S 1283

SENATE, No. 1283
STATE OF NEW JERSEY
222nd LEGISLATURE
�
PRE-FILED FOR INTRODUCTION IN THE 2026 SESSION
Sponsored by:
Senator LINDA R. GREENSTEIN
District 14 (Mercer and Middlesex)
SYNOPSIS
���� "Citizen's Fund Act"; establishes trust
fund for conveyance of certain public entity assets, as permitted, for interest
of public benefit plans.
CURRENT VERSION OF TEXT
���� Introduced Pending Technical Review by Legislative
Counsel.
��
An Act concerning the conveyance of certain assets to a
trust fund for the interest of public benefit plans and supplementing and
amending various parts of the statutory law.
���� Be It
Enacted by the Senate and General Assembly of
the State of New Jersey:
���� 1.��� (New section) This act
shall be known and may be cited as the "Citizens Fund Act."
���� 2.��� (New section) As used in
sections 1 through 7 of P.L.    , c.    (C.   ) (pending
before the Legislature as this bill):
���� "All-inclusive
review" means a comprehensive analysis of the asset and the asset
conveyance that includes an assessment of a public entity�s fiscal condition,
an inventory of asset and liability optimization opportunities, and an initial
due diligence review of any asset proposed for conveyance to the Citizens Fund,
established pursuant to section 3 of P.L.��� , c.��� (C.������ �) (pending
before the Legislature as this bill).
���� "Asset" means title
to real and personal property, leaseholds, licenses, franchises, easements,
concessions, and any other right, title, or interest deemed appropriate by the
fund board, land, including improvements and fixtures thereon, and property of
any nature appurtenant thereto or used in connection therewith, and every
estate, interest, and right, legal or equitable, therein, including terms for
years and liens by way of judgment, mortgage or otherwise, and indebtedness
secured by those liens, and any other enterprise or asset, including public
infrastructure, as that term is defined in section 10 of P.L.2014, c.63
(C.34:1B-251), tangible or intangible, deemed appropriate by the trust fund under
rules issued pursuant hereto.
���� "Asset conveyance"
means the transfer and conveyance of all or part of an entity�s ownership
interest in an asset to the trust fund.
���� "Associated public
entity" means a public entity whose residents are customers of an asset
conveyed to the trust fund.
���� "Benefitting public
entity" means a public entity, including any associated public entity, for
which the conveyance of an asset to the trust fund would act to increase the
pension funded ratio of the benefitting public benefit plans.
���� "Certificate of
trust" means a document providing the fractional, beneficial, or economic
interest in assets or income of the trust fund or any of its subaccounts.
���� "Fund" or
"trust fund" means the Citizens Fund established to hold in trust or
in trusts the utility assets in a TRU area, and other assets� pursuant to or
not prohibited under section 3 P.L.    , c.    (C.    )
(pending before the Legislature as this bill).
���� "New Jersey
Infrastructure Bank" or "I-Bank" means the New Jersey
Infrastructure Bank established pursuant to section 4 of P.L.1985, c.334
(C.58:11B-4).
���� "Public benefit
plan" means a State-administered retirement system and other public
pension plans and other post-employment benefit plans in which the public
entity participates.
���� "Public entity"
means the State, a county, municipality, district, or political subdivision
thereof, and any authority, agency, instrumentality, board, or body of the
foregoing. ��Public entity� shall also mean a school district, community
college, or public institution of higher education.
���� "Public-private
partnership agreement" means an agreement entered into by a public entity
and a private entity for the purpose of permitting the private entity to
assume, in whole or in part, the financial and administrative responsibility
for the development, construction, reconstruction, repair, alteration,
improvement, extension, operation, and maintenance of a public asset.
���� "Qualified independent
valuation agent" or "valuation agent" means an entity or person
who is:
���� (1)� accredited by the
American Society of Appraisers to conduct appraisals; or
���� (2)� an investment bank, trust
company, accountant, engineer, or financial advisor qualified to perform fair
market valuations of assets or render fairness opinions on the valuation of
assets; and who is independent of the entity making, and the trust fund receiving,
a conveyance of one or more assets.
���� "Real property"
means land, and anything growing on, affixed to, or built upon the land, real
property and improvements thereon, and any easements rights appertaining
thereto.
���� "Special asset"
means the trust fund assets, including the holding account but excluding the
investment account.
���� "TRU area" means the
area within a county that has an aviation district and a Capital City District.
���� 3.��� (New section)� a.� There
is established a body corporate and politic, with corporate succession, to be
known as the "Citizens Fund."� The fund is constituted as an
instrumentality of the State exercising public and essential governmental
functions in addition to the powers conferred by the provisions of P.L.��� ,
c.��� (C.������ �) (pending before the Legislature as this bill).� No part of the
revenues shall accrue to the benefit of any individual.
���� b.��� The purpose of the fund
shall include, but not be limited to, lessening the burdens of government by
providing a fund through which a public entity may contribute, transfer, or
sell its revenue-producing assets to a segregated or commingled account and
share the risks and benefits of the performance of those assets, and maximizing
the performance and long-term value of those assets, which value shall be known
as the special asset value of the conveyed assets and shall act to increase the
benefit plan funded ratio of the public entity and associated public entity or
entities as provided in the transfer agreement. �Collectively, the special
asset value of all assets held by the fund shall be known as the fund�s special
asset value.
���� c.��� The fund shall operate
consistent with section 115 of the federal Internal Revenue Code (26 U.S.C.
s.115). �The fund shall be a trust, trust account, or custodial account, the
assets of which shall be deemed an arrangement equivalent to a trust for all
legal purposes, and shall be established by means of appropriate documentation
so as to comply with and be exempt from taxation under applicable provisions of
federal and State law.
���� d.��� The assets of the fund
shall be maintained as a separate account segregated from all other funds of
the State and the non-State public employers participating in public benefit
plans. �The fund shall be legally independent and separate, regardless of its
treatment for tax, accounting, reporting, securities law, or other purposes.
���� e.��� The fund shall maintain
appropriate books and records in compliance with generally accepted accounting
principles and subject to annual financial audit by a nationally recognized
accounting firm.
���� f.���� A person shall not use
or authorize the use of the assets in the fund, or the investment earnings
thereon, for any purpose other than for the maximization of the value of the
assets in the fund, including meeting or exceeding the level of service
required to operate the asset pursuant to State and federal law and regulations
for the safety of the public and the environment, for the benefit of members
and retirees in the public benefit plans, and for defraying the reasonable
costs of administering the fund.
���� g.��� The Citizens Fund board,
created pursuant to section 4 of P.L.��� , c.��� (C.������ �) (pending before
the Legislature as this bill) shall undertake any administrative action
necessary to establish the fund in any form suitable to carry out the purposes
of P.L.    , c.    (C.   ) (pending
before the Legislature as this bill). �The fund may be subdivided as
appropriate.
