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Sweeney-Oroho P3 Bill Advances

Senate Approves Measure for Building & Highway Projects

TRENTON – Legislation sponsored by Senate President Steve Sweeney and Senator Steve Oroho permitting government entities to enter into public-private partnership agreements with private entities for undertaking building and highway infrastructure projects was approved by the Senate today.

The bill, S-865, provides for oversight of these agreements by the New Jersey Economic Development Authority.

“We have to maximize the impact of public and private resources to create jobs and generate economic growth,” said Senator Sweeney (D-Gloucester/Salem/Cumberland). “Public-private partnerships are an innovative way to permit a wider array of entities to engage the private sector to help advance critical infrastructure and facilities projects. This is a way to 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.”

“Public-private partnerships will pave the way for innovative and sustainable infrastructure in New Jersey,” said Senator Oroho (R-Sussex/Morris/Warren). “Governments on the local, county, and state levels should be permitted flexibility in financing their capital needs given proper oversight.  These partnerships are an important way to stretch scarce public dollars to complete needed projects that will benefit our residents and create jobs and economic growth.”

The bill 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.

Under current law, a state college or county college is already authorized to enter into public-private partnership agreements. This bill would allow local government units, school districts, and State government entities to be eligible to enter as well.

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.

The bill 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 percent of the project’s financing.

The vote was 36-2.