2019 New Jersey Revised Statutes
Title 40A - Municipalities and Counties
Section 40A:11-52 - Definitions relative to public-private projects.

40A:11-52 Definitions relative to public-private projects.

1. a. As used in this section:

"Authority" means the New Jersey Economic Development Authority established pursuant to section 4 of P.L.1974, c.80 (C.34:1B-4).

"Bundling" means the use of a solicitation for multiple projects in one single contract, through a public-private partnership project delivery method, the result of which restricts competition.

"Local government unit" means a county, a municipality, or any board, commission, committee, authority or agency thereof that is subject to the provisions of the "Local Public Contracts Law," P.L.1971, c.198 (C.40A:11-1 et seq.), including a housing authority or redevelopment agency created or continued under the "Local Redevelopment and Housing Law," P.L.1992, c.79 (C.40A:12A-1 et seq.). A local government unit shall not include a public entity that has entered into a contract with a private firm or a public authority pursuant to the "New Jersey Wastewater Treatment Public-Private Contracting Act," P.L.1995, c.216 (C.58:27-19 et al.), for the provision of wastewater treatment services.

"Project" means the development, construction, reconstruction, repair, alteration, improvement, extension, operation, and maintenance of any building, local or county road, vertical structure, or facility constructed or acquired by a local government unit to operate local government functions, including any infrastructure or facility used or to be used by the public or in support of a public purpose or activity; and including any site acquisition, provided that, with respect to a project, a qualifying project shall include an expenditure of at least $10 million in public funds, or any expenditure in solely private funds.

"Public building, road, structure, infrastructure, or facility" means any site building, road, structure, infrastructure, or facility used or to be used by a local government unit to house a local government function or functions, including any infrastructure or facility used or to be used by the public, or in support of a public purpose or activity.

"Public-private partnership agreement" means an agreement entered into by a local government unit and a private entity pursuant to this section for the purpose of permitting a private entity to assume full financial 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 local government unit.

b. (1) A local government unit may enter into a contract with a private entity, subject to subsection f. of this section, to be referred to as a public-private partnership agreement, that permits the private entity to assume full financial and administrative responsibility for a project of, or for the benefit of, the local government unit, provided that the project is financed in whole by the private entity and the local unit retains full ownership of the land upon which the project is located.

(2) A public-private partnership agreement may include an agreement under which a local government unit and a private entity enter into a lease of a revenue-producing public building, road, structure, infrastructure, or facility in exchange for up-front or structured financing by the private entity for the project. Under the lease agreement, the private entity shall be responsible for the management, operation, and maintenance of the building, road, structure, infrastructure, or facility. The private entity shall receive some or all, as per the agreement, of the revenue generated by the building, road, structure, infrastructure, or facility, and shall operate the building, road structure, infrastructure, or facility in accordance with local government unit standards. At the end of the lease term, subsequent revenue generated by the building, road, structure, infrastructure, or facility, along with management, operation, and maintenance responsibility, shall revert to the local government unit. A lease agreement entered into pursuant to this section shall be limited in duration to a term of not more than 30 years. A lease agreement shall be subject to all applicable provisions of current law governing leases by a local government unit not inconsistent with the provisions of this section. For the purposes of this section, "revenue-producing" shall include leaseback arrangements.

(3) Bundling of projects shall be prohibited under this section.

(4) Nothing in this section shall be construed to exempt a local government unit from provisions of the "Local Bond Law," N.J.S.40A:2-1 et seq., or the "Local Authorities Fiscal Control Law," P.L.1983, c.313 (C.40A:5A-1 et seq.), or other law, that may apply to local government unit borrowing or financing, including but not limited to provisions requiring review by and approval from the Local Finance Board or the Director of the Division of Local Government Services in the Department of Community Affairs.

c. (1) Unless otherwise set forth herein, a private entity that assumes full financial and administrative responsibility for a project pursuant to this section shall not be subject to the procurement and contracting requirements of all statutes applicable to the local government unit at which the project is completed, including, but not limited to, the "Local Public Contracts Law," P.L.1971, c.198 (C.40A:11-1 et seq.).

(2) Notwithstanding any provision of law to the contrary, a public entity shall be empowered to enter into contracts with a private entity and its affiliates without being subject to the procurement and contracting requirements of any statute applicable to the public entity provided that the private entity has been selected by the local government unit pursuant to a solicitation of proposals or qualifications from at least two private entities, or it has received an unsolicited proposal and followed the procedure set forth in paragraph (4) of subsection j. of this section. A local government unit shall be the owner or lessee of any project being financed by a local government unit.

