A state appellate court threw a wrench into two multi-million-dollar county redevelopment projects Thursday, in a ruling that found one of those projects had improperly skirted New Jersey public bidding requirements.
The decision is expected to bring a sudden halt to a major $80 million renovation of the historic Bergen County Justice Center, but is also likely to stop Union County’s $145 million plans to build a new $145 million county government complex in Elizabeth.
Bergen County officials said they were utilizing a process that had been upheld by two trial courts.
“The county is involved in redevelopment projects that are being constructed pursuant to the Local Redevelopment and Housing Law, a law that enables public entities to construct important and inherently beneficial redevelopment projects in an expedited fashion,” said a county spokesman. “The county continues to believe that such important redevelopment projects should be permitted to use this process which ensures the best quality work, results in the least costs and provides the greatest benefits to taxpayers.”
In Union County, attorney David L. Minchello, who represents the county improvement authority, said they have reviewed the Bergen County decision and “see no indication that our ruling will be the same.”
Minchello said the Bergen County selection process for a redeveloper was different in many respects from the one utilized by the Union County Improvement Authority.
“We look forward to highlighting those differences in court and we are confident that our process was fair and transparent to all applicants,” he said. “Dobco has attempted on two prior occasions to halt this project in Union County Superior Court and has been unsuccessful each time. We will continue to defend our selection process and are committed to moving forward in the construction of a new government complex for Union County.”
The appellate ruling came after a Dobco Group, a Wayne-based construction and development company that was seeking contracts for the work in the two counties, filed a lawsuit charging that Bergen and Union circumvented state public contracts law by using public improvement authorities to get around New Jersey’s Local Public Contracts Law.
That was illegal, the company maintained.
The Appellate Division, in its ruling, said a county improvement authority “cannot avoid the requirements of public bidding for goods or services covered by the Local Public Contracts Law simply by cloaking itself in the rubric of a redevelopment entity.”
While the decision was specific to the project in Bergen County, it affects the project in Union County as well.
Attorney Greg Trif of Morristown, who represents Dobco, said he expects to file an application with a trial court judge in Union to enter an order permanently restraining the Union County Improvement Authority from proceeding with its project, as was ordered by the Appellate Division in Bergen.
“We’re pleased with the decision and that future public projects will be let with the protections afforded under the local public contracts law,” Trif said.
Curiously, part of the lawsuit by Dobco was dismissed because it had voluntarily participated in the procurement process without challenge until it was eliminated from consideration. But its litigation was joined by a number of individuals, including a Dobco official, and the court said it was well-settled that “taxpayers have the right to challenge whether public bidding is required in a particular instance.”
The project in Bergen involves a multi-year renovation and rehabilitation of the county’s court complex. That work started prior to the county’s current administration taking office.
In Union County, Moody’s Investors Service last month issued its highest Aaa rating for bonds that will be used to finance the planning, design, construction and equipping of a new county administration complex.
Dobco in its court filings had argued that both counties had evaded state public contracts law by weaving “a tangled weblike transaction that involved reshuffling ownership of public land and monies.” In both cases, a county improvement authority was used as the vehicle to redevelop the properties.
Dobco said the counties ignored the public bidding requirements of New Jersey’s Local Public Contracts Law by going through the state’s Local Redevelopment and Housing Law to solicit requests for the design and construction of the projects. The company argued in its filings that state law requires every contract awarded by the counties, and their improvement authorities, with few exceptions, to be awarded “to the lowest responsible bidder after public advertising.”
The appellate court said it did not disagree with the assertion by Bergen officials that redevelopment entities are permitted to choose a redeveloper without public bidding.
But it said state statutes did not exempt county improvement authorities from complying with the state’s public contracts law simply because it is a redevelopment.
“Nothing in our case law suggests that by giving county improvement authorities the power to contract with redevelopers, the Legislature intended to allow a public agency to use public funds to pay a general contractor without complying with the Local Public Contracts Law simply by denominating the contractor as a ‘redeveloper,’” the court wrote.
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Ted Sherman may be reached at tsherman@njadvancemedia.com. Follow him on Twitter @TedShermanSL.