New Jersey Administrative Code
Title 17 - TREASURY - GENERAL
Chapter 49 - PUBLIC-PRIVATE PARTNERSHIPS RULES
Subchapter 7 - SCHOOL DISTRICT PROCEDURES AND REQUIREMENTS
Section 17:49-7.5 - Project review
Universal Citation: NJ Admin Code 17:49-7.5
Current through Register Vol. 56, No. 18, September 16, 2024
(a) A school district 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 school
facilities project approval letter issued by the Commissioner of Education
pursuant to the requirements of
N.J.A.C.
6A:26-3.3;
3. A copy of the proposed public-private
partnership agreement between the school district and the private entity, as
well as any supporting documents including the development agreement, any
relevant contracts and leases between the school district and the private
entity, and all information obtained by, and findings of, the school district,
including redacted copies of all documents for purposes of providing any public
document as required under the Open Public Records Act;
4. A proposed public-private partnership
agreement between the school district 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 school
district 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 school
district;
vii. Standards and rights
of parties relating to payments by the school district 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 school district before execution of
the public-private partnership agreement, including costs of retaining
independent experts to review, analyze, and advise the school district with
respect to the project;
ix.
Standards for construction and maintenance of the project, which shall be
consistent with
N.J.A.C.
6A:26-6.1et seq., and the facilities
efficiency standards developed by the Commissioner pursuant to N.J.S.A.
18A:7G-4, or for charter schools, consistent with those sections of N.J.A.C.
6A:26-6, pertaining to the health and safety of pupils;
x. Standards for allocation of costs of
development including allocation of cost overruns; under no circumstance shall
cost overruns result in the expenditure of funds by a school
district;
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 the school district;
xiii. The rights and the standards for
allocation of any revenue generated by the project and the agreement, in
addition to the school district's retention of full ownership of the land upon
which a project is located;
xiv. A
maximum rate of return to the private entity and a provision for the
distribution of excess earnings to the school district 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 school district, and penalties for failure to achieve these
standards;
xvi. A maintenance plan
for the full life cycle of the project, which shall include, at a minimum, the
criteria set forth in
N.J.A.C.
6A:26-20.3;
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 school district and the financial
impact of that termination, which shall include express permission to terminate
a lease due to lack of availability and appropriation annually of sufficient
funds as provided for in N.J.S.A. 18A:18A-42(n) or non-renewal or revocation of
a charter of a charter school. Under no circumstance shall a public-private
partnership agreement require payment of a termination penalty by a school
district for lack of availability or appropriation annually of sufficient funds
or the non-renewal or revocation of a charter by a charter school;
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 by either party and upon expiration of
term of the 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
school district and private entity's property
interest including the acquisition of any property, of which the school district 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 school district, including costs of retaining
independent experts to review, analyze, and advise the school district with
respect to the proposal; 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;
5. 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 school district 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 contractor, 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 Schools Development Authority, 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 is 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 school district at which the project is completed, including,
but not limited to, the Public School Contracts Law, N.J.S.A.
18A:18A-1;
6. In
addition, a school district shall provide 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;
ii. A
long-range maintenance plan and a long-range maintenance bond specifying the
expenditures that qualify as an appropriate investment in
maintenance;
7. A
completed Initial Screening Tool, including any changes to the project made in
response to the results of the self- assessment;
8. 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;
9. A timetable for completion of the
construction of the project, including all pre-development and development
phases;
10. All relevant
engineering and architectural plans, drawings, and schematics;
11. 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;
12. A performance monitoring plan for the
agreement. The performance monitoring plan will provide details on how the
school district 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, and any performance bonuses or reductions based
upon the early or late completion and delivery of a project;
13. A record of the public hearing held,
including any public comments received and responses to public comments;
i. In the event that a lease is considered, a
copy of the minutes of the meeting of the board of education at which the
public hearing for facility leases in excess of five years was discussed
accompanied by a copy of the district board of education resolution endorsing a
facility lease in excess of five years, if a project involves a
lease;
14. A resolution
by the school district's governing body of its intent to enter into a
public-private partnership agreement pursuant to this section;
15. A list of all experts retained, including
information on expert qualification and industry experience;
16. An affirmation that any proposed
procurement contains all necessary elements, based upon minimum contract
standards outlined in this section; and
17. 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 Department of
Education, the Division of Property Management and Construction within the
Department of the Treasury, the Schools Development Authority, and as
appropriate, the Division of Local Government Services within the Department of
Community Affairs for projects where municipal approval is required, and 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 in the Department of the
Treasury;
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 school district 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 Commissioner of the Department of
Education shall:
i. Verify that the project
conforms to the requirements in N.J.S.A. 18A:36A-1et seq., and 18A:7G-3, and
that the project is consistent with the provisions of N.J.S.A. 18A:7G-1et seq.,
unless specifically exempted by N.J.S.A. 18A:18A-60et seq., 18A:18A-16,
18A:18A-16.1, and 18A:18A-17 regarding the preparation and approval of plans
and specification for public school buildings, capacity requirements, and
facilities requirements for students with disabilities, respectively;
and
ii. Where necessary, determine
if a project is subject to voter approval pursuant to N.J.S.A. 18A:24-10. If
the project is subject to voter approval, such approval is required to progress
through the review process. Project approvals shall be held in abeyance pending
approval by the voters;
6. The project review committee shall review
the viability of the project as well as the advisability of the project for the
school district. 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 school district 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 school district'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 school district;
v. The adequacy of the long-range maintenance
plan to protect the investment;
vi.
The validity of the school district's determination that the project is in the
best interest of the public, including an evaluation of the school district'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; and
(5) The private development will result in
timely and efficient development and operation;
8. The risks, liabilities, and
responsibilities transferred to the private entity provide sufficient benefits
to warrant not using other means of procurement;
9. Members of the project review committee
may request additional information as needed to make a complete assessment of
the project;
10. 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;
11. 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;
12. The State Treasurer may also condition
any approval upon specific stipulations as outlined in the approval
letter;
13. Within seven days of
the completion of a review by the State Treasurer, the Office of Public Finance
shall notify the school district of the finding of the State Treasurer in
writing;
14. Any time frame
prescribed under these rules may be extended or modified by the Office of
Public Finance, as necessary, to ensure a complete review of a
project;
15. No public-private
partnership agreement shall be executed until a project has been approved by
the State Treasurer;
16. In the
event that a project materially deviates from the approved project parameters,
the school district shall immediately notify the Office of Public Finance of
the change and seek approval of the material change; and
17. 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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