���� h.��� The fund shall be
established to receive, acquire, and improve assets and to issue certificates
of trust conveying beneficial ownership of those assets to the public benefit
plans. �Assets in the fund shall be maintained in one or more segregated
subaccounts or as may be deemed in the transfer agreement.� The comingling of
any assets or holdings in a subaccount shall not alter any underlying
beneficial interest assigned in certificates of trust issued pursuant to P.L.���
, c.��� (C.������ �) (pending before the Legislature as this bill).
���� i.���� The transfer agreement
may permit the optimization of the asset for conveyance, in part or in whole. �Only
that portion of the conveyed asset that is net of financing costs, amounts
deposited into the investment account, and other distributions made to, or on
behalf of, the public entity shall be evidenced by certificates of trust and
credited to the holding account of the Common Pension Fund as provided in
section 7 of P.L.��� , c.��� (C.������ �) (pending before the Legislature as
this bill). �Whereas the fund�s asset distributions, net of financing costs and
any distributions to, or on behalf of, the public entity, shall be deposited
into the investment account of the Common Pension Fund as provided in section 7
of P.L.    , c.    (C.        )
(pending before the Legislature as this bill).
���� j.���� The fund and the assets
therein shall be maintained in a manner that bond issuance may qualify as a
"State or local bond" as that term is defined in paragraph (1) of
subsection (c) of section 103 of the Internal Revenue Code (26 U.S.C.
s.103(c)(1)), and any similar provisions under the laws of this State.
���� k.��� Nothing in P.L.��� ,
c.��� (C.������� ) (pending before the Legislature as this bill) shall be
construed to prohibit the holding of any assets in any special purpose entity,
limited liability corporation, limited partnership, not-for-profit corporation,
public benefit corporation, or other arrangement deemed appropriate by the fund
board.
���� 4.��� (New section) a. �The Citizens
Fund shall have a fund board, comprised of five members, who shall be appointed
by the Governor, as follows:
���� (1)� a member of the New
Jersey Infrastructure Bank;
���� (2)� a member of the Division
of Investment in the Department of the Treasury, established pursuant to
section 1 of P.L.1950, c.270 (C.52:18A-79), or their designee, who shall serve
ex officio;
���� (3)� the Commissioner of the
Department of Community Affairs or their designee;
���� (4)� the chairperson of the
fund advisory board established by subsection f. of this section; and
���� (5)� the largest holder of
certificates of trust who is not represented by, or associated with, a
State-administered retirement system. � Members shall remain active until their
successor is qualified. �
���� b.��� The member of the New
Jersey Infrastructure Bank shall serve as chairperson and the director of the
Division of Investment shall serve as treasurer and as vice chairperson of the
fund board. �The position of secretary shall be elected from among the members
of the fund board that are not State office holders. �The term for secretary
shall be three years. �The fund board shall be constituted as an
instrumentality of the State exercising public and essential governmental
functions, and the exercise by the fund board of the powers conferred by P.L.���
, c.��� (C.������ �) (pending before the Legislature as this bill) shall be
deemed and held to be an essential governmental function of the State. �Notwithstanding
the existence of common management, the board shall be treated and accounted
for as a separate legal entity.�
���� c.��� The members of the
Citizens Fund board shall serve without compensation, but the fund shall
reimburse the members for actual and necessary expenses incurred in the
performance of their duties. �Notwithstanding the provisions of any other law
to the contrary, no officer or employee of the State shall be deemed to have
forfeited or shall forfeit the officer's or employee's office or employment or
any benefits or emoluments thereof by reason of the officer's or employee's
acceptance of the office of ex officio director of the fund or the ex officio
director's services thereon.
���� d.��� Except as otherwise
limited by the provisions of P.L.    , c.    (C.        )
(pending before the Legislature as this bill), the Citizens Fund may:
���� (1)� make and alter bylaws for
its organization and internal management and, subject to agreements with
holders of its bonds, notes, or other obligations, make rules and regulations
with respect to its operations, properties, and facilities;
���� (2)� adopt an official seal
and alter it;
���� (3)� sue and be sued;
���� (4)� make and enter into all
contracts, leases, and agreements necessary or incidental to the performance of
its duties and the exercise of its powers under the provisions of P.L.��� ,
c.��� (C.������ �) (pending before the Legislature as this bill), and subject
to any agreement with the holders of fund�s bonds, notes, or other obligations,
consent to any modification, amendment, or revision of any contract, lease, or
agreement to which the trust is a party;
���� (5)� enter into agreements or
other transactions with and accept grants, appropriations, and the cooperation
of the federal government, State government including other states, or any State
agency, in furtherance of the purposes of P.L.��� , c.��� (C.������ �) (pending
before the Legislature as this bill), and do anything necessary in order to
avail itself of that aid and cooperation;
���� (6)� receive and accept aid or
contributions from any source of money, property, labor, or other things of
value, to be held, used, and applied to carry out the purposes of P.L.��� ,
c.��� (C.������ �) (pending before the Legislature as this bill), subject to
the conditions upon which that aid and those contributions may be made,
including, but not limited to, gifts or grants from any department or agency of
the State, or any State agency, for any purpose consistent with the provisions
of P.L.��� , c.��� (C.��� ����) (pending before the Legislature as this bill);
���� (7)� acquire, own, hold,
construct, improve, rehabilitate, renovate, operate, maintain, sell, assign,
exchange, lease, mortgage or otherwise dispose of real and personal property,
or any interest therein, in the exercise of its powers and the performance of its
duties under the provisions of P.L.��� , c.��� (C.������� �) (pending before
the Legislature as this bill);
���� (8)� retain, appoint, or
procure an administrator and any other officers or employees as it may require
for the performance of its duties, without regard to the provisions of Title 11A
of the New Jersey Statutes.� An administrator shall have at least 15 years of
experience in infrastructure development, management or finance, pension fund
infrastructure investment, or public administration managing or financing of
infrastructure assets, or managing state agencies that finance public
infrastructure assets;
���� (9)� borrow money, issue
bonds, notes and other obligations, securing the same, and provide for the rights
of the holders thereof;
���� (10) pledge assets of the fund
as security for bonds, notes, and other obligations, as legally permissible,
for the following purposes:
���� (a)�� paying the costs of
acquiring, constructing, renovating, equipping, expanding, improving, or
operating the assets of, or assets to be transferred to, the fund;
���� (b)� paying expenses incident
to or incurred in connection therewith; and
���� (c)�� facilitating the transfer
of an asset to the fund, including but not limited to, the refinance,
extension, or reissuance of debt of the asset in the name of the fund;
���� (11) subject to any agreement
with holders of its bonds, notes, or other obligations, invest monies of
Citizens Fund not required for immediate use, including proceeds from the sale
of any bonds, notes, or other obligations, in any obligations, securities, and
other investments in accordance with the rules and regulations of the Division
of Pensions and Benefits or as may otherwise be approved by the Director of the
Division of Investment in the Department of the Treasury upon a finding that
such investments are consistent with the corporate purposes of the Citizens
Fund;
���� (12) procure insurance to
secure the payment of its bonds, notes, or other obligations or the payment of
any guarantees or loans made by it in accordance with the provisions of P.L.���
, c.��� (C.������ �) (pending before the Legislature as this bill), or against
any loss in connection with its property and other assets and operations, in
amounts and from any insurers as it deems desirable;
���� (13) engage the services of
attorneys, accountants, engineers, and financial experts, and any other
advisors, consultants, agents, or experts, including a trustee or custodian for
the fund, as may be necessary, and fix their compensation;
���� (14) subject to any agreement
with holders of its bonds, notes, or other obligations, purchase bonds, notes,
and other obligations of the Citizens Fund and:
���� (a)�� hold the same for resale
for any duration, including until maturity thereof, including in connection
with any cross-investment initiative of the trust; or
���� (b) provide for the
cancellation thereof in accordance with the provisions of P.L.��� , c.���
(C.������ �) (pending before the Legislature as this bill);
���� (15) charge to and collect
from the fund monies as shall be sufficient to pay for all reasonable costs
necessarily incurred by the Citizens Fund in connection with its management of
the fund and responsibilities pursuant to P.L.��� , c.��� (C.������ �) (pending
before the Legislature as this bill);
���� (16) maintain in a special
fund separate from any other funds held by the Citizens Fund monies collected
by the Citizens Fund pursuant to this subsection that shall be available for
any corporate purposes of the Citizens Fund;
���� (17) subject to any agreement
with holders of its bonds, notes, or other obligations, obtain as security, or
to provide liquidity for payment of all or any part of the principal of and
interest and premium on the bonds, notes, and other obligations of the Citizens
Fund, or for the purchase upon tender or otherwise of the bonds, notes, or
other obligations, lines of credit, letters of credit and other security
agreements or instruments in any amounts and upon terms as the Citizens Fund
may determine, and pay fees and expenses required in connection therewith; and
���� (18) take any action necessary
or convenient for the exercise of the powers under this subsection.
