League and NJAC Support New Legislation on Interest Arbitration Cap

correct size blogMEDIA ADVISORY

February 9, 2018

League and NJAC Support New Legislation on Interest Arbitration Cap

Yesterday, Senator Declan O’Scanlon introduced S-1558, and Assemblywomen Betty Lou DeCroce and Holly Schepisi introduced the Assembly companion, A-3378. These bills will permanently extend the common-sense limit on interest arbitration awards and provide immediate tax relief. They will also enact other reforms recommended in the September 2017 Report, made on behalf of the Governor’s appointees to the Interest Arbitration Task Force.

The New Jersey League of Municipalities and the New Jersey Association of Counties both strongly support this essential response to the January 1 expiration of the 2% cap on interest arbitration awards.The 2% cap on binding interest arbitration awards, first enacted in 2010 and extended for an additional three years in 2014, empowers municipalities and counties  across the State to effectively control public safety employment salaries and personnel costs.  In general, local governments dedicate the majority of their overall annual operating budgets to employee salaries, wages, health benefits, and other related costs.  In addition to these considerable expenses, local governments face a 2% property tax levy cap, which is permanent.   The expiration of the interest arbitration cap, combined with the permanent 2% levy cap, creates an untenable position.   Failure to permanently extend the 2% cap on binding interest arbitration awards will allow arbitrators to once again award generous contracts that will force municipal and county governments, throughout the State, to further reduce or even eliminate essential services, critical personnel, and long-overdue infrastructure improvement projects.

It’s not just the League and NJAC raising these concerns.    In recent weeks, all three rating agencies, Fitch, Moody’s and Standard and Poor’s, have issued analysis, citing their concerns about the possible impact of excessive salary awards on municipal budgets, and about the impact on their respective credit ratings.

At a December press conference, a large coalition of business advocates and local government organizations expressed their support for the extension of the 2% cap, including:


Chamber of Commerce, Southern New Jersey

Commerce and Industry Association of New Jersey

Government Finance Officers Association of New Jersey

International Council of Shopping Centers, NJ Chapter

NAIOP New Jersey

New Jersey Association of Counties

New Jersey Association of County Finance Officers

New Jersey Builders Association

New Jersey Business & Industry Association

New Jersey Chamber of Commerce

New Jersey Conference of Mayors

New Jersey League of Municipalities

New Jersey Municipal Management Association

New Jersey Realtors

New Jersey Urban Mayors Association

Southern New Jersey Freeholders Association


League Executive Director Michael J. Darcy stated:

“A recent editorial correctly described the extension of the interest arbitration a ‘no brainer.’   That is reflective of the overwhelming and bipartisan consensus among local leaders at the municipal and the county level, business interests and newspaper editorial boards across the state that the reinstatement of the 2% interest arbitration cap is in the best interests of the State’s property taxpayers.    We thank Senator O’Scanlon and Assembly Representatives DeCroce and Schepisi, for sponsoring this critical legislation.  Further, we call on the Governor and Legislative Leaders to support this initiative and for its quick passage.”

NJAC Executive Director John Donnadio stated:

“We all have the utmost respect and admiration for the police, firefighters, correction officers, and sheriff officers who put their lives on the line every day to protect the communities in which they serve.   But we must recognize that our State, local governments, and property taxpayers are struggling to make ends meet.  The 2% cap has proven to be an effective tool for controlling cost without impacting the recruitment, retention or response of our public safety officials.  Property taxes are the number one concern of our taxpayers, so we call on the Governor and the Legislature to make the extension of the IA cap a top and immediate priority.”


John Donnadio, Executive Director, NJAC, (609)-394-3467

Michael F. Cerra, Assistant Executive Director, NJLM, 609-695-3481 x120


Swift Moving Legislation Will Transfer Management of PFRS to Labor Dominate Board of Trustees

correct size blogSenate President Sweeney and Senator Kean sponsor S-5, which transfers the management of Police and Fire Retirement System (PFRS) to a Board of Trustees of PFRS.  This legislation would disproportionately shift control of the PFRS, from balanced labor-management control, to a union-dominated (7-5) decision-making structure.   The bill has been released by the Senate Budget and Appropriations Committee and can be scheduled for a final vote in the Senate at the next voting session.      An Assembly companion will likely be introduced shortly.

