Senate Bill S2125

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

                                  2125

                       2009-2010 Regular Sessions

                            I N  S E N A T E

                            February 11, 2009
                               ___________

Introduced  by  Sen.  GOLDEN -- read twice and ordered printed, and when
  printed to be committed to the Committee on Corporations,  Authorities
  and Commissions

AN ACT to amend the public authorities law and the state finance law, in
  relation  to establishing a loan guarantee program for schools author-
  ized under article 56 of the education law

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

  Section  1.  The  public  authorities  law  is amended by adding a new
section 1689-j to read as follows:
  S 1689-J. CHARTER SCHOOL LOAN GUARANTEE PROGRAM.   1. DEFINITIONS.  AS
USED IN THIS SECTION:
  (A)  "AUTHORITY" SHALL MEAN THE DORMITORY AUTHORITY CREATED BY SECTION
SIXTEEN HUNDRED SEVENTY-SEVEN OF THIS TITLE.
  (B) "CHARTER SCHOOL" SHALL MEAN A SCHOOL AUTHORIZED BY ARTICLE  FIFTY-
SIX OF THE EDUCATION LAW.
  (C) "CHARTER SCHOOL PROJECT" SHALL MEAN CONSTRUCTION OF ANY NEW BUILD-
ING,  PURCHASE  OF  AN  EXISTING BUILDING, OR REFINANCING OF AN EXISTING
BUILDING IN ORDER TO FACILITATE  SUBSTANTIAL  IMPROVEMENT  THERETO,  THE
FINANCING OF REAL PROPERTY DEEMED ESSENTIAL FOR THE CONDUCT OF A CHARTER
SCHOOL,  THE EXTENSION OR PROVISION OF UTILITIES AND ANY OTHER APPURTEN-
ANT FACILITIES TO BE USED BY ANY CHARTER  SCHOOL  APPROVED  PURSUANT  TO
SECTION TWENTY-EIGHT HUNDRED FIFTY-TWO OF THE EDUCATION LAW.
  (D)  "LENDING  INSTITUTION"  SHALL  MEAN THE ORIGINAL LENDER UNDER THE
LOAN AGREEMENT OF PARTICIPANTS THEREIN AND ITS SUCCESSORS  AND  ASSIGNS,
AND  MAY  INCLUDE  BUT  IS  NOT LIMITED TO, AN INDIVIDUAL LENDER, CORPO-
RATION, INSURANCE COMPANY, BANK, INVESTMENT COMPANY,  EXECUTOR,  TRUSTEE
OR OTHER FIDUCIARY, PENSION, PROFIT SHARING, AND RETIREMENT FUND.
  (E) "PAYMENTS" SHALL MEAN PERIODIC PAYMENTS CALLED FOR UNDER THE TERMS
OF  A  LOAN,  AND MAY INCLUDE, BUT IS NOT LIMITED TO, INTEREST, INSTALL-

 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                      [ ] is old law to be omitted.
                                                           LBD07741-01-9

              

