Bill Text: NY S50016 | 2009-2010 | General Assembly | Introduced
Bill Title: Relates to the effectiveness of the sale of bonds and notes of the city of NY; NYS financial emergency act; interest rate exchange agreements and refunding of bonds.
Spectrum: Committee Bill
Status: (Engrossed - Dead) 2009-06-23 - PASSED SENATE [S50016 Detail]
Download: New_York-2009-S50016-Introduced.html
S T A T E O F N E W Y O R K
________________________________________________________________________
16
Extraordinary Session
I N S E N A T E
June 23, 2009
___________
Introduced by COMMITTEE ON RULES -- (at request of the Governor) -- read
twice and ordered printed, and when printed to be committed to the
Committee on Rules
AN ACT to amend the local finance law, in relation to the sale of bonds
and notes of the city of New York, the refunding of bonds, the down
payment for projects financed by bonds, variable rate debt, and inter-
est rate exchange agreements of the city of New York; 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 refund-
ing 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 117 of the laws of 2008, 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 [nine] TEN,
6 the mayor and comptroller of such city may, subject to the approval of
7 the state comptroller and the limitations on private sales of bonds and
8 notes, respectively, provided by law:
9 S 2. The opening paragraph of paragraph a of section 57.00 of the
10 local finance law, as amended by chapter 117 of the laws of 2008, is
11 amended to read as follows:
12 Bonds shall be sold only at public sale and in accordance with the
13 procedure set forth in this section and sections 58.00 and 59.00 of this
14 title, except as otherwise provided in this paragraph. Bonds may be sold
15 at private sale to the United States government or any agency or instru-
16 mentality thereof, the state of New York municipal bond bank agency, to
17 any sinking fund or pension fund of the municipality, school district or
EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
[ ] is old law to be omitted.
LBD12129-01-9
S. 16 2
1 district corporation selling such bonds, or, in the case of sales by the
2 city of New York prior to July first, two thousand [nine] TEN, also to
3 the municipal assistance corporation for the city of New York or to any
4 other purchaser with the consent of the mayor and the comptroller of
5 such city and approval of the state comptroller, or, in the case of
6 sales by the county of Nassau prior to December thirty-first, two thou-
7 sand seven, also to the Nassau county interim finance authority with the
8 approval of the state comptroller, or, in the case of sales by the city
9 of Buffalo prior to June thirtieth, two thousand thirty-seven, also to
10 the Buffalo fiscal stability authority with the approval of the state
11 comptroller, or, in the case of bonds or other obligations of a munici-
12 pality issued for the construction of any sewage treatment works, sewage
13 collecting system, storm water collecting system, water management
14 facility, air pollution control facility or solid waste disposal facili-
15 ty, also to the New York state environmental facilities corporation, or,
16 in the case of bonds or other obligations of a school district or a city
17 acting on behalf of a city school district in a city having a population
18 in excess of one hundred twenty-five thousand but less than one million
19 inhabitants according to the latest federal census, issued to finance or
20 refinance the cost of school district capital facilities or school
21 district capital equipment, as defined in section sixteen hundred seven-
22 ty-six of the public authorities law, also to the dormitory authority of
23 the state of New York. Bonds of a river improvement or drainage district
24 established by or under the supervision of the department of environ-
25 mental conservation may be sold at private sale to the State of New York
26 as investments for any funds of the state which by law may be invested,
27 provided, however, that the rate of interest on any such bonds so sold
28 shall be approved by the water power and control commission and the
29 state comptroller. Bonds may also be sold at private sale as provided in
30 section 63.00 of this title. No bonds shall be sold on option or on a
31 deferred payment plan, except that options to purchase, effective for a
32 period not exceeding one year, may be given:
33 S 3. Subdivision 3 of paragraph g of section 90.00 of the local
34 finance law, as amended by chapter 117 of the laws of 2008, is amended
35 to read as follows:
36 3. Outstanding bonds may, pursuant to a power to recall and redeem or
37 with the consent of the holders thereof, be exchanged for refunding
38 bonds (i) if the refunding bonds are to bear interest at a rate equal to
39 or lower than that borne by the bonds to be refunded or (ii) if, in the
40 case of the city of New York prior to July first, two thousand [nine]
41 TEN, the annual payment required for principal and interest on the
42 refunding bond is less than the annual payment required for principal
43 and interest on the bond to be refunded, in each case such annual
44 payments to be determined by dividing the total principal and interest
45 payments due over the remaining life of the bond by the number of years
46 to maturity of the bond or (iii) if the bonds to be refunded were issued
47 by the city of New York after June thirtieth, nineteen hundred seventy-
48 eight and prior to July first, two thousand [nine] TEN and contain
49 covenants referring to the existence of the New York state financial
50 control board for the city of New York or any other covenants relating
51 to matters other than the prompt payment of principal and interest on
52 the obligations when due and the refunding bond omits or modifies any
53 such covenant.
