Bill Text

Transfer of Development Rights Act

AN ACT authorizing the transfer of development rights by municipalities.

Summary: This Act extends authority and sets forth parameters for municipalities to enact transfer of development rights programs, and creates local and state development rights banks.

Be it enacted by the Legislature of the state of <insert your state’s name here>:

Section 1. Short Title.

This Act shall be known and may be cited as the “Transfer of Development Rights Act.”

Section 2. Findings and Declarations.

The Legislature finds and declares that:

(A) The state of <insert your state’s name here> is faced with the challenge of accommodating vital growth while maintaining its environmental integrity, and strengthening and preserving the natural resources, agricultural, open space and forestland, and the cultural heritage of the state;

(B) 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;

(C) 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

(D) The tools necessary to meet the challenge of balanced growth in an equitable manner in <insert your state’s name here> must be made available to local government as the architects of <insert your state’s name here>’s future.

The Legislature therefore determines that it is in the public interest to authorize all municipalities in the state to establish and implement Transfer of Development Rights programs.

Section 3. Definitions.

For the purposes of this Act, unless the context clearly indicates a different meaning:

(A) “Board” means the board of directors of the state Transfer of Development Rights Bank established pursuant to this Act;

(B) “Capital improvement” means a governmental acquisition of real property or major construction project;

(C) “County planning board” means the county planning board, as defined in <insert applicable state statute>, of the county in which the land or development is located;

(D) “Development” means the division of a parcel of land into two or more parcels; or the construction, reconstruction, conversion, structural alteration, relocation or enlargement of any building or other structure, or of any mining excavation or landfill; or any use or change in the use of any building or other structure, or land or extension of use of land, for which permission may be required pursuant to this Act;

(E) “Development potential” means the maximum number of dwelling units or square feet of nonresidential floor area that may be constructed on a specified lot or in a specified zone under the master plan and land use regulations in effect on the date of the adoption of the development transfer ordinance, and in accordance with recognized environmental constraints;

(F) “Development transfer” means the conveyance of development potential, or the permission for development, from one or more lots to one or more other lots by deed, easement, or other means as authorized by ordinance adopted pursuant to law;

(G) “Development transfer bank” refers to a bank established pursuant to this Act responsible for authorizing, overseeing, and evaluating development transfers;

(H) “Municipality” means any city, borough, town, township, or village;

(I) “Receiving zone” means an area or areas designated in a master plan and zoning ordinance, within which development may be increased, and which is otherwise consistent with the provisions of Section 8 of this Act;

(J) “Sending zone” means an area or areas designated in a master plan and zoning ordinance, within which development may be restricted, and which is otherwise consistent with the provisions of Section 7 of this Act;

(K) “State Transfer of Development Rights Bank,” “bank,” or “state TDR Bank” means the bank established pursuant to Section 13 of this Act; and

(L) “Variance” means permission granted by state or local governments to depart from the literal requirements of a zoning ordinance.

Section 4. Transfer of Development Rights.

(A) The governing body of any municipality that fulfills the criteria set forth in Section 5 of this Act may, by ordinance, 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 5 of this Act may, by substantially similar ordinances, 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 state 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 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 5 of this Act, a capital improvement program, or a development transfer ordinance.

Section 5. Criteria for Adopting Development Transfer Plan.

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 in accordance with the requirements of Section 6 of this Act;

(B) Adopt a capital improvement program 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;

(C) Adopt a utility service plan element of the master plan 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; and

(D) Prepare a real estate market analysis pursuant to Section 10 of this Act, 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.

Section 6. Defining Development Transfer Masterplans.

In order to serve as the basis for a development transfer ordinance pursuant to Section 4 of this Act, a development transfer plan element of a master plan shall include:

(A) An estimate of the anticipated population and economic growth in the municipality for the succeeding 10 years;

(B) The identification and description of all prospective sending and receiving zones;

(C) An analysis of how the anticipated population growth estimated pursuant to subsection (A) of this section is to be accommodated within the municipality in general, and the receiving zone or zones in particular;

(D) An estimate of existing and proposed infrastructure of the proposed receiving zone;

(E) A presentation of the procedure and method for issuing the instruments necessary to convey the development potential from the sending zone to the receiving zone; and

(F) Explicit planning objectives and design standards to govern the review of applications for development in the receiving zone in order to facilitate their review by the approving authority.

Section 7. Sending Zones.

(A) A sending zone shall be composed predominantly of land having one or more of the following characteristics:

(1) Forestland, agricultural land, woodland, floodplain, wetlands, threatened or endangered species habitat, aquifer recharge area, recreation or park land, waterfront, steeply sloped land, or other lands as defined by state law on which development activities are restricted or precluded by duly enacted local laws or ordinances or by laws or regulations adopted by federal or state agencies;

(2) Lands and structures of aesthetic, architectural, and historic significance in the municipality; or

(3) Other open space, critical and sensitive areas, natural hazard areas, and improved or unimproved areas that should remain at low densities for reasons of inadequate transportation, sewerage, or other infrastructure issues.