���� e.��� The fund board shall
possess all executive powers, duties, and responsibilities over the fund and
the assets contained therein, and all the powers as a body corporate necessary
and convenient to accomplish the purposes of P.L.��� , c.��� (C.������ �) (pending
before the Legislature as this bill).
���� f.���� The fund board shall
serve as the fund fiduciary and representative of the holders of certificates
of trust and shall represent the interests thereof in financial dealings of the
fund and its assets. �The fund board shall be responsible to perform all duties
otherwise necessary to effectuate the purposes of P.L.    , c.    (C.    ) (pending
before the Legislature as this bill), including the duty to maximize the
long-term value of assets in the fund. �The fund board, as fiduciary, shall:
���� (1)� notwithstanding any other
provision of State law to the contrary, establish the terms and conditions of
any transaction to effectuate an asset conveyance consistent with the
provisions of section 7 of P.L.��� , c.��� (C.������ �) (pending before the
Legislature as this bill);
���� (2)� review and approve or
reject the report issued by the qualified independent valuation agent, which
approval shall not be unreasonably withheld;
���� (3)� review and approve or
reject the terms of the certificates of trust and any financial transaction
involving a change in beneficial ownership of fund assets pursuant to the
certificates. �The board shall ensure that the rights conveyed to a public
benefit plan in a certificate of trust includes the right to receive monetary
distributions in proportion to the system�s respective interests, and generally
protect the liquidity of pension assets, given that conveyance in a certificate
of trust may restrict the right to transfer or otherwise dispose of interest
in, or to withdraw from, the fund;
���� (4)� invest and manage the
proceeds of and investment earnings on assets in the fund, and distribute
proceeds and investment earnings to the holders of the certificates of trust in
proportion to their relative equitable interests in the account or subaccount from
which the disbursement is made, consistent with the provisions of section 8 of P.L.���
, c.��� (C.������ �) (pending before the Legislature as this bill);
���� (5)� sell, exchange, or
re-invest the assets of the fund, subject to a right of first refusal by the
benefitting public entity that conveyed the asset to the fund;
���� (6)� select and contract with
consultants, including independent fiduciaries, lawyers, engineers,
contractors, operators, and other services providers with respect to the
management, operations, and administration of the fund in accordance with
federal and State law and the maximizing of the long-term value of the fund;
���� (7)� procure an independent
fund manager that shall carry out the duties and obligations set forth by the
fund. �The fund manager shall ensure the independent performance of all duties
delegated to it by fund, and shall operate, manage, conduct, and control assets
of the fund, and the subaccounts thereof, with the goal of maximizing the value
of the assets in the fund over the long term and ensuring that each asset meets
or exceeds the level of service required to operate the asset pursuant to State
and federal law and regulations for the safety of the public and the
environment. �The fund manager shall be a fiduciary with respect to the fund
and any appropriate subaccounts thereof. �The fund board may delegate certain
of its responsibilities to the fund manager, which may include but not be
limited to, asset management, reporting requirements, procurement of
consultants and legal services, and conducting, managing, and overseeing
all-inclusive reviews and financings;
���� (8)� ensure that each asset
meets or exceeds the level of service required to operate the asset pursuant to
State and federal law and regulations for the safety of the public and the
environment;
���� (9)� meet at least quarterly;
and
���� (10) conduct an annual
comprehensive contract review of the transfer agreement with the benefitting
public entity, or its successor, and the fund manager, which shall include, but
not be limited to:
���� (a)�� the prior year�s
management performance, including financial operations, capital investment, and
future capital needs;
���� (b)� the current year�s
budget;
���� (c)�� compliance with
operating and performance standards as enumerated in the transfer agreement; and
���� (d)� a forecast of future
financial operations, including, if appropriate, projected user rates and
charges; and recommendations for any amendments to the transfer agreement.
���� g.��� (1)� There shall be
established a fund advisory board to the fund board that shall represent the
enterprise advisory board formed for each asset or group of assets conveyed to
the fund by a public entity, pursuant to paragraph (2) of this subsection.� All
public information that is distributed to the fund board relative to the fund
board meetings shall also be provided simultaneously to the fund advisory board
members. �
���� (2)� The enterprise advisory
board shall be comprised of each municipality or county that is an associated
public entity. �Enterprise advisory board membership shall be based on a
pro-rata share of the average annual volume sales of the asset over the previous
five years and the membership shall be adjusted at least every 10 years in
accordance with the provisions of the transfer agreement.� The enterprise
advisory board members shall serve for two years and may remain until a
qualified successor has been properly appointed. �Members of an enterprise
advisory board shall be appointed by the secretary of the fund board upon the
recommendation from the executive of the associated public entity conveying the
asset to the fund. �The members of the enterprise advisory board or boards
shall elect a chairperson and vice-chairperson who shall serve on the fund
advisory board. �The purpose of the enterprise advisory board is to provide the
fund board with advice and information relevant to the local systems of the
conveyed assets. �Neither the fund advisory board or the enterprise advisory
board shall have any voting or veto authority over the fund board.
