senate Bill S4655

Signed By Governor
2013-2014 Legislative Session

Relates to the sale of bonds, the down payment for projects financed by bonds, variable rate debt and interest rate exchange agreements of the city of New York

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Archive: Last Bill Status Via A7175 - Signed by Governor


  • Introduced
  • In Committee
  • On Floor Calendar
    • Passed Senate
    • Passed Assembly
  • Delivered to Governor
  • Signed by Governor

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Actions

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Assembly Actions - Lowercase
Senate Actions - UPPERCASE
Jun 30, 2013 signed chap.79
Jun 26, 2013 delivered to governor
Jun 21, 2013 returned to assembly
passed senate
3rd reading cal.497
substituted for s4655
Jun 21, 2013 substituted by a7175
May 06, 2013 advanced to third reading
May 01, 2013 2nd report cal.
Apr 30, 2013 1st report cal.497
Apr 17, 2013 referred to local government

Votes

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S4655 - Bill Details

See Assembly Version of this Bill:
A7175
Law Section:
Local Finance Law
Laws Affected:
Amd §§54.10, 57.00, 90.00, 107.00 & 54.90, Loc Fin L; amd §10-a, §2 of Chap 868 of 1975; amd §5, Chap 142 of 2004
Versions Introduced in 2011-2012 Legislative Session:
S7501

S4655 - Bill Texts

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Relates to the sale of bonds, the down payment for projects financed by bonds, variable rate debt and interest rate exchange agreements of the city of New York.

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BILL NUMBER:S4655

TITLE OF BILL: An act to amend the local finance law, in relation to
the sale of bonds and notes of the city of New York, the refunding of
bonds, the down payment for projects financed by bonds, variable rate
debt, and interest rate exchange agreements of the city of New York;
to amend the New York state financial emergency act for the city of
New York, in relation to a pledge and agreement of the state; and to
amend chapter 142 of the laws of 2004, amending the local finance law
relating to interest rate exchange agreements of the city of New York
and refunding bonds of such city, in relation to the effectiveness
thereof

SUMMARY OF PROVISIONS:

Section one of this bill would amend § 54.10(a) of the Local Finance
Law ("LFL") to extend until 2013 the provisions of such section
authorizing the City to sell its obligations through negotiated
agreement, to Provide for compensation for services rendered in
connection with the private sale of obligations by selling such
obligations at a discount, to provide for redemption of its
obligations prior to maturity at prices and pursuant to terms
determined by the City, and to include the costs of a negotiated
underwriting and other costs of issuance of its obligations in the
cost of the object or purpose being financed by such obligations.

Section two would amend LFL § 57.00(a) to extend until 2013 the City's
authority to sell bonds at private sale.

Section three would amend LFL § 90.00(g)(3) to extend until 2013 the
City's authorization to exchange refunding bonds for outstanding bonds
under certain circumstances.

Section four would amend LFL § 107.00(d)(8) to extend until 2013 the
inapplicability of the down payment provisions of that section to
certain bonds and notes of the City.

Section five of the bill would amend LFL § 54.90(a) to extend through
July 15, 2013 the authorization for the City to issue bonds or notes
with variable rates of interest.

Section six of the bill would amend LFL § 54.90(d)(1) to extend
through July 15, 2013 the authorization for the City to enter into
interest rate exchange agreements (commonly referred to as "swaps") or
other similar agreements.

Section seven would amend § 10-a(1) of the New York State Financial
Emergency Act for the City of New York ("FEA") to extend-until 2013
the authority of the City to include the pledge and agreement of the
State in agreements with holders or guarantors of City obligations.

Section eight would amend § 5 of Ch. 142 of the laws of 2004 to extend
until 2013 the amendment to section 90.10(b)(2)(a) of the LFL
providing that for Purposes of calculating present value savings in a
refund transaction, the interest payments on variable rate bonds may
be the fixed rate payable by the City in a related interest rate
exchange agreement, if any, or as found by the Finance Board of the


City of New York ("Finance Board"); and in the case of refunding of
variable rate bonds with variable rate bonds, if determined by the
Finance Board, present value savings would not need to be
demonstrated.

REASONS FOR SUPPORT: This bill includes several elements that will be
instrumental in ensuring that the City of Mew York has efficient and
cost-effective access to the capital markets, which have been
experiencing unprecedented turmoil over the past few years. First, in
1978, the Legislature enacted various provisions of the LFL and the
FEA to respond to the financial emergency existing in the City and to
improve marketability of City obligations by authorizing their sale on
terms consistent with current market practices. Certain of these
provisions contained sunset provisions, and in 1982, the Legislature
extended certain sunset provisions and introduced other changes
necessary for the continued successful marketing of City obligations,
some of which were applicable to other municipal issuers as well.
Since 1985, the Legislature has extended these sunset provisions
annually.

