New Jersey-2014-A3943-Introduced

An Act authorizing certain public-private partnerships for water supply purposes and supplementing chapter 31 of Title 40A of the New Jersey Statutes.

Be It Enacted by the Senate and General Assembly of the State of New Jersey:

1. a. (1) A municipality 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 the construction, reconstruction, repair, alteration, improvement, or extension of water supply infrastructure, or the management or operation of a water supply facility of, or for the benefit of, the municipality, provided that the project is financed in whole by the private entity and that the municipality retains its ownership of, or property interest in, the land upon which the project is completed.

(2) A public-private partnership agreement may include an agreement under which a municipality leases to a private entity the operation of a water supply facility in exchange for up-front or structured financing by the private entity for the construction, reconstruction, repair, alteration, improvement, or extension of water supply infrastructure. Under the lease agreement, the municipality shall continue to hold title to the water supply facility, and the private entity shall be responsible for the management, operation, and maintenance of the facility. The private entity shall receive some or all, as per the agreement, of the revenue generated by the facility and shall operate the facility in accordance with applicable State and federal water supply standards. A lease agreement shall not affect the status or employment rights of municipal employees who are assigned to, or provide services to, the leased facility. At the end of the lease term, subsequent revenue generated by the facility, along with management, operation, and maintenance responsibility, shall revert to the municipality.

b. (1) A private entity that assumes financial and administrative responsibility for a project pursuant to subsection a. of this section shall not be subject to the procurement and contracting requirements applicable to municipalities, including, but not limited to, the "Local Public Contracts Law," P.L.1971, c.198 (C. 40A:11-1 et seq.). For the purposes of facilitating the financing of a project pursuant to subsection a. of this section, a public entity may become the owner or lessee of the project or the lessee of the land, or both, may become the lessee of a water supply facility to which the municipality holds title, may issue indebtedness in accordance with the public entity's enabling legislation and, notwithstanding any provision of law to the contrary, 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 municipality pursuant to a solicitation of proposals or qualifications. For the purposes of this section, a public entity shall include the New Jersey Economic Development Authority, and any project undertaken pursuant to subsection a. of this section of which the authority becomes the owner or lessee, or which is situated on land of which the authority becomes the lessee, shall be deemed a "project" under "The New Jersey Economic Development Authority Act," P.L.1974, c.80 (C.34:1B-1 et seq.).

(2) As the carrying out of any project described pursuant to this section constitutes the performance of an essential public function, a project predominantly used in furtherance of the purposes of the municipality undertaken pursuant to this section, provided it is owned by or leased to a public entity, non-profit business entity, foreign or domestic, or a business entity wholly owned by such non-profit business entity, shall at all times be exempt from property taxation and special assessments of the State, or any municipality, or other political subdivision of the State and, notwithstanding the provisions of section 15 of P.L.1974, c.80 (C.34:1B-15), section 2 of P.L.1977, c.272 (C.54:4-2.2b), or any other section of law to the contrary, shall not be required to make payments in lieu of taxes. The land upon which the project is located shall also at all times be exempt from property taxation. Further, the project and land upon which the project is located shall not be subject to the provisions of section 1 of P.L.1984, c.176 (C.54:4-1.10) regarding the tax liability of private parties conducting for profit activities on tax exempt land, or section 1 of P.L.1949, c.177 (C.54:4-2.3) regarding the taxation of leasehold interests in exempt property that are held by nonexempt parties.

(3) A public-private partnership agreement entered into by a municipality which prescribes and, from time to time, alters rates or rentals to be charged to users of water supply services, shall provide the municipal partner with the power to set rates in accordance with applicable provisions of law. With respect to the rates or rentals to be charged to users of water supply services, a public-private partnership entered into pursuant to this section shall be exempt from the jurisdiction, regulation, and control of the Board of Public Utilities if the municipal partner was not subject to regulation by the board prior to execution of the agreement. However, if the partnership supplies water to more than 1,000 billed customers located outside the boundaries of the municipal partner, the partnership shall be subject to the jurisdiction, rate regulation, and control of the Board of Public Utilities to the extent the partnership supplies water to customers within that other local unit.

c. Each worker employed in the construction, rehabilitation, or services of a water supply facility by a private entity that has entered into a public-private partnership agreement with a municipality pursuant to subsection a. of 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.).

d. (1) All 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. Further, the general contractor, construction manager, design-build team, or subcontractor for a construction project proposed in accordance with this section 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 to perform work on a public-private partnership water supply infrastructure project. All construction projects proposed in accordance with this paragraph shall be submitted to the New Jersey Economic Development Authority for its review and approval 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.