54 S 4. Subdivision 8 of paragraph d of section 107.00 of the local
55 finance law, as amended by chapter 117 of the laws of 2008, is amended
56 to read as follows:
S. 16 3
1 8. Notwithstanding any other provision of law, the financing by the
2 city of New York prior to July first, two thousand [nine] TEN of any
3 object or purpose which has a period of probable usefulness determined
4 by law by the issuance of any bonds or notes, including (i) the issuance
5 of bonds or notes to obtain reimbursement for funds heretofore advanced
6 for the object or purpose for which the bonds or notes are being issued,
7 (ii) the issuance of bonds or notes to redeem notes previously issued
8 for the object or purpose for which the bonds or notes are being issued
9 or (iii) the issuance of bonds to refund bonds previously issued for the
10 object or purpose for which bonds are being issued.
11 S 5. The closing paragraph of paragraph a of section 54.90 of the
12 local finance law, as amended by chapter 117 of the laws of 2008, is
13 amended to read as follows:
14 Notwithstanding the foregoing, whenever in the judgment of the finance
15 board of the city of New York the interest of such city would be served
16 thereby, the city of New York may without further approval issue bonds
17 or notes, on or before July fifteenth, two thousand [nine] TEN, with
18 interest rates that vary in accordance with a formula or procedure and
19 are subject to a maximum rate of interest set forth or referred to in
20 the bonds or notes and may provide the holders thereof with such rights
21 to require the city or other persons to purchase such bonds or notes or
22 renewals thereof from the proceeds of the resale thereof or otherwise
23 from time to time prior to the final maturity of such bonds or notes as
24 the finance board of the city of New York may determine and the city may
25 resell, at any time prior to final maturity, any such bonds or notes
26 acquired as a result of the exercise of such rights; provided, however,
27 that at no time shall the total principal amount of bonds and notes
28 issued by the city of New York pursuant to this paragraph (other than
29 bonds and notes (1) bearing interest at rates and for periods of time
30 that are specified without reference to future events or contingencies,
31 or (2) described in section 136.00 of this article) exceed twenty-five
32 percent of the limit prescribed by section 104.00 of this article.
