Bill Text: NY S04197 | 2019-2020 | General Assembly | Amended


Bill Title: Relates to the sale of bonds and notes of the city of New York, the issuance of bonds or notes with variable rates of interest, interest rate exchange agreements of the city of New York, the refunding of bonds, and the down payment for projects financed by bonds; amends the New York state financial emergency act for the city of New York; makes further amendments relating to the effectiveness thereof.

Spectrum: Partisan Bill (Democrat 1-0)

Status: (Passed) 2019-07-03 - SIGNED CHAP.75 [S04197 Detail]

Download: New_York-2019-S04197-Amended.html



                STATE OF NEW YORK
        ________________________________________________________________________

                                         4197--B
            Cal. No. 793

                               2019-2020 Regular Sessions

                    IN SENATE

                                      March 4, 2019
                                       ___________

        Introduced  by  Sen. JACKSON -- read twice and ordered printed, and when
          printed to be committed  to  the  Committee  on  Local  Government  --
          committee  discharged,  bill amended, ordered reprinted as amended and
          recommitted to said committee -- reported favorably from said  commit-
          tee,  ordered  to first and second report, ordered to a third reading,
          passed by Senate and delivered to the Assembly, recalled, vote  recon-
          sidered,  restored  to  third  reading, amended and ordered reprinted,
          retaining its place in the order of third reading

        AN ACT to amend the local finance law, in relation to the sale of  bonds
          and notes of the city of New York, the issuance of bonds or notes with
          variable  rates  of interest, interest rate exchange agreements of the
          city of New York, the refunding of bonds, and  the  down  payment  for
          projects  financed  by  bonds;  to  amend the New York state financial
          emergency act for the city of New York, in relation to  a  pledge  and
          agreement  of the state; and to amend chapter 142 of the laws of 2004,
          amending the local finance law  relating  to  interest  rate  exchange
          agreements  of  the city of New York and refunding bonds of such city,
          in relation to the effectiveness thereof

          The People of the State of New York, represented in Senate and  Assem-
        bly, do enact as follows:

     1    Section  1. The opening paragraph of paragraph (a) of section 54.10 of
     2  the local finance law, as amended by chapter 91 of the laws of 2018,  is
     3  amended to read as follows:
     4    To facilitate the marketing of any issue of bonds or notes of the city
     5  of  New York issued on or before June thirtieth, two thousand [nineteen]
     6  twenty, the mayor and comptroller of  such  city  may,  subject  to  the
     7  approval  of  the state comptroller and the limitations on private sales
     8  of bonds and notes, respectively, provided by law:
     9    § 2. The closing paragraph of paragraph a  of  section  54.90  of  the
    10  local  finance  law,  as  amended  by chapter 91 of the laws of 2018, is
    11  amended to read as follows:

         EXPLANATION--Matter in italics (underscored) is new; matter in brackets
                              [ ] is old law to be omitted.
                                                                   LBD10405-03-9

        S. 4197--B                          2

     1    Notwithstanding the foregoing, whenever in the judgment of the finance
     2  board of the city of New York the interest of such city would be  served
     3  thereby,  the  city of New York may without further approval issue bonds
     4  or notes, on or before July fifteenth, two thousand  [nineteen]  twenty,
     5  with  interest rates that vary in accordance with a formula or procedure
     6  and are subject to a maximum rate of interest set forth or  referred  to
     7  in  the  bonds  or  notes  and may provide the holders thereof with such
     8  rights to require the city or other persons to purchase  such  bonds  or
     9  notes  or  renewals  thereof  from the proceeds of the resale thereof or
    10  otherwise from time to time prior to the final maturity of such bonds or
    11  notes as the finance board of the city of New York may determine and the
    12  city may resell, at any time prior to final maturity, any such bonds  or
    13  notes  acquired  as  a  result of the exercise of such rights; provided,
    14  however, that at no time shall the total principal amount of  bonds  and
    15  notes  issued  by the city of New York pursuant to this paragraph (other
    16  than bonds and notes (1) bearing interest at rates and  for  periods  of
    17  time that are specified without reference to future events or contingen-
    18  cies,  or  (2) described in section 136.00 of this article) exceed twen-
    19  ty-five percent of the limit prescribed by section 104.00 of this  arti-
    20  cle.
    21    §  3. The opening paragraph of subdivision 1 of paragraph d of section
    22  54.90 of the local finance law, as amended by chapter 91 of the laws  of
    23  2018, is amended to read as follows:
    24    On  or before July fifteenth, two thousand [nineteen] twenty the mayor
    25  and comptroller of the city of New York may:
    26    § 4. The opening paragraph of paragraph a  of  section  57.00  of  the
    27  local  finance  law,  as  amended  by chapter 91 of the laws of 2018, is
    28  amended to read as follows:
    29    Bonds shall be sold only at public sale and  in  accordance  with  the
    30  procedure set forth in this section and sections 58.00 and 59.00 of this
    31  title, except as otherwise provided in this paragraph. Bonds may be sold
    32  at private sale to the United States government or any agency or instru-
    33  mentality  thereof, the state of New York municipal bond bank agency, to
    34  any sinking fund or pension fund of the municipality, school district or
    35  district corporation selling such bonds, or, in the case of sales by the
    36  city of New York prior to July first, two  thousand  [nineteen]  twenty,
    37  also to the municipal assistance corporation for the city of New York or
    38  to any other purchaser with the consent of the mayor and the comptroller
    39  of  such  city and approval of the state comptroller, or, in the case of
    40  sales by the county of Nassau prior to December thirty-first, two  thou-
    41  sand seven, also to the Nassau county interim finance authority with the
    42  approval  of the state comptroller, or, in the case of sales by the city
    43  of Buffalo prior to June thirtieth, two thousand thirty-seven,  also  to
    44  the  Buffalo  fiscal  stability authority with the approval of the state
    45  comptroller, or, in the case of bonds or other obligations of a  munici-
    46  pality issued for the construction of any sewage treatment works, sewage
    47  collecting  system,  storm  water  collecting  system,  water management
    48  facility, air pollution control facility or solid waste disposal facili-
    49  ty, also to the New York state environmental facilities corporation, or,
    50  in the case of bonds or other obligations of a school district or a city
    51  acting on behalf of a city school district in a city having a population
    52  in excess of one hundred twenty-five thousand but less than one  million
    53  inhabitants according to the latest federal census, issued to finance or
    54  refinance  the  cost  of  school  district  capital facilities or school
    55  district capital equipment, as defined in section sixteen hundred seven-
    56  ty-six of the public authorities law, also to the dormitory authority of

