Does NJ Law Signal P3 Trend in Social Infrastructure?
Posted in Legislation, P3s

Included in New Jersey’s Economic Stimulus Act of 2009  are provisions to allow the use of PPPs to design, build, finance, operate and maintain higher education facilities.  Is this the start of a trend for developing social infrastructure in the US?

Social infrastructure includes housing, educational, recreational and law and order facilities that support the community's need for social interaction.  As reflected by several projects in Canada, this is not a new concept for North America.  Along with the recent use of a PPP for development of the Long Beach Courthouse, New Jersey’s authorization of PPPs for higher education projects may indicate that the US market is warming to the idea as well.

Under the  new law, a State or county college may enter into a PPP that permits the private entity to assume full financial and administrative responsibility for the on-campus construction, reconstruction, repair, alteration, improvement or extension of a building, structure or facility of the institution.  The project must be financed in whole by the private entity, and the State or institution of higher education retains full ownership of the land upon which the project is completed.

Proposals for higher education PPP’s must be submitted to the New Jersey Economic Development Authority within 19 months of the law’s July 2009 enactment for review and approval.  In order to be considered, proposals must include, at a minimum:         

  • A public-private partnership agreement between the State or county college and the private developer; 
  • A full description of the project;
  • The estimated costs and financial documentation for the project (including a long-range maintenance plan);
  • A timetable for completion of the project extending no more than five years after consideration and approval; and
  • Any other requirements that the Economic Development Authority deems appropriate or necessary.

With budgets stretched to the limit across the country, we’ll be watching to see if other states look to PPPs  to develop much needed social infrastructure.

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