Municipal Clerk: Please distribute to Mayor and Governing Body members. Also, a more comprehensive summary of recent legislative developments will be sent out later today via e-mail. A handful of municipal clerk e-mail addresses have been removed from our list because the e-mails were not being successfully delivered. If you have not received recent e-mail correspondence, please contact Mike Cerra at 609-695-3481 x20 or email at mcerra@njslom.com to be added to our clerks’ e-mail distribution list. If you prefer, we can fax you a copy of this afternoon’s e-mail.
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Dear Mayor:

On Thursday, January 5, 2006, Acting Governor Codey signed into law two measures of significant importance to municipalities.

I. Pay-to-Play

A-3013 (S-1987) allows municipalities, counties and school boards to enact stronger pay-to-play bans and protects the pay-to-play ordinances that have been adopted by several municipalities. The League strongly supported this legislation which was needed to protect the pay-to-play ordinances enacted in over 60 municipalities from being pre-empted by statewide legislation that took effect on January 1st.

Any municipal pay-to-play ordinance will be required to be filed with the New Jersey Secretary of State. That requirement is intended to provide a central location where businesses or citizens can determine whether there is a municipal pay-to-play ordinance and the requirements for compliance with the local pay-to-play standards.

The legislation, which takes effect immediately, also includes important new disclosure requirements on all local government contracts with a potential value of $17,500 or more.

There is some confusion about the impact of the legislation on contracts being awarded as municipalities reorganize. The statute requires that “Not later than 10 days prior to entering into an contract having an anticipated value in excess of $17,500, except for a contract that is required by law to be publicly advertised for bids … any business entity bidding thereon or negotiating therefore [shall] submit along with its bid or price quote, a list of political contributions … that are required to be reported by the recipient … and that were made by the business entity during the preceding 12 month period, along with the date and amount of each contribution and the name of the recipient of each contribution …”

That applies to all contributions over $300, the level at which contributions must be reported by recipients on their ELEC reports.

There is no exemption from the reporting requirement simply because a large business entity does not have anyone with more than a 10% interest in the entity. The legislation requires that all contributions by principals, partners, officers or directors of the business entity or their spouses must be reported:

When a business entity is other than a natural person, a contribution by: all principals, partners, officers, or directors of the business entity or their spouses; any subsidiaries directly or indirectly controlled by the business entity; or any political organization organized under section 527 of the Internal Revenue Code that is directly or indirectly controlled by the business entity, other than a candidate committee, election fund, or political party committee, shall be deemed to be a contribution by the business entity.

Municipal officials should consult with their municipal attorney to determine the impact of the legislation and the reporting requirements on contracts being awarded by the municipality. Additionally, municipalities that are awarding contracts at their reorganization meetings, where the disclosure requirement was not known sufficiently in advance of the meeting for literal compliance with the “10 days” requirement, may wish to have the business entity file a disclosure certification as soon as possible to demonstrate substantial compliance with the new law.

It is our understanding that the Department of Community Affairs will be issuing a Local Finance Notice within the next few days with some guidance on the new legislation.

II. Penalties for Municipal Ordinance Violations

A-3732 was signed into law by the Governor and takes effect immediately. The legislation, now identified as PL 2006, c 269, increases the authorized maximum penalty for an ordinance violation to $2,000. The bill changed the statutory provisions setting the maximum, so that it is applicable in all municipalities. In order to implement the higher limit, the municipality needs to enact an ordinance setting the new maximum. The statute also provides that where a fine in excess of $1250 is sought to be imposed for a housing violation or for a zoning violation, the owner shall be provided a 30-day period in which the owner has an opportunity to cure or abate the condition and the owner shall have an opportunity for a hearing before the court. After the 30-day period the higher fine may be imposed if a court has not determined that the abatement has been substantially completed. Again, municipalities should consult with their municipal attorney regarding the implementation of this new legislation.

As mentioned above, the League will be e-mailing out a more comprehensive summary of legislative developments as the “lame duck” session draws to a close. If you do not get a copy of this e-mail, please e-mail Mike Cerra at the above address for a copy.

Thank you.