S. 2125                             2

MENTS OF PRINCIPAL, TAXES AND ASSESSMENTS, LOAN INSURANCE  PREMIUMS  AND
HAZARD INSURANCE PREMIUMS.
  2. POWERS AND LIMITATIONS. THE AUTHORITY SHALL HAVE POWER TO:
  (A)  GUARANTEE  LOAN  REPAYMENTS  TO  A  LENDING  INSTITUTION THAT HAS
PROVIDED THE FUNDING FOR A CHARTER SCHOOL PROJECT, AS DEFINED IN  SUBDI-
VISION  ONE  OF  THIS  SECTION,  NOT  TO EXCEED EIGHTY PER CENTUM OF THE
AMOUNT OF SUCH LOAN, UPON SUCH TERMS AND  CONDITIONS  AS  THE  FUND  MAY
PRESCRIBE, AND FOR SUCH PURPOSES, THE FUND MAY ENTER INTO SUCH AGREEMENT
OR AGREEMENTS WITH LENDING INSTITUTIONS OR OTHER PERSONS AS REQUIRED.
  (B)  ACCEPT  GIFTS,  GRANTS OR LOANS FROM, AND ENTER INTO CONTRACTS OR
OTHER TRANSACTIONS WITH, ANY FEDERAL OR STATE AGENCY, ANY  MUNICIPALITY,
ANY PRIVATE ORGANIZATION OR ANY OTHER SOURCE.
  (C)  ENTER  INTO  AGREEMENTS WITH PROSPECTIVE LENDING INSTITUTIONS AND
BORROWERS FOR THE PURPOSE OF PLANNING, DESIGNING, CONSTRUCTING,  ACQUIR-
ING, ALTERING AND FINANCING PROJECTS.
  (D)  WHEN  IT  BECOMES DESIRABLE FOR THE FUND TO SAFEGUARD ITSELF FROM
LOSSES, IT MAY ACQUIRE, PURCHASE, MANAGE AND OPERATE, HOLD  AND  DISPOSE
OF  REAL  AND  PERSONAL PROPERTY, TAKE ASSIGNMENTS OF RENTALS AND LEASES
AND MAKE AND ENTER INTO ALL CONTRACTS, LEASES, AGREEMENTS  AND  ARRANGE-
MENTS NECESSARY OR INCIDENTAL TO THE PERFORMANCE OF ITS DUTIES.
  (E)  IN ORDER TO FURTHER THE PURPOSES OF THIS SECTION, OR TO SAFEGUARD
THE LOAN GUARANTEE FUND,  PURCHASE,  ACQUIRE  AND  TAKE  ASSIGNMENTS  OF
NOTES,  MORTGAGES,  AND OTHER FORMS OF SECURITY AND EVIDENCES OF INDEBT-
EDNESS, PURCHASE, ACQUIRE, ATTACH, SEIZE, ACCEPT OR TAKE  TITLE  TO  ANY
PROJECT  BY  CONVEYANCE,  OR WHEN AN INSURED LOAN THEREON IS IN DEFAULT,
FORECLOSE, SELL, LEASE OR RENT THE SUBJECT MATTER PROVIDED  FOR  BY  THE
LOAN.
  (F)  PRESCRIBE  STANDARDS  AND CRITERIA BY WHICH APPLICATIONS FOR LOAN
GUARANTEES FOR CHARTER SCHOOLS WILL BE JUDGED, INSOFAR AS SUCH STANDARDS
AND CRITERIA ARE NOT INCONSISTENT WITH THE PURPOSES OF THIS ARTICLE.
  (G) GUARANTEE TO ANY BONDING AGENCY AUTHORIZED TO DO BUSINESS IN  THIS
STATE  ANY  BOND  NECESSARY TO THE ACTIVITY OF THE CHARTER SCHOOL OR FOR
THE UNDERTAKING OF A CHARTER SCHOOL PROJECT. SUCH  GUARANTEE  SHALL  NOT
EXCEED  EIGHTY PER CENTUM OF THE FACE AMOUNT OF ANY LOSS INCURRED BY THE
BONDING AGENCY.
  (H) ISSUE AND SELL ITS DEBENTURES, BEARING  SUCH  INTEREST  RATES  AND
HAVING  SUCH  MATURITIES AND OTHER TERMS AND PROVISIONS AS MAY BE DETER-
MINED BY THE AUTHORITY.
  (I) TO DO ANY AND ALL THINGS NECESSARY OR CONVENIENT TO CARRY OUT  ITS
PURPOSES  AND  EXERCISE THE POWERS GIVEN AND GRANTED UNDER THIS SECTION,
OR UNDER ANY OTHER LAW, SPECIAL, GENERAL OR LOCAL.
  3. LOAN GUARANTEE FUND. THE AUTHORITY SHALL ESTABLISH A LOAN GUARANTEE
FUND. THE LOAN GUARANTEE FUND SHALL BE A NON-LAPSING, REVOLVING FUND  TO
BE  USED FOR THE PURPOSE OF CARRYING OUT THE PROVISIONS OF THIS SECTION.
TO SUCH LOAN GUARANTEE FUND SHALL BE CHARGED PAYMENTS REQUIRED  BY  LOAN
DEFAULTS.  TO SUCH LOAN GUARANTEE FUND SHALL BE CREDITED ALL RECEIPTS OF
THE FUND, OTHER THAN RECEIPTS ALLOCATED FOR THE PAYMENT OF CURRENT OPER-
ATING EXPENSES, INCLUDING LOAN  GUARANTEE  PREMIUMS,  GIFTS,  GRANTS  OR
LOANS,  PROCEEDS  OF  THE SALE OF DEBENTURES BY THE FUND, TRANSFERS FROM
THE CHARTER SCHOOLS STIMULUS FUND CREATED BY SECTION NINETY-SEVEN-SSS OF
THE STATE FINANCE LAW, AND PROCEEDS FROM THE SALE,  DISPOSAL,  LEASE  OR
RENTAL OF REAL OR PERSONAL PROPERTY WHICH THE FUND MAY RECEIVE UNDER THE
PROVISIONS OF THIS SECTION. MONIES OF THE LOAN GUARANTEE FUND, NOT NEED-
ED  TO  MEET  CURRENT OBLIGATIONS OF THE FUND, SHALL BE DEPOSITED TO THE
CREDIT OF SUCH LOAN GUARANTEE FUND AND MAY BE INVESTED AS THE  DIRECTORS
OF THE FUND SHALL DETERMINE.