The League, joined by our partners with the NJ Conference of Mayors and the NJ Association of Counties,  adamantly opposes this legislation.

Funded entirely by property taxpayer dollars, municipal and county governments will spend an estimated $913.0 million in 2018 to subsidize the Police and Firemen’s Retirement System (PFRS), while PFRS members will contribute approximately $334.0 million to the defined benefit plan.  In other words, property taxpayers will finance over 73.0% of PFRS in 2018, while PFRS members will pay 27.0%.

In its current form, the bill will allow public safety union members and retirees to enhance their own benefits; while forcing their public employers, and New Jersey taxpayers to assume a disproportionate amount of the risk.

The legislation gives the labor-management board, at its discretion, and at such time and in such a manner as it determines the ability to:

  • Enhance any benefit set forth in N.J.S.A. 43:16A-1 et seq.; and
  • Modify any such benefit as an alternative to an increase in the member contribution rate; and
  • Reinstate, when appropriate, such reduced benefit to the statutory level without an additional contribution by the member.

The legislation would allow the PFRS to enhance member benefits without meeting the 80% target fund ratio. The target fund ratio is a measure put in place to ensure the financial stability of the State’s pension systems prior to enhancing member benefits and something that is required by the State’s other pension systems.

PFRS is not like a 401K. Rather, it is a defined benefit program in which the employers are responsible for any shortfall in funding.   Employees’ contribution rates are fixed at 10% of their salary while the employers’ contribution rates are based on the funds needs and performance based on actuarial reports. Currently, that requires local employers to contribute 27.35% of the employees’ salary.  As a result any shortfall due to a downtown in the economy, mismanagement of fund assets, or any enhancement in benefits ordered by the labor-controlled board, will be borne by property taxpayers.

The League, along with the New Jersey Association of Counties, opposes the bill for the reasons outlined above.  We have requested the following taxpayer-friendly changes that will serve to protect the long-term health and viability of PERS as well as establish critical safeguards that require the new Board of Trustees to manage valuable property taxpayers’ dollars in an effective and efficient manner:

  • Create a 15-member PFRS Board of Trustees comprised of an equal number of labor and management representatives with 1 independent member;
  • Authorize the League and Association of Counties to make direct management appointments to the new Board of Trustees as is the case for the labor representatives;
  • Prohibit the new Board of Trustees from enhancing member benefits until the system achieves a target funded ratio of 80% as required under current law;
  • Require a supermajority vote of the full membership of the new Board of Trustees to enhance members benefits, and only after the system achieves a target funded ratio of 80%; and
  • Establish a mandatory retirement age.

The League and Association of Counties further suggest that if the Legislature and Governor fail to amend the measure accordingly, then PFRS must be changed to a defined contribution plan where employees make greater contributions and assume a greater risk of loss as is the case with 401(k) investments.

Given the inaction on extending the 2% cap on binding interest arbitration awards, the sunsetting of employee health benefit controls implemented under Chapter 78, the restricting of SALT deductions on federal income taxes, and the long-term ramifications of enacting this legislation without the recommended safeguards, municipal and county leaders fear they are facing a perfect storm of uncontrollable property tax growth and substantial service cuts.


  • Michael F. Cerra, Assistant Executive Director, mcerra@njslom.org or 609-695-3481 x120
  • Lori Buckelew, Senior Legislative Analyst, lbuckelew@njslom.org, 609-695-3481 x112

Minority Report from the BDAC


correct size blogLast week, the Federal Communication Commission’s (“FCC”), Broadband Deployment Advisory Committee (“BDAC”) held two meetings where many of the BDAC’s recommendations were formally adopted.  (To see the BDAC’s full report please click here.) For those who are unaware, the BDAC was recently created by the FCC and tasked with examining current barriers to broadband deployment.  The BDAC was to then provide the FCC with recommendations on how to best overcome these barriers, with the ultimate goal being to expand affordable and reliable access to broadband services.