���� 5.��� (New section)� a. �A
public entity may convey to the fund an asset held by the public entity. �The
conveyance shall be governed by a transfer agreement, which shall be proposed
by the fund and approved by the governing body of the public entity as
evidenced by a resolution adopted by a majority of its authorized membership.
���� b.��� The transfer agreement
may permit the optimization of the asset for conveyance, in part or in whole. �Only
that portion of the conveyed asset including, but not limited to, real
property, intangible assets, cash, and investments, that have not been
distributed to, or on behalf of the public entity or amounts deposited into the
investment account on behalf of the public entity shall be evidenced by
certificates of trust and credited to the holding account of the Common Pension
Fund as provided in section 7 of P.L.��� , c.��� (C.������ �) (pending before
the Legislature as this bill). �Assets held in the holding account may be
treated as special assets and the estimated fair market value of holding
account assets shall be reappraised at least annually, but not more than
quarterly.
���� c.��� Asset contributions on
behalf of the public entity and the fund�s asset distributions shall be
deposited in the investment account of the Common Pension Fund as provided in
section 7 of P.L.��� , c.��� (C.������ �) (pending before the Legislature as
this bill). �The fund�s asset distributions shall be from cash and investments
deemed to be more than amounts required for proper operations, capital
investment, and administration of the conveyed asset, and may include, but
shall not be limited to, asset conveyance amounts net of financing costs, debt
obligations, and other liabilities secured by, or payable from, the conveyed
asset, and any distribution to, or on behalf of the public entity, and
investment income, proceeds of asset sales, lease or other entitlements, and
any other amounts as the fund board may determine. �These assets shall be
invested and distributed to the public benefit plans as directed by the
transfer agreement for the account of the benefitting public entities. �The
asset value contributed to the investment account shall be added to the
actuarial value of assets and increase assets attributable to a benefitting
public entity on a proportional basis. �A benefitting public entity�s funding
ratio may be calculated by the sum of its actuarial value of assets, including
amounts held in or transferred from the investment account and the value of
special assets held in its holding account divided by its actuarial accrued
liabilities.
���� d.��� The public benefit plans
shall not be required or permitted to pay any expenses incurred in connection
with the conveyance of an asset pursuant to P.L.��� , c.��� (C.������ �) (pending
before the Legislature as this bill).
���� e.��� An asset conveyance
shall meet all of the following conditions:
���� (1)� the fair market value of
the public asset conveyed has been established by a qualified independent
valuation agent unaffiliated with any of the public benefit plans or with the
public entity making the conveyance, which valuation shall have been affirmed
as acceptable by both the public entity and the fund board;
���� (2)� the terms and conditions
of the asset conveyance transaction shall be no less favorable to the
applicable retirement system than those in any transaction with a willing
buyer;
���� (3)� shall ensure that an
all-inclusive review is performed upon the advice of the I-Bank and the
direction of the fund board;
���� (4)� the asset conveyance
transaction is administratively feasible;
���� (5)� the asset conveyance
transaction is in the best interests of the retirement system or systems and
its members and retirees and sufficiently protects the rights of those persons;
and
���� (6)� the asset conveyance
transaction is consistent with all other standards and requirements provided pursuant
to
P.L.    , c.    (C.        ) (pending
before the Legislature as this bill).
���� f.���� Should the fund board
determine that emergent conditions, as described under section 5 of P.L.2015,
c.18 (C.58:30-5), exist pursuant to paragraph (5) of subsection b. of section 6
of P.L.    , c.    (C.        )
(pending before the Legislature as this bill), and that action is necessary to
address the emergent conditions, the following shall occur:
���� (1)� the fund shall ensure
that an all-inclusive review is performed with the advice of the I-Bank, which
shall be transmitted to the fund board and the public entity and made available
for public review;
���� (2)� the public entity shall,
within 180 days of receipt of the report produced pursuant to the all-inclusive
review, undertake remedial action as necessary to address the emergent
conditions, including, but not limited to:
���� (a)�� funding necessary
capital and operational improvements through:
���� (i)�� necessary legislative or
executive action to effectuate an increase in the charges, rates, or fees that
will be paid for services generated by the public asset by users in the
applicable jurisdiction or service area;
���� (ii)� entering into one or
more financing agreements;
���� (iii) applying for and
receiving grants, donations, or other financial assistance from available
public or private sources;
���� (iv) procuring qualified
vendors to make necessary improvements; or
���� (v)� any other action
necessary to secure funding.
���� Any action proposed to be
undertaken by a public entity pursuant to this subparagraph shall be reviewed
and approved as sufficient to correct the emergent condition by the Department
of Environmental Protection;
���� (b)� entering into a sale or
long-term lease of the asset pursuant to applicable State law and any local
ordinances or regulations, including under the "Water Infrastructure
Protection Act," P.L.2015, c.18 (C.58:30-1 et seq.) or under any other law
governing applicable public-private partnership agreements, as appropriate; or
���� (c)�� propose the asset for
conveyance to the Citizens Fund pursuant to subsections a. and b. of this
section; and
���� (3)� the public entity shall
provide notice to the public of the remedial action chosen to be undertaken
pursuant to this section on its official Internet website no later than 180
days of receipt of the report produced pursuant to the all-inclusive review.� If
an applicable official Internet website does not exist, the public entity shall
contact the Department of Community Affairs, and the notice shall be published
on the official Internet website of the Department of Community Affairs.
���� g.��� Beneficial interests of
25 percent or more in a public asset held by the Citizens Fund shall not be
granted by the fund to a private entity until after the first day of the fifth
year following conveyance of the asset to the fund.
���� 6.��� (New section)� a. �(1)� An
asset proposed for conveyance to, or acquisition by, the fund shall be valued
by an independent valuation agent pursuant to paragraph (2) of this subsection,
and shall be revalued periodically if requested by the fund, which shall occur
at least once but not more than quarterly in any State fiscal year, whether
discretionary or otherwise, or more frequently, as deemed necessary by the fund
board.
���� (2)� Upon receipt of a written
notice by an entity of its intention to make an asset conveyance, sale, or
exchange, which shall identify the asset, the fund shall contract for the
services of a qualified independent valuation agent to evaluate and conduct a
valuation of the proposed asset.
���� The qualified independent
valuation agent shall issue a report representing its opinion as to the
valuation of the asset in accordance with an asset conveyance, sale, or
exchange.
���� The asset value shall exclude
proceeds counted in any prior actuarial valuation as a receivable and may be in
an amount less any costs associated with consummating the asset conveyance.
���� b.��� An asset conveyance
shall not be effectuated until after the report has been issued and both the
fund board and the public entity accept the proposed value. �If either rejects
the proposed value, the conveyance, sale, or exchange shall not be effectuated,
and any written agreement for the conveyance of an asset shall be void.
