SENATE COMMUNITY AFFAIRS COMMITTEE

STATEMENT TO

SENATE, No. 1530

STATE OF NEW JERSEY

DATED: JANUARY 14, 1997

      The Senate Community Affairs Committee reports favorably Senate Bill No. 1530.

      This bill concerns the calculation of the amount of a performance guarantee under the "Municipal Land Use Law" that may be retained by a municipality after a portion of improvements have been completed.

      Section 41 of P.L.1975, c.291 (C.40:55D-53), allows for the release of performance guarantees as required improvements are completed; the municipality, however, is allowed to retain 30 percent of the amount of the performance guarantee to ensure the completion and acceptability of all improvements.

      This bill would provide that as each improvement covered by the performance guarantee is fully completed and accepted by both the municipal engineer and the governing body, the amount of the performance guarantee attributable to the individual item must be reduced by the total amount for each such improvement, in accordance with the itemized cost estimate prepared by the municipal engineer and appended to the performance guarantee, including any contingency factor applied to the cost of installation.

      The 30 percent amount that a municipality may retain to ensure completion and acceptability of all improvements would be based on the amount of the total performance guarantee rather than each separate improvement. Under the bill's provisions, once an improvement is accepted, it would be reduced in full. In making this calculation, however, the municipality would be required to include the 20 percent contingency factor applied to the cost of installation in order to determine the amount of the performance guarantee. If the calculation performed in this way would otherwise allow the municipality to withhold less than 30 percent of the total performance guarantee, the bill would allow the municipality to withhold up to 30 percent of the total.

      This bill would also reconcile the conflicting amendments made to subsection h. of section 41 of P.L.1975, c.291 (C.40:55D-53) by P.L.1991, c.256 and P.L.1991, c.311. This bill would replace the term "reasonably anticipated fees," which was used in the language of P.L.1991, c.311, with the term "inspection fees," which was used in P.L.1991, c.256. In this way, the conflict between the two chapters would be eliminated.