As predicted, many of these recommendations are grounded in the misguided notion that state and local governments present the primary barrier to broadband deployment. Based on that erroneous assumption, the BDAC recommends federal preemption of local control.  An underlying question, of course, is whether or not the FCC has been granted legal authority to preempt local control in regards to broadband deployment.  The BDAC, however, did not address the threshold issue of FCC authority but instead pressed on, continuing to operate under the assumption of authority.  This error could ultimately prove the BDAC’s work to be fruitless, and this would only serve to delay progress towards the shared goal of bridging the digital divide.

Why this essential threshold issue was ignored is likely the same reason why preemption was an overarching theme of nearly every recommendation – membership of the BDAC is made up, nearly exclusively, of broadband service providers and telecommunications representatives.

From its inception, the BDAC lacked sufficient local government representation.  Instead, the FCC stacked the BDAC’s membership with industry insiders, giving very little voice to the concerns of local government.  Lack of input from all effected stakeholders caused the goal of the BDAC to shift.  Rather than being consensus-driven solutions, the recommendations that have come out of the BDAC can more aptly be described as an industry wish list.

Reacting to the steamrolling of local concerns, San Jose, CA. Mayor, Sam Liccardo, one of the few municipal representatives on the BDAC, submitted a “Minority Report.”  The Minority Report examines the threshold question of the FCC authority to preempt local control, as well as its authority to set rates for use of local rights of way.  The Minority Report also exams solutions to bridging the digital divide.  Solutions not premised on the idea that state and local control are the only barriers to deployment, instead, taking a more holistic approach and examining the actions of all stakeholders.

We hope that the FCC takes the Minority Report into consideration when driving policy and rulemaking decisions.  Bridging the digital divide is an important goal for all involved, as it means a better quality of life for all residents.  Any proposed solutions, however, must be fully examined from an unbiased viewpoint.  Something the BDAC’s report and recommendations fail to do.

Contact: Frank Marshall, Esq., League Staff Attorney, FMarshall@njslom.org or 609-695-3481 x.137.

Court Rules Draft Meeting Minutes Exempt From OPRA




We would like to make our members aware of a published Appellate Division opinion issued today concerning the disclosure of draft minutes under the Open Public Records Act.

In Libertarians for Transparent Government v. Government Records Council, the Court held that draft minutes prepared for a public body’s approval and adoption are NOT required to be provided in response to a request under OPRA.  The Court found that draft minutes fall under the “advisory, consultative, or deliberative material” exemption to OPRA disclosure.

You should review today’s decision with your municipal attorney for more information on the impact it will have on your town.  This information should also be shared with your municipal clerk and records custodian.

Contact: Frank Marshall, Esq., League Staff Attorney, FMarshall@njslom.org, 609-695-3481 x.137.

Governor Murphy Signs Slew of Executive Orders



town-crier_facebookIn just a little more than one full week since being sworn in as Governor, Phil Murphy has issued five executive orders (EO).  This may seem like a lot in a short amount of time but it pales in comparison to the eight EOs issued by Governor Christie on his first full day in office.  We informed our members last week about the first two executive orders – which can be found, here.  Below, is a short summary of the four EO’s issued since then.

EO-3: Audit of State’s Tax Incentives Program

In this EO, Governor Murphy has ordered the State Comptroller to conduct a complete performance audit of the Grow New Jersey Assistance Program and the Economic Redevelopment and Growth Grant Program, from 2010 onward.  The target completion date is December 31, 2018.  The audit is to examine and provide information on:

  • the actual benefits realized from the programs including, the number of new jobs created;
  • the types of jobs that have been created, including salaries, wages, benefit levels and the locations of these jobs throughout the state;
  • the examination of the application process for awarding tax incentives under the programs, including costs associated with administering the programs.

EO-4: Access to Affordable Health Care       

EO-4 takes aim at the recent drop in New Jerseyans signing up for health care through the Federal marketplace and is intended to increase awareness of the opportunity to receive affordable healthcare through the Affordable Care Act.  To achieve this goal EO-4 requires all state agencies that regularly interact with the public to undertake reasonable measures to provide information to the public regarding the Affordable Care Act.  The EO does not create any new requirements or mandates on local governments.

EO-5: Comprehensive Audit of NJ Transit

This EO orders the Commissioner of Transportation to perform a comprehensive review of the operations of NJ Transit.  This includes reviewing; the current source of funding, leadership structure, personnel matters, and customer satisfaction.  While there is no specific deadline for this review to be completed the EO calls for the review to be conducted as expeditiously as possible.

