Senate Bill S3363

                            
                    S T A T E   O F   N E W   Y O R K
________________________________________________________________________

                                 3363--A

                       2009-2010 Regular Sessions

                            I N  S E N A T E

                             March 17, 2009
                               ___________

Introduced  by  Sen. KRUGER -- (at request of the New York State Housing
  Finance Agency) -- read twice and ordered printed, and when printed to
  be committed to the Committee on Finance -- committee discharged, bill
  amended, ordered reprinted as amended and recommitted to said  commit-
  tee

AN  ACT  in relation to redistributing 2008 bond volume allocations made
  pursuant to section 146 of the federal tax  reform  act  of  1986,  in
  relation  to  allocation of the unified state bond volume ceiling, and
  in relation to enacting the private activity bond  allocation  act  of
  2009 and providing for the expiration of certain provisions thereof

  THE  PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM-
BLY, DO ENACT AS FOLLOWS:

  Section 1. Short title. This act shall be known and may  be  cited  as
the "private activity bond allocation act of 2009".
  S  2.  Legislative  findings  and  declaration. The legislature hereby
finds and declares that the federal tax reform act of 1986 established a
statewide bond volume ceiling on the  issuance  of  certain  tax  exempt
private  activity  bonds  and  notes  and,  under certain circumstances,
governmental use bonds and notes issued by  the  state  and  its  public
authorities,  local governments, agencies which issue on behalf of local
governments, and certain other  issuers.  The  federal  tax  reform  act
establishes  a  formula  for  the  allocation of the bond volume ceiling
which was subject to temporary modification by  gubernatorial  executive
order  until December 31, 1987. That act also permits state legislatures
to establish, by statute, an  alternative  formula  for  allocating  the
volume ceiling. Bonds and notes subject to the volume ceiling require an
allocation  from  the  state's annual volume ceiling in order to qualify
for federal tax exemption.
  It is hereby declared to be the policy of the state  to  maximize  the
public  benefit  through  the issuance of private activity bonds for the
purposes of, among other things, allocating a fair  share  of  the  bond

 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                      [ ] is old law to be omitted.
                                                           LBD09538-05-9
              

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volume  ceiling upon initial allocation and from a bond reserve to local
agencies and for needs identified by local governments; providing  hous-
ing  and  promoting  economic  development;  job creation; an economical
energy  supply;  resource  recovery;  and  to provide for an orderly and
efficient volume ceiling allocation process for state and local agencies
by establishing an alternative formula for making such allocations.
  S 3. Definitions. As used in this act,  unless  the  context  requires
otherwise:
  1. "Bonds" means bonds, notes or other obligations.
  2.  "Carryforward"  means  an  amount  of unused private activity bond
ceiling available to an issuer pursuant to an election  filed  with  the
internal revenue service pursuant to section 146(f) of the code.
  3. "Code" means the internal revenue code of 1986, as amended.
  4. "Commissioner" means the commissioner of the New York state depart-
ment of economic development.
  5.  "Covered  bonds" means those tax exempt private activity bonds and
that portion of the non-qualified amount of an issue of governmental use
bonds for which an allocation of the statewide ceiling is  required  for
the  interest  earned  by  holders of such bonds to be excluded from the
gross income of such holders for federal income tax purposes  under  the
code.
  6. "Director" means the director of the New York state division of the
budget.
  7. "Issuer" means a local agency, state agency or other issuer.
  8.  "Local  agency" means an industrial development agency established
or operating pursuant to article 18-A of the general municipal law,  the
Troy industrial development authority and the Auburn industrial develop-
ment authority.
  9.  "Other  issuer"  means  any agency, political subdivision or other
entity, other than a local agency or state agency, that is authorized to
issue covered bonds.
  10. "Qualified small issue bonds" means qualified small  issue  bonds,
as defined in section 144(a) of the code.
  11.  "State  agency"  means  the state of New York, the New York state
energy research and development authority, the New York job  development
authority,  the New York state environmental facilities corporation, the
New York state urban development corporation and its  subsidiaries,  the
Battery  Park  city  authority,  the  port authority of New York and New
Jersey, the power authority of the state  of  New  York,  the  dormitory
authority  of  the state of New York, the New York state housing finance
agency, the state of New York mortgage  agency,  and  any  other  public
benefit  corporation  or public authority designated by the governor for
the purposes of this act.
  12. "Statewide ceiling" means for any calendar year the highest  state
ceiling  (as such term is used in section 146 of the code) applicable to
New York state.
  13. "Future allocations" means allocations of statewide ceiling for up
to two future years.
  14. "Multi-year housing development project" means a project (a) which
qualifies for covered bonds; (b) which is to be constructed over two  or
more  years;  and  (c)  in which at least twenty percent of the dwelling
units will be occupied by persons and families of low income.
  S 4. Local agency set-aside. A  set-aside  of  statewide  ceiling  for
local  agencies for any calendar year shall be an amount which bears the
same ratio to one-third of the statewide ceiling as  the  population  of
the  jurisdiction  of  such  local agency bears to the population of the

