Current through Register Vol. 56, No. 6, March 18, 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.
