A2711

ASSEMBLY, No. 2711

STATE OF NEW JERSEY

INTRODUCED FEBRUARY 3, 1997

By Assemblymen GREGG, GARRETT, Sacco, DeCroce, Bateman, Bodine, Augustine, Lance, Assemblywomen Murphy, Myers and Assemblyman Malone

An Act concerning the approval of certain board of education lease purchase agreements, supplementing chapter 20 of Title 18A of the New Jersey Statutes and amending N.J.S.18A:20-4.2.

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

1. N.J.S.18A:20-4.2 is amended to read as follows:

18A:20-4.2. The board of education of any school district may, for school purposes:

(a) Purchase, take and condemn lands within the district and lands not exceeding 50 acres in extent without the district but situate in a municipality or municipalities adjoining the district, but no more than 25 acres may be so acquired in any one such municipality, without the district, except with the consent, by ordinance, of such municipality;

(b) Grade, drain and landscape lands owned or to be acquired by it and improve the same in like manner;

(d) Borrow money therefor, with or without mortgage; in the case of a type II district without a board of school estimate, when authorized so to do at any annual or special school election; and in the case of a type II district having a board of school estimate, when the amount necessary to be provided therefor shall have been fixed, determined and certified by the board of school estimate; and in the case of a type I district, when an ordinance authorizing expenditures for such purpose is finally adopted by the governing body of a municipality comprised within the district; provided, however, that no such election shall be held nor shall any such resolution of a school estimate board or ordinance of a municipal governing body be introduced to authorize any lease of any building for a term exceeding one year, until the proposed terms of such lease have been reviewed and approved by the Commissioner of Education and the Local Finance Board in the Department of Community Affairs;

(e) Construct, purchase, lease or otherwise acquire a building with the federal government, the State, a political subdivision thereof or any other individual or entity properly authorized to do business in the State; provided that: (1) the noneducational uses of the building are compatible with the establishment and operation of a school, as determined by the Commissioner of Education; (2) the portion of the building to be used as a school meets regulations of the Department of Education; (3) the board of education has complied with the provisions of law and regulations relating to the selection and approval of sites; and (4) in the case of a lease, that any lease in excess of five years shall be approved by the Commissioner of Education and the Local Finance Board in the Department of Community Affairs;

(f) Acquire by lease purchase agreement a site and school building in accordance with the procedures established pursuant to section 2 of P.L. c. (C. )(now pending before the Legislature as this bill); provided that the site and building meet guidelines and regulations of the Department of Education and that any lease purchase agreement in excess of five years shall be approved by the Commissioner of Education as in the best interest of the school district after determining that the relationship of the proposed lease purchase project to the district's goals and objectives established pursuant to P.L.1975, c.212 (C.18A:7A-1 et seq.) has clearly been established; and provided that for any lease purchase agreement in excess of five years the Local Finance Board in the Department of Community Affairs shall determine within 30 days that the cost and the financial terms and conditions of the agreement are reasonable. As used herein, a "lease purchase agreement" refers to any agreement which gives the board of education as lessee the option of purchasing the leased premises during or upon termination of the lease, with credit toward the purchase price of all or part of rental payments which have been made by the board of education in accordance with the lease. As part of such a transaction approved by the Commissioner of Education, the board of education may transfer or lease land or rights in land, including any building thereon, after publicly advertising for proposals for the transfer for nominal or fair market value, to the party selected by the board of education, by negotiation or otherwise, after determining that the proposal is in the best interest of the taxpayers of the district, to construct or to improve and to lease or to own or to have ownership interests in the site and the school building to be leased pursuant to such lease purchase agreement, notwithstanding the provisions of any other law to the contrary. The land and any building thereon which is described in a lease purchase agreement entered into pursuant to this amendatory act, shall be deemed to be and treated as property of the school district, used for school purposes pursuant to R.S.54:4-3.3, and shall not be considered or treated as property leased to another whose property is not exempt, and shall not be assessed as real estate pursuant to section 1 of P.L.1949, c.177 (C.54:4-2.3). Any lease purchase agreement authorized by this section shall contain a provision making payments thereunder subject to the annual appropriation of funds sufficient to meet the required payments or shall contain an annual cancellation clause and shall require all construction contracts let by public school districts or let by developers or owners of property used for school purposes to be competitively bid, pursuant to P.L.1977, c.114 (N.J.S.18A:18A-1 et seq.);

(g) Establish with an individual or entity authorized to do business in the State a tenancy in common, condominium, horizontal property regime or other joint ownership arrangement on a site contributed by the school district; provided the following conditions are met:

(1) The individual or entity agrees to construct on the site, or provide for the construction thereon, a building or buildings for use of the board of education separately or jointly with the individual or entity, which shall be subject to the joint ownership arrangement;

(2) The provision of the building shall be at no cost or at a reduced cost to the board of education;

(3) The school district shall not make any payment for use of the building other than its pro rata share of costs of maintenance and improvements;

(4) The noneducational uses of the building are compatible with the establishment and operation of a school, as determined by the Commissioner of Education;

(5) The portion of the building to be used as a school, and the site, meet regulations of the Department of Education; and

(6) Any such agreement shall be approved by the Commissioner of Education and the Local Finance Board in the Department of Community Affairs.

(cf: P.L.1991,c.477)

2. (New section) Prior to voting on a resolution to enter into a lease purchase agreement pursuant to subsection (f) of N.J.S.18A:40-4.2, a board of education shall have published a legal notice and shall hold a public hearing to discuss and to receive public comment on lease purchase agreements and other means of financing school facilities. Not sooner than 14 days after the public hearing, the board may adopt, by a majority vote, a resolution proposing a lease purchase agreement. Following the adoption of the resolution, the board shall have published a legal notice and shall hold a second public hearing at which the lease purchase proposal shall be explained and the public shall be afforded the opportunity to ask questions and comment. Not sooner than 14 days after the second public hearing the board may, by an affirmative vote by two-thirds of the members of the board, adopt a resolution authorizing the chief school administrator and the board secretary or business administrator to submit the question of entering into the lease purchase agreement to the voters of the school district at a regular or special school election. If a majority of the voters approve, the district may proceed with the lease purchase agreement as provided in subsection (f) of N.J.S.18A:40-4.2.

3. This act shall take effect immediately.

STATEMENT

This bill requires voter approval before a school district may enter into a lease purchase agreement for the construction or renovation of a school building. The bill also provides that prior to placing the lease purchase proposal on the ballot, a board of education would be required to hold two public hearings and secure an affirmative vote from two-thirds of the board's membership. In addition, the bill requires that all construction contracts let by boards of education be competitively bid.

Requires voter approval of a school district lease purchase agreement.