Legislation sponsored by Assemblyman Albert Coutinho to boost construction investments in New Jersey’s state and county colleges has been signed into law.
“In a stagnant economy, with limited state assistance, this will help colleges leverage their assets to construct critical facilities or renovate existing ones,” said Coutinho (D-Essex). “It’s an innovative way for our higher education institutions to boost their capacity without burdening students or taxpayers.”
The new law (S-2501/A-3141) amends current law so that state and county colleges can enter into public-private partnerships to allow private entities to assume full financial and administrative responsibility for on-campus construction projects, provided that that the project is financed entirely by the private entity and the state or institution, as applicable, retains ownership of the land and any building resulting from the project.
The law provides state and county colleges with an additional public-private partnership option for the financing of college facilities by allowing the school to lease to a private entity the operation of a dormitory or other revenue-producing facility to which the college holds the title, in exchange for up-front or structured financing by the private entity for the construction of classrooms, laboratories, or other academic buildings.
“We hear so many stories about students fighting to get into limited classes at some of our state schools or about the number of high school students that flee New Jersey for out-of-state colleges,” added Coutinho. “Expanding classroom and dormitory capacities will help us fight this so-called ‘brain drain’ and keep our best and brightest here in New Jersey.”
Under the lease agreement, the college will continue to hold title to the facility, and the private entity will be responsible for the management, operation, and maintenance of the facility. The private entity will receive some or all of the revenue generated by the facility and must operate the facility in accordance with college standards. At the end of the lease term, subsequent revenue generated by the facility will revert, along with management, operation, and maintenance responsibility, to the college.
The law also amends a number of existing laws that authorize the New Jersey Educational Facilities Authority (EFA) to issue bonds for the construction and renovation of facilities, and the purchase of equipment, at public and independent institutions of higher education. The amount currently available for issuance under each of the programs, is as follows: approximately $100 million under the Higher Education Equipment Leasing Fund Act; approximately $220 million under the Higher Education Facilities Trust Fund Act; approximately $55 million under the Higher Education Technology Infrastructure Fund Act; and approximately $165 million under the Higher Education Capital Improvement Fund Act.
Grant funding and lease agreements would be subject to approval by the Joint Budget Oversight Committee of the Legislature.