By Avi D. Kelin, Esq.
With the presidential election now less than a year away, 2020 promises to be a year in which politics is difficult to escape. But before businesses and individuals rush to engage in political activity and make political contributions at the county and municipal levels, it is important to review New Jersey’s pay-to-play laws. Because what the real-estate world doesn’t know about political contributions may come back to hurt it.
Pay-to-play laws are those statutes and ordinances that impose reduced contribution limits and heightened disclosure obligations on government contractors and redevelopers. While contributions to federal candidates (President and Congress) will generally not jeopardize eligibility for New Jersey government contracts and redevelopment agreements, the Garden State is known as the Pay-to-Play Law State because New Jersey is home to a series of overlapping pay-to-play laws.
For example, under New Jersey statute, a contribution of more than $300 per election to a candidate for governor or more than $300 per calendar year to a political party committee or legislative leadership committee will jeopardize eligibility for New Jersey Executive Branch contracts for a period of between 18 months and 5.5 years. This includes contracts to buy, sell, or lease property with the State of New Jersey Executive Branch (including such departments and agencies as the Department of Transportation, the Department of Corrections, and Fort Monmouth State universities). The same restrictions apply to professional-service companies that provide engineering, accounting, insurance, and legal services to the New Jersey Executive Branch. These restrictions apply not only to business entities that make political contributions with corporate funds, but to the principals, partners, members, and officers of such business entities.
In addition, pay-to-play laws apply to New Jersey redevelopment agreements. State redevelopment agreements with the NJSEA, New Jersey Redevelopment Authority, and the Capital City Redevelopment Authority are subject to reduced limits that apply not only to contributions made to gubernatorial candidates and political party committees but also to those legislative and local candidates whose jurisdiction includes the property subject to the redevelopment agreement. Moreover, many municipalities (notably Newark, Jersey City, and Hoboken) have adopted their own stringent redevelopment pay-to-play ordinances that can prohibit contributions, in any amount, to municipal candidates and related political recipients for a business entity that seeks to enter an agreement for the planning, re-planning, construction, or undertaking of any redevelopment project. The time periods under these municipal ordinances can range from three months before the date of the redevelopment agreement (Jersey City) to as long as the date that the redevelopment property was included in a memorializing resolution directing the Planning Board to conduct a preliminary investigation (Hoboken). These local restrictions also generally apply to the professionals, consultants, and lobbyists that provide services in connection with the redevelopment agreement; thus if a professional makes a contribution to a covered recipient in excess of the limits set forth in the redeveloper pay-to-play ordinance – potentially as far back as when the redevelopment project was approved – that professional will soon find itself ineligible to serve as the professional on the project.
As the 2020 election heats up, there will be pressure to engage in political activity and make political contributions. But it is important to keep in mind that making a political contribution without knowing the full implications can cost your business contracting and redevelopment opportunities.
Avi D. Kelin, Esq. is an attorney in the Newark office of Genova Burns LLC and a member of the Corporate Political Activity and Commercial Real Estate and Redevelopment Practice Groups. He focuses on the interaction between government and business, advising businesses and individuals on campaign-finance law, pay-to-play restrictions, government-ethics rules, and the government-procurement process.