By Michael W. Klein, JD, PhD, CEO NJ Association of State Colleges and Universities
Partnerships between public institutions of higher education and private developers expand campus capacity, generate jobs, create high-quality facilities, and save time and money. Thanks to a new extension signed into law with bipartisan leadership and support, the state colleges and universities have more time to pursue these valuable partnerships.
On May 3, the governor signed legislation that extends to August 1, 2013 from February 1, 2012 the deadline for state colleges and universities to submit project proposals to the New Jersey Economic Development Authority (NJEDA) for its review and approval. With the extension in place, we hope to see more successes like these projects:
- “The Heights,” a 2,000-bed student housing and dining facility at Montclair State University that opened last September and is helping to meet significant residential demand;
- a new roof on the main academic building at Ramapo College, which not only saved the college $9 million in construction costs, but is now generating low-cost energy from solar panels installed during the renovation; and
- the “Campus Town” project at The College of New Jersey, a mixed-used development that will include housing, a bookstore, a fitness and wellness facility for students, plus retail stores, health facilities, and restaurants for the broader community. The project will generate $400,000 per year while strengthening the local economy.
There are two keys to the success of public-private partnership projects:
- the private entity assumes the financial and administrative responsibility for the project, and
- the projects are free from the usual procurement and contracting requirements that the state colleges and universities must follow.
The cost savings are real, and they take the burden off the backs of taxpayers and students. The private partner provides the resources that would otherwise come from the State, the institution, or the institution’s students. The bond-rating agencies see this as a good idea if conducted in the right way. In its 2012 outlook for U.S. higher education, Moody’s Investors Service wrote that it assesses the credit impact of privatized projects on a university’s underlying credit profile by analyzing “not only the university’s legal requirements to support the project but also the project’s strategic ties to the university and the university’s role in the project.”
Public-private partnerships cut through a lot of red tape, such as overly restrictive bidding requirements, that often ties up construction projects on our campuses. The New Jersey Higher Education Task Force, chaired by former Governor Tom Kean, found that many state regulations applying to state colleges and universities “restrict the ability of these institutions to enter long-range contracts, slow the pace of construction, and increase procurement and construction costs.”
The public-private partnership law ensures that the state colleges and universities enter these contracts responsibly. Contractors must be registered under New Jersey’ Public Works Contractor Registration Act. Moreover, the application to NJEDA must include a long-range maintenance plan and detail the expenditures for an appropriate investment in maintenance. NJEDA must approve these long-range maintenance plans according to regulations that reflect national building maintenance standards.
Construction projects at institutions of higher education generate much-needed jobs for construction workers and the building trades. About 1,500 construction jobs have been created thus far. The Campus Town project at TCNJ is expected to create about 150 construction jobs. The jobs are good ones and pay prevailing wage, as required under the public-private partnership law. The contracts must also contain a project labor agreement that guarantees workers’ rights and helps prevent work stoppages. The project labor agreement must also enhance employment opportunities for workers living in the county of the project’s location.
Creating new partnerships to construct facilities is becoming an important strategy for state universities to stay on top of their infrastructure needs in a period of limited state financial support. Future projects are already in the planning stages. Rowan University is considering constructing a 1,400-bed freshman residence that could generate hundreds of jobs and help keep more students in the area. Montclair State has a combined heating and cooling cogeneration plant underway that will create 150 construction jobs and produce 5.6 megawatts of power.
These projects reflect the vision of the presidents and trustees at the state colleges and universities, who have solid records of educational success and fiscal responsibility under the increased autonomy they have received from state officials who are confident in their stewardship. Moody’s recognizes that colleges and universities that are led by experienced management teams and boards of trustees are the ones “best placed to navigate through ongoing future challenges. Across the rating spectrum, those organizations that are willing and able to adapt their business models to an era of ‘new normal’ realities will be best poised for long-term success.” Public-private partnerships are part of the adapted business model at New Jersey’s state colleges and universities to help them succeed.
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