A3654 —

A3654 2R FISCAL ESTIMATE   LEGISLATIVE FISCAL ESTIMATE [Second Reprint] ASSEMBLY, No.

3654 STATE OF NEW JERSEY 218th LEGISLATURE   DATED:INTRODUCED MARCH 13, 2018     Sponsored by:

JUNEAssemblywoman  19,YVONNE 2018LOPEZ  District  19 SUMMARY(Middlesex)  Assemblyman  Synopsis:DANIEL R.

RequiresBENSON NJTDistrict to14 establish(Mercer officeand ofMiddlesex) realAssemblywoman  estatePATRICIA economicEGAN developmentJONES District 5 (Camden and transit-orientedGloucester) development;  Co-Sponsored by:

Assemblymen Chiaravalloti, Holley and Assemblywoman Vainieri Huttle         SYNOPSIS      Requires NJT to establish office of real estate economic development and transit-oriented development;

Type  ofCURRENT Impact:VERSION OF TEXT      As amended by the General Assembly on June 7, 2018.

Increased  StateAn costAct Agenciesconcerning Affected:the New Jersey Transit Corporation and supplementing 1and amending1 P.L.1979, c.150 1[(C.27:25-1 et al.)]1.

New Jersey Transit Corporation (NJ Transit)   Office     ofBe LegislativeIt ServicesEnacted Estimateby Fiscal Impact Year 1  Year 2  Year 3    State Cost Indeterminate         ·         NJ Transit is likely to incur an indeterminate amount of additional costs for the creationSenate of a new office of real estate economic development and transit-orientedGeneral developmentAssembly (office).  The magnitude of increased costs is unclear because real estate development and transit-oriented development are already functions performed by existing NJ Transit staff, and it is not known at this point to what degree the officeState will result in the rearrangement of existingNew staffJersey: or an increase in overall NJ Transit staff.

·          The     recommendations1.    that1[a.]1  theThe officeNew isJersey toTransit reportCorporation toshall theestablish Executivean Directoroffice of NJreal Transit,estate economic development and thetransit-oriented annualdevelopment.  propertyThe reportoffice toshall beassess approvedand bydevelop therecommendations NJfor Transiteconomic boarddevelopment ofand directorstransit-oriented willdevelopment incuropportunities costsfor parcels of real property in which the formcorporation ofholds additionala staffproperty timeinterest in order to prepareincrease the reports. corporation’s Thenon-fare appraisalrevenue requirementsources.  inThe theoffice propertyshall report applies to propertythe ownedExecutive byDirector NJof Transitthe wherecorporation, anat appraisalleast hasannually, beenall obtainedrecommendations indeveloped thepursuant lastto threethis years,1[subsection] mitigatingsection1 thewith needan toestimate obtainof the servicesamount of annon-fare appraiserrevenue justlikely forto thebe purposegenerated ofby theeach report.recommendation.

·             1[b.  The Statecorporation subsidizesshall NJannually Transitreport operations;to the Governor and, pursuant to section 2 of P.L.1991, c.164 (C.52:14-19.1), to the Legislature an inventory of each parcel of real property in which the corporation holds a property interest, including the appraised value of that property interest, the purpose for which the corporation holds the property interest, and any revenue the corporation receives that arises out of the property interest.]1        12.   Section of P.L.1979, c.150 (C.27:25-20) is amended to read as follows:

therefore,     to20.  thea. extent that these costs increase NJ Transit’s operating deficit, the State appropriation to subsidize NJ Transit operations will need to increase to offset that deficit.

·         The Thecorporation billshall, requiresby September 15 of each year, file with the officeCommissioner toof assessTransportation a report in such format and developdetail recommendationsas forthe economicCommissioner developmentmay require setting forth the actual, operational, capital and transit-orientedfinancial developmentresults opportunitiesof the previous fiscal year, the operational, capital and financial plan for NJthe Transitcurrent propertyfiscal inyear orderand toa increaseproposed NJoperational, Transit’scapital non-fareand revenuefinancial sources.plan for the next ensuing fiscal year.

