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BY TOM HESTER SR.
NEWJERSEYNEWSROOM.COM
Gov. Jon Corzine Monday signed the so-called "EnCap Reform bill,'' which requires businesses receiving any combination of government financial assistance totaling more than $50 million to file independently audited financial statements annually with the state treasurer.
"Today, we are putting in place aggressive reforms that will ensure a similar situation is not repeated in the Garden State," Corzine said in North Arlington. "Had these safeguards been in effect prior to EnCap, the project would have been shut down at the first sign of trouble. As stewards of public resources, we must remain vigilant in our efforts to maintain public trust through accountability and transparency. This bill accomplishes that goal."
For any contract that falls under the new standard, the private business must spend a minimum of $1 for every $5 received in public funds; the government agency must reserve 10 percent of the total government funding to be disbursed upon the successful completion of the project, and the business provide a performance bond, the amount of which would be tied to the government funding.
One group that is not praising the new standard is the Sierra Club of New Jersey, which charges 90 percent of the original reform legislation was gutted by the Senate amid the last June rush to summer recess.
Jeff Tittel, Sierra Club director, said Corzine signed the bill without any strong reform.
"With all of the indictments and corruption over development that has taken place in New Jersey, the failure to have any kind of meaningful reform is outrageous,'' Tittle said. "In fact, in some areas, this bill loosens oversight over existing regulations.
"This bill was originally intended to strengthen oversight when public money is involved. Instead, it has been so weakened that it is a sham. All this bill will do is give cover to pay to play and other abuses of public money without providing any real oversight.
"Under this bill, we haven't stopped another EnCap,'' Tittle said. " We've empowered many more EnCaps. We had asked Governor Corzine to conditionally veto the bill and send it back to original form that Assemblyman Gary Schaer put forward. Instead, he took the side of special interests over public interests."
Schaer (D-Passaic) praised the version of the bill Corzine signed.
"Quite simply, the public cannot afford to finance another EnCap-style debacle," he said. "Putting these protections in place will help ensure that the mistakes made with EnCap cannot and will not be repeated. EnCap's failure highlighted the need for more oversight in the way the state provides public money for private redevelopment. The breakdown of checks and balances that precipitated EnCap's collapse must not happen again."
AIG is now honoring its obligation to fund the cleanup of the Meadowlands site. That cleanup is currently underway.
As a result of the EnCap financial disaster, the state lost approximately $200 million, $50 million of which has not been recouped. While $150 million of the losses was covered from insurance by AIG, that company was recently bailed out by the federal government. EnCap borrowed from state government entities, such as the New Jersey Infrastructure Trust, that did not have adequate insurance or bonds to back up the lands.
