An aerial view of a campus town center that opened this summer at The College of New Jersey was advanced through New Jersey’s Higher Education Institutions Public-Private Partnership Program just prior to the law expiring.

A campus town center at The College of New Jersey is the newest project to materialize from a public-private partnership program that faces an uncertain future after a five-year run.

The public college opened the first phase last month of a mixed-use development that includes housing for 612 students, a bookstore, a fitness facility, retail stores, health facilities and restaurants. The initiative was coordinated through the Higher Education Institutions Public-Private Partnership Program overseen by the New Jersey Economic Development Authority and was entirely funded at no cost to TCNJ or taxpayers by The PRC Group, which invested $120 million into the project.

"It was a critical element of making the project happen," said Curt Heuring, TCNJ's vice president for facilities management on the importance of the P3 program. "We were struggling with a way to do it."

TCNJ got necessary approvals for the development just before authorization for the P3 program expired in August.

Plans to extend the program and expand it to local governments and transportation projects are stalled after Gov. Chris Christie sent the bill to do so back to the state legislature, requesting changes.

The P3 legislation had permitted state or county colleges to enter into a private-public partnership allowing a private entity to assume full financial and administrative responsibility for on-campus construction projects as long as the school retains ownership of the land. The arrangement took flight thanks to legislation Christie signed into law in March 2010 to ease restrictions on P3s between higher education institutions and private entities.

Christie's conditional veto Aug. 11 supports P3s, but recommended that provisions imposing prevailing wage requirements and mandating project labor agreements, which were part of the 2010 P3 legislation, be removed from the bill.

Richard McGrath, a spokesman for State Senate President Steve Sweeney, D-Gloucester, said any school that has an application in the pipeline will still receive funding and that the NJEDA is expected to work with those who submitted incomplete applications so that they can also be completed. He added that Sweeney and State Sen. Jim Whelan, D-Northfield, who co-sponsored the P3 legislation, disagree with Christie's conditional veto and remain committed to seeing the program succeed.

"They want to build upon the current success of this program," said McGrath. "These partnerships advance important projects and help to maximize the impact of public and private resources to create jobs and generate economic growth, which are among our top priorities in New Jersey."

Heuring said TCNJ was fortunate to take advantage of the P3 program during its short time in place and he hopes lawmakers can soon come to an agreement to bring it back. The school just outside of Trenton first began discussions about the campus town initiative in 2009 prior to the law taking effect and when state was feeling effects from the recession of 2008.

Heuring emphasized that without the ability to partner with a private developer and lease out state land for development, the campus town project would likely not have advanced. He added that a part of the law that made the project immune from local zoning laws was also helpful for public colleges in expediting developments.

"We were able to tailor the project to what the legislation allowed," said Heuring. "It was a huge help."

The first beneficiary of the P3 law was Montclair State University, which constructed a 2,000-unit housing and dining complex called "The Heights" after it took effect. The facility opened in August 2011 and boosted the college's housing capacity to 5,500.

"Public higher education institutions, particularly in New Jersey, are facing increasing demand for high-quality, affordable education in an extremely challenging environment, where state funding continues to erode and where the campuses have historically been significantly under-built," said Dr. Susan Cole, president of Montclair State. "Since 2000, Montclair State University's enrollment has grown from about 12,000 to over 20,000 students and the need for new and renovated facilities has never been greater."

Cole said the university's Heights facility, which cost $211 million, has been at 100% capacity since opening four years ago. A second project undertaken under the P3 program was a $90 million campus-wide combined heating, cooling, power and energy distribution system that came on line in fall 2013 and replaced what she described as aging and obsolete infrastructure.

"Both of these projects met critical needs, and it is not at all clear what the recourse would have been to accomplish them without the possibility of the public-private partnership methodology," Cole said. "For certain types of projects, public-private partnerships can enable the university to meet critical facilities needs at no cost to the state."

Greg Lentine, director of campus development at The PRC Group, said the P3 program allows public colleges to advance dorm and dining projects that otherwise might be challenging due to limitations state schools have on raising tuition. He said colleges are often not equipped to construct non-academic buildings and these facilities can be very important for schools to attract students.

"The P3 program allows whatever borrowing power the college has to be put into education and academic buildings," said Lentine. "It's truly a win-win scenario."

In addition to the TCNJ project, PRC is also partnering with New Jersey City University on a new facility that includes student housing, apartments and retail. He said the TCNJ project was an off-the balance sheet transaction that did not impact the school's bond rating and this setup was essential for it to work. PRC assumed 100% of the risk and TCNJ's debt level was not affected.

"TCNJ was pretty much at their borrowing limit so they basically couldn't do anything else," said Lentine. "We did a true off-the book transaction."

The uncertainty of New Jersey's higher education P3 program comes as the state faces financial struggles due to unfunded liabilities and weak liquidity. The state is rated A by Standard & Poor's and Fitch Ratings and A2 by Moody's Investors Service.

Professor Marc Pfeifer, assistant director of the Rutgers University Bloustein Local Government Research Center, said resurrecting the P3 program would benefit some future projects at New Jersey state colleges, but added that it isn't essential for these schools to thrive.

"The public colleges that were in position to take advantage of the P3 program did so," said Pfeifer. "There will be projects that don't happen, but I don't think any of these projects are life or death."

 

 

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