If     NJb.    TransitOn realizesor profitablebefore newOctober real31 estateof activities,each thisyear, billthe maycorporation indirectlyshall incentivizemake profitablean businessannual report of its activities thatfor offsetthe preceding fiscal year to the directGovernor costs[and ofto the newpresiding officeofficers and reportingthe requirementsTransportation whichCommittees couldof ultimatelyboth reduceHouses of the amountLegislature] , the President of the StateSenate, appropriationthe necessarySpeaker toof implementthe General Assembly, and the provisionsAssembly ofTransportation and Independent Authorities Committee and the bill.Senate Transportation Committee, or their successor committees.

 Each BILLsuch DESCRIPTIONreport  shall      set Thisforth billa requirescomplete theoperating Newand Jerseyfinancial Transitstatement Corporationcovering (NJits Transit)operations toand establishcapital anprojects officeduring ofthe realyear. estate economic development and transit-oriented development (office).

The officereport isshall toalso assessinclude andan developaccount recommendationsof forthe economicon-time developmentperformance andof transit-orientedrail developmentpassenger opportunitiesservice, forincluding parcelslight ofrail realservice, propertyoperated inby, whichor NJunder Transitcontract holdsto, the corporation, including data for each such passenger line.  The report shall provide a propertydetailed interestdiscussion inof orderthe tomethodology increaseused NJby Transit’sthe non-farecorporation revenuein sources.measuring on-time performance.

The     officec.     isAll torecords reportof itsminutes, recommendationsaccounts, bills, vouchers, contracts or other papers connected with anor estimateused ofor filed with the amountcorporation ofor non-farewith revenueany likelyofficer or employee acting [for or in] on its behalf are hereby declared to be generated[public] bygovernment eachrecords recommendationand shall be open to thepublic Executiveinspection Directorin ofaccordance NJwith TransitP.L.1963, atc.73 least(C.47:1A-1 onceet perseq.) year.and regulations prescribed by the corporation.

The     billd.    alsoThe requirescorporation theshall NJcause Transitan Boardaudit of Directorsits (board)books and accounts to approvebe andmade NJat Transitleast toonce transmiteach onyear orby beforecertified Marchpublic 1accountants ofand eachthe yearcost tothereof themay Commissionerbe treated as a cost of Transportationoperation.  andThe toaudit theshall Presidentbe offiled thewithin Senate,[4] four months after the Speakerclose of the Generalfiscal Assembly,year andof the Assemblycorporation Transportation and Independenta Authoritiescertified Committeeduplicate andcopy thethereof Senateshall Transportationbe Committee,filed orwith theirthe successorDivision committeesof aBudget reportand containingAccounting certainin realthe propertyDepartment information.of the Treasury.

The     reporte.     isNotwithstanding the provisions of any law to include:the contrary, the State Auditor or [his] a legally authorized representative may examine the accounts and books of the corporation.

a     descriptionf.     On or before 2[March] October2 1 of each parcelyear, the board shall approve and the corporation shall transmit to the Commissioner of realTransportation propertyand ownedto bythe NJPresident Transit;of the Senate, the Speaker of the General Assembly, and the Assembly Transportation and Independent Authorities Committee and the Senate Transportation Committee, or their successor committees, a report containing:

thea appraised2[description] valuelist2 of NJeach Transitparcel of real property if2[in anwhich] appraisalowned hasby2 beenthe obtainedcorporation on2[holds thata property ininterest]2; the last three years;

the purpose2most forrecent2 whichappraised NJvalue Transitof holdsthat the2real2 property interest;2[interest] only if the corporation has obtained an appraisal during the three years immediately preceding the report2;

anythe revenuepurpose NJfor Transitwhich receivesthe thatcorporation arisesholds out of the 2real2 property interest;2[interest]2;

and any propertyrevenue interests sold or otherwise disposed of, including the amountcorporation ofreceives money received by NJ Transit for that salearises orout disposition,of in the one2real2 year period immediately preceding the report and including an accompanying explanation for any property interest2[interest]2; disposed of for less than market value and any property interest acquired for more than market value.

