

Lastly, the bill amends the authority of the State Transfer of Development Rights Bank to: (1) increase the amount that may be awarded as planning assistance grants to municipalities for up to 50% of the cost incurred by a municipality in preparing the utility service plan element, development transfer plan element, real estate market analysis, and capital improvement program, or $75,000 (current law allows for $40,000), whichever is less; (2) allow the State Transfer of Development Rights Bank to provide grants, not to exceed $10,000, for administrative costs to development transfer banks established by municipalities or counties; (3) provide that not more than $400,000 from the "1989 Development Potential Transfer Bank Fund" may be used to provide these grants for administrative costs; and (4) increase from $1.5 million to $3 million the amount that may be used from the "1989 Development Potential Transfer Bank Fund" for grants to municipalities for the cost incurred by a municipality in preparing the utility service plan element, development transfer plan element, real estate market analysis, and capital improvement program.