New Jersey Administrative Code
Title 17 - TREASURY - GENERAL
Chapter 49 - PUBLIC-PRIVATE PARTNERSHIPS RULES
Subchapter 6 - LOCAL GOVERNMENT UNIT PROCEDURES AND REQUIREMENTS
Section 17:49-6.5 - Project review
Universal Citation: NJ Admin Code 17:49-6.5
Current through Register Vol. 56, No. 14, July 15, 2024
(a) A local government unit shall provide the Office of Public Finance the following items for review of a public-private partnership project in an application format prescribed by the Office of Public Finance:
1. A full description of the proposed
public-private partnership project;
2. A copy of the proposed public-private
partnership agreement between the local government unit and the private entity,
including any supporting documents such as the development agreement, any
relevant contracts and leases, and all information obtained by, and findings
of, the local government unit, as well as a redacted copy of all materials for
purposes of providing any public document as required under the Open Public
Records Act;
3. A proposed
public-private partnership agreement between the local government unit and the
private entity, including the following minimum criteria:
i. An agreement term length clearly defined
to include the estimated construction and operational period, as
needed;
ii. A complete description
of the public-private partnership project to be developed and the functions and
responsibilities to be performed by the local government unit and the private
entity;
iii. Terms regarding the
planning, acquisition, financing, development, design, construction,
reconstruction, rehabilitation, replacement, improvement, maintenance,
management, operation, repair, leasing, and ownership of the public-private
partnership project;
iv. A
provision allowing express permission of the public entity, and State and local
officials, to inspect project-related assets or property; such provision shall
include any specific limitations, particular requirements or allowances related
to such review. Examples of limitations, particular requirements or allowances
may include, but are not limited to, any notice requirements, time constraints,
or review restrictions;
v. The
roles and responsibilities of the parties for the duration of the
agreement;
vi. Requirements for
bonds or other forms of security in amounts acceptable to the local government
unit;
vii. Standards and rights of
parties relating to payments by the local government unit to the private entity
if payments are part of the project;
viii. Requirements for any payment by the
private entity of any 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 project;
ix. Standards for construction and
maintenance of the project;
x.
Standards for allocation of costs of development, including allocation of
liability for cost overruns;
xi.
Performance criteria and incentives, if any;
xii. Risk mitigation plans and
responsibilities at all project stages, including at project development,
construction, operations, and maintenance, for both the private entity and
local government unit;
xiii. The
rights that the local government unit and the private entity may have, if any,
to revenue generated as a result of the agreement, and any standards for
allocation of such revenue between the parties;
xiv. 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;
xv. The minimum quality standards, technical
requirements, and/or performance criteria applicable to the public-private
partnership project, including key performance indicators, reporting
requirements, incentives, cure periods, standards of performance or metrics,
including performance points systems, monitoring rights of the local government
unit, and penalties for failure to achieve these standards;
xvi. A maintenance plan for the full life
cycle of the public-private partnership project;
xvii. A hand-back plan that includes
requirements regarding return of the facility in a state of good repair and
standards for determining such state of repair;
xviii. Any compensation and/or revenue
structure of the private entity related to the project coming into the private
entity, including the extent to which, and terms upon which, the private entity
may charge fees to individuals and entities for the use of the public-private
partnership project, as well as a full payment schedule (if
applicable);
xix. Rights and
remedies, including, but not limited to, compensatory, liquidated or other
types of damages, and dispute resolution procedures available or applicable in
the event of nonperformance or breach of contract, up to and including,
material default;
xx. Procedures
for notice and cure of default;
xxi. Insurance requirements for any project
to be operated by the private entity;
xxii. Grounds for termination of the
public-private partnership agreement by the local government unit and the
financial impact of that termination;
xxiii. Grounds for termination of the
public-private partnership agreement by the private entity and the financial
impact of that termination;
xxiv.
