Greenwald & Coughlin Bill Permitting Public-Private Partnership Agreements for Building & Highway Infrastructure Projects Now Law

Legislation sponsored by Assembly Majority Leader Lou Greenwald and Speaker Craig Coughlin permitting certain government entities to enter into public-private partnership agreements with private entities for undertaking certain building and highway infrastructure projects was signed into law by the Governor on Tuesday.

The law (A-1299) also provides for oversight of these agreements by the New Jersey Economic Development Authority (EDA).

Previously, state or county colleges were already authorized to enter into public-private partnership agreements. This law now gives local government units, school districts, and state government entities the eligibility to enter as well.

The law specifically allows the government entity to enter into a public-private partnership agreement under which the private entity assumes final and administrative responsibility for the development, construction, reconstruction, repair, alteration, improvement, extension, operation, and maintenance of a project of, or for the benefit of, the government entity, provided that the project is financed in whole or in part by the private entity.

“Public-private partnerships have produced enormous benefits to our state colleges and universities in the form of infrastructure improvements. We’ve seen private-public partnerships help Montclair State University build a new dormitory and The College of New Jersey build a mixed use campus town. I want to see the same results in our public schools, highways, and government buildings as a benefit to our taxpayers,” said Majority Leader Greenwald (D-Camden/Burlington). “Now is the time to use these successes and empower the private sector so that we can address our state’s infrastructure issues and ensure these projects are completed in a structured, timely and cost efficient manner.”

The measure requires that workers employed in the construction, rehabilitation, or building maintenance services of a project by a private entity that has entered into an agreement with a government entity by subject to the applicable provisions of the “New Jersey Prevailing Wage Act;” that building construction projects undertaken pursuant to an agreement contain a project labor agreement; and that the general contractor, construction manager, design-build team, or subcontractor for a project is registered and classified by the state to perform with on a project.

“This piece of legislation comes at an appropriate time when our State has experienced months of harsh weather conditions causing severe damage to many of our buildings and roadways,” said Coughlin (D-Middlesex). “By creating a public-private partnership agreement, this measure would help to eliminate the stress and hassle of long-term construction projects as well as ultimately create a safer, cleaner state for our citizens.”

The law states that a public-private partnership project may be structured using availability payments as a financing method. However, the bundling of multiple projects would be prohibited. In addition, roadway or highway projects must include an expenditure of at least $10 million in public funds or any expenditure in private funds. A private entity would be required to establish a construction account to fully capitalize and fund the project, while the general contractor, construction manager, or design-build team would be required to post performance and payment bonds, instead of the chief financial officer of the public entity. A contractor would be prohibited from engaging in a project having an expenditure of under $50 million if the contractor contributed more than 10% of the project’s financing.

All applications for agreements authorized under the law are to be submitted to the EDA for its review and approval prior to beginning the procurement process. The EDA would have the power to cancel the procurement after a short list of private entities is developed, if deemed in the public interest.