Sponsored by:

Assemblyman TROY SINGLETON

District 7 (Burlington)

Assemblyman BENJIE E. WIMBERLY

District 35 (Bergen and Passaic)

Assemblywoman BONNIE WATSON COLEMAN

District 15 (Hunterdon and Mercer)

Co-Sponsored by:

Assemblymen Johnson, Burzichelli and Assemblywoman Oliver

SYNOPSIS

Establishes State pension fund preference for certain in-State infrastructure investment.

CURRENT VERSION OF TEXT

Introduced Pending Technical Review by Legislative Counsel

An Act establishing a State pension fund preference for certain in-State infrastructure investment, amending P.L.1950, c.270.

Be It Enacted by the Senate and General Assembly of the State of New Jersey:

1. Section 11 of P.L.1950, c.270 (C.52:18A-89) is amended to read as follows:

11. a. Limitations, conditions and restrictions contained in any law concerning the kind or nature of investment of any of the moneys of any of the funds or accounts referred to herein shall continue in full force and effect; provided, however, that subject to any acceptance required, or limitation or restriction contained herein: the Director of the Division of Investment shall at all times have authority to invest and reinvest any such moneys in investments as defined in subsection c. of this section and, for or on behalf of any such fund or account, to sell or exchange any such investments.

b. In investing and reinvesting any and all money and property committed to the director's investment discretion from any source whatsoever, and in acquiring, retaining, selling, exchanging and managing investments, the Director of the Division of Investment shall exercise the care, skill, prudence and diligence under the circumstances then prevailing that a prudent person acting in a like capacity and familiar with such matters would use in the conduct of an enterprise of a like character and with like aims. In making each investment, the director may, depending on the nature and objectives of the portfolio, consider the whole portfolio, provided that, in making each investment, the director shall act with the reasonable expectation that the return on each investment shall be commensurate with the risk associated with each investment. The director shall be under a duty to manage and invest the portfolio solely in the interests of the beneficiaries of the portfolio and for the exclusive purpose of providing financial benefits to the beneficiaries of the portfolio.

c. For the purposes of this section, "investments" means and includes property of every nature, real, personal and mixed, tangible and intangible, and specifically includes, solely by way of description and not by way of limitation, bonds, debentures and other corporate obligations, direct and indirect investments in equity real estate, mortgages and other direct or indirect interests in real estate or investments secured by real estate, capital stocks, common stocks, preferred stocks, diversified pools of venture capital which otherwise could be made consistent with the standard of care required by subsection b. of this section, common trust funds as defined in and regulated by sections 36 through 46 of P.L.1948, c.67 (C.17:9A-36 through 17:9A-46), repurchase agreements, securities loan transactions secured by cash, securities issued by the United States government or its agencies, or irrevocable bank letters of credit, whether directly or through a bank or similar financial institution acting as agent or trustee, mutual funds, and any other security issued by an investment company or investment trust, whether managed or not by third parties, registered under the "Investment Company Act of 1940," 15 U.S.C. s.80a-1 et seq. No investment that is otherwise permissible under this subsection shall be considered to be unlawful solely because the investment is made indirectly or through a partnership, trust, or other legal entity.

d. (1) Subject to the Director of the Division of Investment's fiduciary duties established by this section and management of funds for qualified federal income tax treatment, pursuant to the federal Internal Revenue Code, including but not limited to sections 401, 402, 414, and 501 of the federal Internal Revenue Code (26 U.S.C. ss.401, 402, 414, and 501), the director is authorized to prioritize the following investments for in-State investment opportunities relative to comparable out-of-State investment opportunities:

infrastructure projects.

(2) As used in this subsection:

"Infrastructure project" means: the debt or equity of an entity making a substantial capital investment in New Jersey facilities wherein the rate of return on the debt or equity instrument is significantly dependent on the New Jersey facilities' activity.

(cf: P.L.1997, c.26, s.26)

2. This act shall take effect immediately.

STATEMENT

This bill authorizes the Director of the Division of Investment to prioritize the investment of State pension fund moneys in a New Jersey infrastructure project over a comparable out-of-state infrastructure project if the in-state investment is consistent with the director's fiduciary duties and the director's management of funds for qualified federal income tax treatment. The bill defines the term "infrastructure project" as the debt or equity of an entity making a substantial capital investment in New Jersey facilities wherein the rate of return on the debt or equity instrument is significantly dependent on the New Jersey facilities' activity. The bill is modeled after a California law, Cal. Gov. Code � 7514.2, designed to support economic recovery efforts by spurring job growth while improving the state's infrastructure.