New Jersey governor signs legislation expanding the state’s PPP options

Bill S-865 allows more government bodies to enter into public-private partnerships, which are no longer limited to social infrastructure and can now include roads.

New Jersey governor Phil Murphy signed legislation on Tuesday that expands the state’s ability to enter into public-private partnerships, including wage and labour provisions that kept his predecessor from signing a previous bill.

The legislation, Bill S-865, broadens the type of government bodies allowed to enter into PPPs and the sort of assets available for private investment. Previously, only the building of higher education facilities could be contracted to investors, but now town, county and state authorities can use private-sector money to build public facilities, roads and other types of infrastructure.

The law will allow projects to be financed entirely by the private sector, but public input, land use and funding approvals, and government oversight is required. No lease agreement can last more than 30 years and projects can’t be bundled together. All projects must go through a procurement process.

Public funding will be allowed for projects costing more than $100 million and for smaller projects of around $10 million, investors are required to create a construction account to fund the project and post performance and payment bonds to ensure the scheme is completed.

‘Common sense PPPs’

Murphy, a Democrat, said in a statement the bill “gives our communities greater opportunities to benefit from common sense public-private partnerships”.

“By doing so, we give state, county and local officials the much-needed flexibility they need to improve their communities […] while leveraging private capital to invest in public infrastructure,” Murphy said.

New Jersey senate president Steve Sweeny, a Democrat who co-sponsored the bill with Republican Senator Steve Oroho, added in a statement: “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.”

Sweeny had previously co-sponsored PPP legislation that then-governor Chris Christie, a Republican, turned down in August 2015 because it included language related to wage provisions and project-labour agreements. Christie said at the time he wanted to “ensure competitive bidding for projects and reduce project costs”.

Bill S-865 includes provisions that requires workers involved in the construction of PPP projects to be subject to the New Jersey Prevailing Wage Act and that projects contain a labour agreement.

Murphy signed the bill at The College of New Jersey’s Campus Town, a project built with private-sector support. Through the state’s previous PPP legislation, New Jersey has built developments at Montclair State University and Stockton University’s Atlantic City Gateway project.