Proliferation of Local "Pay to Play" Ordinances

Paul Josephson
July 16, 2008 — 995 views  
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Spurred on by good intentions to take the next “logical” step, some municipalities have begun to adopt “redeveloper pay to play” ordinances.  These ordinances purport to impose limits or outright bans on political contributions by redevelopers and redevelopment professionals.  Our most recent survey identified at least eighteen towns in New Jersey that already specifically regulate contributions by would-be redevelopers and their professionals – even though there is no legislative authorization for these ordinances.  Redevelopment designations and redevelopment agreements have never before been viewed as public contracts, nor have they been subject to public bidding laws.

As the new Legislature in New Jersey considers reform of eminent domain laws and the redevelopment process, it is inevitable that calls will be made to extend State pay to play law to redevelopment activities, and perhaps to again allow local variants.  More communities will propose a new wave of redevelopment pay to play restrictions, each having its own twists, turns and pitfalls for the unsuspecting.  Let’s review some of those traps.

Local redevelopment pay to play ordinances generally impose strict contribution limits or bans to control the amounts of campaign contributions that elected officials can receive from developers.  Pay to play measures also attempt to confront and deter the practice commonly known as “wheeling”, where campaign contributions are funneled through so-called “pass-through accounts,” i.e., county political committees and political action committee (PAC) accounts, even though these may well be bona fide organizations performing crucial roles in our political process.  The ordinances restrict contributions from actual and prospective redevelopers, and often prohibit contributions through third parties such as family members or lobbyists.  Sub-developers of the redeveloper may also be subject to the restrictions, as may development professionals that have performed services or will perform services for the developer in relation to the development project. 

Local redevelopment pay to play ordinances don’t simply restrict contributions by the redeveloper during the term of the redevelopment project.  They also limit the amount a redeveloper may contribute for some time prior to the date of the redevelopment contract.  The amount that a redeveloper may contribute varies based on local political tastes.  Some municipalities may prohibit contributions above $300, while others take a more constitutionally suspect route and completely ban any contribution commencing a specific period of months prior to the agreement.  Almost all of the redevelopment ordinances place a total ban on any contribution in any amount by developers during the term of the redevelopment agreement.

Paul Josephson

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Paul P. Josephson is a partner of Hill Wallack LLP. He is partner-in-charge of the firm's Regulatory & Government Affairs and Gaming Law Practice Groups. Mr. Josephson concentrates his practice in Regulatory Law, with a focus on Redevelopment, Gaming, Government Procurement, Complex Civil Litigation, Election and Campaign Finance, Government Ethics and corporate compliance issues. An accomplished commercial and administrative litigator, he has represented many national and state corporations in legal disputes and advised numerous State agencies on licensing, enforcement, procurement and real estate development and redevelopment matters. He is also experienced in all aspects of the gaming industry, including casino, horse racing, lottery and Internet issues. He has also published numerous articles on gaming and ethic law. He spearheaded the historic merger of the New Jersey Turnpike and Garden State Parkway and the successful effort to fix EZ Pass. Mr. Josephson has also served as counsel to numerous Senate, House and Gubernatorial candidates, including Governor Jon S. Corzine, and has represented many of New Jersey's other top elected officials. Mr. Josephson was listed in the top tier of PoliticsNJ.com's list of most influential attorneys in New Jersey for 2002 and 2004, and recognized for distinguished legislative service by the New Jersey State Bar Association.