���� c.��� The valuation as set
forth in the transfer agreement shall serve as the basis for the beneficial
interest assigned in corresponding certificates of trust to the public benefit
plans, accounting for the fair market value of the asset, less any costs associated
with consummating the asset conveyance and any distributions to, or on behalf
of the public entity including deposits to the investment account.
���� d.��� Upon execution of a
transfer agreement, and pursuant thereto, the fund board shall provide for the
transfer of the asset into the fund. �Ownership in the trust fund shall be
delineated by units that shall be evidenced by certificates issued by the trust
fund to the public benefit plans.
���� e.��� During the time an asset
remains in the fund, all new assets acquired by or for the asset shall be owned
by the fund, the beneficial interests in which assets shall be in such amounts
as are dictated by the certificates of trust, except those assets which may
only be held, licensed, acquired, or procured by a public entity making the
conveyance, in which case the assets shall be held, licensed, acquired, or
procured thereby on behalf of and for the benefit of the fund.
���� 7.��� (New section)� a. �A Common
Pension Fund is established within the Division of Investment in the Department
of the Treasury for the purpose of receiving the asset contribution on behalf
of the retirement systems. �The Common Pension Fund shall constitute part of
each retirement system and the participating trust through which each
retirement system is funded.� Only the retirement systems and the trusts
through which they are funded shall have an interest in the Common Pension
Fund. �The Common Pension Fund shall satisfy the requirements of section
401(a)(24) of the federal Internal Revenue Code of 1986 (26 U.S.C.
s.401(a)(24)), as amended, in accordance with Revenue Ruling 81-100, as amended
by Revenue Ruling 2004-67 and Revenue Ruling 2011-1, and the requirements for
exemption under section 501(a) of the federal Internal Revenue Code of 1986 (26
U.S.C. s.501(a)), as amended. �Consistent with section 401(a)(24) of the
federal Internal Revenue Code of 1986 (26 U.S.C. s.401(a)(24)), as amended,
regulations of the United States Department of the Treasury, and other guidance
of the federal Internal Revenue Service, each retirement system shall participate
in the Common Pension Fund. �No part of the corpus or income of the Common
Pension Fund that equitably belongs to a retirement system or a trust of the
retirement system may be used for or diverted to any purpose other than for the
exclusive benefit of the members or beneficiaries entitled to benefits under the
retirement system or trust of the retirement system.
���� b.��� Upon the establishment
of the Common Pension Fund, there shall be established two subaccounts therein
as the asset holdings account and investment account for the following
purposes:
���� (1)� the certificates of trust
shall be deposited into an asset holdings account. �As provided in section 4 of
P.L.��� , c.��� (C.������ �) (pending before the Legislature as this bill), the
fund�s board solely shall manage the asset holdings account and shall make
deposits therein, invest amounts therein, make requisition and payment for
costs incurred in the operation and administration of the Common Pension Fund�s
assets, and otherwise manage the asset holdings account. �All interest in the
assets deposited in the asset holdings account shall be qualified plan assets
subject to the requirements of sections 401(a) and 501(a) of the federal
Internal Revenue Code of 1986 (26 U.S.C. ss.401(a) and 501(a)), as amended, but
shall not be assets managed by the Division of Investment for the benefit of
the retirement systems under N.J.S.18A:66-61, section 14 of P.L.1944, c.255 (C.43:16A-14),
or section 32 of P.L.1954, c.84 (C.43:15A-32) until any assets have been
transferred from the asset holdings account to the investment account;
���� (2)� proceeds in amounts
determined by the Common Pension Fund shall be transferred from the asset
holdings account to the investment account on a periodic basis and the proceeds
shall constitute the distributions of the Common Pension Fund�s asset.� The proceeds
transferred together with all investments and investment earnings shall be
available solely to and for the benefit of the retirement systems.� The
investment account shall be managed and invested by the Director of the
Division of Investment pursuant to the authority, responsibilities, and duties
set forth in P.L.1950, c.270 (C.52:18A-79 et seq.), subject to the oversight of
the State Investment Council, pursuant to the authority of P.L.1950, c.270
(C.52:18A-79 et seq.). �The Director of the Division of Investment shall have
full discretion to distribute proceeds and all investments and investment
earnings from the investment account into investment vehicles managed by the
Division of Investment on behalf of the retirement systems. �The investment
account may be further subdivided into subaccounts in the discretion of the
Director of the Division of Investment for purposes of investing in different
types of investments; and
���� (3)� notwithstanding any
provision of P.L.��� , c.��� (C.������ �) (pending before the Legislature as
this bill), or any other provision of law to the contrary, the Director of the
Division of Investment and the State Investment Council shall not have any
responsibility for the asset holdings account of the Common Pension Fund and
shall not be liable for any claims, demands, suits, actions, damages,
judgments, costs, charges, or expenses, including court costs or attorneys'
fees in any way related to the account.� Notwithstanding the establishment of
the Common Pension Fund in the Division of Investment, the Director of the
Division of Investment, the Division of Investment, and the State Investment
Council shall not have any authority to manage the Common Pension Fund�s assets
or the asset holdings account.
���� c.��� Upon receipt of the
certificates of trust to be contributed to the holding account and any assets
to be contributed to the investment account, the Director of the Division of
Investment shall:
���� (1)� invest and manage all
assets in the investment account;
���� (2)� make distributions of
proceeds and investment earnings from the investment account into investment
vehicles managed by the Division of Investment for the sole benefit of the
retirement systems; and
���� (3)� make distributions of
proceeds and investment earnings from the investment account to the retirement
systems from the Common Pension Fund to be used by each retirement system for a
legitimate purpose of the retirement system; provided that any distribution
under this paragraph shall be made on a simultaneous and pro rata basis to the
retirement systems, which pro rata basis shall be based on each retirement
system's relative equitable interest in the asset contribution.
���� d.��� The portion of the asset
contribution allocated to each retirement system shall increase the funded
ratio with respect to eligible members of the retirement system; provided,
however, all amounts in the investment account, to the extent of the interest
of each retirement system therein, may be distributed by the Director of the
Division of Investment to the retirement systems from the Common Pension Fund
and used by each retirement system for a legitimate purpose of the retirement
system. �A distribution shall be made on a simultaneous and pro rata basis to
the retirement systems, which pro rata basis shall be based on each retirement
system's relative equitable interest in the asset contribution.
���� For the purpose of this
subsection, the funded ratio shall be the ratio of the actuarial value of
assets plus the value of the special asset, determined in accordance with
section 38 of P.L.2010, c.1 (C.43:3C-14), to the actuarially determined accrued
liabilities expressed as a percentage.
���� 8.��� Section 3 of P.L.2015,
c.18 (C.58:30-3) is amended to read as follows:
���� 3.��� As used in [this act,] P.L.2015,
c.18 (C.58:30-1 et seq.):
���� "All-inclusive
review" means a comprehensive analysis of the asset and the asset
conveyance that includes an assessment of a public entity�s fiscal condition,
an inventory of asset and liability optimization opportunities, and an initial
due diligence review of any asset proposed for conveyance to the Citizens Fund.