EO-6: Mandating a Review of NJ’s Medical Marijuana Policy

EO-6 orders the Department of Health and the Board of Medical examiners to undertake a review of all aspects of NJ’s medical marijuana program.  The purpose of the EO is to expand the number of residents with access to medical marijuana.  Among other things, an evaluation of the current rules regulating the operations and siting of dispensaries and cultivation facilities is to be examined, focusing on whether rules should be revised to remove unwarranted obstructions to expansion.  This has the potential to impact municipalities as currently, local zoning approval is required before a license can be issued to a medical marijuana dispensary.  There is the possibility, however misguided it may be, that local zoning requirements could be viewed as an obstruction to access of medical marijuana.  While there has been no indication that the administration has taken such a view on local zoning it is something the League will be monitoring closely.  The review is to be completed within 60 days from the issuance of the EO.

Contact: Frank Marshall, Esq., League Staff Attorney, FMarshall@njslom.org, 609-695-3481 x137.

UEZ Extension/Reauthorization Bill Advances


correct size blogOn Thursday, the Senate Economic Growth Committee approved S-846, which will extend the Urban Enterprise Zone (UEZ) designation for participating municipalities for another 10 years. The League supports this extension, which will encourage businesses to continue to invest in those communities.  Municipalities that host UEZs have higher than average unemployment rates, lower than average per capita and household incomes, and the vast majority are also home to high percentages of tax-exempt properties.

The bill, sponsored by Senator Shirley Turner, will now head to the Senate Budget and Appropriations Committee.

The UEZ Program offers incentives to participating businesses, designed to encourage business growth, provide jobs, and stimulate local economies. Approximately 6,800 certified UEZ businesses participate and benefit from the advantages of the UEZ program statewide. To qualify for these advantages, a business must agree that 25 percent of its workforce will include either local residents, or State residents who have been unemployed for at least a year, or both.

As you may recall, at the end of 2016 the UEZ program expired in five municipalities. Businesses in those municipalities – Bridgeton, Camden, Newark, Plainfield, and Trenton – lost the benefits accorded to qualified enterprises, through the program. At the League’s request, the bill was amended to make certain that it will reinvigorate the UEZ program and empower the businesses in those municipalities.

We thank Senator Turner and urge approval of S-846. A companion bill, A-1320, awaits action in the Assembly Commerce and Economic Development Committee.


Contact: Jon Moran, Senior Legislative Analyst, jmoran@njslom.org, 609-695-3481 x121.

Division Issues Guidance on Refunding Advance Property Tax Payments



correct size blogOn January 18, the Division of Local Government Services issued Local Finance Notice 2018-04 regarding the refunding of 3rd and 4th Quarter 2018 Property Tax Payments, which were made on or before December 31, 2017.  The Division issued the Local Finance Notice after consultation with the Attorney General’s Office.

The Division noted that while there is no statute that specifically authorizes or forbids refunds of 3rd and 4th quarter 2018 taxes paid in December 2017, before billing, N.J.S.A. 54:4-69 requires that “payments made in the ‘current year’ that are in ‘excess of the tax or assessed levied’ must be refunded ‘on or before December first of the current year’. Typically, such a refund does not occur until a determination is made that the tax is not owed in that year and that an actual overpayment was made.

The Division is advising that the municipal tax collector, chief financial officer, and municipal attorney must interpret and provide guidance to the governing body, concerning whether or not the payment of 3rd and 4th quarter 2018 taxes qualifies as a payment “in excess of the tax or assessment levied,” when the assessment has not be levied yet.

The Division advises as a matter of policy, if the municipality wishes to permit refunding payments, then the governing body must adopt a resolution specifically authorizing the refunds on the basis that the payment is “in excess of the tax or assessment levied”. Refunds should only be issued upon written request of the taxpayer.

If there is a contract for sale on a property, the Division has recommended that municipalities authorize refunds of tax quarters not yet billed, when such refunds are requested, as “failure to do so could place an undue burden on the purchasing party”.

If the mortgage company has made a payment on a quarter that has already been paid by the property owner, the municipality should refund the mortgage company their payment.