Procedures for amending the public-private partnership agreement;
xxv. Provisions for the termination of the
public-private partnership agreement and the disposition of the public-private
partnership facility upon termination;
xxvi. Identification of funding sources to be
used to fully fund the capital, operation, maintenance, and other expenses
under the public-private partnership agreement;
xxvii. The nature of the local government and
private entity's property interest including the acquisition of any property,
of which the local government unit shall retain full ownership of the land upon
which the project is located;
xxviii. An articulation of the legal
relationship and requirements of the parties involved, including the rights and
responsibilities of the parties, as to design elements, technologies,
techniques, methods, information, or intellectual property contained in an
agreement;
xxix. Details on
distribution of costs between the private entity and local government unit,
including costs of retaining independent experts to review, analyze, and advise
the local government unit with respect to the proposal; and any stipends
authorized for work completed, which shall not exceed 0.5 percent of the
project total; and
xxx. When
applicable, a provision in the agreement establishing that the private entity
will not take any action or fail to take any action, if any such action or
failure to take action would adversely affect the exclusion from gross income
of the interest on any Outstanding Tax-Exempt Bonds under Section 103 of the
Internal Revenue Code (Code). The provision shall also establish that the
applicant will not directly or indirectly use or permit the use of any proceeds
of any Outstanding Tax-Exempt Bonds or take or omit to take any action that
would cause any Outstanding Tax-Exempt Bond to be an "arbitrage bond" within
the meaning of Section 148(a) of the Code.
4. A project agreement, including the
following terms and conditions:
i. Ensure 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 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 (N.J.S.A. 34:11-56.25et seq.) and
P.L.
2005, c. 379 (N.J.S.A.
34:11-56.58et seq.);
ii. Guarantee
that any building construction projects under a public-private partnership
agreement contain a project labor agreement. The project labor agreement shall
be subject to N.J.S.A. 52:38-1et 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;
iii. Ensure the general contractor,
construction manager, design-build team, or subcontractor for a construction
project be registered pursuant to N.J.S.A. 34:11-56.48et seq., and be
classified by the Division of Property Management and Construction, or shall be
pre-qualified 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;
iv. When practicable, 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 and
the green building manual prepared by the Commissioner of Community Affairs
pursuant to
section
1 of
P.L.
2007, c. 132 (N.J.S.A.
52:27D-130.6);
v. Ensure that the
general contractor, construction manager, or design-build contractor 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.A. 2A:44-143et seq.;
vi. Where a project is less than $ 50
million, 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 percent of the project's financing
costs;
vii. Where appropriate,
include a requirement that work performed under the agreement are subject to
the provisions of the Construction Industry Independent Contractor Act,
P.L.
2007, c. 114 (N.J.S.A.
34:20-1et seq.); and
viii. In the
event that a private entity assumes full financial and administrative
responsibility for a project, a stipulation that the private entity shall not
be subject to the procurement and contracting requirements of 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 (N.J.S.A. 40A:11-1et seq.);
5. The estimated costs, including development
and operating costs, as well as financial documentation for the project showing
the underlying financial models and assumptions that determined the estimated
costs. The financial documentation shall include:
i. 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, including a net present value analysis
for each of the scenarios; and
ii.
A long-range maintenance plan and a long-range maintenance bond specifying the
expenditures that qualify as an appropriate investment in
maintenance;
6. A
completed Initial Screening Tool, including any changes to the project made in
response to the results of the self-assessment;
7. A completed project analysis, including
any supporting documents, as well as documentation of the qualification of any
experts retained to perform any aspect of the project analysis;
8. A timetable for completion of the
construction of the project, including all pre-development and development
phases;
9. All relevant engineering
and architectural plans, drawings, and schematics;
10. 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;
11. A performance monitoring plan for the
agreement. The performance monitoring plan will provide details on how the
local government unit will monitor the performance of the private entity for
the full term of the agreement. This plan shall identify the required skills
and resources for monitoring performance, specify schedules for periodic
monitoring, and specify the requirements for the preparation and issuance of
reports and/or updates to support performance monitoring, and specify any
applicable metrics for monitoring performance, including the use of possible
performance-points systems, the use of possible performance-points systems, and
any performance bonuses or reductions based upon the early or late completion
and delivery of a project;
12. A
record of the public hearing held, including any public comments received and
responses to public comments;
13. 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;
14. A list of all experts retained, including
information on expert qualification and industry experience;
15. An affirmation that any proposed
procurement contains all necessary elements, based upon minimum contract
standards outlined in this section; and
16. When applicable, an opinion of Bond
Counsel, defined as an opinion signed by an attorney or firm of attorneys in
good standing in the field of law related to municipal bonds, that such project
will not adversely affect the tax-exempt status of any Outstanding
Bonds.