���� "Board" means the
Board of Public Utilities.
���� "Capable private or
public entity" means any private or public water system owner who, at the
time of submitting a proposal to long-term lease or purchase public water or
wastewater assets, currently (1) owns a system serving no less than the number
of residential and commercial accounts as the system which the entity is
proposing to lease or purchase, and (2) is not a significant noncomplier, as
defined pursuant to section 3 of P.L.1977, c.7 (C.58:10A-3), is not currently
the subject of a formal enforcement action initiated by the New Jersey
Department of Environmental Protection to address a material violation by the
entity which has not been corrected over a reasonable period of time given the
specific situation, or is not substantially out of compliance with an
administrative consent order, settlement agreement, stipulation of settlement
or judicial consent order entered into with the department.� The term shall
also include the Citizens Fund.
���� "Citizens Fund"
means the fund established pursuant to section 3 of P.L.��� , c.��� (C.�������
) (pending before the Legislature as this bill).
���� "Department" means
the Department of Environmental Protection.
���� "Director" means the
Director of the Division of Local Government Services in the Department of
Community Affairs.
���� "Governing body"
means a "governing body" as defined in section 3 of the "New
Jersey Wastewater Treatment Public-Private Contracting Act," P.L.1995,
c.216 (C.58:27-19 through C.58:27-27).
���� "Licensed engineer"
means a professional engineer licensed pursuant to P.L.1938, c.342 (C.45:8-27
et seq.).
���� "Long-term lease"
means a lease of longer than 30 years under which the municipal owner seeks to
transfer ownership of the system at the end of the lease term.
���� "Owner" means any
municipality, except a municipality that is a city of the first class with a
population of 270,000 or more according to the latest federal decennial census,
that owns water or wastewater assets.� Municipalities constituting a joint
meeting, and the joint meeting itself shall not be considered an owner for the
purposes of this definition.
���� "Registered
apprenticeship program" means an apprenticeship program registered with
and approved by the United States Department of Labor and which provides to
each trainee combined classroom and on-the-job training under the direct and
close supervision of a highly skilled worker in an occupation recognized as an
apprenticeable trade, and which meets the program performance standards of
enrollment and graduation under 29 C.F.R. s.29.6.
���� "System" means the
plants, structures, and other real and personal property of an owner that is,
or is to be, acquired, constructed, or operated for the purpose of processing
water or wastewater, including sewage, for distribution or treatment.
���� "Water or wastewater
assets" means any system along with any other related buildings,
equipment, or other infrastructure.
(cf: P.L.2015, c.18, s.3)
���� 9.��� Section 5 of P.L.2015,
c.18 (C.58:30-5) is amended to read as follows:
���� 5.��� a. �The determination
that emergent conditions exist shall be made by certification of the mayor, the
mayor's designee of the municipality, and a licensed engineer.
���� b.��� Emergent conditions
shall exist if at least one of the following conditions is met:
���� (1)� The system is located in
an area designated by the Department of Environmental Protection as an Area of
Critical Water Supply Concern I or II, or any future designation or newly added
area of critical water supply concern;
���� (2)� The owner of the system
is a significant noncomplier, as defined pursuant to section 3 of P.L.1977, c.7
(C.58:10A-3), has been the subject of a formal enforcement action initiated by
the department, or is substantially out of compliance with an administrative
consent order, settlement agreement, stipulation of settlement, or judicial
consent order entered into with the department; or
���� (3)� There is a present
deficiency or violation of maximum contaminant levels established pursuant to
the "Safe Drinking Water Act," P.L.1977, c.224 (C.58:12A-1 et seq.),
concerning the availability or potability of water, or concerning the provision
of water at adequate volume or pressure, or distribution or treatment of
wastewater;
���� (4)� There is a demonstrated
lack of historical investment, repair, or sustainable maintenance as determined
by the department, or material damage to the infrastructure of the system; or
���� (5)� The system owner lacks
the financial, technical, or managerial capacity to adequately address any of
the foregoing on a sustainable basis or own and operate the system in a way
that supports economic activity in the municipality on a sustainable basis.
���� c.��� Should the owner
determine that one or more emergent conditions contained in subsection b. of
this section exists and that it is necessary to take steps to effectuate the
sale or long-term lease of its water or wastewater assets to a capable private
or public entity pursuant to this act to address these emergent conditions and
to operate and maintain the system, the owner shall: (1) through the
utilization of applicable public procurement laws of the State of New Jersey
retain the services of an independent financial advisor to review, analyze and
report on the value of the system and the short and long term impacts to
rate-payers of the cash-flow structure of the proposed transaction and to
provide an estimate as to the financial requirements necessary to address the
emergent conditions and to operate and maintain the system. �Upon completion of
the analysis and review, the independent financial advisor shall transmit its
report to the owner; or (2) contact the Citizens Fund and propose an asset
conveyance pursuant to section 7 of P.L.��� , c.��� (C.��� ����) (pending
before the Legislature as this bill). �Within 10 days of the approval of
the report [by
the owner]
issued pursuant to this section, the owner shall transmit copies to the
board, the director, and the department and shall make the report available for
public review.
���� d.��� After the independent
financial advisor, or the Citizens Fund, has completed its analysis of
the financial aspects of the proposed transaction and has presented its report
to the owner, a public hearing on the proposed emergent condition certification
shall be held. �The owner shall provide notice of the public hearing no less
than 30 days prior to the date of the hearing. �The notice shall prominently
state the findings upon which the certification of emergent conditions is
based, a summary of the findings by the independent financial advisor, or
the Citizens Fund, and that the certification is in anticipation of a
proposed long-term lease or sale of water or wastewater assets to a capable
private or public entity.� Notice of the public hearing shall be published on
the official Internet website of the municipality and at least once in one or
more newspapers circulating in the municipality.� Notice of the public hearing
shall be published on the official Internet website of the county and at least
once in one or more newspapers circulating in the county.� If an applicable
official website does not exist, notice of the public hearing shall be
published on the official Internet website of the Department of Community
Affairs.
���� e.��� After the public hearing
and after giving due consideration to the findings of the independent financial
advisor, or the Citizens Fund, the governing body of the owner shall, by
resolution adopted by at least two-thirds of its authorized membership, or,
with respect to an asset conveyance to the Citizens Fund, adopted by a majority
of its authorized membership, certify that one or more emergent conditions
exist and that the owner intends to sell or long-term lease its water or
wastewater assets to a capable private or public entity to address these
emergent conditions and to operate and maintain the system. �Within five days
of the adoption of the resolution, the governing body of the owner shall
transmit a true copy of the resolution, to the department, the board, and the
director.� Within 30 days of receipt of the resolution by the department, the
department shall approve or reject the owner's emergent conditions
certification as contained in the resolution.