If the municipality chooses not to issue a refund of unbilled 3rd and 4th quarter 2018 property taxes, the Division advises that the municipality should require the taxpayer to request in writing either:

  • Refund of any overpayment once the 3rd and 4th quarters have been billed; or
  • Application of the overpayment amount towards their 2019 property taxes

The Division also suggests that municipalities consult with their auditors and municipal attorneys on whether or not to:

  • Require taxpayers seeking a refund to file a W-9; and
  • Have the municipality issue a 1099 to each taxpayer receiving a refund.

We strongly suggest you review this Local Finance Notice with your chief financial officer, tax collector, municipal auditor, and municipal attorney.

Contact: Lori Buckelew, Senior Legislative Analyst, lbuckelew@njslom.org, 609-695-3481 x112.


Governor ChristieTakes Action on Bills of Interest


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town-crier_facebookBills that are passed and considered by the Governor after the adjournment of legislative session can either be signed into law or “pocket vetoed” in which the Governor takes no action and the bill expires.

On January 15, his last full day in office, Governor Christie took such action on 159 bills; signing 109 of them into law and pocket vetoing 50.  A recap and summary of action taken on bills of municipal interest, with sponsors noted,  are listed below.

Bills Signed Into Law

S-294/A-2430, Vitale, Turner, Conaway, McGuckin, Wolfe, Benson, McKnight, Jimenez, and Sumter. This legislation requires anyone administered opioid antidote to treat drug overdose be provided with information concerning substance treatment programs and resources by either the first responder, including police, or healthcare facility.  This law will take on May 1, 2018, except that the Commissioner of Human Services may take such anticipatory administrative action in advance thereof as shall be necessary for the implementation of this law.

S-713/A-3977,  Cruz-Perez, Van Drew/Mazzeo, Lagana, Mukherji, Holley, and Downey. This legislation adds US Armed Forces and the Reserves members to those protected under existing protections against interference with their employment, trade or business. This law took effect on January 15, 2018.

S-848/A-5339, Stack, Oroho, Mukherji, and Chaparro. This bill requires  State oversight of budgets of regional sewerage authorities in a similar manner to municipal budgets. The League supported the amended legislation and thanks the sponsors for addressing our concerns. This law took effect on January 15, 2018,  and is applicable the following budget year.

S-2180,  Gordon, A.R. Bucco, Vainieri Huttle, Singleton, A.M. Bucco, Houghtaling. This bill, the “New Jersey Rural Electric Cooperative Act” was supported by the League. This law took effect on January 15, 2018.

S-2978/A-4404, Beach, Cruz-Perez, Greenwald, permits local units and school districts to invest in local government investment pools managed in accordance with applicable Governmental Accounting Standards Board guidelines. The  League supported this legislation, which was necessary to accommodate the GASB regulatory changes. This law took effect January 15, 2018.

S-3233/A-1425,  Van Drew, Oroho, Johnson, Wimberly, Pintor Marin, Wisniewski. Modifies performance and maintenance guarantee requirements under “Municipal Land Use Law.”  This law took effect on January 15, 2018.

S-3370/A-5205,  Sarlo, Quijano, Bramnick, Mazzeo, Mukherji, and Benson. This legislation regulates and prohibits certain operation of drones. The League supported this bill. This law will take effect on May 1, 2018.

S-3409/A-5071 Gordon, A.R. Bucco/Vainieri Huttle, Singleton, A.M. Bucco, and Houghtaling. This legislation establishes standardized changed condition clauses for local public construction contracts.  For more information please click here for our recent blog post. This law took effect on January 15, 2018.

S-3449/A-5211,  Bell, Van Drew, Mazzeo, Mukherji, Jimenez, McKnight, Wimberly, and Downey.  This bill allows counties to prioritize county homelessness trust fund grants for homeless veterans. This law took effect on January 15, 2018.

S-3459/A-5329,  Sarlo, Gordon/Burzichelli, Quijano, Lagana.  This legislation exempts law enforcement officers and certain private property towing companies from certain provisions of “Predatory Towing Prevention Act”. This law took effect on January 15, 2018.

