SCHAER & SCALERA BILL
TO PREVENT ENCAP REPEAT SIGNED INTO LAW
Measure Protects Taxpayers In Public/Private Deals Gone Bad
(TRENTON) – Legislation Assemblymen Gary S. Schaer and Fred Scalera sponsored to enhance the protections and oversight surrounding public investments in private redevelopment projects was signed into law today by Gov. Jon S. Corzine.
Schaer and Scalera crafted the bill (A-2650) following the collapse of the EnCap Mixed-Use Redevelopment Project, which squandered more than $300 million in public money from the state and Bergen County in an attempt to remediate abandoned municipal landfills in the Meadowlands.
“Quite simply, the public cannot afford to finance another EnCap-style debacle,” said Schaer (D-Passaic/Bergen/Essex).. “Putting these protections in place will help ensure that the mistakes made with EnCap cannot and will not be repeated.”
“Bergen County learned an expensive lesson that it cannot rely on an honor system of handshakes, winks and nods when it comes to multi-million dollar redevelopment deals,” said Scalera (D-Essex/Bergen/Passaic). “This boondoggle could have been stopped at the very first sign of trouble had these reforms been in place sooner.”
The Inspector General faulted the company for over-representing its environmental remediation experience and indicating that it had access to millions of dollars in private funding. The report also cited a lack of coordination and communication between public entities even after concerns about the project’s viability surfaced that allowed the company to change its story and apply for various state and county loans and grants, cobbling together more then $300 million.
The Schaer/Scalera bill requires businesses receiving any combination of grants, loans, or other financial assistance in excess of $50 million from single or multiple public entities to help fund a redevelopment or environmental remediation project to file annual, independently audited financial statements with the state Treasurer and each entity from which it has secured financing.
The law stipulates the following for any qualifying contract:
· The private business spends a minimum of $1 for every $5 received in public funds;
· The public entity reserves 10 percent of the total funds approved to be disbursed upon the successful completion of the project;
· The private business submits payment of a performance bond, the amount of which will be tied to the project costs attributable to the publically funded improvements.
Failure to comply with the financial statement reporting deadlines will result in an increase in the amount of public money kept in escrow. Any business that knowingly fails to submit a financial statement or purposefully misrepresents the businesses finances will be required to refund the full amount of the public financial assistance.
A nonpartisan Office of Legislative Services analysis said the measure will “effectively function as an insurance policy for governmental entities.”
“EnCap’s catastrophic failure highlighted the near-total absence of internal oversight in the way the state provides public money for private redevelopment,” said Schaer (D-Passaic). “The breakdown of checks and balances that precipitated EnCap’s collapse must never happen again.”
“We can never again allow the public’s trust to be undermined in such a way,” said Scalera. “We must make certain that part of the EnCap project’s legacy includes the preventative measure and proactive protections that will secure future public-private redevelopment partnerships.”
|