        S. 4197--B                          3

     1  the state of New York. Bonds of a river improvement or drainage district
     2  established by or under the supervision of the  department  of  environ-
     3  mental conservation may be sold at private sale to the state of New York
     4  as  investments for any funds of the state which by law may be invested,
     5  provided, however, that the rate of interest on any such bonds  so  sold
     6  shall  be  approved  by  the  water power and control commission and the
     7  state comptroller. Bonds may also be sold at private sale as provided in
     8  section 63.00 of this title. No bonds shall be sold on option  or  on  a
     9  deferred  payment plan, except that options to purchase, effective for a
    10  period not exceeding one year, may be given:
    11    § 5. Subdivision 3 of paragraph  g  of  section  90.00  of  the  local
    12  finance law, as amended by chapter 91 of the laws of 2018, is amended to
    13  read as follows:
    14    3.  Outstanding bonds may, pursuant to a power to recall and redeem or
    15  with the consent of the holders  thereof,  be  exchanged  for  refunding
    16  bonds (i) if the refunding bonds are to bear interest at a rate equal to
    17  or  lower than that borne by the bonds to be refunded or (ii) if, in the
    18  case of the city of New York prior to July first,  two  thousand  [nine-
    19  teen]  twenty, the annual payment required for principal and interest on
    20  the refunding bond is less than the annual payment required for  princi-
    21  pal  and  interest  on the bond to be refunded, in each case such annual
    22  payments to be determined by dividing the total principal  and  interest
    23  payments  due over the remaining life of the bond by the number of years
    24  to maturity of the bond or (iii) if the bonds to be refunded were issued
    25  by the city of New York after June thirtieth, nineteen hundred  seventy-
    26  eight  and  prior  to  July  first,  two  thousand [nineteen] twenty and
    27  contain covenants referring to the  existence  of  the  New  York  state
    28  financial  control board for the city of New York or any other covenants
    29  relating to matters other than  the  prompt  payment  of  principal  and
    30  interest  on  the  obligations  when due and the refunding bond omits or
    31  modifies any such covenant.
    32    § 6. Subdivision 8 of paragraph d  of  section  107.00  of  the  local
    33  finance law, as amended by chapter 91 of the laws of 2018, is amended to
    34  read as follows:
    35    8.  Notwithstanding  any  other provision of law, the financing by the
    36  city of New York prior to July first, two thousand [nineteen] twenty-two
    37  of any object or purpose which  has  a  period  of  probable  usefulness
    38  determined  by  law by the issuance of any bonds or notes, including (i)
    39  the issuance of bonds or notes to obtain reimbursement for funds hereto-
    40  fore advanced for the object or purpose for which the bonds or notes are
    41  being issued, (ii) the issuance of bonds or notes to redeem notes previ-
    42  ously issued for the object or purpose for which the bonds or notes  are
    43  being  issued  or (iii) the issuance of bonds to refund bonds previously
    44  issued for the object or purpose for which bonds are being issued.
    45    § 7. Subdivision 1 of section 10-a of section 2 of chapter 868 of  the
    46  laws  of  1975,  constituting the New York state financial emergency act
    47  for the city of New York, as amended by chapter 91 of the laws of  2018,
    48  is amended to read as follows:
    49    1.  In  the  event that after the date on which the provisions of this
    50  act become operative, any notes or bonds are issued by the city prior to
    51  July 1, [2019] 2020, or any bonds are issued by a state financing  agen-
    52  cy,  the state of New York hereby authorizes the city and authorizes and
    53  requires such state financing agency to include a pledge  and  agreement
    54  of the state of New York in any agreement made by the city or such state
    55  financing  agency with holders or guarantors of such notes or bonds that
    56  the state will not take any action which will (a)  substantially  impair