(B) Notwithstanding subsection (A) of this section, lands permanently restricted through development easements or conservation easements existing prior to the adoption of a development transfer ordinance may be included in a sending zone upon a finding by the municipal governing body that this inclusion is in the public interest; and

(C) The development transfer ordinance may assign bonus development potential to specified properties in the sending zone based on specified criteria in order to encourage the permanent protection of those lands pursuant to the development transfer ordinance.

Section 8. Receiving Zones.

(A) A receiving zone shall be appropriate and suitable for development and shall be at least sufficient to accommodate all of the development potential of the sending zone;

(B) 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;

(C) The development potential of the receiving zone shall be realistically achievable, considering:

(1) The availability 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;

(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; and

(E) No density increases may be achieved in a receiving zone without the use of appropriate instruments of transfer.

Section 9. Development Transfer Ordinance.

(A) Except as otherwise provided in this section, a development transfer ordinance shall provide that, on granting a variance that increases the development potential of a parcel of property not in the designated receiving zone for which the variance has been granted by more than 5%, the parcel of property shall constitute a receiving zone and the provisions of the ordinance for receiving zones shall apply with respect to the amount of development potential required to implement that variance;

(B) A development transfer ordinance shall provide for the issuance of such instruments as may be necessary and the adoption of procedures for recording the permitted use of the land at the time of the recording, the separation of the development potential from the land, and the recording of the allowable residual use of the land upon separation of the development potential;

(C) A development transfer ordinance shall specifically provide that, upon the transfer of development potential from a sending zone, the owner of the property from which the development potential has been transferred shall cause a statement, containing the conditions of the transfer and the terms of the restrictions of the use and development of the land, to be attached to and recorded with the deed of the land in the same manner as the deed was originally recorded. These restrictions and conditions shall state that any development inconsistent therewith is expressly prohibited, shall run with the land, and shall be binding upon the landowner and every successor in interest thereto;

(D) The restrictions shall be expressly enforceable by the municipality and the county in which the property is located, any interested party, and the state of <insert your state’s name here>;

(E) All development potential transfers shall be recorded in the manner of a deed in the book of deeds in the office of the county clerk or county register of deeds and mortgages, as appropriate. This recording shall specify the lot and block number of the parcel in the sending zone from which the development potential was transferred and the lot and block number of the parcel in the receiving zone to which the development potential was transferred;

(F) All development potential transfers also shall be recorded with the state Transfer of Development Rights Bank;

Section 10. Real Estate Market Analysis.

(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 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 <insert appropriate state administrative law reference>; and

(C) The Office of Community and Housing Development or <insert your state’s equivalent>, in consultation with the board of directors of the state Transfer of Development Rights Bank, shall, within 180 days of the enactment of this Act, adopt rules and regulations which set forth the required contents of the real estate market analysis.

Section 11. Submitting Development Transfer Ordinances.

(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 and capital improvement program, proposed municipal master plan changes necessary for the enactment of the development transfer ordinance, 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 Section 7 (A) of this Act;

(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.

Section 12. Adopting and Reviewing Development Transfer Ordinances.

(A) Within 60 days after receiving a proposed development transfer ordinance and accompanying documentation transmitted pursuant to Section 11 of this Act, the county planning board shall submit to the municipality formal comments detailing its review and shall either recommend or not recommend enactment of the proposed development transfer ordinance. If enactment of the proposed ordinance is recommended, the municipality may proceed with adoption of the ordinance. Failure to submit recommendations within the 60-day period shall constitute recommendation of the ordinance.

(B) <Insert state agency authorized to review the development transfer ordinance> shall review a proposed development transfer ordinance and accompanying documentation within 30 days of receipt thereof, and shall submit such written recommendations as it deems appropriate, to the county planning board. charge

(C) If the county planning board does not recommend enactment, the reasons shall be clearly stated in the formal comments. If the objections of the county planning board cannot be resolved to the satisfaction of both the municipality and the county planning board within an additional 30 days, the municipality shall petition the <insert appropriate state agency> to render a final determination.

Section 13. State Transfer of Development Rights Bank.

