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New Jersey Passes Public-Private Partnership Regulations
New Jersey Passes Public-Private Partnership Regulations

On Monday, April 20, 2020, New Jersey at long last finalized and passed the regulations needed to implement the Public-Private Partnership (P3) statutes passed nearly two years ago. The rules follow the anticipated chronological steps that will be undertaken through the life cycle of a P3 project. They will also help to ensure the requisite analysis is conducted by public entities seeking to enter into a P3 so that resources are properly committed and that the public's interest is protected.

By way of background, in August 2018 New Jersey passed legislation authorizing various schools, and local and state agencies to enter into P3 agreements. A P3 is a contractual agreement between a public entity, such as a county, municipality or school board, and a private entity that allows for greater private sector participation in the delivery and financing of a project. P3 brings financial investors/private equity, contractors/design professionals and public entities all to the same table. Financing and construction through a P3 may allow a project to be completed sooner and/or for less money, and may even permit certain projects to become a possibility in the first place. One example of a P3 project would be a toll road where the road is constructed with private money and then the private investors receive all or a portion of the tolls for a period of time. Another P3 example may be a school built with private money and then leased back to the public entity. In New Jersey prior to August 2018, only public colleges and universities were able to engage in P3 contracts. The 2018 legislation expanded the permissible use of P3 projects to local governments, school districts and public authorities, as well as state and local colleges. 

The newly passed regulations both complement and expand upon the 2018 statutes and provide detail on how New Jersey’s new P3 regime will function in practice. For example, the P3 regulations enumerate the following: (1) the categories of entities that must be pre-qualified with the State, including third-party financial institutions, contractors, design professionals, advisors and even legal counsel; (2) fees (including a review fee of $50,000.00); (3) standards for entrance into a P3 agreement and operation of the project; (4) necessary project analysis/criteria; (5) public notice and hearing requirements; (6) accepting unsolicited proposals; (7) project review; (8) lease arrangements (including that a lease term shall not exceed 30 years and that upon completion of the lease term, subsequent revenue generated and any capital improvements shall revert back to the government unit); (9) construction standards and account requirements; and (10) minimum standards for the operation of a project, etc.  The foregoing is a just a sample of the information contained in the new regulations, as they are detailed and informative as to the implementation of the 2018 P3 statutes.

The current state of P3 law in New Jersey may present a promising opportunity for those in both the public and private sectors alike. With the passage of New Jersey’s P3 regulations and the greater detail they provide, the time to begin planning for the solicitation and procurement of future P3 projects is now.

The regulations may be accessed at this link

  • Mitchell W. Taraschi
    Partner

    As chair of Connell Foley’s Product Liability and Tort Law Practice Group, Mitchell Taraschi delivers successful outcomes related to product liability, construction litigation and complex commercial litigation across a ...

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