Digging Deep: Pay-to-Play applies to investments, redevelopment, school districts and independent authorities

08.21.2007

By: Jisha V. Dymond

Pay-to-play regulation is commonly described as the practice of business entities “paying” to “play,” that is political contributions in exchange for government contracts. Turns out, however, that pay-to-play regulation applies in other sectors such as investments, redevelopment, school districts and independent authorities. For example, the New Jersey State Investment Council regulates investment management firms seeking to provide investment management services to the State of New Jersey. Firms are required to disclose – prior to selection – all political contributions and payments to political parties made or paid by the firm, any investment management professional or third-party solicitor associated with the firm, or related political action committees. The regulations set forth contribution limits to officials that if exceeded, will likely bar the award of investment contract. Many localities have also adopted ordinances that specifically apply to redevelopment contracts. Similar to regular pay-to-play regulations, these laws restrict contributions and many times bar the award of redevelopment contracts. Examples of localities with such ordinances include Edison Township, Highstown, and Maplewood. Additionally, the New Jersey State Department of Education has adopted pay-to-play regulations applicable to Abbott School Districts. The regulations prohibit a Board of Education in an Abbott School District from voting upon or awarding any contract (whether fair and open or non-fair and open) in the amount of $17,500 or greater to any business entity which has made a reportable contribution to a member of the Board of Education during the preceding 1-year period. The prohibition also extends during the term of any such contract. And how about a pay-to-play law that applies to just one entity? In addition to Chapter 51 (the state law), a separate pay-to-play law applies only to contracts issued by the Fort Monmouth Economic Revitalization Planning Authority. This law prohibits the Authority from awarding a contract to a business entity that has made a reportable contribution since September 1, 2004 to a candidate committee of a member of the Authority or to any State, county or municipal committee of the political party to which any member of the Authority belongs to when the contract is awarded. Digging deep indeed.

Tag: New Jersey