S-3521/A-5194,  Gordon, Oroho/Eustace, Rooney, Holley, and Wisniewski. This bill allows expanded use of recycled asphalt pavement. This law will take effect on October 1, 2018, except the Commissioner of Environmental Protection may take any anticipatory action in advance thereof as shall be necessary for the implementation of this law.

S-3558/ A-5231, Lesniak, Cruz-Perez, Sacco/ Benson, Vainieri Huttle, DiMaio. This bill revises animal cruelty law enforcement in NJ. This law will take effect on February 1, 2019, except that sections 26 and 29 of this bill will take effect on August 1, 2018; sections 33 and 34 of this bill took effect immediately on January 15, 2018, and the Attorney General and any county prosecutor or governing body of a municipality may take any administrative action in advance thereof as shall be necessary for the implementation of this law.

S-3620/A-5322, Cunningham/Mukherji. This legislation changes PERS membership eligibility for certain elected public officials and provides for PERS re-enrollment. This law took effect immediately. This law took effect on January 15, 2018.

SJR-23/AJR-47, Vitale, Oroho, Wisniewski, Pinkin, Coughlin. This bill establishes a task force to study and make recommendations concerning stabilization and growth of volunteer first responder community. The League supported this bill.  This joint resolution took effect on January 15, 2018,  and will expire upon submission of the task force’s final report to the Governor and Legislature.

A-2098/S-1988, Mukherji, Lampitt, Eustace, Lagana, Johnson, Downey, Danielsen, Wimberly/Cruz-Perez, Van Drew. This legislation establishes a “Veterans Affordable Housing Section 8 Voucher Pilot Program”. This law took effect on January 15, 2018.

A-2204/S-3355,  Eustace, Benson, Zwicker, Wimberly/Gordon, Cruz-Perez. This bill authorizes virtual net metering for certain electric public utility customers connected to certain hydropower facilities and resource recovery facilities. This law took effect on  January 15, 2018.

A-3150/S-1622. Land, Andrzejczak, Webber, Houghtaling, Mazzeo, Danielsen/Van Drew, Cruz-Perez.  This bill authorizes veterans property tax exemption for totally disabled veterans who did not serve in theater of war.  While we appreciate the intent of the bill, the League opposed this bill because the State will not provide appropriate funding.  Instead, this exemption will displace the tax burden to other taxpayers in the community.  This law took effect on January 15, 2018.

A-3466/S-1278, Coughlin, Downey, Webber, Mukherji, Phoebus, McKnight, Singleton, Benson, Space/Vitale, Oroho – Revises application deadline for homestead property tax reimbursement program from July 1 to beginning April 1 and ending October 31 of the year following the year for which the claim is being made. This law took effect on  January 15, 2018.

A-4464/S-2787, Land, Andrzejczak, Van Drew, and Madden. This bill permits the conduct of punch-board games under raffle license. This law took effect on January 15, 2018. 

For the following bills, Governor Christie took no action, i.e, “pocket vetoed.”

S-2107/A-536,  Sarlo, T. Kean/Schepisi, A.M. Bucco, Auth, Danielsen, and DiMaio. The League strongly supported this common-sense initiative.  The bill provided that a PERS or PFRS member who continues to be volunteer firefighter or emergency services worker after retirement with an employer from whom member retires has bona fide severance for compliance with State and federal law. While well intended the Division of Pensions has created an unintended consequence which, if not changed, will impact every public employee who volunteers in the state and will not only drive up property taxes but would also reduce the quality and level of essential public services.

S-2276/A-3918, Smith, Bateman, DeAngelo, Eustace, Johnson. This bill would have modified the State’s solar renewable energy portfolio standards.

S-2469/ A-1115,  Sweeney, Rice, Weinberg, Cunningham, Oliver, Conaway, Tucker, Sumter, Holley, and Wimberly. This legislation would have required the Attorney General to handle the investigation and prosecution of crime involving person’s death by law enforcement officer while acting in officer’s official capacity or while in custody and require trial in venue outside county where incident occurred.

S-3499/A-5250, Rice, T. Kean/Greenwald, and Burzichelli.   The League supported this legislation which would have authorized certain local government utilities to impose additional connection fees.