(2) When no public fund has been established for the financing of a public improvement, the chief financial officer of the municipality shall require the private entity for whom the public improvement is being made to post, or cause to be posted, a bond guaranteeing prompt payment of moneys due to the contractor, his or her subcontractors and to all persons furnishing labor or materials to the contractor or his or her subcontractors in the prosecution of the work on the public improvement.

e. A general contractor, construction manager, design-build team, or subcontractor 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 to perform work on a public-private partnership water supply infrastructure project.

f. (1) On or before August 1, 2020, all projects proposed in accordance with this section shall be submitted to the New Jersey Economic Development Authority for the authority's review and approval. 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). Any application that is deemed to be incomplete on August 2, 2020 shall not be eligible for consideration.

(2) (a) In order for an application to be complete and considered by the authority, the application shall include, but not be limited to: (i) a public-private partnership agreement between the municipality and the private developer; (ii) a full description of the project, including a description of any agreement for the lease of a water supply facility related to the project; (iii) the estimated costs and financial documentation for the project; (iv) a timetable for completion of the project extending no more than five years after consideration and approval; and (v) any other requirements that the authority deems appropriate or necessary.

(b) As part of the estimated costs and financial documentation for the project, the application shall contain a long-range maintenance plan and shall specify the expenditures that qualify as an appropriate investment in maintenance. The long-range maintenance plan shall be approved by the authority pursuant to regulations promulgated by the authority that reflect national water supply facility maintenance standards and other appropriate benchmarks. All contracts to implement a long-range maintenance plan pursuant to this paragraph 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.

(3) The authority shall review all completed applications, and request additional information as is needed to make a complete assessment of the project. The authority may grant preliminary approval of a project, subjecting final approval to the condition that the project secure all necessary permits and approvals from the Board of Public Utilities, the Department of Community Affairs, and the Department of Environmental Protection, as may be applicable. No project shall be undertaken until final approval has been granted by the authority; provided, however, that the authority shall retain the right to revoke approval if it determines that the project has deviated from the plan submitted pursuant to paragraph (2) of this subsection.

(4) The authority may promulgate any rules and regulations necessary to implement this subsection, including provisions for fees to cover administrative costs. In developing rules and regulations, the authority shall consult with the Board of Public Utilities, the Department of Community Affairs, and the Department of Environmental Protection.

g. When no public fund has been established for the financing of a public improvement, the chief financial officer of the municipality shall require the private entity for whom the public improvement is being made to post, or cause to be posted, a bond guaranteeing prompt payment of moneys due to the contractor, his or her subcontractors, and to all persons furnishing labor or materials to the contractor or his or her subcontractors in the prosecution of the work on the public improvement.

h. The provisions of P.L.2009, c.136 (C.52:18-42 et al.), regarding certain public-private contracts, shall not apply to any project carried out pursuant to this section.

i. For the purposes of this section,

"water supply facility" means and refers to the real property and the plants, structures, interconnections between existing water supply facilities, machinery and equipment, any component part or parts thereof, including a water filtration system, and other property, real, personal, and mixed, acquired, constructed or operated, or to be acquired, constructed, or operated, in whole or in part by a municipality for the purpose of augmenting the natural water resources of the State and making available an increased supply of water for all uses, or of conserving existing water resources, and any and all appurtenances necessary, useful, or convenient for the collecting, impounding, storing, improving, treating, filtering, conserving, or transmitting of water and for the preservation and protection of these resources and facilities and providing for the conservation and development of future water supply resources;

"water filtration system" means any equipment, plants, structures, machinery, apparatus, or land, or any combination thereof, acquired, used, constructed, rehabilitated, or operated for the collection, impoundment, storage, improvement, filtration, or other treatment of drinking water for the purposes of purifying and enhancing water quality and ensuring its portability prior to the distribution of the drinking water to the general public for human consumption, including plants and works, and other personal property and appurtenances necessary for their use or operation.

2. This act shall take effect immediately.

STATEMENT

This bill would authorize municipalities to enter into public-private partnerships with private entities, permitting a private entity to assume full financial and administrative responsibility for the construction, reconstruction, repair, alteration, improvement, or extension of water supply infrastructure, or the management or operation of a water supply facility of, or for the benefit of, the municipality, provided that the project is financed in whole by the private entity and that the municipality retains its ownership of, or property interest in, the land upon which the project is completed.

A public-private partnership agreement may include an agreement under which a municipality leases to a private entity the operation of a water supply facility in exchange for up-front or structured financing by the private entity for the construction, reconstruction, repair, alteration, improvement or extension of water supply infrastructure. Under the lease agreement, the municipality would continue to hold title to the water supply facility, and the private entity would be responsible for the management, operation, and maintenance of the facility. The private entity would receive some or all, as per the agreement, of the revenue generated by the facility and would operate the facility in accordance with applicable State and federal water supply standards.