Focus on Newark, New Jersey Pay-to-Play Compliance

One of the challenges of navigating New Jersey’s political environment is that the rules of the road may differ in each of our 21 counties and 565 municipalities. A few years ago, I was speaking to a Pennsylvania-based political-law attorney and he expressed shock that each of our municipalities have home rule, while in Pennsylvania it is only Philadelphia and a handful of other jurisdictions that can adopt significant local laws and ordinances.

In the political sphere, perhaps the greatest challenge for compliance arises when considering New Jersey’s local pay-to-play ordinances. A state statute, Chapter 19, is the pay-to-play law that governs eligibility for county and municipal government contracts. In the absence of a local pay-to-play ordinance, Chapter 19 is the governing law. However, more than 100 New Jersey counties and municipalities have adopted their own local pay-to-play ordinances, each of which may impose different limitations on political contributions, different disclosure requirements, and a different scope of covered contributors and recipients for business entities that wish to contract with that jurisdiction. In addition, a handful of local governments have also adopted ordinances that govern redevelopment projects within their locality and may contain a separate set of restrictions and requirements.

The City of Newark is a good example of the sometimes-confusing environment for business entities and candidates that wish to comply with pay-to-play restrictions.

Newark previously had an executive order governing pay-to-play for government contractors, as well as local ordinances governing both procurement contracts and redevelopment agreements. The procurement pay-to-play ordinance was revised in 2020. Among other changes in that amendment were that Essex County political party committees and Newark-focused PACs (also known as CPCs) are no longer covered recipients, and language that previously permitted contributions of $300 per calendar to a covered recipient from each contributor was removed; based on the amended ordinance, all contributions to covered recipients, in any amount, are prohibited during the relevant time periods, which generally begins one year before the date of the contract and continues during the term of the contract.

In addition, just last month, Newark rescinded its local pay-to-play ordinance that governed eligibility for City redevelopment agreements. Previously, redevelopers, and the professionals who provided services related to redevelopment agreements, were subject to reduced contribution limits to Newark candidates and recipients. This restriction is no longer in effect.

Where does that leave people hoping to navigate Newark’s pay-to-play restrictions?

• Business entities that wish to provide goods and services to the City of Newark must comply with the procurement pay-to-play ordinance, as amended in 2020.
• Redevelopers and their professionals are no longer subject to reduced contribution limits for redevelopment agreements entered with the City of Newark because the City’s redeveloper pay-to-play ordinance has been rescinded.

As we have seen, however, the applicable restrictions can change over time. Therefore, a key step in maintaining compliance with these pay-to-play restrictions is not only understanding the current restrictions but also staying updated on amendments and changes to the laws and ordinances.

Compliance Tip

While City of Newark redevelopment agreements are no longer subject to reduced pay-to-play contribution limits after the City’s redeveloper ordinance was rescinded, that does not mean that Newark developers are free from pay-to-play considerations. Agreements with the New Jersey Redevelopment Authority are still subject to the pay-to-play restrictions of Executive Order 118 (Corzine), and thus redevelopment projects located in Newark with the New Jersey Redevelopment Authority still require compliance with reduced contribution limits to City of Newark candidates and State legislative candidates representing Newark.

For more information, please contact Partner and Chair of the Firm's Corporate Political Activity Law Practice Group Rebecca Moll Freed via email here, Counsel Avi D. Kelin via email here, or call 973.533.0777.

An earlier version of this post appeared in InsiderNJ.