A-191/S-2313, Caputo, Tucker, Quijano, Vainieri Huttle, Sumter, McKnight/Rice, and Ruiz. This bill would have required school buildings to be equipped with emergency light and panic alarm linked to local law enforcement.

A-2220/S-1729, Benson, Webber, Singleton, Wimberly and Oroho, Bell.   The bill would have authorized local units of government subject to “Local Public Contracts Law” and “Public School Contracts Law” to use electronic procurement technologies. The League supported this bill.

A-3105/S-3004, Caputo, Tucker, Wimberly, Codey, and  Rice.  This bill would have provided that limitation on hours of retail sale of alcohol be consistent throughout licensed premises

A-3612/S-2118,  Greenwald, Lampitt, Mosquera, Holley, Benson, Downey/Beach, Cruz-Perez. Jake’s Law, which was intended to provide incentivizes for counties to design and construct completely inclusive playgrounds as a priority for State funding for recreational and conservation purposes. The League initially opposed this legislation but along with the Association of Counties, worked with the sponsors to satisfactorily address our concerns.

A-3783/S-2408,  Zwicker, Benson, Barclay/Greenstein, Bateman. This legislation would have allowed county and municipal police departments to establish designated safe areas for Internet purchase transactions and establish a public awareness campaign. The League supported this permissive legislation.

A-4814/S-3487, Rooney, Johnson, Schaer, Moriarty/Allen, Beach.  This bill would have prohibited investment of pension and annuity funds by the State in entities that avoid Superfund obligations.

Contact: Ciara Bradley, Legislative Administrator, CBradley@njslom.org, 609-695-3481 x128.



Standardized Change Condition Clause in Public Construction Contracts Now Law


As one town-crier_facebookof his last actions, on January 15, 2018, Governor Christie signed into law S-3409, which establishes standardized changed condition clauses on local public construction contracts.  This new law requires all construction contracts advertised after January 15 to include a change condition provision.

The law addresses four types of change conditions provisions – “differing site conditions”; “suspension of work”; “character of work”; and “change in quantity”.

“Differing Site Conditions”

The law defines “differing site conditions” as the physical conditions at the contract work site that are subsurface or otherwise concealed and which differ materially from those indicated in the contract documents or are of such an unusual nature that the conditions differ materially from those ordinarily encountered and generally recognized as inherent in the work of the character provided for in the contract.

All construction contracts must include the following differing site conditions provisions:

  • If the contractor encounters differing site conditions during the progress of the contract work, the contractor must promptly provide written notification to the contracting unit of the specific differing site conditions encountered before the site is further disturbed and before any additional work is performed in the impacted area
  • Upon receipt of differing site conditions written notice or upon the contracting unit otherwise learning of differing site conditions, the contracting unit must promptly undertake an investigation to determine whether differing site conditions are present.
  • If the contracting unit determines that different site conditions may result in additional cost or delays, the contracting unit shall provide prompt written notification to the contractor containing directions on how to proceed.
    • The contracting unit must make a fair and equitable adjustment to the contract price and contract completion date for increased costs and delays resulting from the agreed upon differing site conditions encountered by the contractor.
    • If both parties agree to the contracting unit’s investigation and directions decrease the contractor’s costs or time, the contracting unit is entitled to fair and equitable downward adjustment to the contract and price
    • If the contracting unit determines that there are no differing site conditions present that would result in additional costs or delays, the contracting unit must notify the contractor, in writing, and the contractor must resume performance of the contract, and be entitled to pursue a differing site conditions claim against the contracting unit for additional compensation or time attributable to the alleged differing site conditions.
  • Contract execution by the contractor constitutes a representation that the contractor has visited the site and has become generally familiar with the local conditions under which the work is to be performed.