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entire state. The commissioner  shall  administer  allocations  of  such
set-aside to local agencies.
  S  5. State agency set-aside. A set-aside of statewide ceiling for all
state agencies for any calendar year shall be one-third of the statewide
ceiling. The director shall administer allocations of such set-aside  to
state  agencies  and  may  grant  an allocation to any state agency upon
receipt of an application in such form as the director shall require.
  S 6. Statewide bond reserve. One-third of  the  statewide  ceiling  is
hereby  set  aside as a statewide bond reserve to be administered by the
director.
  1. Allocation of the statewide  bond  reserve  among  state  agencies,
local  agencies and other issuers. The director shall transfer a portion
of the statewide bond reserve to the commissioner for allocation to  and
use  by local agencies and other issuers in accordance with the terms of
this section. The remainder of the statewide bond reserve may  be  allo-
cated  by the director to state agencies in accordance with the terms of
this section.
  2. Allocation of statewide bond reserve to  local  agencies  or  other
issuers.
  (a)  Local  agencies  or  other  issuers  may at any time apply to the
commissioner for an allocation from the  statewide  bond  reserve.  Such
application shall demonstrate:
  (i)  that  the requested allocation is required under the code for the
interest earned on the bonds to be excluded from  the  gross  income  of
bondholders for federal income tax purposes;
  (ii)  that  the  local  agency's  remaining unused allocation provided
pursuant to section four of  this  act,  and  other  issuer's  remaining
unused  allocation,  or  any available carryforward will be insufficient
for the specific project or projects for which the reserve allocation is
requested; and
  (iii) that, except for those  allocations  made  pursuant  to  section
twelve of this act to enable carryforward elections, the requested allo-
cation  is  reasonably expected to be used during the calendar year, and
the requested future allocation is reasonably expected to be used in the
calendar year to which the future allocation relates.
  (b) In reviewing  and  approving  or  disapproving  applications,  the
commissioner  shall  exercise discretion to ensure an equitable distrib-
ution of allocations from the statewide bond reserve to  local  agencies
and other issuers. Prior to making a determination on such applications,
the  commissioner shall notify and seek the recommendation of the presi-
dent and chief executive officer of the New York state  housing  finance
agency  in  the case of an application related to the issuance of multi-
family housing or mortgage revenue bonds,  and  in  the  case  of  other
requests,  such  state  officers, departments, divisions and agencies as
the commissioner deems appropriate.
  (c) Applications for allocations  shall  be  made  in  such  form  and
contain such information and reports as the commissioner shall require.
  3.  Allocation of statewide bond reserve to state agencies. The direc-
tor may make an allocation from the statewide bond reserve to any  state
agency.  Before  making  any allocation of the statewide bond reserve to
state agencies the director shall be satisfied:
  (a) that the allocation is required under the code  for  the  interest
earned  on the bonds to be excluded from the gross income of bondholders
for federal income tax purposes;
  (b) that the  state  agency's  remaining  unused  allocation  provided
pursuant  to section five of this act or any available carryforward will