        S. 4197--B                          4

     1  the authority of the board during a control period, as defined in subdi-
     2  vision  twelve  of section two of this act as in effect on the date such
     3  notes or bonds are issued (i) to  approve,  disapprove,  or  modify  any
     4  financial  plan  or  financial  plan modification, including the revenue
     5  projections (or any item thereof)  contained  therein,  subject  to  the
     6  standards set forth in paragraphs a, c, d, e and f of subdivision one of
     7  section  eight  of this act as in effect on the date such notes or bonds
     8  are issued and paragraph b of such subdivision as in effect from time to
     9  time, (ii) to disapprove a contract of the city or a  covered  organiza-
    10  tion  if the performance of such contract would be inconsistent with the
    11  financial plan or to approve or disapprove proposed short-term or  long-
    12  term borrowing of the city or a covered organization or any agreement or
    13  other  arrangement  referred  to in subdivision four of section seven of
    14  this act, or (iii) to establish and adopt procedures with respect to the
    15  deposit in and disbursement from the board fund of  city  revenues;  (b)
    16  substantially  impair  the  authority  of  the board to review financial
    17  plans, financial plan  modifications,  contracts  of  the  city  or  the
    18  covered organizations and proposed short-term or long-term borrowings of
    19  the  city  and  the  covered organizations; (c) substantially impair the
    20  independent maintenance of a separate  fund  for  the  payment  of  debt
    21  service on bonds and notes of the city; (d) alter the composition of the
    22  board  so  that  the majority of the voting members of the board are not
    23  officials of the state of New York elected in a state-wide  election  or
    24  appointees  of  the  governor;  (e) terminate the existence of the board
    25  prior to the time to be determined in accordance with  section  thirteen
    26  of this act as in effect on the date such notes or bonds are issued; (f)
    27  substantially  modify  the  requirement that the city's financial state-
    28  ments be audited by a nationally recognized independent certified public
    29  accounting firm or consortium of firms and that a report on  such  audit
    30  be  furnished  to  the  board;  or (g) alter the definition of a control
    31  period set forth in subdivision twelve of section two of this act, as in
    32  effect on the date such notes or  bonds  are  issued,  or  substantially
    33  alter  the  authority  of the board, as set forth in said subdivision to
    34  reimpose or terminate a control  period;  provided,  however,  that  the
    35  foregoing  pledge  and agreement shall be of no further force and effect
    36  if at any time (i) there is on deposit in a separate trust account  with
    37  a  bank,  trust  company  or other fiduciary sufficient moneys or direct
    38  obligations of the United States or obligations guaranteed by the United
    39  States, the principal of and/or interest on which will provide moneys to
    40  pay punctually when due at maturity or prior to maturity by  redemption,
    41  in  accordance  with  their  terms, all principal of and interest on all
    42  outstanding notes and bonds of the city or such state  financing  agency
    43  containing  this  pledge and agreement and irrevocable instructions from
    44  the city or such state financing agency to such bank, trust  company  or
    45  other  fiduciary  for  such  payment of such principal and interest with
    46  such moneys shall have been given, or (ii) such notes and bonds, togeth-
    47  er with interest thereon, have been paid in full  at  maturity  or  have
    48  otherwise been refunded, redeemed, defeased, or discharged; and provided
    49  further  that  the foregoing pledge and agreement shall be of full force
    50  and effect upon its inclusion in any agreement made by the city or state
    51  financing agency with holders or guarantors of such notes or bonds.
    52    Upon payment for such obligations issued pursuant to this act  by  the
    53  original  and all subsequent holders inclusion of the foregoing covenant
    54  shall be deemed conclusive evidence of valuable  consideration  received
    55  by the state and city for such covenant and of reliance upon such pledge
    56  and agreement by any such holder. The state hereby grants any such bene-

        S. 4197--B                          5

     1  fited  holder  the right to sue the state in a court of competent juris-
     2  diction and enforce this covenant and agreement and waives all rights of
     3  defense based on sovereign immunity in such an action or suit.
     4    §  8. Section 5 of chapter 142 of the laws of 2004, amending the local
     5  finance law relating to interest rate exchange agreements of the city of
     6  New York and refunding bonds of such city, as amended by chapter  91  of
     7  the laws of 2018, is amended to read as follows:
     8    §  5.  This  act shall take effect immediately, provided, that section
     9  three of this act shall expire and be deemed repealed  July  15,  [2019]
    10  2020.
    11    § 9. Separability. If any clause, sentence, paragraph, section or part
    12  of  this act shall be adjudged by any court of competent jurisdiction to
    13  be invalid, such judgment shall not affect,  impair  or  invalidate  the
    14  remainder thereof, but shall be confined in its operation to the clause,
    15  sentence,  paragraph,  section  or part thereof directly involved in the
    16  controversy in which such judgment shall have been rendered.
    17    § 10. This act shall take effect immediately.
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