 and  any FISCAL2real2 ANALYSISproperty  2[interests]2 EXECUTIVEsold BRANCHor  otherwise      disposed Noneof, received.including the amount of money received by the corporation for that sale or disposition, 2[in the] during the one year period2 immediately preceding 2[year] the report2 and including an accompanying explanation for any 2real2 property 2[interest]2 disposed of for less than market value and any 2real2 property 2[interest]2 acquired for more than market value.1 (cf:

 P.L.2007,  c.263, OFFICEs.1) OF  LEGISLATIVE     SERVICES1[2.]  3.1         This billact isshall likelytake toeffect resultimmediately. in an indeterminate amount of increased operating costs for NJ Transit.  These increased costs will be generated by the creation of the new office and recommendations that the office is to report to the Executive Director of NJ Transit, and the annual property report to be approved by the NJ Transit board of directors.

      The increase in costs for the creation of the new office is indeterminate because it is unclear how NJ Transit will staff this new office.  There are already existing staff at NJ Transit that pursue non-fare revenue opportunities, manage the agency’s real estate assets, and manage transit-oriented development initiatives.  If current staff is reorganized to establish this office, there is likely to be little to no net increase in staff and resources.  If the functions of the new office are provided in addition to the current business functions in these areas, then NJ Transit may need to increase staffing and equipment that would likely cost $1 to $10 million in additional salary, fringe, and equipment.

      The recommendation to be generated annually by the office for the executive director and the report to be approved by the board will result in an additional indeterminate cost.  The bill does not indicate the level of detail required to be provided in the recommendation report.  Without information about the level of detail and depth of analysis, it is not possible to determine the amount of staff time or outside resources that might be required to generate the report.  The property report that the board must approve requires reporting on the property owned by NJ Transit.  NJ Transit is only required to report on the appraised value that NJ Transit has obtained an appraisal on in the last three years..        There will be a clear staffing cost in the first year to generate this first report and that cost will depend on the property detail included in the report and the staff time necessary to collect internal property data, generate a uniform agency-wide data set, and format that data into a report that is consistent with the statutory requirement.  In subsequent years, the cost will likely be much less as updates to the report are likely to be far less labor intensive, requiring changes only for property acquired or disposed of during the year.  By only utilizing appraisals that have already been performed, the bill will not require any additional appraisal services.

      The aforementioned costs are all direct costs that will be required under the bill.  These costs will only manifest in direct State costs to the extent that they increase the operating deficit of NJ Transit and result in the need for an increased State appropriation to subsidize NJ Transit operations.  If NJ Transit is able to offset these costs, specifically by covering some of these costs through the transportation capital program (some real estate and planning costs are eligible capital purposes), then these costs would result in a redistribution of expenditures under the capital program and have no net State cost.  If these costs are covered through an increase to the NJ Transit operating budget, then it will increase NJ Transit’s operating deficit and require an increased State appropriation.

      The bill identifies that the recommendations of the office are intended to increase NJ Transit’s non-fare revenue sources.  If the recommendations are implemented by the executive director, and are ultimately successful in generating additional non-fare revenue, then the bill will catalyze indirect positive revenue impacts.  These indirect benefits or losses (if the recommendations do not succeed) will either offset or increase the direct costs incurred under the bill.

    Section:

Authorities, Utilities, Transportation and Communications Analyst:

Patrick Brennan Lead Fiscal Analyst Approved:

Frank W.

Haines III Legislative Budget and Finance Officer     This fiscal estimate has been prepared pursuant to P.L.1980, c.67 (C.52:13B-6 et seq.).