(3) Prior to the commencement of work on a project, the private entity shall establish a construction account and appoint a third-party financial institution, who shall be prequalified by the State Treasurer, to act as a collateral agent, and manage the construction account. The construction account shall include the funding, financial instruments, or both, that shall be used to fully capitalize and fund the project, and the collateral agent shall maintain a full accounting of the funds and instruments in the account. The funds and instruments in the construction account shall be held in trust for the benefit of the contractor, construction manager, and design-build team involved in the project. The funds and instruments in the construction account shall not be the property of the private entity unless all amounts due to the construction account beneficiaries are paid in full. The construction account shall not be designated for more than one project.

d. Each worker employed in the construction, rehabilitation, or building maintenance services of facilities by a private entity that has entered into a public-private partnership agreement with a local government unit pursuant to this section shall be paid not less than the prevailing wage rate for the worker's craft or trade as determined by the Commissioner of Labor and Workforce Development pursuant to P.L.1963, c.150 (C.34:11-56.25 et seq.) and P.L.2005, c.379 (C.34:11-56.58 et seq.).

e. (1) All building construction projects under a public-private partnership agreement entered into pursuant to this section shall contain a project labor agreement. The project labor agreement shall be subject to the provisions of P.L.2002, c.44 (C.52:38-1 et seq.), and shall be in a manner that to the greatest extent possible enhances employment opportunities for individuals residing in the county of the project's location. The general contractor, construction manager, design-build team, or subcontractor for a construction project proposed in accordance with this paragraph shall be registered pursuant to the provisions of P.L.1999, c.238 (C.34:11-56.48 et seq.), and shall be classified by the Division of Property Management and Construction, or shall be prequalified by the Department of Transportation, New Jersey Transit, or the New Jersey Turnpike Authority, as appropriate, to perform work on a public-private partnership project.

(2) All projects proposed in accordance with this section shall be submitted to the State Treasurer, in consultation with the New Jersey Economic Development Authority and the Department of Community Affairs for a review and approval in accordance with subsection f. of this section prior to the execution of the public-private partnership agreement and, when practicable, are encouraged to adhere to the Leadership in Energy and Environmental Design Green Building Rating System as adopted by the United States Green Building Council, the Green Globes Program adopted by the Green Building Initiative, or a comparable nationally recognized, accepted, and appropriate sustainable development rating system.

(3) The general contractor, construction manager, or design-build team shall be required to post a performance bond to ensure the completion of the project and a payment bond guaranteeing prompt payment of moneys due in accordance with and conforming to the requirements of N.J.S.2A:44-143 et seq.

(4) Prior to being submitted to the State Treasurer for review and approval, all projects proposed in accordance with this section shall be subject to a public hearing, the record of which shall be made available to the public within seven days following the conclusion of the hearing, after the ranking of proposals takes place pursuant to paragraph (5) of subsection j. of this section. The local government unit shall provide notice of the public hearing no less than 14 days prior to the date of the hearing. The notice shall prominently state the purpose and nature of the proposed project, and shall be published on the official Internet website of the local government unit and at least once in one or more newspapers with Statewide circulation.

(5) Prior to entering into a public -private partnership, the local government unit shall determine: (i) the benefits to be realized by the project; (ii) the cost of project if it is developed by the public sector supported by comparisons to comparable projects; (iii) the maximum public contribution that local government unit will allow under the public -private partnership; (iv) a comparison of the financial and non-financial benefits of the public-private partnership compared to other options including the public sector option; (v) a list of risks, liabilities and responsibilities to be transferred to the private entity and those to be retained by the local government unit; and (vi) if the project has a high, medium or low level of project delivery risk and how the public is protected from these risks.

(6) Prior to entering into a public-private partnership, the local government unit at a public hearing shall find that the project is in the best interest of the public by finding that (i) it will cost less than the public sector option, or if it costs more there are factors that warrant the additional expense; (ii) there is a public need for the project and the project is consistent with existing long-term plans; (iii) there are specific significant benefits to the project; (iv) there are specific significant benefits to using the public-private partnership instead of other options including No-Build; (v) the private development will result in timely and efficient development and operation; and (vi) the risks, liabilities and responsibilities transferred to the private entity provide sufficient benefits to warrant not using other means of procurement.

f. (1) All projects proposed in accordance with this section shall be submitted to the State Treasurer for review and approval, which shall be conducted in consultation with the Commissioner of the Department of Community Affairs. The projects are encouraged, when practicable, to adhere to the green building manual prepared by the Commissioner of Community Affairs pursuant to section 1 of P.L.2007, c.132 (C.52:27D-130.6).

(2) All projects proposed in accordance with this section that have a transportation component or impact the transportation infrastructure shall be submitted to the State Treasurer, in consultation with the Commissioner of the Department of Transportation, for review and approval.

