Current through Register Vol. 56, No. 18, September 16, 2024
(a) There are several
methods of valuation available to appraisers to establish a value of development
potential credits. Credits in the sending area may have a different value from
credits in the receiving area. The methods in (a)1 through 8 below shall be
considered by appraisers to determine the valuation of credits. Guidance concerning
these methods may be found in the Uniform Standards of Professional Appraisal
Practice (USPAP) promulgated by the Appraisal Standards Board of the Appraisal
Foundation, http://www.appraisalfoundation.org/
and in the Board's "Appraisal Guidelines for Determining Development Potential,"
http://www.nj.gov/agriculture/sadc/tdr/tdrbank/about/AppraisalGuidelines.pdf.
1. The Direct Comparison of sales of development
potential credits method applies to both receiving and sending area
properties;
2. The before and after
valuation method takes into consideration a sending area property's fee unencumbered
value and its restricted value. Both unencumbered and restricted sales shall be
considered;
3. Another sending area
valuation method is to look at those properties of reasonably similar
characteristics from which a development easement has been sold through the Farmland
Preservation Program pursuant to N.J.A.C. 2:76;
4. The Subdivision Development Analysis via a
Discounted Cash Flow Analysis is a method of value determination applicable first to
the base property without the credits added, and then with them. The difference in
the value indications is the value of the credits;
5. The Linear Regression Method and Allocation
Methods can be utilized where the total new land costs proportion can be estimated
to the finished products' sale price;
6.
The Subdivision Method;
7. The Income
Capitalization Method; and
8. The Cost
Method.
(b) The Board, in
addition to the methods of valuation described in (a) above, may utilize the
following methods for establishing development potential valuations.
1. Municipal averaging, which includes, but is not
limited to, the following:
i. Utilizing a simple
weighted or unweighted average of market sales in the sending area;
ii. Utilizing the market value of the development
potential of all sending area properties divided by the total number of credits
allocated in the sending area;
iii.
Utilizing the average values of development easements determined pursuant to the
farmland preservation program; or
iv.
Utilizing other similar methods that produce justified value conclusions.
2. Formula valuations, which include,
but are not limited to, the following:
i.
Considering the relationship between the development potential value to total fee
unencumbered value of the property in the sending area;
ii. Utilizing the average ratio of all county
development easement purchases to property fee values for a period of "x" years;
and
iii. Utilizing other similar methods
that produce justified value conclusions.
