ASSEMBLY, No. 239

STATE OF NEW JERSEY

Introduced Pending Technical Review by Legislative Counsel

PRE-FILED FOR INTRODUCTION IN THE 1996 SESSION

By Assemblymen GARCIA and PASCRELL

An Act establishing a contract bond participation program in the New Jersey Development Authority for Small Businesses, Minorities' and Women's Enterprises, supplementing P.L.1985, c.386 (C.34:1B-47 et seq.) and making an appropriation.

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

    1. a. The New Jersey Development Authority for Small Businesses, Minorities' and Women's Enterprises shall establish a contract bond participation program to provide financial support to eligible businesses for projects of public entities where the total contracted payment to the eligible business is no more than $2,000,000.

    b. Financial support to eligible businesses shall include assistance in obtaining or securing performance bonds, maintaining cash flow when payments to eligible businesses are delayed and providing short-term financial assistance to eligible businesses to bridge budgetary gaps resulting from delays in the payment of retainage following satisfactory fulfillment of contractual obligations. The authority shall adopt, pursuant to the "Administrative Procedure Act," P.L.1968, c.410 (C.52:14B-1 et seq.), regulations concerning the requirements and conditions for participation in the program which shall include, but not be limited to, the establishment of terms and conditions:

    (1) For the participation of eligible businesses in the program;

    (2) For the participation of surety companies in the program;

    (3) For the provision of assistance, and the extent of that assistance, to an eligible business.

    c. In reviewing applications for participation in the program, the authority shall encourage the greatest participation while protecting the financial stability of the funds available to the authority for the program.

    d. The authority shall establish an escrow account or accounts, as may be required, for funds available to the authority for the program.

    2. The sum of $5,000,000 is appropriated to the authority from the General Fund for the purposes of this act.

    3. This act shall take effect immediately.

STATEMENT

    The percentage of State and local government contracts awarded to small businesses, minority businesses and women's businesses falls short of desired goals. Often these businesses cannot compete for contracts because they have experienced difficulty in qualifying for performance bonds and have insufficient assets to call upon if it becomes necessary to meet unforseen expenses during the course of a project. This bill would establish a contract bond participation program in the New Jersey Development Authority for Small Businesses, Minorities' and Women's Enterprises to provide financial support to eligible businesses for projects of public entities where the total contracted payment to the eligible business is no more than $2,000,000.

    Financial support provided by the program would include assistance in obtaining or securing performance bonds, maintaining cash flow when payments to eligible businesses are delayed and providing short-term financial assistance to eligible businesses to bridge budgetary gaps resulting from delays in the payment of retainage following satisfactory fulfillment of contractual obligations.

    The authority is directed to adopt regulations concerning the requirements and conditions for participation in the program which regulations are to include establishing terms and conditions: (1) for participation of eligible businesses in the program; (2) for the participation of surety companies in the program; and (3) for the provision of assistance, and the extent of that assistance, to an eligible business. The authority is further directed, when reviewing applications for the program, to encourage the greatest participation while protecting the financial stability of the funds available for the program.

    Finally, the bill appropriates $5,000,000 to the authority from the General Fund for the purposes of the act.

Establishes a contract bond participation program in the NJ Development Authority for Small Businesses, Minorities' and Women's Enterprises; appropriates $5,000,000.