S. 2125                             3

  4. GUARANTEE OF LOANS. THE AUTHORITY IS AUTHORIZED TO GUARANTEE REPAY-
MENTS  OF  A  LOAN  MADE BY A LENDING INSTITUTION TO PROVIDE FUNDING FOR
CHARTER SCHOOL PROJECTS AS DEFINED IN SUBDIVISION ONE OF  THIS  SECTION,
NOT  TO  EXCEED  EIGHTY  PER CENTUM OF THE PRINCIPAL AMOUNT OF THE OBLI-
GATION,  UPON  SUCH TERMS AND CONDITIONS AS THE AUTHORITY MAY PRESCRIBE,
PROVIDED THAT THE AGGREGATE AMOUNT OF THE UNPAID BALANCE  OF  ALL  OBLI-
GATIONS  SO  GUARANTEED AND OUTSTANDING AT ANY ONE TIME SHALL NOT EXCEED
TEN MILLION DOLLARS DURING THE FIRST FISCAL YEAR OF  OPERATIONS  OF  THE
FUND,  AND  IN ANY SUCCEEDING FISCAL YEAR, FIVE TIMES THE AVERAGE ANNUAL
BALANCE IN THE LOAN GUARANTEE FUND FOR THE PRECEDING  FISCAL  YEAR,  AND
PROVIDED  FURTHER,  HOWEVER,  THAT  THE TOTAL POTENTIAL LIABILITY OF THE
FUND TO A LENDING INSTITUTION ON BEHALF OF ANY ONE  BORROWER  SHALL  NOT
EXCEED FIVE MILLION DOLLARS.
  5.  CONDITIONS  FOR  GUARANTEE.  IN  ORDER FOR A LOAN TO BE GUARANTEED
UNDER THE PROVISIONS OF THIS SECTION, THE LOAN TO BE GUARANTEED MUST  BE
EXECUTED  BY  A  BORROWER TO WHOM CREDIT IS NOT REASONABLY AVAILABLE AND
PROVIDE FINANCING FOR THE ACQUISITION, CONSTRUCTION,  RECONSTRUCTION  OR
REHABILITATION OF A FACILITY FOR A CHARTER SCHOOL.
  6.  LOAN  GUARANTEE  PREMIUM.  THE  AUTHORITY  IS  AUTHORIZED  BUT NOT
REQUIRED TO FIX PREMIUMS FOR THE GUARANTEE OF LOAN REPAYMENTS UNDER  THE
PROVISIONS  OF  THIS SECTION, SUCH PREMIUMS TO BE COMPUTED AS A PERCENT-
AGE, WHICH SHALL NOT EXCEED ONE PER CENTUM PER ANNUM ON THAT PORTION  OF
THE  PRINCIPAL  OBLIGATION GUARANTEED HEREUNDER AS THE FUND SHALL DETER-
MINE ON THE BASIS OF ALL PERTINENT AVAILABLE DATA. SUCH  PREMIUMS  SHALL
BE  PAYABLE BY THE BORROWER IN SUCH MANNER AS SHALL BE PRESCRIBED BY THE
AUTHORITY. THE AMOUNT OF PREMIUM IS NOT REQUIRED TO BE UNIFORM AMONG THE
VARIOUS LOANS INSURED.
  7. EXPENSES. THE AUTHORITY MAY IN ITS DISCRETION EXPEND SUCH MONIES AS
MAY BE NECESSARY FOR ANY  OF  ITS  EXPENSES,  INCLUDING  ADMINISTRATIVE,
LEGAL, ACTUARIAL AND OTHER SERVICES.
  8.  OBLIGATIONS ELIGIBLE FOR INVESTMENT. OBLIGATIONS GUARANTEED BY THE
AUTHORITY UNDER THIS SECTION AND PARTICIPATIONS THEREIN ARE HEREBY  MADE
LEGAL  INVESTMENTS  FOR ALL INSURANCE COMPANIES, TRUST COMPANIES, BANKS,
INVESTMENT COMPANIES, SAVINGS BANKS,  BUILDING  AND  LOAN  ASSOCIATIONS,
CREDIT UNIONS, SAVINGS AND LOAN ASSOCIATIONS, EXECUTORS, ADMINISTRATORS,
GUARDIANS,   CONSERVATORS,  TRUSTEES  AND  OTHER  FIDUCIARIES,  PENSION,
PROFIT-SHARING AND RETIREMENT FUNDS.
