S T A T E O F N E W Y O R K
________________________________________________________________________
5089
2015-2016 Regular Sessions
I N S E N A T E
April 30, 2015
___________
Introduced by Sen. GOLDEN -- (at request of the NYC Office of Management
and Budget) -- 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 66 of the laws of 2014, 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 [fifteen]
SIXTEEN, 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 66 of the laws of 2014, 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
EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
[ ] is old law to be omitted.
LBD10777-01-5
S. 5089 2
district corporation selling such bonds, or, in the case of sales by the
city of New York prior to July first, two thousand [fifteen] SIXTEEN,
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 66 of the laws of 2014, 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 [fifteen]
SIXTEEN, the annual payment required for principal and interest on the
refunding bond is less than the annual payment required for principal
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 [fifteen] SIXTEEN 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 66 of the laws of 2014, is amended to
read as follows:
S. 5089 3
8. Notwithstanding any other provision of law, the financing by the
city of New York prior to July first, two thousand [fifteen] SIXTEEN of
any object or purpose which has a period of probable usefulness deter-
mined by law by the issuance of any bonds or notes, including (i) the
issuance of bonds or notes to obtain reimbursement for funds heretofore
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 66 of the laws of 2014, 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 [fifteen] SIXTEEN,
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 66 of the laws of
2014, is amended to read as follows:
On or before July fifteenth, two thousand [fifteen] SIXTEEN 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 66 of the laws of 2014,
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, [2015] 2016, 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. 5089 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. 5089 5
New York and refunding bonds of such city, as amended by chapter 66 of
the laws of 2014, 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, [2015]
2016.
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.