Suspension of Work

Contract must include the following suspension of work provisions:

  • The contracting unit must provide advance written notice to the contractor of any suspension of work lasting more than 10 calendar days of the performance of all or any portion of the work of the contract.
  • If the performance of all or any portion of the work of the contract is suspended by the contracting unit for more than 10 calendar days due to no fault of the contractor or as a consequence of an occurrence beyond the contracting unit’s control, the contractor shall be entitled to compensation for any resultant delay to the project completion or additional contractor expenses, and to an extension of time, provided that, to the extent feasible, the contractor, within 10 calendar days following the conclusion of the suspension, notifies the contracting unit, in writing, of the nature and extent of the suspension of work.
    • The notice must include available supporting information, which information may thereafter be supplemented by the contractor as needed and as may be reasonably requested by the contracting unit.
    • Whenever a work suspension exceeds 60 days, upon seven days’ written notice, either party shall have the option to terminate the contract for cause and to be fairly and equitably compensated therefor.
  • Upon receipt of the contractor’s suspension of work notice, the contracting unit must promptly evaluate the contractor’s notice and promptly advise, in writing, the contractor of its determination on how to proceed.
    • If the contracting unit determines that the contractor is entitled to additional compensation or time, the contracting unit must make a fair and equitable upward adjustment to the contract price and contract completion date.
    • If the contracting unit determines that the contractor is not entitled to additional compensation or time, the contractor shall proceed with the performance of the contract work and is entitled to pursue a suspension of work claim against the contracting unit for additional compensation or time attributable to the suspension.
  • Failure of the contractor to provide timely notice of a suspension of work will result in a waiver of a claim if the contracting unit can prove by clear and convincing evidence that the lack of notice or delayed notice by the contractor actually prejudiced the contracting unit’s ability to adequately investigate and defend against the claim.

Change in Character of Work”

The law defines “material change” as a character change which increases or decreases the contractor’s cost of performing the work, increases or decreases the amount of time by which the contractor completes the work in relation to the contractually required completion date or both.

Contract must include the following material change provisions:

  • If the contractor believes that a change directive by the contracting unit results in a material change to the contract work, the contractor must notify the contracting unit in writing. The contractor must continue to perform all work on the project that is not the subject of the notice.
  • Upon receipt of the contractor’s change in character notice the contracting unit shall promptly evaluate the contractor’s notice and promptly advise the contractor of its determination on how to proceed in writing.
  • If the contracting unit determines that a change to the contractor’s work caused or directed by the contracting unit materially changes the character of any aspect of the contract work, the contracting unit must make a fair and equitable upward adjustment to the contract price and contract completion date.  The basis for any such price adjustment shall be the difference between the cost of performance of the work as planned at the time of contracting and the actual cost of such work as a result of its change in character, or as otherwise mutually agreed upon by the contractor and the contracting unit prior to the contractor performing the subject work.
  • If the contracting unit determines that the contractor is not entitled to additional compensation or time, the contractor must continue the performance of all contract work and is entitled to pursue a claim against the contracting unit for additional compensation or time attributable to the alleged material change.

Change in Quantity

The law defines “bid proposal quantity” as the quantity indicated in the bid proposal less the quantities designated in the project plans as “if and where directed.”

Contract must include the following change in quantity provisions:

  • Contracting unit may increase or decrease the quantity of work to be performed by the contractor
  • If the quantity of a pay item:
    • Is cumulatively increased or decreased by 20% or less from the bid proposal quantity, the quantity change is considered a minor change in quantity.
      • The contracting unit must make payment for the quantity of the pay item performed at the bid price for the pay item
    • Is cumulatively increased or decreased by more than 20% from the bid proposal quantity, the quantity change is considered a major change in quantity.
  • For major increase:
    • the contracting unit or the contractor may request to renegotiate the price for the quantity in excess of 120% of the bid proposal.
    • If mutual agreement cannot be reached the contracting unit must pay the actual cost plus an additional 10% for overhead and additional 10% for profit unless otherwise specified in the original bid.
  • For major decrease:
    • The contracting unit or the contractor may request to renegotiate the price for the quantity of work performed
    • If mutual agreement cannot be reached the contracting unit must pay the actual cost plus an additional 10% for overhead and additional 10% for profit unless otherwise specified in the original bid. Provided that the contracting unit does not make a payment in an amount that exceeds 80% of the value of the bid price multiplied by the bid proposal quantity.

The law requires the Division of Local Government Services to promulgate rules and regulations to standardize the forms and procedures for the change conditions process within 90 days.

We suggest you review this new law with your purchasing officials, municipal engineer, and municipal attorney.

Contact: Lori Buckelew, Senior Legislative Analyst, lbuckelew@njslom.org, 609-695-3481 x112.