S T A T E O F N E W Y O R K
________________________________________________________________________
5910
2009-2010 Regular Sessions
I N A S S E M B L Y
February 23, 2009
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Introduced by M. of A. TOWNS, GREENE -- read once and referred to the
Committee on Ways and Means
AN ACT to amend the state finance law, in relation to establishing a
competitive process for negotiated bond offerings for every state
agency and public authority that issues bonds
THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM-
BLY, DO ENACT AS FOLLOWS:
Section 1. The state finance law is amended by adding a new section
136-d to read as follows:
S 136-D. COMPETITIVE PROCESS FOR NEGOTIATED BOND OFFERINGS. 1. FOR
THE PURPOSES OF THIS SECTION, "BONDS" SHALL MEAN (A) ANY BONDS OR OTHER
EVIDENCES OF INDEBTEDNESS ISSUED AFTER THE EFFECTIVE DATE OF THIS
SECTION BY THE STATE OR ANY STATE DEPARTMENT, BOARD, AGENCY OR AUTHORITY
OR (B) ANY BONDS OR OTHER EVIDENCES OF INDEBTEDNESS ISSUED BY ANY PUBLIC
AUTHORITY CREATED UNDER ARTICLES TWO, THREE, FOUR, FIVE, SIX, SEVEN, AND
EIGHT OF THE PUBLIC AUTHORITIES LAW OR (C) ANY BONDS OR OTHER EVIDENCES
OF INDEBTEDNESS ISSUED BY ANY JOINT POWERS AGENCY CREATED BY THE STATE
THAT ARE PAYABLE FROM PAYMENTS MADE WITH RESPECT TO A LEASE OR SALE OF
PROPERTY TO OR FROM THE STATE OF ANY STATE DEPARTMENT, BOARD, AGENCY, OR
AUTHORITY. FOR PURPOSES OF THIS SECTION, "EVIDENCE OF INDEBTEDNESS"
INCLUDES, BUT IS NOT LIMITED TO, CERTIFICATES OF PARTICIPATION OR INTER-
ESTS IN ANY RENTAL OR LEASE PAYMENTS OR INSTALLMENT PURCHASE PAYMENTS,
IN AN AGGREGATE PRINCIPAL AMOUNT EXCEEDING TEN MILLION DOLLARS, TO BE
MADE BY THE STATE OR ANY STATE DEPARTMENT, BOARD, AGENCY, OR PUBLIC
AUTHORITY WITH RESPECT TO BUILDINGS OR OTHER CAPITAL IMPROVEMENTS.
2. THE PROVISIONS OF THIS SECTION SHALL APPLY TO EVERY BOND REGARDLESS
OF ANY OTHER PROVISION OF LAW OR ANY PROVISION OF THE BOND'S AUTHORI-
ZATION.
3. (A) EXCEPT AS PROVIDED IN PARAGRAPHS (B), (C), AND (D) OF THIS
SUBDIVISION, THE COMPTROLLER, IN EXERCISING THE DUTIES OF AGENT FOR
OFFERING AND SELLING BONDS, WHOSE DUTIES INCLUDE, AMONG OTHERS, ESTAB-
EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
[ ] is old law to be omitted.