(3) (a) In order for an application to be complete and considered by the State Treasurer, the application shall include, but not be limited to: (i) a full description of the proposed public-private partnership agreement between the local government unit and the private developer, including all information obtained by and findings of the local government unit pursuant to paragraphs (4) and (5) of subsection e. of this section; (ii) a full description of the project, including a description of any agreement for the lease of a revenue-producing facility related to the project; and (iii) the estimated costs and financial documentation for the project showing the underlying financial models and assumptions that determined the estimated costs. The financial documentation shall include at least three different projected estimated costs showing scenarios in which materially different economic circumstances are assumed and an explanation for how the estimated costs were determined based on the three scenarios; (iv) a timetable for completion of the construction of the project; (v) an analysis of all available funding options for the project, including an analysis of the financial viability and advisability of such project, along with evidence of the public benefit in advancing the project as a public-private partnership; (vi) a record of the public hearing held pursuant to paragraph (4) of subsection e. of this section, which shall have been made available to the public within seven days following the conclusion of the hearing; and (vii) any other requirements that the State Treasurer deems appropriate or necessary. The application shall also include a resolution by the local government unit's governing body of its intent to enter into a public-private partnership agreement pursuant to this section.

(b) As part of the estimated costs and financial documentation for the project, the application shall contain a long-range maintenance plan and a long-range maintenance bond and shall specify the expenditures that qualify as an appropriate investment in maintenance. The long-range maintenance plan shall be approved by the State Treasurer pursuant to regulations promulgated by the State Treasurer that reflect national building maintenance standards and other appropriate building maintenance benchmarks.

(4) The State Treasurer, in consultation with the authority and the Commissioner of the Department of Community Affairs, shall review all completed applications, and request additional information as is needed to make a complete assessment of the project. No public-private partnership agreement shall be executed until approval has been granted by the State Treasurer. Prior to a final decision by the State Treasurer on the application, the authority and the Department of Community Affairs shall be afforded the opportunity to provide comments on the application that they deem appropriate, and the State Treasurer shall consider any comments submitted by the authority and the Department of Community Affairs with respect to the application. In order to approve the application, the State Treasurer shall find that: (i) the local government unit's assumptions regarding the project's scope, its benefits, its risks and the cost of the public sector option were fully and reasonably developed; (ii) the design of the project is feasible; (iii) the experience and qualifications of the private entity; (iv) the financial plan is sound; (v) the long-range maintenance plan is adequate to protect the investment; (vi) the project is in the best interest of the public, using the criteria in paragraph (6) of subsection e. of this section; (vii) a resolution by the local government unit's governing body of its intent to enter into a public-private partnership agreement for the project has been received; and (viii) the term sheet for any proposed procurement contains all necessary elements. The State Treasurer shall retain the right to revoke approval if the project has substantially deviated from the plan submitted pursuant to this section, and shall retain the right to cancel a procurement after a short list of private entities is developed if deemed in the public interest.

(5) The State Treasurer, the authority, and division may promulgate any rules and regulations necessary to implement this subsection, including, but not limited to, provisions for fees to cover administrative costs, and for the determination of minimum local government unit standards for the operation of the project, and for the qualification for professional services, construction contracting, and other relevant qualifications.

g. A project with an expenditure of under $50 million developed under a public-private partnership agreement shall include a requirement that precludes contractors from engaging in the project if the contractor has contributed to the private entity's financing of the project in an amount of more than 10% of the project's financing costs.

h. The power of eminent domain shall not be delegated to any private entity under the provisions of P.L.2018, c.90 (C.40A:11-52 et al.); however, a local government unit may dedicate any property interest, including improvements and tangible personal property of the local government unit for public use in a qualifying project if the local government unit finds that so doing will serve the public purpose of the project by minimizing the cost of the project to the local government unit or reducing the delivery time of a project.

i. Any public-private partnership agreement, if appropriate, shall include provisions affirming that the agreement and any work performed under the agreement are subject to the provisions of the "Construction Industry Independent Contractor Act," P.L.2007, c.114 (C.34:20-1 et seq.). Any public-private partnership agreement shall also include, at a minimum: (i) the term of the agreement; (ii) the total project cost; (iii) a completion date guarantee; (iv) a provision for damages if the private entity fails to meet the completion date; and (v) a maximum rate of return to the private entity and a provision for the distribution of excess earnings to the local government unit or to the private party for debt reduction.

j. (1) A private entity seeking to enter into a public-private partnership agreement with the local government unit shall be qualified by the local government unit as part of the procurement process, provided such process ensures that the private entity and its subcontractors and consultants, when relevant meet at least the minimum qualifications standards promulgated by the State Treasurer, in consultation with the New Jersey Economic Development Authority, Department of Community Affairs, and such other local government unit standards for qualification for professional services, construction contracting, and other qualifications applicable to the project, prior to submitting a proposal under the procurement process.

