Gov. Corzine Signs 'Anti-EnCap' Bill Into Law

NORTH ARLINGTON, NJ-On Monday here, Gov. Jon Corzine signed the so-called “Anti-EnCap” bill, which establishes oversight on certain public-private projects, into law. After a string of victories in the legislature, the move was a rare defeat for the commercial real estate industry and economic development community that maintains the bill was an overreaction to the controversial EnCap project in the Meadowlands.

Passed in June, the bill sets parameters for contracts between private firms and public entities. It requires that a business receiving $50 million or more in public assistance for a project post a performance bond equal to at least 110% of the publicly funded improvements associated with the venture; and annually file audited financial statements for the project, as well as the business entity itself. Further, the public agency would retain up to 10% of the amount of the funding it doles out until the project is finished and has the right to review the project’s subcontractors. Also included in the legislation is a mandate that for every $5 that comes from a public entity, at least $1 of the total project cost must come from other sources.

The bill was a response to the now-defunct EnCap scheme in the Meadowlands. Originally envisioned as a massive mixed-use project on 800 acres of closed landfills that included everything from golf courses and retail to residences and office space, the developer–an affiliate of Raleigh, NC-based Cherokee Investment Partners–halted the venture after a series of cost overruns and delays, eventually filing for bankruptcy in May. What made the collapse more troubling was the fact that the state and Bergen County had parceled out nearly $50 million to the developer.