New Jersey Governor Phil Murphy recently signed a bill that will expand the use of public-private partnerships in the state to include building and highway projects. Lawmakers hope the new legislation will encourage greater investment in New Jersey infrastructure.
Governor Predicts ‘Tremendous Benefits’ from new Partnerships
“Today, I’m proud to enact bipartisan legislation that gives our communities greater opportunities to benefit from commonsense public-private partnerships for essential construction and capital projects,” said Governor Murphy.
“Democrats and Republicans alike recognize the tremendous benefits that can arise when public officials and private sector partners work together,” he said. “By doing so, we give state, county, and local officials the much-needed flexibility they need to improve their communities while creating good-paying new jobs – in most cases good, union jobs – while leveraging private capital to invest in public infrastructure.”
What are Public Private Partnerships?
Public private partnerships (P3s) are an agreement between a government agency and a private sector company that is used to finance, build and operate infrastructure projects, like buildings, highways and schools.
New Jersey’s higher education community was previously allowed to use P3s as long as they were 100 percent privately financed and the public entity remained the owner of the land.
How will the new P3 Law work in New Jersey?
In New Jersey, public entities, like school districts, municipalities, counties and state government bodies, may make an agreement with a private organization to fund public construction. However, these public private partnerships in New Jersey now must be financed solely by a private sector organization.
Under the new law, the private company must assume:
- Financial and administrative responsibility for the development
If the agreement includes a lease of a public building, road or facility in exchange for initial or structured financing, the term of the lease may not exceed 30 years. Workers on these type of projects must be paid New Jersey’s prevailing wage. The general contractor, construction manager, design-build team or subcontractor must be registered and classified by the State of New Jersey.
The New Jersey State Treasurer will then provide financial oversight and approval of all P3 agreements. Progress updates will be provided on the Treasurer’s website.
The new law will take effect in February.