LBD08045-01-9
A. 5910 2
LISHING THE TIMING OF A SALE, PREPARATION OR APPROVAL OF THE DOCUMENTA-
TION FOR THE SALE, SOLE AUTHORITY TO SELECT THE UNDERWRITERS FOR NEGOTI-
ATING THE SALE, AND EXECUTING THE BOND PURCHASE AGREEMENT ON BEHALF OF
THE STATE OR THE STATE'S AGENCIES, SHALL BE RESPONSIBLE FOR DEVELOPING
AND IMPLEMENTING A COMPETITIVE PROCESS FOR SELECTION OF UNDERWRITERS FOR
NEGOTIATED OFFERINGS OF BONDS. THE COMPETITIVE PROCESS MAY BE CONDUCTED
ON AN ISSUE-BY-ISSUE BASIS OR TO ESTABLISH ONE OR MORE POOLS OF UNDER-
WRITERS FOR VARIOUS TYPES OF ISSUES. THE COMPETITIVE PROCESS SHALL HAVE
AT LEAST ALL OF THE FOLLOWING FEATURES:
(I) SOLICITATION OF WRITTEN QUALIFICATIONS FROM AT LEAST TWENTY UNDER-
WRITING FIRMS;
(II) ESTABLISHMENT OF CRITERIA TO IDENTIFY SMALL FIRMS THAT ARE NEW
YORK BASED;
(III) CONSIDERATION OF THE GOALS FOR SMALL FIRMS AND MINORITY AND
WOMEN BUSINESS ENTERPRISE PARTICIPATION IN PROFESSIONAL BOND SERVICES
CONTRACTS;
(IV) REQUIRING THAT THE WRITTEN SUBMISSIONS SHALL BE AVAILABLE FOR
INSPECTION AT THE OFFICE OF THE COMPTROLLER FOR A PERIOD OF AT LEAST SIX
MONTHS;
(V) IF A POOL OF UNDERWRITERS IS ESTABLISHED, A REQUIREMENT THAT THE
COMPETITIVE PROCESS SHALL BE REPEATED AT LEAST EVERY TWENTY-FOUR MONTHS
TO REESTABLISH THE POOL OF UNDERWRITERS;
(VI) A PRIORITY OF DESIGNATION POLICY THAT HAS A GOAL OF SELECTING AT
LEAST TWO QUALIFIED SMALL FIRMS OR MINORITY AND WOMEN BUSINESS ENTER-
PRISE FIRMS AS CO-SENIOR MANAGERS AND/OR CO-MANAGERS ON EVERY NEGOTIATED
BOND ISSUANCE WITH A MINIMUM TOTAL PARTICIPATION OF TWENTY PERCENT;
(VII) REQUIRING THAT FIRMS SHALL MAKE APPLICATION AND BE QUALIFIED TO
PROVIDE THE FOLLOWING SERVICES: BOOK RUNNING OR CO-SENIOR MANAGER,
CO-MANAGER AND BOND COUNSEL;
(VIII) REQUIRING THAT FIRMS DESIGNATED AS SMALL FIRMS SHALL NOT HAVE
GROSS EARNINGS THAT EXCEED AN AVERAGE OF THIRTY MILLION DOLLARS PER
ANNUM OVER THE THREE YEARS PRIOR TO APPLICATION;
(IX) PROVIDING THAT THE MINIMUM NET CAPITAL REQUIREMENTS FOR APPLICANT
QUALIFICATION SHALL NOT EXCEED TWO HUNDRED THOUSAND DOLLARS; AND
(X) SUCCESSFUL PARTICIPATION IN BOND UNDERWRITINGS IN OTHER STATES
SHALL BE GIVEN DUE CONSIDERATION AND WEIGHT IN SELECTING QUALIFIED
APPLICANTS.
(B) FOR NEGOTIATED OFFERINGS OF BONDS BY STATE FINANCING AUTHORITIES
THAT ACT AS CONDUITS TO PROVIDE FINANCING TO OTHER PUBLIC, NONPROFIT, OR
PRIVATE ORGANIZATIONS, THE COMPTROLLER SHALL USE THE COMPETITIVE PROCESS
DESCRIBED IN PARAGRAPH (A) OF THIS SUBDIVISION TO ESTABLISH ONE OR MORE
POOLS OF UNDERWRITERS FOR EACH FINANCING AUTHORITY. EACH FINANCING
AUTHORITY SHALL SELECT UNDERWRITERS FROM THE APPROVED STATE POOL OF
UNDERWRITERS. THE COMPTROLLER MAY MAKE ADDITIONS TO A POOL WITHOUT
COMPETITIVE SOLICITATION, ON A CASE-BY-CASE DETERMINATION UPON THE
RECOMMENDATION OF A PROJECT APPLICANT, WHERE THE COMPTROLLER FINDS THAT
THE UNDERWRITER TO BE ADDED HAS PROVIDED SIGNIFICANT SERVICES TO THE
PROJECT APPLICANT WITH THE EXPECTATION OF COMPENSATION FOR THOSE
SERVICES FROM UNDERWRITING THE REVENUE BONDS WHICH WILL FUND THE APPLI-
CANT'S PROJECT.
