Senate Bill S292

                                 BILL NUMBER:  S292

 TITLE OF BILL :
An act to amend the local finance law, in relation to advance
refunding of certain bonds

 PURPOSE :
Amends section 90.10 of the local finance law to permit the refunding
(refinancing) of outstanding bonds for the sole purpose of
restructuring debt service.

 SUMMARY OF PROVISIONS :
Section 1-authorizes a specific amendment to section 90.10 of the
local finance law to accomplish the above described purpose.

Section 2-contains the severability provision.

Section 3-contains the effective date.

 EXISTING LAW :
The present value limitation on debt refundings of section 90.10 of
the local finance law would be eliminated for refunding certain
outstanding bonds.

 JUSTIFICATION :
Section 90.10 of the local finance law permits the refunding
              

(refinancing) of outstanding serial bonds of municipalities and school
districts prior to their maturity dates. For many years this provision
included a requirement that any such refunding result in present value
savings to the issuer. In 2001, Chapter 383 of the laws of 2001
amended section 90.10 to permit school districts to refund outstanding
bonds without present value savings for debt service restructuring
purposes in connection with changes in the timing of receipt of future
state building aid. This bill would extend the authority to issue
refunding bonds under section 90.10 without present value savings to
all municipalities and school districts for debt service restructuring
purposes.

Over the years, the periods of probable usefulness for many capital
projects already financed with outstanding bonds have been extended.
For example, in 2003, the useful life of a typical building
reconstruction (a very common capital project) was amended from 20
years to 25 years. In addition, many municipalities and school
districts have, in the past, issued their bonds for less than the full
period of probable usefulness in order to reduce overall interest
expense.

Furthermore, bonds issued prior to January 1, 1994, could not be
structured with substantially level or declined annual debt services
as authorized by Chapter 201 of the laws of 1994. With tighter
budgets, many municipalities and school districts would like to
consider the option to extend the maximum maturities of their
outstanding bonds to the full period of probable usefulness legally
available. While aggregate interest over time would increase, it could
be spread over a longer legally permitted time period with less debt
service due in the next several years. This is generally not possible
under section 90.10 as currently written because such an extension of
maturity would not generally result in present value savings. The
proposed amendment to section 90.10 of the local finance law would
permit such "debt restructuring" refundings within the limitations of
(1) existing maximum periods of probable usefulness authorized by the
local finance law, (2) the existing debt amortization methodology
authorized by the local finance law and its Constitutional
requirements and (3) the existing Office of the State Comptroller
review, oversight and approval process mandated by section 90.10 of
the local finance law.
The Legislature has approved similar legislation for school districts
in the past. Therefore, there is precedent for this type of
legislation for all local governments.

 LEGISLATIVE HISTORY :
2007/08: S.1138 - Passed Senate
2005/06: S.731 - Passed Senate
2004:  S.6877 - Passed Senate

 FISCAL IMPLICATIONS :
None to the State. Provides budgetary relief to local governments.

 EFFECTIVE DATE :
This act shall take effect immediately.