This network of legislation has enabled the City to continue to sell
its obligations in the public credit markets during these difficult
times. Indeed, the size of the City's capital program and the current
market environment, in which competitive sales of debt have, on
occasion, failed to attract any bidders, makes the ability to sell
debt through negotiated sales crucial to the City. If the City is to
continue to undertake necessary capital projects, it is essential that
it retain its ability to utilize modern financing techniques. The
extension of these sunset provisions therefore is essential to the
City's fiscal health, especially in light of the current economic
downturn.

Second, by extending through July 15, 2013 the authorization of the
City to enter into interest rate exchange agreements or "swaps",
whether or not relating to variable-rate bonds, the Legislature would
be confirming the utility of these agreements that it recognized when
it created this swap authorization in Chapter 93 of the Laws of 2002.

Third, with respect to interest on variable rate bonds used in a
refunding, by extending through July 15, 2013 the amendment made to
section 90.10(b)(2) (a) of the LFL, the City would continue to be able
to demonstrate present value savings by permitting the rate on
variable rate bonds to be the fixed rate payable in a related interest
rate exchange agreement or as found by the Finance Board.
Furthermore, this would extend the City's ability to refund variable
rate bonds with other variable rate bonds without reference to the
present value savings test. The extension of these provisions and the
enhanced flexibility in entering into exchange agreements are
essential if the City is to efficiently access the public credit
markets.

Accordingly, the Mayor urges the earliest Possible favorable
consideration of this proposal by the Legislature.

EFFECTIVE DATE: Immediately.


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

                                  4655

                       2013-2014 Regular Sessions

                            I N  S E N A T E

                             April 17, 2013
                               ___________

Introduced  by  Sen.  GOLDEN -- read twice and ordered printed, and when
  printed to be committed to the Committee on Local Government

AN ACT to amend the local finance law, in relation to the sale of  bonds
  and  notes  of  the city of New York, the refunding of bonds, the down
  payment for projects financed by bonds, variable rate debt, and inter-
  est rate exchange agreements of the city of New York; to amend the New
  York state financial emergency act  for  the  city  of  New  York,  in
  relation  to a pledge and agreement of the state; and to amend chapter
  142 of the laws of 2004, amending the local finance  law  relating  to
  interest  rate exchange agreements of the city of New York and refund-
  ing bonds of such city, in relation to the effectiveness thereof

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

  Section  1. The opening paragraph of paragraph (a) of section 54.10 of
the local finance law, as amended by chapter 89 of the laws of 2012,  is
amended to read as follows:
  To facilitate the marketing of any issue of bonds or notes of the city
of  New York issued on or before June thirtieth, two thousand [thirteen]
FOURTEEN, the mayor and comptroller of such city  may,  subject  to  the
approval  of  the state comptroller and the limitations on private sales
of bonds and notes, respectively, provided by law:
  S 2. The opening paragraph of paragraph a  of  section  57.00  of  the
local  finance  law,  as  amended  by chapter 89 of the laws of 2012, is
amended to read as follows:
  Bonds shall be sold only at public sale and  in  accordance  with  the
procedure set forth in this section and sections 58.00 and 59.00 of this
title, except as otherwise provided in this paragraph. Bonds may be sold
at private sale to the United States government or any agency or instru-
mentality  thereof, the state of New York municipal bond bank agency, to
any sinking fund or pension fund of the municipality, school district or
district corporation selling such bonds, or, in the case of sales by the

 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                      [ ] is old law to be omitted.
                                                           LBD10343-01-3

