New Jersey-2012-A2312-Introduced

An Act establishing a community school project pilot program in the Department of Education, supplementing P.L.2000, c.72 (C.18A:7G-1 et al.), and amending N.J.S.18A:20-4.2 and P.L.2009, c.90.

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

1. (New section) As used in this act:

"Community school project" means a school facilities project included in the SDA 2011 Statewide Prioritization contained in the March 2011 SDA Capital Program Report, that is approved by the Commissioner of Education for construction by a redevelopment entity with the inclusion of community design features.

"Development authority" means the New Jersey Schools Development Authority established pursuant to section 3 of P.L.2007, c.137 (C.52:18A-237).

"Financing authority" means the New Jersey Economic Development Authority established pursuant to P.L.1974, c.80 (C.34:1B-1 et seq.).

"Pilot district" means the Camden, New Brunswick, and Paterson School Districts.

"Redevelopment entity" means a redevelopment entity authorized by a municipal governing body to implement plans and carry out redevelopment projects in the municipality pursuant to the "Local Redevelopment and Housing Law," P.L.1992, c.79 (C.40A:12A-1 et al.).

"SDA district" means an SDA district as defined in section 3 of P.L.2000, c.72 (C.18A:7G-3).

2. (New section) There is established a Community School Project Pilot Program in the Department of Education. The purpose of the pilot program is to advance the construction of school facilities projects through a cost-effective construction model, while at the same time creating critically-needed jobs.

Under the pilot program, the Commissioner of Education, in consultation with the New Jersey Schools Development Authority, shall select one school facilities project in each of the pilot districts, that was included in the SDA 2011 Statewide Prioritization contained in the March 2011 SDA Capital Program Report, for construction by a redevelopment entity as a community school project. The commissioner may authorize the inclusion of community design features in a community school project. Notwithstanding the provisions of section 5 of P.L.2000, c.72 (C.18A:7G-5) to the contrary, a community school project shall have a State share that is less than 100%, and any community design features approved by the commissioner for inclusion in the project shall be financed by the pilot district.

3. (New section) a. A pilot district and the municipality that comprises the pilot district may apply to the commissioner for the designation of a school facilities project as a community school project. The application shall be accompanied by resolutions requesting the designation by the board of education of the pilot district and the governing body of the municipality. A community school project may be constructed by a redevelopment entity as a single project or as part of a local economic development, redevelopment, or community development project. The application shall set forth:

(1) the State and local share proposed for the community school project;

(2) a description of the community design features to be included in the project;

(3) the name of the redevelopment entity to undertake the project under the "Local Redevelopment and Housing Law," P.L.1992, c.79 (C.40A:12A-1 et al.);

(4) whether the community school project is to be constructed as a single project or as part of a local economic development, redevelopment, or community development project;

(5) if the community school project is to be constructed as part of a local economic development, redevelopment, or community development project, a description of how the project fits into a redevelopment plan adopted or to be adopted by the municipal governing body pursuant to section 7 of P.L.1992, c.79 (C.40A:12A-7); and

(6) the manner in which the local share of the community school project will be financed.

b. The commissioner shall evaluate the application to determine whether the school facilities project is suitable for designation as a community school project based upon consideration of the following factors:

(1) the critical need for the community school project evaluated in accordance with the priority project categories established pursuant to paragraph (2) of subsection m. of section 5 of P.L.2000, c.72 (C.18A:7G-5);

(2) whether the community school project provides significant social and economic benefits to the municipality, its neighborhoods, and residents;

(3) if the community school project is to be constructed as part of a local economic development, redevelopment, or community development project, whether the community school project furthers definite local objectives as to appropriate land uses, density of population, and improved traffic and public transportation, public utilities, recreational and community facilities, and other public improvement;

(4) if the community school project is to be constructed as part of a local economic development, redevelopment, or community development project, whether the community school project is consistent with the local development plan;

(5) the extent to which the community school project contains community design features that can be used by the community;

(6) whether the redevelopment entity has the current capacity to construct the community school project;

(7) whether the redevelopment entity has the appropriate prior experience in developing similar types of projects;

(8) the availability of an appropriate financing mechanism for the local share of the community school project; and

(9) the extent to which the local share of the community school project reduces the State share of the final eligible costs of the project.

c. The commissioner shall approve the inclusion of community design features as part of the school facilities project if he finds that the inclusion of the community design features would be conducive to the usefulness and success of the project for both the students of the district and the residents of the community. The commissioner may condition the approval upon the adoption by the district of policies suitable for assuring continuing community or educational access to the community design features.

