ASSEMBLY APPROPRIATIONS COMMITTEE

STATEMENT TO

[First Reprint]

ASSEMBLY, No. 2560

with Assembly committee amendments

STATE OF NEW JERSEY

DATED: MARCH 3, 1997

      The Assembly Appropriations Committee reports favorably Assembly Bill No. 2560 1R, with committee amendments.

      Assembly Bill No. 2560 1R, as amended, authorizes the Commissioner of Transportation to select seven transportation projects to be developed as demonstration projects using public-private partnership agreements.

      Over the next five fiscal years, the commissioner could select up to a total of seven projects. A project could be selected from the list of transportation projects for which monies had been appropriated in the annual appropriations acts or, if a project is not contained in the appropriations acts, with the approval of the Legislature.

      The bill authorizes a public partner, either the Department of Transportation (DOT) or the New Jersey Transit Corporation (NJTC), to solicit proposals from private or public entities or consortia thereof to be a "developer" to plan, design, construct, equip, operate, finance, improve or maintain demonstration projects. The public partner would negotiate with one or more proposers to reach an agreement in the best interests of the State based on the qualifications and financial strength of the proposer, the proposer's responsiveness to the public partner's requirements, the total project cost to be incurred by the public partner, the nature of project financing, the revenues to be generated by the project on behalf of and in support of the State, the impact of any direct or indirect user fees and other appropriate criteria.

      Agreements may provide for full reimbursement to the State for services rendered by the public partner or other State entities or agencies or for the provision of revenues generated to the State. The public partner may enter into financing, funding, and credit agreements on such terms as the commissioner deems favorable to the State to promote the purposes of this act. Credit agreements would be subject to concurrence by the State Treasurer and financial participation, in the form of loans or other credit arrangements would be subject to legislative appropriation and the availability of funds.

       Agreements may authorize the developer to set and impose rents, fares or user fees for use of a facility constructed by the developer and may provide that the revenues received by the developer by applied to the repayment of the developer's capital outlay costs, interest expense, costs associated with operations, fare or user fee collection, facility management, reimbursement of State project review and oversight costs, repayment of loans, technical and law enforcement services, and a reasonable return on investment to the developer.

      An agreement entered into would include the requirement that a developer include public involvement in the development of a demonstration project and to periodically provide a forum for users and residents of the affected project area throughout the development and implementation of a demonstration project. Upon entering an agreement, the public partner would publish a notice in a newspaper circulating in the county in which the demonstration project will be located describing the project and the project responsibilities of the developer and the public partner, or in a paper circulating in the region if a demonstration project will be located in more than one county or have a regional impact.

      Demonstration projects constructed by and leased by a developer would subject to traffic and other laws applicable on the State transportation system. Demonstration projects would be subject to all applicable environmental requirements and all other applicable State and federal laws and regulations necessary to the protection of the public health, safety and welfare. The demonstration projects are to comply with DOT or NJTC standards for transportation projects, unless determined otherwise.

      Any power possessed or function performed by a public partner may be used by the public partner to facilitate the development, construction, maintenance and operation of demonstration projects.       The bill provides that all absolute and qualified immunities and defenses provided to the State and State employees shall apply to all interests held and activities performed by the DOT, the NJTC and other State agencies in connection with demonstration projects. The bill also authorizes the public partner to enter into indemnification agreements in connection with the demonstration project.

FISCAL IMPACT:

      The fiscal impact of the bill cannot be determined at this time. The impact will depend on the projects selected, their total direct costs and revenues and their incidental revenue impacts on long term State economic development.

COMMITTEE AMENDMENTS:

       The amendments require that all credit agreements entered into by the public partner be subject to concurrence by the State Treasurer. The committee amendments also clarify that a maximum of seven projects may be selected under the bill; clarify that traffic and other laws applicable on the State transportation system shall be enforceable, as appropriate, on demonstration projects constructed by and leased by a developer pursuant to this bill; and make technical changes to the bill.