BILL NUMBER:S7554

TITLE OF BILL:
CONCURRENT RESOLUTION OF THE SENATE AND ASSEMBLY
proposing
an amendment to section 5 of article 8 of the constitution, in relation
to the exclusion of indebtedness contracted for sewage facilities

PURPOSE:
To enable counties, cities, towns and villages to finance
construction and reconstruction of sewage facilities without
impairing their ability to finance other essential capital
requirements.

SUMMARY OF PROVISIONS:
Section 1 of this bill amends Paragraph E of
Section 5 of Article 8 of the Constitution to extend, until January
1, 2024, the authority of counties, cities, towns and villages to
exclude from their constitutional debt limits indebtedness contracted
for the construction and reconstruction of facilities for the
conveyance, treatment and disposal of sewage by eliminating the
expiration provision.

PRIOR LEGISLATIVE HISTORY:
New bill.

              

JUSTIFICATION:
The exclusion of sewer debt from the constitutional
debt limits of counties, cities, towns and villages was originally
authorized in 1963 for a ten-year period. When first enacted, the
general purpose of the exclusion was to encourage and enable
municipalities to participate in the State's then new sewer
construction assistance plan without fear that, by incurring
indebtedness for sewer purposes, they would diminish their power to
incur debt for other capital improvements which they desired to
undertake and finance.

It initially was believed that limiting the exclusion to indebtedness
incurred during a 10-year period would encourage municipalities to
take action during such 10-year period, and that thus the exclusion
would assist in accomplishing the purposes of the State's water
anti-pollution program. Reflecting the fact that these pollution
concerns are continuing and require an ongoing effort, however, the
exclusion has been subsequently extended for four successive ten-year
periods. Without a further extension, the exclusion will apply only
to debt contracted through the end of 2013. This amendment would
permit the exclusion of such indebtedness until January 1, 2024.

The concerns addressed in 1963 and by subsequent extensions of the
exclusion are still valid today. Although many pollution problems
have been abated, there are still significant concerns that need to
be addressed. Technology continues to evolve to make
more efficient systems available, additional development necessitates
the construction of new systems, and existing sewage treatment
facilities age, necessitating reconstruction and refurbishment.


Further, municipalities have been able to benefit from the State's
current loan program the Clean Water State Revolving Fund ("CWSRF"),
administered by the State Department of Environmental Conservation
("DEC") and the Environmental Facilities Corporation ("EFC"). This
program provides loans at below-market interest rates to
municipalities for a variety of projects relating to water pollution,
including waste-water treatment facilities and sewer systems. Since
its inception in 1990, the CWSRF program has loaned more than $12.1
billion for 1,500 projects across the State. According to the 2012
intended use plan prepared with respect to the CWSRF, DEC and EFC
anticipate financing approximately $705 million in diverse projects,
including many for the conveyance, treatment and disposal of sewage
in New York State.

These numbers are indicative of the continuing efforts by the State
and municipalities to help manage sewage in the State. In addition,
certain federal agencies, such as the U.S.
Department of Agriculture Rural Development, may make loans at
below-market rates, along with grants, available. Under these
programs, however, municipalities generally still must issue their
own indebtedness and, therefore, the need for debt contracting
capacity continues.

The constitutional exclusion has been implemented by Local Finance Law
§124.10, which requires that applications for the exclusion of sewer
indebtedness be filed with the State Comptroller. The Office of the
State Comptroller's records indicates that from January of 2001
through the close of 2011, municipalities have applied for and were
granted 178 exclusions of sewer debt. Each applicant derived benefit
from its exclusion by virtue of protecting its debt contracting
margin, thereby preserving the ability to issue debt for other
capital projects and needs. This bill would continue the exclusion of
sewer debt from debt limitations and so maintain the resulting
significant benefits to municipalities throughout the State.

The current authorization for excluding indebtedness for sewage
construction from municipal debt limitations will expire on December
31, 2013. Since a constitutional amendment requires passage by two
consecutively elected legislatures and approval by the voters, the
current authorization will expire unless the Legislature extends the
sunset date by passing an amendment during the current 2012
legislative session and again in 2013.

The Comptroller urges the passage of this proposed legislation.

FISCAL IMPLICATIONS FOR STATE:
This bill has no significant State
fiscal impact.

EFFECTIVE DATE:
This amendment would become effective on the first day
of January next succeeding approval of both houses of two
consecutively elected legislatures and approval of the people in the
subsequent general election.