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What's New: Government Affairs

Infrastructure Bills Are Moving in New Jersey

Friday, December 19, 2014  

As introduced on October 14, AB 3859/SB 2489 would authorize local governments to enter into P3 agreements for any public building, road, structure, infrastructure or facility that exceed $10 million. The bill also extends this authority to school districts and State and county colleges. A P3 may be a lease agreement for a public building, road, structure, infrastructure or facility. The chief financial officer of the public owner must require the private partner to obtain a payment and performance bond that complies with the Little Miller Act. All P3s also must contain a project labor agreement and must comply with the prevailing wage statute. All P3 projects must be submitted to the New Jersey Economic Development Authority for review and approval. As originally introduced, a long-term maintenance plan was required as part of the financial documentation submitted for review. As amended in the Senate this week, the bill also would require a long-range maintenance bond. AB 3859, the companion bill, has not moved since it was introduced on October 23.

AB 3628/SB 2412 would authorize municipalities (except a municipality of the first class with a population of 270,000 or more) to enter into a long-term lease or sell their water or wastewater systems to a public or a private entity if an emergent condition exists. The bill recently was amended to clarify that long-term leases are those that exceed 30 years. Under the bill, an emergent water issue would include issues such as violations of the drinking water quality requirements, demonstrated lack of investment, repair or maintenance of the system, material damage to the infrastructure, significant non-compliance with enforcement actions or court orders regarding environmental violations or the public owner’s lack of financial, technical or managerial capacity to operate the system. The municipality would need approval from the State to sell or lease its systems, and the bill contain a process for approval, which includes the State of New Jersey retaining an independent financial advisor to review and analyze proposals from municipalities. The bill is silent on the issue of bonding for any construction involved in restoring or rebuilding the infrastructure as a part of the lease or sale of the system. The bills were introduced in the fall and they are on their way to enactment.

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