Prohibits lease agreements between SDA districts and developers for construction and lease of new school buildings.

A5149

ASSEMBLY, No. 5149

STATE OF NEW JERSEY

222nd LEGISLATURE

�

INTRODUCED MAY 28, 2026

Sponsored by:

Assemblyman� GREGORY P. MCGUCKIN

District 10 (Monmouth and Ocean)

Co-Sponsored by:

Assemblywoman Fantasia

SYNOPSIS

���� Prohibits lease agreements between SDA districts and
developers for construction and lease of new school buildings.

CURRENT VERSION OF TEXT

���� As introduced.

��

An Act
concerning certain school district lease agreements and
amending N.J.S.18A:20-4.2.

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

���� 1.��� N.J.S.18A:20-4.2 is
amended to read as follows:

���� 18A:20-4.2.� The board of
education of any school district may, for school purposes:

���� (a)�� Purchase, take and
condemn lands within the district and lands not exceeding 50 acres in extent
without the district but situate in a municipality or municipalities adjoining
the district, but no more than 25 acres may be so acquired in any one such municipality,
without the district, except with the consent, by ordinance, of such
municipality;

���� (b)�� Grade, drain and
landscape lands owned or to be acquired by it and improve the same in like
manner;

���� (c)�� Erect, lease for a term
not exceeding 50 years, enlarge, improve, repair or furnish buildings;

���� (d)�� Borrow money therefor,
with or without mortgage; in the case of a type II district without a board of
school estimate, when authorized so to do at any annual or special school
election; and in the case of a type II district having a board of school estimate,
when the amount necessary to be provided therefor shall have been fixed,
determined and certified by the board of school estimate; and in the case of a
type I district, when an ordinance authorizing expenditures for such purpose is
finally adopted by the governing body of a municipality comprised within the
district; provided, however, that no such election shall be held nor shall any
such resolution of a school estimate board or ordinance of a municipal
governing body be introduced to authorize any lease of any building for a term
exceeding one year, until the proposed terms of such lease have been reviewed
and approved by the Commissioner of Education and the Local Finance Board in
the Department of Community Affairs;

���� (e)�� Construct, purchase,
lease or otherwise acquire a building with the federal government, the State, a
political subdivision thereof or any other individual or entity properly
authorized to do business in the State; provided that: (1) the noneducational
uses of the building are compatible with the establishment and operation of a
school, as determined by the Commissioner of Education; (2) the portion of the
building to be used as a school meets regulations of the Department of
Education; (3) the board of education has complied with the provisions of law
and regulations relating to the selection and approval of sites; and (4) in the
case of a lease, that any lease in excess of five years shall be approved by
the Commissioner of Education and the Local Finance Board in the Department of
Community Affairs
.

����
Notwithstanding the
provisions of this subsection or any other provision of law to the contrary,
the board of education of an SDA district, as defined pursuant to section 3 of
P.L.2000, c.72 (C.18A:7G-3), shall not enter into a lease agreement with a
developer for the construction and lease of a new school building
;

���� (f)�� Acquire, with the
approval of either the commissioner, or voters or board of school estimate, as
applicable, improvements or additions to school buildings through lease
purchase agreements not in excess of five years.� The agreement shall be
recorded as an expenditure of the General Fund of the district.� The
commissioner shall approve the agreement only upon a demonstration by the
district that the lease purchase payments and any operating expenses related to
the agreement can be included within the district's tax levy growth limitation
and will not result in the need for approval by the voters or board of school
estimate, as appropriate, of additional spending proposals to maintain existing
instructional programs and extracurricular activities.� If the commissioner
cannot approve the agreement, the board of education may frame a separate
question to authorize the lease purchase agreement and obtain voter or board of
school estimate approval to enter into the agreement.� A district may, without
separate prior approval of the commissioner, also acquire equipment through a
lease purchase agreement not in excess of five years or in the case of a lease
purchase agreement entered into for the acquisition of fossil fuel school buses
not in excess of 10 years and in the case of a lease purchase agreement entered
into for the acquisition of electric school buses and related charging
equipment and services not in excess of the service life of the electric school
buses, provided that the amount of the first installment and each subsequent
installment for the lease purchase payments is included in the budget that is
advertised and submitted for approval to the voters of the district or the
board of school estimate, as appropriate.� As used herein, a "lease
purchase agreement" refers to any agreement which gives the board of
education as lessee the option of purchasing the leased equipment or
improvements or additions to existing school buildings during or upon
termination of the lease, with credit toward the purchase price of all or part
of rental payments which have been made by the board of education in accordance
with the lease.� As part of such a transaction, the board of education may
transfer or lease land or rights in land, including any building thereon, after
publicly advertising for proposals for the transfer for nominal or fair market
value, to the party selected by the board of education, by negotiation or
otherwise, after determining that the proposal is in the best interest of the
taxpayers of the district, to construct or to improve and to lease or to own or
to have ownership interests in the site and the school building to be leased
pursuant to such lease purchase agreement, notwithstanding the provisions of
any other law to the contrary.� The land and any building thereon which is
described in a lease purchase agreement entered into pursuant to this
amendatory act, shall be deemed to be and treated as property of the school
district, used for school purposes pursuant to R.S.54:4-3.3, and shall not be
considered or treated as property leased to another whose property is not
exempt, and shall not be assessed as real estate pursuant to section 1 of
P.L.1949, c.177 (C.54:4-2.3).� Any lease purchase agreement authorized by this
section shall contain a provision making payments thereunder subject to the
annual appropriation of funds sufficient to meet the required payments or shall
contain an annual cancellation clause and shall require all construction
contracts let by public school districts or let by developers or owners of
property used for school purposes to be competitively bid, pursuant to
N.J.S.18A:18A-1 et seq.;

���� (g)�� Establish with an
individual or entity authorized to do business in the State a tenancy in
common, condominium, horizontal property regime or other joint ownership
arrangement on a site contributed by the school district; provided the
following conditions are met:

���� (1)�� The individual or entity
agrees to construct on the site, or provide for the construction thereon, a
building or buildings for use of the board of education separately or jointly
with the individual or entity, which shall be subject to the joint ownership
arrangement;

���� (2)�� The provision of the
building shall be at no cost or at a reduced cost to the board of education;

���� (3)�� The school district
shall not make any payment for use of the building other than its pro rata
share of costs of maintenance and improvements;

���� (4)�� The noneducational uses
of the building are compatible with the establishment and operation of a
school, as determined by the Commissioner of Education;

���� (5)�� The portion of the
building to be used as a school, and the site, meet regulations of the
Department of Education; and

���� (6)�� Any such agreement shall
be approved by the Commissioner of Education and the Local Finance Board in the
Department of Community Affairs;

���� (h)�� Acquire through sale and
lease-back textbooks and non-consumable instructional materials provided that
the sale price and principal amount of the lease-back do not exceed the fair
market value of the textbooks and instructional materials and that the interest
rate applied in the lease-back is consistent with prevailing market rates or is
less.

(cf: P.L.2024, c.38, s.2)

���� 2.��� This act shall take
effect immediately.

STATEMENT

���� This bill prohibits an SDA
district from entering into a lease agreement with a developer for the
construction and lease of a new school building.

���� Current law authorizes school
districts to construct, purchase, lease, or otherwise acquire a building with
the federal government, the State, a political subdivision, or any other
individual or entity authorized to do business in the State, provided that
certain other requirements are met.� This bill prohibits an SDA district (former
Abbott district) from entering into a lease agreement with a developer for the
construction and lease of a new school building.