(2) A request for qualifications for a public-private partnership agreement shall be advertised at least 45 days prior to the anticipated date of receipt. The advertisement of the request for qualifications shall be published on the official Internet website of the local government unit and at least one or more newspapers with Statewide circulation.

(3) After the local government unit determines the qualified respondents utilizing, at minimum, the qualification standards promulgated by the State Treasurer, the local government entity shall issue a request for proposals to each qualified respondent no less than 45 days prior to the date established for submission of the proposals. The request for proposals shall include relevant technical submissions, documents, and the evaluation criteria to be used in the selection of the designated respondent. The evaluation criteria shall be, at minimum, criteria promulgated by the State Treasurer, in consultation with the New Jersey Economic Development Authority and Department of Community Affairs.

(4) The local government unit may accept unsolicited proposals from private entities for public-private partnership agreements. If the local government unit receives an unsolicited proposal and determines that it meets the standards of this section, the local government unit shall publish a notice of the receipt of the proposal on the Internet site of the local government unit and through advertisement in at least one or more newspapers with Statewide circulation. The local government unit shall also provide notice of the proposal at its next scheduled public meeting and to the State Treasurer. To qualify as an unsolicited proposal, the unsolicited proposal shall at a minimum include a description of the public-private project, the estimated construction and life-cycle costs, a timeline for development, proposed plan of financing, including projected revenues, public or private, debt, equity investment, description of how the project meets needs identified in existing plans, the permits and approvals needed to develop the project from local, state and federal agencies and a projected schedule for obtaining such permits and approvals, a statement of risks, liabilities and responsibilities to be assumed by the private entity. The notice shall provide that the local government unit shall accept, for 120 days after the initial date of publication, proposals meeting the standards of this section from other private entities for eligible projects that satisfy the same basic purpose and need. A copy of the notice shall be mailed to each municipal and county local government body in the geographic area affected by the proposal.

(5) After the proposal or proposals have been received, and any public notification period has expired, the local government unit shall rank the proposals in order of preference. In ranking the proposals, the local government unit shall rely upon, at minimum, the evaluation criteria promulgated by the State Treasurer, in consultation with the New Jersey Economic Development Authority and the Department of Community Affairs. In addition, the local government unit may consider factors that include, but may not be limited to, professional qualifications, general business terms, innovative engineering, architectural services, or cost-reduction terms, finance plans, and the need for local government funds to deliver the project and discharge the agreement. The private entity selected shall comply with all laws and regulations required by the State government entity, including but not limited to section 1 of P.L.2001, c.134 (C.52:32-44), sections 2 through 8 of P.L.1975, c.127 (C.10:5-32 to 38), section 1 of P.L.1977, c.33 (C.52:25.24-2), P.L.2005, c.51 (C.19:44A-20.13 et al.); P.L.2005, c.271 (C.40A:11-51 et al.), Executive Order No. 117 of 2008, Executive Order No. 118 of 2008, Executive Order No. 189, prior to executing the public private partnership agreement. If only one proposal is received, the local government unit shall negotiate in good faith and, if not satisfied with the results of the negotiations, the local government unit may, at its sole discretion, terminate negotiations.

(6) The local government unit may require, upon receipt of one or more proposals, that the private entity assume responsibility for all costs incurred by the local government unit before execution of the public-private partnership agreement, including costs of retaining independent experts to review, analyze, and advise the local government unit with respect to the proposal.

(7) Stipends may be used on public private partnership projects when there is a substantial opportunity for innovation and the costs for developing a proposal are significant. The local government unit may elect to pay unsuccessful proposers for the work product they submit with their proposal in response to a request for proposals. The use by the local government unit of any design element contained in an unsuccessful proposal shall be at the sole risk and discretion of the local government unit and shall not confer liability on the recipient of the stipulated stipend amount. After payment of the stipulated stipend amount, the local government unit and the unsuccessful proposer shall jointly own the rights to, and may make use of any work product contained in the proposal, including the technologies, techniques, methods, processes, ideas, and information contained in the proposal, project design, and project financial plan. The use by the unsuccessful proposer of any part of the work product contained in the proposal shall be at the sole risk of the unsuccessful proposer and shall not confer liability on the local government unit. The State Treasurer, in consultation with the New Jersey Economic Development Authority of New Jersey and Department of Community Affairs shall promulgate guidelines based upon which any stipends paid by a local government unit are to be based.

(8) The local government unit shall set aside one percent of each project and remit it the Public Private Partnership Review fund established pursuant to P.L.2018, c.90 (C.40A:11-52 et al.), for purposes of plan review and analysis required under the bill.

(9) Nothing in this section shall be construed as or deemed a waiver of the sovereign immunity of the State, the local government unit or an affected locality or public entity or any officer or employee thereof with respect to the participation in or approval of all or any part of the public-private project.

L.2018, c.90, s.1.