(b) Upon receipt of a complete proposed project:
1. Within 14
days of receipt of a complete project application, the Office of Public Finance
shall convene a project review committee, which will consist of, at a minimum,
representatives from the Economic Development Authority, the Division of
Property Management and Construction within the Department of the Treasury, the
Division of Local Government Services within the Department of Community
Affairs, and, as appropriate, the Department of Transportation, for projects
where a transportation component is included or the transportation
infrastructure is impacted.
2. The
project shall be added to the project report maintained by the Office of Public
Finance.
3. The Office of Public
Finance shall assign a project to a public-private partnership advisor for
review and analysis of the project.
i. The
public-private partnership advisor's review shall include a value for money
analysis to determine whether a project provides more benefit to its user and
the local government unit when delivered through a public-private partnership
delivery process than when delivered through a traditional method; a review of
the financial strength of the private entity and a risk assessment of the
project.
ii. The public-private
partnership advisor shall provide a report on the project to the Project Review
Committee within 45 days of project assignment; such time limit shall be
extended at the discretion of the Office of Public Finance.
4. An application shall be
reviewed for completeness upon receipt by the Office of Public Finance. An
application shall not be processed for review, or reviewed, until all
submission requirements have been satisfied.
5. The Director of the Division of Local
Government Services shall determine if a project is subject to review by the
Local Finance Board or whether enhanced review is required by the Division of
Local Government Services. If a project is subject to review and approval, such
approval is required prior to progressing through the procurement process.
Project approvals shall be held in abeyance pending review by the Division of
Local Government Services or the Local Finance Board, as appropriate.
6. The project review committee shall assess
the viability of the project as well as the advisability of the project for the
local government unit. This review shall be informed by the work of the
public-private partnership advisor, and include, at a minimum:
i. All technical aspects of the proposal,
including proposed project scope, innovative use of technology, engineering and
design, and operation and maintenance of the project.
ii. All financial aspects of each proposal
including financing to be provided by the private partner, any external source
of financing, and any fiscal obligations of the local government unit for the
project as proposed.
7.
The review shall include, but is not limited to, a review of the following:
i. The feasibility of the project's design,
construction, and operation;
ii.
The local government unit's assumptions regarding the project's scope,
benefits, risks, and the cost of the public sector option, and whether such
assumptions were fully and reasonably developed;
iii. The sufficiency of the experience and
qualifications of the private entity;
iv. The soundness of the financial plan,
within the context of the local government unit;
v. The adequacy of the long-range maintenance
plan to protect the investment; and
vi. The validity of the local government
unit's determination that the project is in the best interest of the public,
including an evaluation of the local government unit's determination that:
(1) The development and operation of the
project will cost less than the public sector option, or if it costs more,
there are factors
that warrant the additional expense;
(2) There is a public need for the project
and the project is consistent with existing long-term plans;
(3) There are specific significant benefits
to the project;
(4) There are
specific significant benefits to using the public-private partnership instead
of other options including No-Build;
(5) The private development will result in
timely and efficient development and operation; and
(6) The risks, liabilities, and
responsibilities transferred to the private entity provide sufficient benefits
to warrant not using other means of procurement.
8. Members of the project review
committee may request additional information as needed to make a complete
assessment of the project.
9. The
review and recommendation by the project review committee shall be provided to
the State Treasurer within 90 days of assignment of the project proposal;
however, the time for review may be extended if the applicant has yet to supply
information requested by the committee. The committee's recommendation letter
to the State Treasurer, as to approval or disapproval, shall also include any
conditions or requirements as the committee deems necessary.
10. The State Treasurer may waive minor
errors, omissions, or irregularities in an application and reserves the right
to determine that such an act is minor in nature.
11. The State Treasurer may also condition
any approval upon specific stipulations as outlined in the approval
letter.
12. Within seven days of
the completion of a review by the State Treasurer, the Office of Public Finance
shall notify the local government unit of the finding of the State Treasurer in
writing.
13. Any time frame
prescribed under these rules may be extended or modified by the Office of
Public Finance, within the Department of the Treasury, as necessary to ensure a
complete review of a project.
14.
No public-private partnership agreement shall be executed until a project has
been approved by the State Treasurer.
15. In the event that a project materially
deviates from the approved project parameters, the local government unit shall
immediately notify the Office of Public Finance of the change and seek approval
of the material change.
16. A
signed copy of the agreement and any post agreement documents, with appropriate
redaction, shall be provided to the Office of Public Finance.
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