S. 3363--A                          4

be insufficient to accommodate the specific bond  issue  or  issues  for
which the reserve allocation is requested; and
  (c) that, except for those allocations made pursuant to section twelve
of  this  act to enable carryforward elections, the requested allocation
is reasonably expected to be used during  the  calendar  year,  and  the
requested  future  allocation  is  reasonably expected to be used in the
calendar year to which the future allocation relates.
  S 7. Access to employment opportunities. 1. All issuers shall  require
that  any new employment opportunities created in connection with indus-
trial or manufacturing projects financed through the issuance of  quali-
fied  small  issue bonds shall be listed with the New York state depart-
ment of labor and with the one-stop career center  established  pursuant
to  the  federal  Workforce Investment Act (Pub. L. No. 105-220) serving
the locality in which the employment opportunities  are  being  created.
Such listing shall be in a manner and form prescribed by the commission-
er. All issuers shall further require that for any new employment oppor-
tunities  created  in  connection  with  an  industrial or manufacturing
project financed through the issuance of qualified small issue bonds  by
such  issuer,  industrial  or  manufacturing  firms shall first consider
persons eligible to participate in Workforce Investment Act (Pub. L. No.
105-220) programs who shall be referred to the industrial or manufactur-
ing firm by one-stop centers in local workforce investment areas  or  by
the  department  of  labor.  Issuers  of qualified small issue bonds are
required to monitor compliance with the provisions of  this  section  as
prescribed by the commissioner.
  2.  Nothing  in  this  section  shall be construed to require users of
qualified small issue bonds to violate any existing collective  bargain-
ing  agreement  with respect to the hiring of new employees.  Failure on
the part of any user of qualified small issue bonds to comply  with  the
requirements  of this section shall not affect the allocation of bonding
authority to the issuer of the bonds  or  the  validity  or  tax  exempt
status of such bonds.
  S  8. Overlapping jurisdictions. In a geographic area represented by a
county local agency and one or more sub-county local agencies, the allo-
cation granted by section four of this act with respect to such area  of
overlapping  jurisdiction  shall  be  apportioned one-half to the county
local agency and one-half to the sub-county local  agency  or  agencies.
Where  there  is  a local agency for the benefit of a village within the
geographic area of a town for the benefit of  which  there  is  a  local
agency, the allocation of the village local agency shall be based on the
population  of the geographic area of the village, the allocation of the
town local agency shall be based upon the population of  the  geographic
area  of the town outside of the village. Notwithstanding the foregoing,
a local agency may surrender all or part  of  its  allocation  for  such
calendar  year to another local agency with an overlapping jurisdiction.
Such surrender shall be made at such time and  in  such  manner  as  the
commissioner shall prescribe.
  S  9.  Ineligible local agencies. To the extent that any allocation of
the local agency set-aside would be made by this act to a  local  agency
which  is  ineligible to receive such allocation under the code or under
regulations interpreting the state  volume  ceiling  provisions  of  the
code, such allocation shall instead be made to the political subdivision
for whose benefit that local agency was created.
  S 10. Municipal reallocation. The chief executive officer of any poli-
tical  subdivision or, if such political subdivision has no chief execu-
tive officer, the governing board of the political subdivision  for  the