S. 4655                             2

city of New York prior to July first, two thousand [thirteen]  FOURTEEN,
also to the municipal assistance corporation for the city of New York or
to any other purchaser with the consent of the mayor and the comptroller
of  such  city and approval of the state comptroller, or, in the case of
sales by the county of Nassau prior to December thirty-first, two  thou-
sand seven, also to the Nassau county interim finance authority with the
approval  of the state comptroller, or, in the case of sales by the city
of Buffalo prior to June thirtieth, two thousand thirty-seven,  also  to
the  Buffalo  fiscal  stability authority with the approval of the state
comptroller, or, in the case of bonds or other obligations of a  munici-
pality issued for the construction of any sewage treatment works, sewage
collecting  system,  storm  water  collecting  system,  water management
facility, air pollution control facility or solid waste disposal facili-
ty, also to the New York state environmental facilities corporation, or,
in the case of bonds or other obligations of a school district or a city
acting on behalf of a city school district in a city having a population
in excess of one hundred twenty-five thousand but less than one  million
inhabitants according to the latest federal census, issued to finance or
refinance  the  cost  of  school  district  capital facilities or school
district capital equipment, as defined in section sixteen hundred seven-
ty-six of the public authorities law, also to the dormitory authority of
the state of New York. Bonds of a river improvement or drainage district
established by or under the supervision of the  department  of  environ-
mental conservation may be sold at private sale to the state of New York
as  investments for any funds of the state which by law may be invested,
provided, however, that the rate of interest on any such bonds  so  sold
shall  be  approved  by  the  water power and control commission and the
state comptroller. Bonds may also be sold at private sale as provided in
section 63.00 of this title. No bonds shall be sold on option  or  on  a
deferred  payment plan, except that options to purchase, effective for a
period not exceeding one year, may be given:
  S 3. Subdivision 3 of paragraph  g  of  section  90.00  of  the  local
finance law, as amended by chapter 89 of the laws of 2012, is amended to
read as follows:
  3.  Outstanding bonds may, pursuant to a power to recall and redeem or
with the consent of the holders  thereof,  be  exchanged  for  refunding
bonds (i) if the refunding bonds are to bear interest at a rate equal to
or  lower than that borne by the bonds to be refunded or (ii) if, in the
case of the city of New York prior to July first,  two  thousand  [thir-
teen]  FOURTEEN,  the annual payment required for principal and interest
on the refunding bond is less than the annual payment required for prin-
cipal and interest on the bond to be refunded, in each case such  annual
payments  to  be determined by dividing the total principal and interest
payments due over the remaining life of the bond by the number of  years
to maturity of the bond or (iii) if the bonds to be refunded were issued
by  the city of New York after June thirtieth, nineteen hundred seventy-
eight and prior to July first,  two  thousand  [thirteen]  FOURTEEN  and
contain  covenants  referring  to  the  existence  of the New York state
financial control board for the city of New York or any other  covenants
relating  to  matters  other  than  the  prompt payment of principal and
interest on the obligations when due and the  refunding  bond  omits  or
modifies any such covenant.
  S  4.  Subdivision  8  of  paragraph  d of section 107.00 of the local
finance law, as amended by chapter 89 of the laws of 2012, is amended to
read as follows:

S. 4655                             3

  8. Notwithstanding any other provision of law, the  financing  by  the
city  of  New York prior to July first, two thousand [thirteen] FOURTEEN
of any object or purpose which  has  a  period  of  probable  usefulness
determined  by  law by the issuance of any bonds or notes, including (i)
the issuance of bonds or notes to obtain reimbursement for funds hereto-
fore advanced for the object or purpose for which the bonds or notes are
being issued, (ii) the issuance of bonds or notes to redeem notes previ-
ously  issued for the object or purpose for which the bonds or notes are
being issued or (iii) the issuance of bonds to refund  bonds  previously
issued for the object or purpose for which bonds are being issued.
  S  5.  The  closing  paragraph  of paragraph a of section 54.90 of the
local finance law, as amended by chapter 89 of  the  laws  of  2012,  is
amended to read as follows:
  Notwithstanding the foregoing, whenever in the judgment of the finance
board  of the city of New York the interest of such city would be served
thereby, the city of New York may without further approval  issue  bonds
or notes, on or before July fifteenth, two thousand [thirteen] FOURTEEN,
with  interest rates that vary in accordance with a formula or procedure
and are subject to a maximum rate of interest set forth or  referred  to
in  the  bonds  or  notes  and may provide the holders thereof with such
rights to require the city or other persons to purchase  such  bonds  or
notes  or  renewals  thereof  from the proceeds of the resale thereof or
otherwise from time to time prior to the final maturity of such bonds or
notes as the finance board of the city of New York may determine and the
city may resell, at any time prior to final maturity, any such bonds  or
notes  acquired  as  a  result of the exercise of such rights; provided,
however, that at no time shall the total principal amount of  bonds  and
notes  issued  by the city of New York pursuant to this paragraph (other
than bonds and notes (1) bearing interest at rates and  for  periods  of
time that are specified without reference to future events or contingen-
cies,  or  (2) described in section 136.00 of this article) exceed twen-
ty-five percent of the limit prescribed by section 104.00 of this  arti-
cle.
  S  6. The opening paragraph of subdivision 1 of paragraph d of section
54.90 of the local finance law, as amended by chapter 89 of the laws  of
2012, is amended to read as follows:
  On  or  before  July  fifteenth,  two thousand [thirteen] FOURTEEN the
mayor and comptroller of the city of New York may:
  S 7. Subdivision 1 of section 10-a of section 2 of chapter 868 of  the
laws  of  1975,  constituting the New York state financial emergency act
for the city of New York, as amended by chapter 89 of the laws of  2012,
is amended to read as follows:
  1.  In  the  event that after the date on which the provisions of this
act become operative, any notes or bonds are issued by the city prior to
July 1, [2013] 2014, or any bonds are issued by a state financing  agen-
cy,  the state of New York hereby authorizes the city and authorizes and
requires such state financing agency to include a pledge  and  agreement
of the state of New York in any agreement made by the city or such state
financing  agency with holders or guarantors of such notes or bonds that
the state will not take any action which will (a)  substantially  impair
the authority of the board during a control period, as defined in subdi-
vision  twelve  of section two of this act as in effect on the date such
notes or bonds are issued (i) to  approve,  disapprove,  or  modify  any
financial  plan  or  financial  plan modification, including the revenue
projections (or any item thereof)  contained  therein,  subject  to  the
standards set forth in paragraphs a, c, d, e and f of subdivision one of

