S2663

An Act concerning investments of State-administered pension and annuity funds in real estate and infrastructure projects and supplementing P.L.1950, c.270 (C.52:18A-79 et seq.).

Be It Enacted by the Senate and General Assembly of the State of New Jersey:

1. a. As used in this section:

“Covered infrastructure asset” means a capital facility or structure, including systems and equipment related to the facility or structure, in which the Division of Investment has an equity interest greater than 50 percent.

“Covered real estate asset” means real property, including an interest in real property, and any share of stock or beneficial interest, partnership interest, depository receipt, or any other interest in a real estate entity in which the Division of Investment has an equity interest greater than 50 percent.

b. On the effective date of P.L. , c. (pending before the Legislature as this bill), the Director of the Division of Investment, in consultation with the State Investment Council, shall promulgate rules and regulations pursuant to the “Administrative Procedure Act,” P.L.1968, c.410 (C.52:14B-1 et seq.), which shall govern the manner in which the division invests or reinvests pension or annuity funds in a covered real estate asset or covered infrastructure asset. The rules and regulations shall set forth requirements for the engagement of contractors and subcontractors performing any construction, delivery to a job site of major construction materials, maintenance, repair, or restoration involving a covered real estate asset or covered infrastructure asset.

c. The rules and regulations promulgated by the director shall include, at minimum, the following elements:

(1) A requirement that contractors and subcontractors provide workers fair wages and fair benefits, as evidenced by payroll and employee records. "Fair wages” and "fair benefits" shall be based on relevant market factors that include the nature and location of the project, comparable job or trade classifications, and the scope and complexity of services provided.

(2) The exclusion from bidding of contractors and subcontractors that have been debarred in the past 36 months by a governmental authority for failure to pay prevailing wages or benefits on any prior job for which it is required by law.

(3) A position of neutrality, by the division and its contractors, in the event there is a legitimate attempt by a labor organization to organize workers employed in the construction, maintenance, operation, or services involving a project, property, or asset in which the division has an ownership interest.

(4) A requirement to reject any investment that has the potential of eliminating public sector jobs, would pose a reputational risk to the State-administered retirement systems, or bring public or regulatory scrutiny to the retirement systems.

d. Following the effective date of P.L. , c. (pending before the Legislature as this bill) and notwithstanding the provisions of section 11 of P.L.1950, c.270 (C.52:18A-89) or any other law, rule, or regulation to the contrary, the division shall not invest any asset of a pension or annuity fund under the jurisdiction of the division in a covered real estate asset or covered infrastructure asset unless the investment complies with the provisions of this section and any rule or regulation adopted pursuant to this section. Each contractually enforceable instrument for additional or new investments, or renewal of existing investment in a covered real estate asset or covered infrastructure asset after the effective date of P.L. , c. (pending before the Legislature as this bill) shall comply with the provisions of this section and any rule or regulation adopted pursuant to this section.

2. This act shall take effect on January 1 next following the date of enactment except the director may take any anticipatory administrative action in advance as shall be necessary for the implementation of this act.

STATEMENT

This bill requires the Director of the Division of Investment, in consultation with the State Investment Council to promulgate rules and regulations concerning investments of State pension and annuity funds in certain real estate assets and infrastructure assets. The bill requires the director to adopt rules and regulations governing the selection of contractors and subcontractors performing any construction, delivery to a job site of major construction materials, maintenance, repair, or restoration involving a real estate asset or infrastructure asset in which the division has an equity interest greater than 50 percent (“covered asset”).

The rules and regulations adopted by the director must include, at minimum, the following elements:

1) A requirement that contractors and subcontractors provide workers fair wages and fair benefits, as evidenced by payroll and employee records. "Fair wages” and "fair benefits" are determined based upon on relevant market factors that include the nature and location of the project, comparable job or trade classifications, and the scope and complexity of services provided.

2) The exclusion from bidding of contractors and subcontractors that have been debarred in the past 36 months by a governmental authority for failure to pay prevailing wages or benefits on any prior job for which it is required by law.

3) A position of neutrality, by the division and its contractors, in the event there is a legitimate attempt by a labor organization to organize workers employed in the construction, maintenance, operation, or services involving a property or asset in which the division has an ownership interest.

4) A requirement to reject any investment that has the potential of eliminating public sector jobs, would pose a reputational risk to the retirement systems, or bring public or regulatory scrutiny to the retirement systems.

The rules and regulations would be applicable to any covered real estate or infrastructure asset following the effective date of the bill. The policy adopted pursuant to this bill is prospective and the bill does not require the divestment of any pension funds. If enacted, the bill will take effect on January 1 next following the date of enactment and the division will have until that date to adopt the rules and regulations required under the bill.