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
                               ___________

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.