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benefit  of  which a local agency has been established, may withdraw all
or any portion of the allocation granted by section four of this act  to
such  local agency. The political subdivision may then reallocate all or
any  portion  of  such  allocation, as well as all or any portion of the
allocation received pursuant to section nine of this act, to  itself  or
any  other issuer established for the benefit of that political subdivi-
sion or may assign all or any portion of the allocation received  pursu-
ant  to  section  nine  of  this act to the local agency created for its
benefit. The chief executive officer or governing board of the political
subdivision, as the case may be, shall notify the  commissioner  of  any
such reallocation.
  S   10-a.   Future  allocations  for  multi-year  housing  development
projects.  1. In addition to other powers granted under  this  act,  the
commissioner  is  authorized to make the following future allocations of
statewide ceiling for any multi-year  housing  development  project  for
which the commissioner also makes an allocation of statewide ceiling for
the current year under this act or for which, in the event of expiration
of provisions of this act described in section seventeen of this act, an
allocation  of volume cap for a calendar year subsequent to such expira-
tion shall have been made under section 146 of the code:  (a)  to  local
agencies  from the local agency set-aside (but only with the approval of
the chief executive officer of the political subdivision  to  which  the
local  agency  set-aside  relates  or  the governing body of a political
subdivision having no chief executive officer) and (b) to other  issuers
from  that portion, if any, of the statewide bond reserve transferred to
the commissioner by the director. Any  future  allocation  made  by  the
commissioner shall constitute an allocation of statewide ceiling for the
future  year  specified  by the commissioner and shall be deemed to have
been made on the first day of the future year so specified.
  2. In addition to other powers granted under this act, the director is
authorized to make future allocations  of  statewide  ceiling  from  the
state agency set-aside or from the statewide bond reserve to state agen-
cies for any multi-year housing development project for which the direc-
tor  also makes an allocation of statewide ceiling from the current year
under this act or for which, in the event of expiration of provisions of
this act described in section seventeen of this act,  an  allocation  of
volume  cap for a calendar year subsequent to such expiration shall have
been made under section 146 of the  code,  and  is  authorized  to  make
transfers  of  the statewide bond reserve to the commissioner for future
allocations to other issuers for multi-year housing development projects
for which the commissioner has made an allocation of  statewide  ceiling
for  the  current  year.  Any  such future allocation or transfer of the
statewide bond reserve for future allocation made by the director  shall
constitute  an allocation of statewide ceiling or transfer of the state-
wide bond reserve for the future years specified  by  the  director  and
shall be deemed to have been made on the first day of the future year so
specified.
  3.  (a)  If  an  allocation  made with respect to a multi-year housing
development project is not used by October  fifteenth  of  the  year  to
which  the  allocation  relates, the allocation with respect to the then
current year shall be  subject  to  recapture  in  accordance  with  the
provisions  of  section  eleven  of this act, and in the event of such a
recapture, unless a carryforward election by another issuer  shall  have
been  approved by the commissioner or a carryforward election by a state
agency shall have been approved by the director, all future  allocations

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made with respect to such project pursuant to subdivision one or  two of
this section shall be canceled.
  (b) The commissioner and the director shall have the authority to make
future allocations from recaptured current year allocations and canceled
future  allocations  to  multi-year  housing  development  projects in a
manner consistent with the provisions of this act. Any such future allo-
cation shall, unless a carryforward election  by  another  issuer  shall
have  been  approved by the commissioner or a carryforward election by a
state agency shall have been approved by the director,  be  canceled  if
the  current year allocation for the project is not used by December 31,
2009.
  (c) The commissioner  and  the  director  shall  establish  procedures
consistent  with  the provisions of this act relating to carryforward of
future allocations.
  4. The aggregate future allocations from either of the two  succeeding
years  shall  not exceed six hundred fifty million dollars for each such
year.
  S 11. Year end allocation recapture. On or  before  October  first  of
each year, each state agency shall report to the director and each local
agency and each other issuer shall report to the commissioner the amount
of  bonds subject to allocation under this act that will be issued prior
to the end of the then current calendar year,  and  the  amount  of  the
issuer's  then  total  allocation that will remain unused. As of October
fifteenth of each year, the unused portion of each  local  agency's  and
other  issuer's  then  total  allocation as reported and the unallocated
portion of the set-aside for state  agencies  shall  be  recaptured  and
added  to the statewide bond reserve and shall no longer be available to
covered bond issuers except as otherwise provided herein.  From  October
fifteenth through the end of the year, each local agency or other issuer
having  an  allocation  shall immediately report to the commissioner and
each state agency having an allocation shall immediately report  to  the
director  any  changes  to the status of its allocation or the status of
projects for which allocations have been made which  should  affect  the
timing  or  likelihood of the issuance of covered bonds therefor. If the
commissioner determines that a local agency or other issuer has  overes-
timated  the  amount of covered bonds subject to allocation that will be
issued prior to the end of  the  calendar  year,  the  commissioner  may
recapture  the  amount  of  the allocation to such local agency or other
issuer represented by such overestimation by notice to the local  agency
or  other issuer, and add such allocation to the statewide bond reserve.
The director may likewise make such  determination  and  recapture  with
respect to state agency allocations.
  S  12.  Allocation  carryforward.  1.  No local agency or other issuer
shall make a  carryforward  election  utilizing  any  unused  allocation
(pursuant  to  section 146(f) of the code) without the prior approval of
the commissioner. Likewise no state agency shall make or  file  such  an
election,  or  elect  to  issue or carry forward mortgage credit certif-
icates, without the prior approval of the director.
  2. On or before November fifteenth of each  year,  each  state  agency
seeking  unused  statewide  ceiling for use in future years shall make a
request for an allocation for a  carryforward  to  the  director,  whose
approval shall be required before a carryforward election is filed by or
on behalf of any state agency. A later request may also be considered by
the  director, who may file a carryforward election for any state agency
with the consent of such agency.