S. 4655                             4

section  eight  of this act as in effect on the date such notes or bonds
are issued and paragraph b of such subdivision as in effect from time to
time, (ii) to disapprove a contract of the city or a  covered  organiza-
tion  if the performance of such contract would be inconsistent with the
financial plan or to approve or disapprove proposed short-term or  long-
term borrowing of the city or a covered organization or any agreement or
other  arrangement  referred  to in subdivision four of section seven of
this act, or (iii) to establish and adopt procedures with respect to the
deposit in and disbursement from the board fund of  city  revenues;  (b)
substantially  impair  the  authority  of  the board to review financial
plans, financial plan  modifications,  contracts  of  the  city  or  the
covered organizations and proposed short-term or long-term borrowings of
the  city  and  the  covered organizations; (c) substantially impair the
independent maintenance of a separate  fund  for  the  payment  of  debt
service on bonds and notes of the city; (d) alter the composition of the
board  so  that  the majority of the voting members of the board are not
officials of the state of New York elected in a state-wide  election  or
appointees  of  the  governor;  (e) terminate the existence of the board
prior to the time to be determined in accordance with  section  thirteen
of this act as in effect on the date such notes or bonds are issued; (f)
substantially  modify  the  requirement that the city's financial state-
ments be audited by a nationally recognized independent certified public
accounting firm or consortium of firms and that a report on  such  audit
be  furnished  to  the  board;  or (g) alter the definition of a control
period set forth in subdivision twelve of section two of this act, as in
effect on the date such notes or  bonds  are  issued,  or  substantially
alter  the  authority  of the board, as set forth in said subdivision to
reimpose or terminate a control  period;  provided,  however,  that  the
foregoing  pledge  and agreement shall be of no further force and effect
if at any time (i) there is on deposit in a separate trust account  with
a  bank,  trust  company  or other fiduciary sufficient moneys or direct
obligations of the United States or obligations guaranteed by the United
States, the principal of and/or interest on which will provide moneys to
pay punctually when due at maturity or prior to maturity by  redemption,
in  accordance  with  their  terms, all principal of and interest on all
outstanding notes and bonds of the city or such state  financing  agency
containing  this  pledge and agreement and irrevocable instructions from
the city or such state financing agency to such bank, trust  company  or
other  fiduciary  for  such  payment of such principal and interest with
such moneys shall have been given, or (ii) such notes and bonds, togeth-
er with interest thereon, have been paid in full  at  maturity  or  have
otherwise been refunded, redeemed, defeased, or discharged; and provided
further  that  the foregoing pledge and agreement shall be of full force
and effect upon its inclusion in any agreement made by the city or state
financing agency with holders or guarantors of such notes or bonds.
  Upon payment for such obligations issued pursuant to this act  by  the
original  and all subsequent holders inclusion of the foregoing covenant
shall be deemed conclusive evidence of valuable  consideration  received
by the state and city for such covenant and of reliance upon such pledge
and agreement by any such holder. The state hereby grants any such bene-
fited  holder  the right to sue the state in a court of competent juris-
diction and enforce this covenant and agreement and waives all rights of
defense based on sovereign immunity in such an action or suit.
  S 8. Section 5 of chapter 142 of the laws of 2004, amending the  local
finance law relating to interest rate exchange agreements of the city of

S. 4655                             5

New  York  and refunding bonds of such city, as amended by chapter 89 of
the laws of 2012, is amended to read as follows:
  S  5.  This  act shall take effect immediately, provided, that section
three of this act shall expire and be deemed repealed  July  15,  [2013]
2014.
  S 9. Separability. 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 10. This act shall take effect immediately.

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