(A) There is established in the executive branch of the state government a public body corporate and politic, with corporate succession, to be known as the state Transfer of Development Rights Bank. The bank is located within the <insert state department / agency in which the state Transfer of Development Rights Bank is located>, but notwithstanding that location, the bank shall be independent of any supervision or control by the department, or by any officer or employee thereof, except as otherwise expressly provided in this Act. The bank is constituted as an instrumentality of the state exercising public and essential governmental functions, and the exercise by the bank of the powers conferred by this Act is deemed to be an essential governmental function of the state; and

(B)

(1) The bank shall be governed by a board of directors consisting of ten voting members, or the designees thereof, as follows:

(a) The Secretary of <insert state department / agency in which the state Transfer of Development Rights Bank is located>, who shall serve as chairperson and who shall vote only in the event there is a tie vote;

(b) The State Treasurer;

(c) <The head of the state Environmental Protection Agency (or your state’s equivalent)>;

(d) <The head of state Department of Transportation (or your state’s equivalent)>;

(e) <The head of state Department of Banking and Finance (or your state’s equivalent)>;

(f) <The head of the Office of Community and Housing Development (or your state’s equivalent)>;

(g) <The President of the State Board of Agriculture (or your state’s equivalent)>;

(h) <The Chairman of the State Planning Commission (or your state’s equivalent)>;

(i) <The President of the Association of Environmental Commissions (or your state’s equivalent)>; and

(j) One member of the general public, who shall be appointed by the Governor, with the advice and consent of the Senate.

(2) All members of the board, except the member of the general public, shall serve ex officio. The term of the member of the general public shall be for four years, with reappointment possible for a second term only.

(3) A majority of the membership of the board shall constitute a quorum except that no action may be taken by the board except upon the affirmative vote of a majority of the total membership of the board. Designees of the nine ex officio members shall have the power to vote in the absence of members.

(C) The powers of the state Transfer of Development Rights Bank are as follows:

(1) To purchase or to provide matching funds for the purchase of development potential and to otherwise facilitate development transfers from any person, or entity, public or private, holding the interest in development potential that is subject to development transfer;

(2) 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;

(3) To adopt and, from time to time, amend or repeal suitable bylaws for the management of its affairs;

(4) To adopt and use an official seal and alter that seal at its pleasure;

(5) 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;

(6) 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;

(7) To adopt, pursuant to the state Administrative Procedure Act <or insert applicable state law>, rules and regulations necessary to implement the provisions of this Act;

(8) 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;

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

(10) 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 state Administrative Procedure Act <or insert applicable state law>;

(11) To enter into agreements with the state Agriculture Development Committee <or your state’s equivalent> 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 <or your state’s equivalent> as necessary and appropriate to accomplish the goals and objectives of the board as provided for pursuant to this Act;

(12) 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;

(13) To provide planning assistance grants to municipalities that have adopted viable development transfer ordinances, as determined by the board, for up to 50% <or other amount deemed appropriate> of the cost of planning associated with such an ordinance, for development potential transfer purposes, a utility service plan element or a development transfer plan element of a master plan, a real estate market analysis required pursuant to Section 10 of this Act, and a capital improvement program, and incurred by a municipality, or <insert dollar amount>, whichever is less, which grants shall be made utilizing moneys deposited into the bank;

(14) To provide funding in the form of grants or loans for the purchase of development potential to development transfer banks established by a municipality or county; and

(15) To serve as a development transfer bank designated by the governing body of a municipality or county pursuant to Section 14 of this Act.

Section 14. Local and County Transfer of Development Rights Banks.

(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 this Act, a purchase by the bank shall be considered an acquisition of lands for public purposes; and

(C) The powers of local and county Transfer of Development Rights Banks are as follows:

(1) A development transfer bank may purchase property in a sending zone if adequate funds have been provided for these purposes and the person from whom the 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 this Act, and certifies that the property is not otherwise encumbered or transferred;

(2) The development transfer bank may, for the purposes of its own development potential transactions, establish a municipal 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;

(3) 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 this Act, but only in a manner that does not substantially impair the private sale or transfer of development potential;

(4) A development transfer bank may apply for funds for the purchase of development potential under the provisions of <insert applicable state law here> 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; and

(5) A development transfer bank may apply for matching funds for the purchase of development potential under the provisions of the <insert applicable state law here> for the purpose of farmland preservation and agricultural development consistent with the provisions and conditions of that act. In addition, a development transfer bank may apply to the state Transfer of Development Rights Bank pursuant to Section 13 of this Act for either planning or development potential purchasing funds, or both.

Section 15. Funds for the state TDR.

(A) There is appropriated to the state Transfer of Development Rights Bank the sum of <suggest $20,000,000> for deposit into the state TDR Bank, which shall be expended in accordance with the provisions of this Act; and

(B) Of the moneys appropriated pursuant to subsection (A) of this section, not more than <suggest $400,000> may be expended, in total, for administrative costs, staff assistance, or professional services within the period of four years from the effective date of this Act.

Section 16. Effective Date.

This Act shall take effect 180 days next following enactment, except that Section 10 shall take effect immediately.