d. Upon the approval by the commissioner of a community school project, the financing authority shall provide funding for the State share of the final eligible costs of the community school project from the aggregate principal amount of bonds authorized to be issued for the State share of SDA district school facilities projects pursuant to section 14 of P.L.2000, c.72 (C.18A:7G-14). The funding shall be provided pursuant to an agreement among the financing authority, the commissioner, the development authority, the redevelopment entity, and the district which shall, in addition to any other terms and conditions, set forth the terms for the disbursement of the State share and provide for the monitoring of the construction by the development authority.

e. Upon completion of a community school project by a redevelopment entity, the pilot district shall submit to the commissioner a plan to provide for the maintenance of the project.

f. The Urban Coordinating Council established pursuant to section 45 of P.L.1996, c.62 (C.55:19-60) shall advise the commissioner, the financing authority, the development authority, the redevelopment entity, and the pilot districts on the potential availability of funding for community school projects including, but not limited to, sources of funds for acquisition, clearance, site remediation, and assemblage of land and the development, redevelopment, construction or rehabilitation of any structure or improvement included in a project.

4. (New section) Upon the completion of a community school project, the board of education of a pilot district may enter into a contract with a nonprofit entity, including an approved charter school, for the management, operation, and staffing of the community school project. The nonprofit entity shall have experience operating a school in a high-risk, low-income urban district. The contract between the board of education and the nonprofit entity shall be for a term of five years, shall be approved by the commissioner, and shall be in accordance with any guidelines for such contracts that may established by the commissioner. The contract shall outline:

a. the educational goals of the community school project, the curriculum to be offered, the methods for assessing whether the students enrolled in the school are meeting the educational goals;

b. any testing and academic performance standards for the community school project beyond those required by State law and regulation; and

c. any other factors deemed significant by the commissioner.

A contract entered into pursuant to this section may renewed for additional five-year periods at the discretion of the board of education.

5. (New section) a. In the event that a community school project is constructed as a single project, the local share of the project may be financed through the issuance of school bonds or through a lease purchase agreement pursuant to the provisions of subsection f. of N.J.S.18A:20-4.2.

b. In the event that a community school project is constructed as part of a local economic development, redevelopment, or community development project, the local share of the project may be financed through the issuance of school bonds, through a lease purchase agreement, or through an incentive grant in accordance with the provisions of the "New Jersey Economic Stimulus Act of 2009," P.L.2009, c.90 (C.52:27D-489a et al.).

6. (New section) The provisions of the "Public School Contracts Law," N.J.S.18A:18A-1 et seq., shall not be applicable to projects constructed by a redevelopment entity pursuant to the provisions of this act.

7. (New section) Upon the completion of the community school projects authorized pursuant to this act, the commissioner shall submit to the Governor, and to the Legislature pursuant to section 2 of P.L.1991, c.164 (C.52:14-19.1), a report which outlines the success of the pilot program in advancing the cost-effective construction of school facilities projects, and shall include a recommendation on the expansion of the school construction model used under the pilot program to other school districts and school facilities projects.

8. 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, with the approval of either the commissioner, or voters or board of school estimate, as applicable, improvements or additions to school buildings through lease purchase agreements not in excess of five years; or in the case of a community school project approved by the commissioner pursuant to P.L. , c. (C. ) (pending before the Legislature as this bill), acquire by lease purchase agreement that may be in excess of five years a site and school building, provided that the site and building meet regulations of the Department of Education and the New Jersey Schools Development Authority, and that any lease purchase agreement in excess of five years is approved by the Commissioner of Education as in the best interest of the school district, and that the Local Finance Board in the Department of Community Affairs determines within 30 days that the cost and the financial terms and conditions of the agreement are reasonable. The agreement shall be recorded as an expenditure of the General Fund of the district. The commissioner shall approve the agreement only upon a demonstration by the district that the lease purchase payments and any operating expenses related to the agreement can be included within the district's tax levy growth limitation and will not result in the need for approval by the voters or board of school estimate, as appropriate, of additional spending proposals to maintain existing instructional programs and extracurricular activities. If the commissioner cannot approve the agreement, the board of education may frame a separate question to authorize the lease purchase agreement and obtain voter or board of school estimate approval to enter into the agreement. A district may, without separate prior approval of the commissioner, also acquire equipment through a lease purchase agreement not in excess of five years or in the case of a lease purchase agreement entered into for the acquisition of school buses not in excess of 10 years, provided that the amount of the first installment and each subsequent installment for the lease purchase payments is included in the budget that is advertised and submitted for approval to the voters of the district or the board of school estimate, as appropriate. 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 equipment or improvements or additions to existing school buildings, or in the case of a community school project approved pursuant to P.L. , c. (C. ) (pending before the Legislature as this bill) the land and school building, 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, 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 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;

(h) Acquire through sale and lease-back textbooks and non-consumable instructional materials provided that the sale price and principal amount of the lease-back do not exceed the fair market value of the textbooks and instructional materials and that the interest rate applied in the lease-back is consistent with prevailing market rates or is less.