  9. CONTRACTS OF GUARANTEE; WAIVERS. (A) THE AUTHORITY SHALL ARRANGE BY
CONTRACT WITH THE LENDING INSTITUTION OR THE BORROWER OR BOTH  TO  SAFE-
GUARD  THE INTEREST OF THE FUND IN THE EVENT OF DEFAULT BY THE BORROWER,
INCLUDING, AT THE DISCRETION OF THE FUND, PROVISION FOR  NOTICE  TO  THE
FUND  OF  DEFAULT  BY THE BORROWER, FOR FORECLOSURE OR OTHER REALIZATION
UPON ANY SECURITY FOR THE LOAN, FOR THE TIME AND CONDITIONS FOR  PAYMENT
TO  THE LENDING INSTITUTION BY THE FUND OF THE AMOUNT OF ANY LOSS TO THE
LENDING INSTITUTION GUARANTEED BY THE FUND, AND FOR THE  DISPOSITION  OF
THE PROCEEDS REALIZED FROM ANY SECURITY FOR THE LOAN GUARANTEED. WHEN IT
APPEARS  DESIRABLE  FOR  A  TEMPORARY  PERIOD UPON DEFAULT OR THREATENED
DEFAULT BY THE BORROWER, THE FUND MAY ITSELF MAKE PAYMENTS  OF  INSTALL-
MENTS  OF PRINCIPAL OR INTEREST OR BOTH, TO THE LENDING INSTITUTION, AND
OF TAXES AND INSURANCE, WHICH  PAYMENTS  SHALL  BE  REPAID,  UNDER  SUCH
CONDITIONS  AS  THE  FUND  MAY PRESCRIBE, AND THE FUND MAY ALSO AGREE TO
REVISED TERMS OF FINANCING WHEN SUCH APPEAR PRUDENT.
  (B) UPON REQUEST OF THE LENDING INSTITUTION, THE FUND MAY AT ANY TIME,
UNDER SUCH EQUITABLE TERMS AND CONDITIONS AS IT MAY  PRESCRIBE,  CONSENT
TO  THE RELEASE OF THE BORROWER FROM HIS OR HER LIABILITY UNDER THE LOAN

S. 2125                             4

OR CONSENT TO THE RELEASE OF PARTS OF ANY SECURED PROPERTY FROM THE LIEN
OF THE LENDING INSTITUTION.
  S 2. Section 97-sss of the state finance law, as added by chapter 4 of
the laws of 1998, is amended to read as follows:
  S  97-sss.  Charter schools stimulus fund. There is hereby established
in the joint custody of the comptroller and the commissioner of taxation
and finance a fund to be known as the  charter  schools  stimulus  fund.
Such  fund shall consist of all monies made available pursuant to appro-
priation for this purpose, all monies transferred to such fund  pursuant
to  law,  and grants, gifts and devises and donations from any public or
private source. The purpose of such fund  is  to  provide  discretionary
financial  support, including grants [and], loans AND LOAN GUARANTEES to
charter school applicants and to charter schools for start-up costs  and
for  costs  associated with the acquisition, renovation, or construction
of school facilities.
  S 3. Severability. If any clause, sentence, paragraph, section or part
of this act shall be adjudged by any court of competent jurisdiction  to
be  invalid,  such  judgment shall not affect, impair, or invalidate 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 4. This act shall take effect immediately.