(C) THE COMPTROLLER MAY SELECT UNDERWRITERS FOR A NEGOTIATED SALE OF
BONDS BY MEANS OTHER THAN AS DESCRIBED IN PARAGRAPH (A) OF THIS SUBDIVI-
SION IF THE COMPTROLLER MAKES A WRITTEN FINDING THAT EXTRAORDINARY
MARKET CONDITIONS DO NOT ALLOW ENOUGH TIME TO COMPLY WITH PARAGRAPH (A)
OF THIS SUBDIVISION WITHOUT RISKING FINANCIAL DETRIMENT TO THE STATE.
WITH THE WRITTEN AUTHORIZATION OF THE COMPTROLLER, AND CONSISTENT WITH
A. 5910 3
THIS PARAGRAPH, STATE AGENCIES AND PUBLIC AUTHORITIES MAY SELECT UNDER-
WRITERS FOR NEGOTIATED SALE OF BONDS BY MEANS OTHER THAN THE STATE POOL
OF UNDERWRITERS.
(D) PARAGRAPHS (A), (B), AND (C) OF THIS SUBDIVISION ARE STRICTLY
CONSTRUED TO APPLY TO THE OFFICE OF THE COMPTROLLER AND EVERY STATE
AGENCY THAT ISSUES BONDS AND EVERY PUBLIC AUTHORITY CREATED UNDER ARTI-
CLES TWO THROUGH EIGHT OF THE PUBLIC AUTHORITIES LAW.
(E) FOR NEGOTIATED SALES, THE COMPTROLLER SHALL MAINTAIN RECORDS OF
ALL COST INFORMATION PERTINENT TO THE INITIAL OFFERING OF ALL STATE
BONDS, EXCEPT THAT IN THE CASE OF BONDS ISSUED BY A STATE AUTHORIZED
PUBLIC AUTHORITY, AS DESCRIBED IN PARAGRAPH (B) OF THIS SUBDIVISION, THE
ISSUING PUBLIC AUTHORITY SHALL INSTEAD BE RESPONSIBLE FOR MAINTAINING
THE SAME COST INFORMATION ON BONDS IT HAS ISSUED. THE INFORMATION SHALL
INCLUDE, BUT NOT BE LIMITED TO, ALL OF THE FOLLOWING:
(I) ALL AMOUNTS PAID OUT OF BOND PROCEEDS TO THE UNDERWRITER, DETAILED
BY MANAGEMENT FEE, TAKEDOWN, RISK, AND UNDERWRITER'S EXPENSES;
(II) ALL COSTS PAID OUT OF BOND PROCEEDS TO RATING AGENCIES FOR RATING
OF THE BONDS;
(III) ALL FEES PAID OUT OF BOND PROCEEDS TO BOND COUNSELS, TRUSTEES,
OR FINANCIAL ADVISERS RELATING TO THE INITIAL OFFERING OF THE BONDS; AND
(IV) THE INTEREST RATE TO BE PAID ON THE BONDS.
(F) FOR COMPETITIVE SALES, THE COMPTROLLER SHALL MAINTAIN RECORDS OF
ALL BIDS SUBMITTED AND THE DOCUMENTATION OF BID VERIFICATIONS INCLUDING
THE TERMS OF SALE AND THE CALCULATION OF NET INTEREST COST OR TRUE
INTEREST COST.
(G) THE COMPTROLLER SHALL AUDIT THE COST RECORDS REQUIRED TO BE MAIN-
TAINED PURSUANT TO PARAGRAPH (E) OF THIS SUBDIVISION AND CONDUCT A
REVIEW OF THE RECORDS REQUIRED TO BE MAINTAINED PURSUANT TO PARAGRAPH
(F) OF THIS SUBDIVISION.
(H) THE COMPTROLLER SHALL REPORT WHETHER THIS SECTION IS BEING FULLY
IMPLEMENTED. THE COMPTROLLER SHALL MAKE COST AND INTEREST RATE COMPAR-
ISONS WITH SIMILAR INITIAL BOND OFFERINGS OF OTHER STATES WHERE POSSI-
BLE. THE COMPTROLLER SHALL SUBMIT A REPORT TO THE LEGISLATURE ON MARCH
FIRST, TWO THOUSAND TEN, AND MARCH FIRST, TWO THOUSAND TWELVE, FOR BONDS
SOLD DURING THE TWO CALENDAR YEARS IMMEDIATELY PRECEDING THE YEAR IN
WHICH THE REPORT IS DUE.
S 2. This act shall take effect immediately.