���� f.���� Upon receipt of the
approval of the emergent conditions certification by the Department of
Environmental Protection, the owner shall publish notice of the approval if the
owner chooses to proceed with the sale or long-term lease of its water or
wastewater assets to a capable private or public entity. �The notice shall
prominently state that the certification is in anticipation of a long-term
lease or sale of water or wastewater assets to a capable private or public
entity. �Notice of the approval shall be published on the official Internet
website of the municipality and at least once in one or more newspapers
circulating in the municipality, and shall prominently state that a petition
may be filed within 45 days after the publication of such notice to require a
referendum before a resolution authorizing the long-term lease or sale of water
or wastewater assets may take effect. �If an applicable official website does
not exist, notice of the approval shall be published on the official Internet
website of the Department of Community Affairs.
���� g.��� A petition may be filed
with the municipal clerk, no later than 45 days after the notice of the
approval of the emergent conditions certification is published, protesting the
lease or sale of water or wastewater assets without a public referendum. �If
the petition is signed by a number of legal voters of the municipality equal to
at least [15%] 15 percent
of the total votes cast in the municipality at the last election at which
members of the General Assembly were elected, a resolution to lease or sell
water or wastewater assets shall not take effect unless the lease or sale of
such assets is approved pursuant to R.S.40:62-4 and R.S.40:62-5. �If a petition
is not filed pursuant to this subsection, a resolution to lease or sell water
or wastewater assets shall not be subject to a public referendum.
(cf: P.L.2015, c.18, s.5)
���� 10.� Section 6 of P.L.2015,
c.18 (C.58:30-6) is amended to read as follows:
���� 6.��� a. �A request for
qualifications from a capable private or public entity wishing to be considered
for the long-term lease or sale of the owner's system shall be advertised after
the emergent conditions certification pursuant to subsection e. of section 5 of
P.L.2015, c.18 (C.58:30-5), but no less than 30 days prior to the date on which
responses to the request are due. �The advertisement of the request for
qualifications shall be published on the official Internet website of the
municipality and at least once in one or more newspapers circulating in the
municipality. �An owner shall also publish the advertisement of the request for
qualifications at least once in one or more newspapers with Statewide
circulation. �If an applicable official website does not exist, the
advertisement of the request for qualifications shall be published on the
official Internet website of the Department of Community Affairs.
���� b.��� After an emergent
conditions certification is made pursuant to subsection e. of section 5 of
P.L.2015, c.18 (C.58:30-5), the owner shall determine the qualified
respondents.  The owner shall issue a request for proposals to each
qualified respondent no less than 14 days prior to the date established for
submission of the proposals.  The request for proposals shall include
relevant technical submissions, documents, and criteria including but not
limited to a description of the facilities and the debt related thereto and the
evaluation criteria to be used in the selection of the designated respondent. �The
proposals shall include and shall be evaluated by, at a minimum, the following:
���� (1)� the documented
deficiencies of the owner's system upon which the emergent conditions
certification is based and a description of the corrective measures to be
undertaken by the respondent to address and correct the identified emergent
conditions;
���� (2)� a description of the
financial, managerial, and technical capabilities of the respondent to operate
and maintain the system in compliance with all applicable State and federal
laws and regulations, as well as a description of all the respondent's outstanding
and pending violations of the "Pollution Prevention Act," P.L.1991,
c.235 (C.13:1D-35 et seq.); P.L.1942, c.308 (C.58:11-9.1 et seq.); "The
Realty Improvement Sewerage and Facilities Act (1954)," P.L.1954, c.199
(C.58:11-23 et seq.); and the "Safe Drinking Water Act," P.L.1977,
c.224 (C.58:12A-1 et seq.);
���� (3)� an analysis of the
relevant expenditures associated with such activities and the projected impact
on customer rates;
���� (4)� an analysis of any
Internal Revenue Code or other tax code issues that may arise from the
long-term lease or sale of a publicly funded water or wastewater asset, as well
as any potential short-term or long-term costs arising there from;
���� (5)� a long-term capital
improvement or asset management plan; and
���� (6)� any other pertinent
information required of or deemed appropriate by the owner.
���� c.��� Upon a review of the
proposals submitted by qualified respondents, the governing body of an owner
shall, by resolution adopted by at least two-thirds of its authorized
membership, designate one qualified respondent, whose proposal the governing
body finds to be the most advantageous to the public, taking into consideration
the evaluation criteria set forth in the request for proposals and as specified
under subsection b. of this section. �The resolution shall include a detailed
summary of the governing body's findings that the proposal of the designated
respondent is most advantageous to the public. �The summary shall be published
in accordance with the notification requirements of section 5 of P.L.2015, c.18
(C.58:30-5).
���� d.��� (1)� The Citizens
Fund shall not be subject to the requirements concerning qualifications and
proposals in subsections a. or b. of this section.
���� (2)� When one of the
proposals submitted by qualified respondents is from the fund, the governing
body, in deciding which proposal is most advantageous to the public under
subsection c. of this section, shall consider the economic benefit accorded to
the municipality and public, as determined through an all-inclusive review, and
the value of the asset conveyance against any applicable pension liabilities.
(cf: P.L.2015, c.18, s.6)
���� 11.� Section 7
of P.L.2015, c.18 (C.58:30-7) is amended to read as follows:
���� 7.��� a. �After the designated
respondent is selected, negotiations for a contract for the lease or sale of
the water or wastewater assets may commence between the owner and the
designated respondent.
���� b.��� (1) �Every proposed
contract shall include a clause stating that to the extent it does not violate
any existing collective bargaining agreements between the capable private or
public entity and its employees, the capable private or public entity shall
give first consideration in hiring to any public employees displaced by the
long-term lease or sale of the water or wastewater assets.
���� (2)� After an agreement on a
proposed contract is reached between the owner and the designated respondent,
the governing body of the owner shall, by resolution adopted by at least
two-thirds of its authorized membership, cause the proposed contract to be submitted
to the board for approval and cause the proposed use of proceeds of the
long-term lease or sale to be submitted to the director for approval.
���� c.��� (1) The proposed
contract submitted to the board shall include the rent or sale price, any
appraisals supporting the rent or sale price, documentation regarding the
defeasance of debt, and any other information requested by the board. �The
board shall approve or reject the proposed contract within 90 days of receipt
thereof. �If no disposition is made within 90 days, the proposed contract shall
be deemed approved.
���� (2)� For the purposes of rate
making and recovery, the board shall accept the negotiated sale price between
the owner and the designated respondent as the new rate base effective as of
the date of the approval of the long-term lease or sale, as may be the case,
provided the price is deemed reasonable.
���� The rent or sale price shall
be deemed reasonable if it meets the following conditions:
���� (a)�� The rent or sale price
is sufficient to defease the debt of the owner; and either
���� (b)(i) �The rent or sale price
is within the range of any appraisals obtained with respect to the long-term
lease or sale of the water or wastewater assets; or
���� (ii)� If there is little or no
established rate base for the water or wastewater assets, the rent or sale
price is reasonably comparable to a proxy rate base equivalent to the rate base
of the designated respondent.