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  3. On or before November fifteenth of each year, each local agency  or
other  issuer  seeking  unused statewide ceiling for use in future years
shall make a request for an allocation for a carryforward to the commis-
sioner, whose approval shall be required before a carryforward  election
is  filed  by or on behalf of any local or other agency. A later request
may also be considered by the commissioner.
  S 13. New York state bond allocation policy advisory panel.  1.  There
is  hereby created a policy advisory panel and process to provide policy
advice regarding the priorities for distribution of the statewide  ceil-
ing.
  2.  The  panel  shall  consist  of  five  members,  one designee being
appointed by each of the following: the governor, the  temporary  presi-
dent  of the senate, the speaker of the assembly, the minority leader of
the senate and the minority leader of the assembly. The designee of  the
governor  shall  chair the panel. The panel shall monitor the allocation
process throughout the year, and in that regard,  the  division  of  the
budget and the department of economic development shall assist and coop-
erate  with  the panel as provided in this section. The advisory process
shall operate through the issuance of advisory opinions  by  members  of
the  panel  as provided in subdivisions six and seven of this section. A
meeting may be held at the call of the chair with the unanimous  consent
of the members.
  3.  (a)  Upon  receipt  of  a  request for allocation or a request for
approval of a carryforward election from the statewide  reserve  from  a
local  agency or other issuer, the commissioner shall, within five work-
ing days, notify the panel of such request and provide  the  panel  with
copies of all application materials submitted by  the applicant.
  (b) Upon receipt of a request for allocation or a request for approval
of carryforward election from the statewide reserve from a state agency,
the  director  shall, within five working days, notify the panel of such
request and provide the panel with copies of all  application  materials
submitted by the applicant.
  4.  (a)  Following  receipt  of  a request for allocation from a local
agency or other issuer, the commissioner shall notify  the  panel  of  a
decision  to approve or exclude from further consideration such request,
and the commissioner shall state the reasons. Such notification shall be
made with or after the  transmittal  of  the  information  specified  in
subdivision  three of this section and at least five working days before
formal notification is made to the applicant.
  (b) Following receipt of a request for allocation from a state agency,
the director shall notify the panel of a decision to approve or  exclude
from  further  consideration  such request, and shall state the reasons.
Such notification shall be made with or after the  transmission  of  the
information  specified in subdivision three of this section and at least
five working days before formal notification is made to the state  agen-
cy.
  5.  The  requirements  of  subdivisions three and four of this section
shall not apply to adjustments to allocations due to bond sizing  chang-
es.
  6.  In  the  event  that  any  decision  to approve or to exclude from
further consideration a request for allocation is made within ten  work-
ing days of the end of the calendar year and in the case of all requests
for consent to a carryforward election, the commissioner or director, as
is  appropriate,  shall  provide  the  panel  with  the longest possible
advance notification of the action, consistent with the requirements  of
the  code,  and  shall,  wherever  possible, solicit the opinions of the

