Contracts FAQ 8

Is it possible for a municipality to avoid the competitive bid law by agreeing to purchase or lease-purchase property which a private developer proposes to develop or renovate on behalf of the municipality?
No. This is known as "turnkey financing," and it may not be used to circumvent the competitive bid laws. In a typical "turnkey" project, a private developer proposes to construct or renovate a building according to the needs and specifications of a municipality and the municipality agrees to subsequently purchase the building. Such a project would be subject to the bid laws at the time that an agreement, whether formal or informal, is consummated which obligates the municipality to purchase or lease the completed structure. 56 Op. Att'y Gen. 181 (1967); Contracts # 358 & # 316.