senate Bill S5213

2013-2014 Legislative Session

Relates to the refunding of bonds and amounts and stated maturity dates of such bonds

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Archive: Last Bill Status - In Committee


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

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Actions

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Assembly Actions - Lowercase
Senate Actions - UPPERCASE
Jan 08, 2014 referred to local government
May 14, 2013 referred to local government

S5213 - Bill Details

See Assembly Version of this Bill:
A7176
Current Committee:
Law Section:
Local Finance Law
Laws Affected:
Amd ยงยง90.00 & 90.10, Loc Fin L

S5213 - Bill Texts

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Relates to the refunding of bonds and amounts and stated maturity dates of such bonds.

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BILL NUMBER:S5213

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

PURPOSE:

This legislation would allow NYC to issue refund bonds for one in a
series of variable rate bonds from institutions that may be
economically unsound or volatile.

SUMMARY OF PROVISIONS:

This bill amends section 90.00 Paragraph b-1 and section 90.10
paragraph c subdivision 3 of the Local Finance Law to permit the
amounts and stated maturity dates of refunding bonds to be the same as
those of the bonds to be refunded.

EXISTING LAW:

Under existing law, refunding bonds must comply with the fifty percent
rule or have level or declining debt service. To meet these
requirements, a refunding of a single maturity in a series must also
refund bonds which yield no present value savings, but are included
only to conform the refunding issue to the requirement of Local
Finance Law. This restriction causes these structuring bonds to be
refunded prematurely, wasting potential present value savings, because
tax-exempt bonds generally may be refunded only once under applicable
federal tax laws.

JUSTIFICATION:

This bill would broaden an issuer's ability to utilize advance
refunding bonds by allowing, as an alternative, the amounts and stated
maturities of the refunding bonds to be set by reference to the
refunded bonds. This eliminates the requirement to include structuring
bonds that provide no present value savings in a refunding issue. This
allows for targeted refunding of a single or limited number of
maturities without triggering a pre-payment of principal. The
protections of the Local Finance Law that assure that bonds are
outstanding no longer than necessary and that avoid balloon payments
are preserved, since they remain fully applicable to the original
bonds to be refunded. In addition, the structure of the City's overall
indebtedness is preserved, since the refunding bonds simply replace
the bonds originally issued.

The consequences of the unprecedented global financial, liquidity and
credit crisis continue to play out in the market, leading many of the
banks that had provided liquidity support for the City's variable rate
bonds to withdraw or announce their future withdrawal from that
business. Targeted refundings are an essential tool to address the
issue of banks not renewing their liquidity facilities, which, absent
a refunding, could result in bank-held bonds that not only revert to
higher rates, increasing the City's debt service expenses, but often
trigger "Will-out" provisions that require accelerated repayment of
those bonds. Correcting the technical restriction on targeted
refunding will better equip the City to specifically address the


issues of the financial and credit crisis without exposing taxpayers
to the risks of increased debt service or principal acceleration on
City bonds.

LEGISLATIVE HISTORY:

None.

FISCAL IMPLICATIONS:

To be determined.

LOCAL FISCAL IMPLICATIONS:

To be determined.

EFFECTIVE DATE:

This act shall take effect immediately.

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

                                  5213

                       2013-2014 Regular Sessions

                            I N  S E N A T E

                              May 14, 2013
                               ___________

Introduced  by  Sen.  FELDER -- 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  refunding  of
  bonds

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

  Section 1. Paragraph b-1 of section 90.00 of the local finance law, as
added by chapter 201 of the laws of 1994, is amended to read as follows:
  b-1. Refunding bonds need not comply with paragraph b of this  section
provided that no annual installment of each separate series of refunding
bonds  shall  be  more  than  fifty per centum in excess of the smallest
prior installment or THE  AMOUNTS  AND  STATED  MATURITY  DATES  OF  THE
REFUNDING  BONDS  SHALL BE THE SAME AS THOSE OF THE BONDS TO BE REFUNDED
OR the finance board of the municipality, school  district  or  district
corporation  issuing  the  bonds shall have determined to use a substan-
tially level or declining annual debt service schedule for the refunding
bonds. The amount of annual installments of the refunding bonds  may  be
determined without reference to the stated maturities of the bonds to be
refunded.
  S  2.  Subdivision  3  of  paragraph  c  of section 90.10 of the local
finance law, as amended by chapter 201 of the laws of 1994,  is  amended
to read as follows:
  3.  No  annual  installment of each separate series of refunding bonds
shall be more than fifty per centum in  excess  of  the  smallest  prior
installment  unless THE AMOUNTS AND STATED MATURITY DATES OF THE REFUND-
ING BONDS SHALL BE THE SAME AS THOSE OF THE BONDS TO BE REFUNDED OR  the
finance  board  of  the municipality, school district or district corpo-
ration issuing the bonds has determined to use a substantially level  or
declining  annual  debt  service  schedule  for the refunding bonds. The
amounts of annual installments of the refunding bonds may be  determined
without reference to the stated maturities of the bonds to be refunded.

 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                      [ ] is old law to be omitted.
                                                           LBD10616-01-3

S. 5213                             2

  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.

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