���� (3)� In valuing the water or
wastewater assets, appraisers shall comply with the Uniform Standards of
Professional Appraisal Practice promulgated by the Appraisal Standards Board of
the Appraisal Foundation.
���� (4)� In valuing the water or
wastewater assets and for the purposes of rate making, the original source of
funding for any part of the water or wastewater assets shall not be relevant.
���� (5)� Reasonable and prudent
transaction, closing, and transition costs incurred by the designated
respondent shall be recoverable in rates.
���� (6)� The proposed use of
proceeds submitted to the director shall include the rent or sale price, the
total amount required to defease debt, any costs associated with compliance
with the Internal Revenue Code or other tax code that may arise from the
long-term lease or sale of a publicly funded water or wastewater asset, the
remaining proceeds after the defeasance of debt and Internal Revenue Service
compliance costs, the amount dedicated to the following, in order of priority:
compliance with the provisions of the "Pollution Prevention Act,"
P.L.1991, c.235 (C.13:1D-35 et seq.); P.L.1942, c.308 (C.58:11-9.1 et seq.);
"The Realty Improvement Sewerage and Facilities Act (1954),"
P.L.1954, c.199 (C.58:11-23 et seq.); and the "Safe Drinking Water
Act," P.L.1977, c.224 (C.58:12A-1 et seq.), any outstanding fees or fines
owed by the entity to any federal, State, county or local governmental units,
capital improvements, community improvements, and general purposes of the
owner. �The amount dedicated to capital improvements shall comply with a
previously adopted long-term capital improvement plan or asset management plan,
and must represent at least 50 percent of the remaining proceeds once the debt
is defeased. �The director shall approve or reject the proposed use of proceeds
within 30 days of receipt thereof. �If no disposition is made within 30 days,
the proposed use of proceeds shall be deemed approved.
���� d.��� The Citizens Fund
shall not be subject to the requirements in this section for sale or lease of
an asset.
(cf: P.L.2015, c.18, s.7)
���� 12.� This act shall take
effect immediately.
STATEMENT
���� This bill, known as "Citizens
Fund Act," establishes a trust fund for the conveyance of certain assets
for the benefit of the public benefit plans.
���� Citizens Fund (fund), is
established as an instrumentality of the State to exercise public and essential
governmental functions.
���� The purpose of the fund is to
lessen the burdens of government by providing a fund through which a public
entity may contribute, transfer, or sell its revenue-producing assets to a
segregated or commingled account and share the risks and benefits of the performance
of those assets, to maximize the performance and long-term value of those
assets, and to benefit the public entity.
���� The fund shall retain,
appoint, or procure a fund manager to provide overall management of the
Citizens Fund and may engage an administrator and other professionals in
overseeing the activities of the fund.� The assets of the fund will be
maintained as a separate account segregated from all other funds of the State
and the non-State public employers participating in public benefit plans.� The
fund will be legally independent and separate, regardless of its treatment for
tax, accounting, reporting, securities law, or other purposes.
���� The bill provides that no
person is to use or authorize the use of the assets in the fund, or the
investment earnings, for any purpose other than for the maximization of the
value of the assets in the fund, including meeting or exceeding the level of
service required to operate the asset pursuant to State and federal law and
regulations for the safety of the public and the environment, for the benefit
of members and retirees in the public benefit plans, and for the reasonable
costs of administering the fund.
���� The bill provides that
Citizens Fund is to have a fund board, the be appointed by the Governor,
comprised of five members as follows: a member of the New Jersey Infrastructure
Bank; a member of the Division of Investment or their designee, who shall serve
ex officio; the chairperson of the fund advisory board; and the largest holder
of certificates of trust in the fund that is not represented by, or associated
with, a State-administered retirement system.� Members are to remain active
until their successor is qualified.� The member of the New Jersey
Infrastructure Bank is to serve as chairperson and the director of the Division
of Investment is to serve as treasurer and as vice chairperson of the fund
board.� The position of secretary is to be elected from among the members of
the fund board that are not State office holders.� The term for secretary is to
be three years.
���� The board will be constituted
as an instrumentality of the State exercising public and essential governmental
functions, and the exercise by the board of the powers conferred by this bill
will be deemed and held to be an essential governmental function of the State.
���� The bill provides that the
members of the Citizens Fund board are to serve without compensation, but the
fund will reimburse the members for actual and necessary expenses incurred in
the performance of their duties
���� The bill establishes a fund
advisory board to the fund board.� The fund is to form an enterprise advisory
board for each asset or group of assets conveyed to the fund by a public entity
and an enterprise advisory board is to be comprised of each municipality or
county that is an associated public entity.� Enterprise advisory board
membership is to be based on a pro-rata share of the average annual volume
sales of the asset over the past five years and adjusted at least every 10
years that is to be in accordance with the provisions in the transfer
agreement.� The enterprise advisory board members are to serve for two years.�
Members of the enterprise advisory board are to be appointed by the secretary
of the fund board upon the recommendation from the executive of the associated
public entity. The members of the enterprise advisory board or boards are to
elect a chairperson and vice-chairperson who will serve on the fund advisory
board.� All public information that is distributed to fund board members relative
to the fund board meetings is to also be provided simultaneously to the
enterprise advisory board members.� The purpose of the enterprise advisory
board is to provide the fund board with advice and information relevant to the
local systems of the conveyed asset.� Neither the fund advisory board nor the
enterprise advisory board is to have any voting or veto authority over the fund
board.� The enterprise advisory board members are to receive no compensation.
���� The bill provides that a
public entity may convey to the fund an asset held by the public entity.� The
conveyance is to be governed by a transfer agreement, which is to be proposed
by the fund board and approved by the public entity.� Only that portion of the
conveyed asset that is net of financing costs and amounts deposited into the
investment account or other distributions made to, or on behalf of the public
entity will be evidenced by certificates of trust and credited to the holding
account of the Common Pension Fund as provided by this bill.� Asset
contributions on behalf of the public entity and the fund�s asset distributions
are to be deposited in the investment account of the Common Pension Fund.
���� The public benefit plans are
not to be required or permitted to pay any expenses incurred in connection with
the conveyance of an asset pursuant to the bill.
���� The bill provides that an
asset proposed for conveyance to the fund is to be valued by an independent
valuation agent, as defined in the bill, and is to be revalued periodically.�
The valuation agent is to issue a report representing its opinion as to the
valuation of the asset in accordance with an asset conveyance.� An asset
conveyance is not to be effectuated until after the report has been issued and
both the fund manager, upon approval from the board, and the public entity or
non-public entity accept the proposed value.� If either rejects the proposed
value, the conveyance is not to be effectuated, and any written agreement for
the conveyance of an asset will be void.
���� The bill amends the "Water
Infrastructure Protection Act" to allow a municipality with a water or
wastewater asset under emergent conditions to include conveyance of the asset
to the fund as an option under that law.