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members of the panel before formally  notifying  any  applicant  of  the
action.  Such  notification  may  be made by means of telephone communi-
cation to the members or by  written  notice  delivered  to  the  Albany
office of the appointing authority of the respective members.
  7.  Upon  notification by the director or the commissioner, any member
of the panel may, within five working days, notify the  commissioner  or
the  director of any policy objection concerning the expected action. If
three or more members of the panel shall  submit  policy  objections  in
writing  to  the intended action, the commissioner or the director shall
respond in writing to the objection prior to taking the intended  action
unless  exigent  circumstances  make  it  necessary to respond after the
action has been taken.
  8. On or before the first day of March,  in  any  year,  the  director
shall report to the members of the New York state bond allocation policy
advisory  panel on the actual utilization of volume cap for the issuance
of bonds during the prior calendar year and the amount of such cap allo-
cated for carryforwards for  future  bond  issuance.  The  report  shall
include, for each local agency or other issuer and each state agency the
initial  allocation,  the  amount  of  bonds issued subject to the allo-
cation, the amount of the issuer's allocation that remained unused,  and
the  allocation  of the statewide bond reserve, carryforward allocations
and recapture of allocations.  Further, the report shall include projec-
tions regarding private activity  bond  issuance  for  state  and  local
issuers for the calendar year, as well as any recommendations for legis-
lative action.
  S  14.  Severability.  If any clause, sentence, paragraph, section, or
part of this act shall be adjudged by any court of  competent  jurisdic-
tion  to  be invalid, such judgment shall not affect, impair, or invali-
date the remainder thereof, but shall be confined in  its  operation  to
the  clause,  sentence,  paragraph,  section,  or  part thereof directly
involved in the controversy in  which  such  judgment  shall  have  been
rendered.
  S  15.  Notwithstanding any provisions of this act to the contrary (1)
provided that a local agency or other issuer certifies  to  the  commis-
sioner  on or before October 1, 2009 that it has issued private activity
bonds described in this section and the amount thereof which used state-
wide ceiling, a commitment or allocation of statewide ceiling to a local
agency or other issuer made to or so used by such local agency or  other
issuer  pursuant to the federal tax reform act of 1986 on or after Janu-
ary 1, 2009 and prior to the effective date of this act,  in  an  amount
which  exceeds the local agency set-aside established by section four of
this act, shall be first chargeable to the statewide bond reserve estab-
lished pursuant to section six of this act,  and  (2)  a  commitment  or
allocation  of  statewide  ceiling  to a state agency made to or used by
such agency pursuant to the internal revenue code,  as  amended,  on  or
after January 1, 2009 and prior to the effective date of this act, shall
be  first  chargeable to the state agency set-aside established pursuant
to section five of this act, and,  thereafter,  to  the  statewide  bond
reserve established by section six of this act.
  S  16.  Nothing  contained  in  this act shall be deemed to supersede,
alter or impair any allocation used by or committed by the  director  or
commissioner  to a state or local agency or other issuer pursuant to the
federal tax reform act of 1986 and prior to the effective date  of  this
act.
  S  17. This act shall take effect immediately; provided, however, that
sections three through thirteen of this  act  shall  expire  January  1,

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2010;  except  that the provisions of subdivision eight of section thir-
teen of this act shall expire March 1, 2010 and the provisions of subdi-
visions two and three of section twelve of this act shall expire  Febru-
ary 15, 2010, and, provided further that section ten-a of this act shall
continue in full force and effect and shall be subject to the applicable
provisions  of this act notwithstanding the expirations of law set forth
in this section.