33 S 6. The opening paragraph of subdivision 1 of paragraph d of section
34 54.90 of the local finance law, as amended by chapter 117 of the laws of
35 2008, is amended to read as follows:
36 On or before July fifteenth, two thousand [nine] TEN the mayor and
37 comptroller of the city of New York may:
38 S 7. Subdivision 1 of section 10-a of section 2 of chapter 868 of the
39 laws of 1975, constituting the New York state financial emergency act
40 for the city of New York, as amended by chapter 117 of the laws of 2008,
41 is amended to read as follows:
42 1. In the event that after the date on which the provisions of this
43 act become operative, any notes or bonds are issued by the city prior to
44 July 1, [2009] 2010, or any bonds are issued by a state financing agen-
45 cy, the state of New York hereby authorizes the city and authorizes and
46 requires such state financing agency to include a pledge and agreement
47 of the state of New York in any agreement made by the city or such state
48 financing agency with holders or guarantors of such notes or bonds that
49 the state will not take any action which will (a) substantially impair
50 the authority of the board during a control period, as defined in subdi-
51 vision twelve of section two of this act as in effect on the date such
52 notes or bonds are issued (i) to approve, disapprove, or modify any
53 financial plan or financial plan modification, including the revenue
54 projections (or any item thereof) contained therein, subject to the
55 standards set forth in paragraphs a, c, d, e and f of subdivision one of
56 section eight of this act as in effect on the date such notes or bonds
S. 16 4
1 are issued and paragraph b of such subdivision as in effect from time to
2 time, (ii) to disapprove a contract of the city or a covered organiza-
3 tion if the performance of such contract would be inconsistent with the
4 financial plan or to approve or disapprove proposed short-term or long-
5 term borrowing of the city or a covered organization or any agreement or
6 other arrangement referred to in subdivision four of section seven of
7 this act, or (iii) to establish and adopt procedures with respect to the
8 deposit in and disbursement from the board fund of city revenues; (b)
9 substantially impair the authority of the board to review financial
10 plans, financial plan modifications, contracts of the city or the
11 covered organizations and proposed short-term or long-term borrowings of
12 the city and the covered organizations; (c) substantially impair the
13 independent maintenance of a separate fund for the payment of debt
14 service on bonds and notes of the city; (d) alter the composition of the
15 board so that the majority of the voting members of the board are not
16 officials of the state of New York elected in a state-wide election or
17 appointees of the governor; (e) terminate the existence of the board
18 prior to the time to be determined in accordance with section thirteen
19 of this act as in effect on the date such notes or bonds are issued; (f)
20 substantially modify the requirement that the city's financial state-
21 ments be audited by a nationally recognized independent certified public
22 accounting firm or consortium of firms and that a report on such audit
23 be furnished to the board; or (g) alter the definition of a control
24 period set forth in subdivision twelve of section two of this act, as in
25 effect on the date such notes or bonds are issued, or substantially
26 alter the authority of the board, as set forth in said subdivision to
27 reimpose or terminate a control period; provided, however, that the
28 foregoing pledge and agreement shall be of no further force and effect
29 if at any time (i) there is on deposit in a separate trust account with
30 a bank, trust company or other fiduciary sufficient moneys or direct
31 obligations of the United States or obligations guaranteed by the United
32 States, the principal of and/or interest on which will provide moneys to
33 pay punctually when due at maturity or prior to maturity by redemption,
34 in accordance with their terms, all principal of and interest on all
35 outstanding notes and bonds of the city or such state financing agency
36 containing this pledge and agreement and irrevocable instructions from
37 the city or such state financing agency to such bank, trust company or
38 other fiduciary for such payment of such principal and interest with
39 such moneys shall have been given, or (ii) such notes and bonds, togeth-
40 er with interest thereon, have been paid in full at maturity or have
41 otherwise been refunded, redeemed, defeased, or discharged; and provided
42 further that the foregoing pledge and agreement shall be of full force
43 and effect upon its inclusion in any agreement made by the city or state
44 financing agency with holders or guarantors of such notes or bonds.
45 Upon payment for such obligations issued pursuant to this act by the
46 original and all subsequent holders inclusion of the foregoing covenant
47 shall be deemed conclusive evidence of valuable consideration received
48 by the state and city for such covenant and of reliance upon such pledge
49 and agreement by any such holder. The state hereby grants any such bene-
50 fited holder the right to sue the state in a court of competent juris-
51 diction and enforce this covenant and agreement and waives all rights of
52 defense based on sovereign immunity in such an action or suit.
53 S 8. Section 5 of chapter 142 of the laws of 2004, amending the local
54 finance law relating to interest rate exchange agreements of the city of
55 New York and refunding bonds of such city, as amended by chapter 117 of
56 the laws of 2008, is amended to read as follows:
S. 16 5
1 S 5. This act shall take effect immediately, provided, that section
2 three of this act shall expire and be deemed repealed July 15, [2009]
3 2010.
4 S 9. Separability. If any clause, sentence, paragraph, section or part
5 of this act shall be adjudged by any court of competent jurisdiction to
6 be invalid, such judgment shall not affect, impair or invalidate the
7 remainder thereof, but shall be confined in its operation to the clause,
8 sentence, paragraph, section or part thereof directly involved in the
9 controversy in which such judgment shall have been rendered.
10 S 10. This act shall take effect immediately.