(cf: P.L.2010, c.44, s.7)

9. Section 3 of P.L.2009, c.90 (C.52:27D-489c) is amended to read as follows:

3. As used in sections 3 through 18 of P.L.2009, c.90 (C.52:27D-489c et al.):

"Applicant" means a developer proposing to enter into a redevelopment incentive grant agreement.

"Ancillary infrastructure project" means public structures or improvements that are located in the public right-of-way outside the project area of a redevelopment project, provided a developer or municipal redeveloper has demonstrated that the redevelopment project would not be economically viable without such improvements.

"Authority" means the New Jersey Economic Development Authority established under section 4 of P.L.1974, c.80 (C.34:1B-4).

"Developer" means any person who enters or proposes to enter into a redevelopment incentive grant agreement pursuant to the provisions of section 9 of P.L.2009, c.90 (C.52:27D-489i). A developer also may be a municipal government or a redevelopment agency as defined in section 3 of P.L.1992, c.79 (C.40A:12A-3).

"Director" means the Director of the Division of Taxation in the Department of the Treasury.

"Eligible revenue" means the property tax increment and any other incremental revenues set forth in section 11 of P.L.2009, c.90 (C.52:27D-489k).

"Incentive grant" means reimbursement of all or a portion of the project financing gap of a redevelopment project through the State or a local Economic Redevelopment and Growth Grant program pursuant to section 4 or section 5 of P.L.2009, c.90 (C.52:27D-489d or C.52:27D-489e).

"Infrastructure improvements in the public right-of-way" mean public structures or improvements located in the public right of way that are located within a project area or that constitute an ancillary infrastructure project.

"Municipal redeveloper" means a municipal government or a redevelopment agency acting on behalf of a municipal government as defined in section 3 of P.L.1992, c.79 (C.40A:12A-3) that is an applicant for a redevelopment incentive grant agreement.

"Project area" means land or lands under common ownership or control including through a redevelopment agreement with a municipality or as otherwise established by a municipality.

"Project financing gap" means the part of the total redevelopment project cost, including return on investment, that remains to be financed after all other sources of capital have been accounted for, including, but not limited to, developer contributed capital, which shall not be less than 20 percent of the total project cost, and investor or financial entity capital or loans for which the developer, after making all good faith efforts to raise additional capital, certifies that additional capital cannot be raised from other sources. In the case of a community school project that is to be constructed as part of a redevelopment project pursuant to the provisions of P.L. , c. (C. ) (pending before the Legislature as this bill), "project financing gap" shall include the local share cost of a community school project but shall not include the State share cost of a community school project.

"Project revenue" means all rents, fees, sales, and payments generated by a project, less taxes or other government payments.

"Property tax increment" means the amount obtained by:

(1) multiplying the general tax rate levied each year by the taxable value of all the property assessed within a project area in the same year, excluding any special assessments; and

(2) multiplying that product by a fraction having a numerator equal to the taxable value of all the property assessed within the project area, minus the property tax increment base, and having a denominator equal to the taxable value of all property assessed within the project area.

For the purpose of this definition, "property tax increment base" means the aggregate taxable value of all property assessed which is located within the redevelopment project area as of October 1st of the year preceding the year in which the redevelopment incentive grant agreement is authorized.

"Qualifying economic redevelopment and growth grant incentive area" means Planning Area 1 (Metropolitan), Planning Area 2 (Suburban), or a center as designated by the State Planning Commission; an area zoned for development pursuant to a master plan adopted by the New Jersey Meadowlands Commission pursuant to subsection (i) of section 6 of P.L.1968, c.404 (C.13:17-6) or subject to a redevelopment plan adopted by the New Jersey Meadowlands Commission pursuant to section 20 of P.L.1968, c.404 (C.13:17-21); any land owned by the New Jersey Sports and Exposition Authority, established pursuant to P.L.1971, c.137 (C.5:10-1 et seq.), within the boundaries of the Hackensack Meadowlands District as delineated in section 4 of P.L.1968, c.404 (C.13:17-4); a pinelands regional growth area, a pinelands town management area, a pinelands village, or a military and federal installation area established pursuant to the pinelands comprehensive management plan adopted pursuant to P.L.1979, c.111 (C.13:18A-1 et seq.); a transit village, as determined by the Commissioner of Transportation; and federally owned land approved for closure under a federal Base Realignment Closing Commission action.

