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May 26, 2011

Re:  Two Issues
I.  A-3285, Cost Estimates in Bid Advertisements
II. S-2762 - Commercial and Industrial Property Tax Refunds Passes
     the Senate

Dear Mayor:

I.   A-3285, Cost Estimates in Bid Advertisements (sample resolustion)

Monday the Assembly Transportation, Public Works and Independent Authorities Committee released A-3285 over strong objects from the League, New Jersey Association of Counties, Association of State Colleges and Universities and New Jersey School Boards Association.  A-3285 would require that certain public contract bid advertisements include certified cost estimates or estimate ranges of projected contract cost and amends the grounds for rejection of bids.

Advocates for this legislation argue that the best interests of taxpayers are served by this legislation, because it promotes, they claim, openness and broad dissemination of information.  We agree that taxpayers are best served by openness and broad dissemination of information.  A-3285, however, would, in fact, limit a competitive process that is the foundation of the Local Public Contracts Law and would not best serve the public interest.

In addition, to requiring that a contracting unit include in the public advertisement their cost estimates or cost estimate ranges for construction projects in excess of $500,000, the bill amends the six reasons to reject all bids.  A-3285 amends the provision to reject all bids in which the lowest bid substantially exceeds the municipality’s cost estimates for the goods or service to require that the cost estimates or estimate ranges be published and attested.  As a result, all contracts, including goods and services, over the contracting unit’s bid threshold will now require the public advertisement for bid to include cost estimates or cost estimates ranges. 

Municipal engineers and other design professionals will typically prepare the projects cost estimates based on the current industry cost and bids received for similar projects in different municipalities.  Their estimates tend to be in the middle of the current industry cost.  Requiring the advertisement of the cost will lead to unfair pricing and increased cost for taxpayers. 

A-3285 also has the potential to expose municipalities to protracted disputes and litigation.  What happens if a municipality receives a bid below the engineer’s estimates?  Can they award the bid or must they reject the bid?  What impact do the provisions of A-3285 have on change orders?  Can a municipality issue a change order, even if the cost of the change order would exceed the engineer’s published estimates?

A-3285 removes the incentives for competitiveness and will lead to increased cost for public contracts.   We urge you to adopt a sample resolution opposing A-3285 (Word or PDF).

If you have any questions or need more information on A-3285 please contact Lori Buckelew at 609-695-3481 ext. 112 or lbuckelew@njslom.com

II. S-2762 - Commercial and Industrial Property Tax Refunds Passes the Senate (sample resolution)

On Monday, S-2762, which would permit a municipality to pay commercial and industrial property tax refunds for tax years 2010 and 2011 over subsequent three local budget years, passed the State Senate 25-12.  (For more information see our May 19th Dear Mayor Letter).

We support the need for the legislation to address property tax refunds for commercial and industrial properties.  We believe that by limiting to commercial and industrial properties it will be a substantial improvement to the situation for many communities. However, there is strong opposition to the bill and we need your help.

In addition to contacting your State Assembly representatives and urging them to support S-2762, we urge you to adopt a sample resolution (Word or PDF) Urging the Swift Passage of S-2762/A-4084.

If you have any questions or need additional information on S-2762/A-4084 please contact Lori Buckelew at lbuckelew@njslom.com or 609-695-3481 ext. 122.

Very truly yours,

William G. Dressel, Jr.
Executive Director

 

 

 

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