The Pinelands Development Credit Bank is an independent state agency that plays a pivotal role in helping the Pinelands Development Credit (PDC) program run smoothly and efficiently.

The PDC Program is a Transferable Development Rights (TDR) program that encourages a shift of development away from important environmental and agricultural areas to other areas within the region. It provides a way for landowners in these environmental and agricultural areas to benefit economically from increased land values in other areas zoned to allow more residential development. Developers benefit by being able to build more homes on these properties than would normally be permitted.

The basic premise of a TDR program is that development opportunities can be moved from one property to another. These so-called transferable development rights are allocated to properties located within sending areas; they are then severed, sold and used to increase the amount of development permitted in receiving areas. Once redeemed, the development rights can not be used again.

If property owners in these sending areas wish to sell transferable development rights, they place a restriction (or easement) on the deed to their properties. These restrictions ensure that the properties will be forever used for agriculture or for other economic uses, such as lumbering or recreation, which are compatible with the environment. Once the deed restriction is recorded, the rights have been removed, or severed, from the property and they can be sold separate and apart from the property itself. The primary receiving areas for the rights are Pinelands Regional Growth Areas. Municipalities specify in their zoning ordinances how many homes can be built in residential zoning districts without PDCs and how many more homes can be built if PDCs are used. Developers can determine how many homes they wish to build on a given property and buy transferable development rights when needed. When a development plan for a receiving site is approved, the developer redeems the requisite number of PDCs.

The PDC program also offers several other sending and receiving opportunities in the Pinelands. For example, people in Pinelands growth areas sometimes seek "variances" from zoning ordinances to permit residential development in a business zone or vice versa. Under the Pinelands Plan, municipalities can grant these variances when PDCs are redeemed. Variances are also occasionally sought to permit a home to be built on an undersized (non-conforming) lot elsewhere in the Pinelands. With some limitations, the Pinelands Plan also authorizes municipalities to consider these types of variances when PDCs are redeemed.

People who own property outside of the normal sending areas can also receive an allocation of PDCs to alleviate a property hardship. These situations sometime exist when a property has severe environmental constraints and cannot be developed without harming the environment. In these cases, the Pinelands Commission may approve a waiver of strict compliance which allocates PDCs to the property so the owner can sell them and receive a financial return equal to the property's fair market value.

Pinelands Development Credits may be sold privately in two different ways. If not severed beforehand, PDCs are automatically transferred to the new owner when a sending property is sold. Buyers and sellers alike should be cautioned, however, that the guaranteed allocation of one right for small properties is lost unless that right is severed before the sending property is sold. Once severed, of course, PDCs can be sold separately from a sending property.

There may also be an opportunity to sell PDCs to the PDC Bank or another government agency. For more information on these possibilities, please contact the PDC Bank.

Anyone wishing to sell PDCs separate and apart from the property must first obtain a Pinelands Development Credit Certificate. This certificate attests to the fact that the PDCs have been officially severed from the sending property.

PDC Certificates are issued by the PDC Bank after the owner applies for a certificate, completes a title search, and a permanent restriction on the deed to the property is recorded.

A 60-year title search and a 20-year search of liens and judgments are required under state law to ensure that title to the property is marketable. Corporations will also need to provide a corporate status report. Although the property itself is not being sold, a deed restriction (or easement) must be placed on the property when these rights are severed. Only an owner of the property has the legal right to place a restriction on the property.

The deed restriction is necessary because separation of the PDCs from the property permanently extinguishes the right to use or develop the property for certain things. Although the property may then be sold or transferred like any other property, the use of the land is controlled by those deed restrictions.

PDCs are almost always bought privately, where it is possible for the buyer and seller to negotiate a mutually acceptable price. The PDC Bank also owns some PDCs and may periodically sell them at an auction with open bidding or by accepting sealed, written bids. Buyers who are having difficulty locating PDCs through the private marketplace may wish to contact the PDC Bank and discuss the possibility of a Bank sale.