"Redevelopment incentive grant agreement" means an agreement between, (1) the State and the New Jersey Economic Development Authority and a developer, or (2) a municipality and a developer, or a municipal ordinance authorizing a project to be undertaken by a municipal redeveloper, under which, in exchange for the proceeds of an incentive grant, the developer agrees to perform any work or undertaking necessary for a redevelopment project, including the clearance, development or redevelopment, construction, or rehabilitation of any structure or improvement of commercial, industrial, residential, or public structures or improvements within a qualifying economic redevelopment and growth grant incentive area or a transit village.

"Redevelopment project" means a specific work or improvement, including lands, buildings, improvements, real and personal property or any interest therein, including lands under water, riparian rights, space rights and air rights, acquired, owned, developed or redeveloped, constructed, reconstructed, rehabilitated or improved, undertaken by a developer within a project area and any ancillary infrastructure project associated therewith.

"Redevelopment utility" means a self-liquidating fund created by a municipality pursuant to section 12 of P.L.2009, c.90 (C.52:27D-489l) to account for revenues collected and incentive grants paid pursuant to section 11 of P.L.2009, c.90 (C.52:27D-489k), or other revenues dedicated to a redevelopment project.

"Revenue increment base" means the amounts of all eligible revenues from sources within the redevelopment project area in the calendar year preceding the year in which the redevelopment incentive grant agreement is executed, as certified by the State Treasurer for State revenues, and the chief financial officer of the municipality for municipal revenues.

"Transit village" means a community with a bus, train, light rail, or ferry station that has developed a plan to achieve its economic development and revitalization goals and has been designated by the New Jersey Department of Transportation as a transit village.

(cf: P.L. 2011, c.89, s.6)

10. This act shall take effect immediately.

STATEMENT

This bill establishes a Community School Project Pilot Program in the Department of Education. The purpose of the pilot program is to move the construction of school facilities projects forward by creating a cost-effective construction model that, based on the experience of the pilot program, could potentially be duplicated in additional communities. At the same time, the construction of school facilities projects under the pilot program will serve to create jobs at a time when such jobs are critically needed.

Under the pilot program, the Commissioner of Education, in consultation with the New Jersey Schools Development Authority, will select in each of the pilot districts, one school facilities project that was originally included in the SDA 2011 Statewide Prioritization contained in the March 2011 SDA Capital Program Report, for construction by a redevelopment entity as a community school project. The pilot districts will be the Camden, New Brunswick, and Paterson School Districts. A community school project will be constructed by a redevelopment entity as either a single project or as part of a larger local economic development, redevelopment, or community development project. A community school project will have a State share that is less than 100%, and the commissioner may include community design features for inclusion in the project which features will be financed locally.

A pilot district and the municipality that comprises the pilot district may apply to the commissioner for the designation of a school facilities project as a community school project. The application will include the following information:

(1) the State and local share proposed for the community school project;

(2) a description of the community design features to be included in the project;

(3) the name of the redevelopment entity to undertake the project;

(4) whether the community school project is to be constructed as a single project or as part of a local economic development, redevelopment, or community development project;

(6) the manner in which the local share of the community school project will be financed.

The bill establishes criteria to be used by the commissioner in evaluating an application for the construction of a community school project such as the critical need for the project, whether the project provides significant social and economic benefits to the municipality and its resident, the extent to which the project includes community design features that can be used by the community, whether the redevelopment entity has the capacity to construct the community school project, the prior experience of the redevelopment entity in developing similar types of projects, and the availability of an appropriate financing mechanism for the local share of the community school project.

Upon the approval by the commissioner of a community school project, the New Jersey Economic Development Authority (EDA) will provide the funding for the State's share of the project's final eligible costs in accordance with an agreement among the EDA, the commissioner, the New Jersey Schools Development Authority (SDA), the redevelopment entity, and the district. The agreement will set forth the terms for the disbursement of the State share and provide for the monitoring of the construction by the SDA.

The bill provides that if a community school project is constructed as a single project, the local share of the project may be financed through the issuance of school bonds or through a lease purchase agreement. In the event that a community school project is constructed as part of a local economic development, redevelopment, or community development project, the local share may be financed through school bonds or a lease purchase agreement, or through an incentive grant in accordance with the provisions of the "New Jersey Economic Stimulus Act of 2009," P.L.2009, c.90 (C.52:27D-489a et al.).

The bill authorizes the board of education of a pilot district to enter into a contract with a nonprofit entity, including an approved charter school, for the management, operation, and staffing of the community school. The nonprofit entity must have experience operating a school in a high-risk, low-income urban district. The contract between the board of education and the nonprofit entity will be for a term of five years, must be approved by the commissioner, and be in accordance with any guidelines for such contracts that may established by the commissioner.

Upon the completion of the pilot program, the commissioner is directed to report to the Governor and the Legislature on the effectiveness of the program in advancing the cost-effective construction of school facilities projects. The report is to include a recommendation on the expansion of the school construction model used under the pilot program to other school districts and school facilities projects.