BILL NUMBER:  S7992

 TITLE OF BILL :

An act to authorize the Sag Harbor Union Free School District, Suffolk
County, New York, to expend the proceeds of certain bonds issued by
the district for an object or purpose that differs from the original
object or purpose for which said bonds were issued

 PURPOSE :

To authorize the District to submit one or more propositions to the
voters for approval to spend the proceeds of the bonds, which were
heretofore authorized and issued to fund a certain synthetic turf
field project, for other objects or purposes described in the New York
State Local Finance Law in lieu of using such proceeds to pay debt
service on such bonds as required by the Local Finance Law.

 SUMMARY OF PROVISIONS :

To authorize the District, subject to voter approval, to expend not to
exceed $1,620,000 of bonds issued on February 25, 2016, to fund any
other object or purpose set forth in section 11.00 (a) of the New York
State Local Finance Law which has a period of probable usefulness of
not to exceed thirty (30) years.

              

 JUSTIFICATION :

At a Special District Meeting duly called and held on November 13,
2013, in the District, the qualified voters present and voting
approved a proposition authorizing the Board of Education to install a
new synthetic turf field at the Pierson High School at a cost of
$1,620,000. In January 2016, the District received the required
approvals from the New York State Department of Education and
thereafter proceeded to publicly bid the project and issue bonds to
fund the cost of the project. Due to unanticipated cost increases
after voter approval of the proposition, the construction bids
received exceeded the voter approved cost of the project. Accordingly,
the bids were rejected. Since such time, the Board of Education of the
District has explored how it can best utilize the funds borrowed for
the synthetic turf field to meet recreational and other needs of its
students.

Pursuant to New York State Local Finance Law, the unexpended bond
proceeds must be used to pay debt service on the bonds issued to fund
the synthetic turf field project until the final maturity date of such
bonds or to redeem the then remaining outstanding bonds on February
15, 2024, the earliest optional redemption date for the bonds. The use
of the bond proceeds in this way would still require the District to
explore alternatives to fund a project that meets the recreational and
other needs of its students, all at an additional cost to the
taxpayers. As a result, this option for the use of the bond proceeds
is not financially beneficial for the taxpayers of the District.

In addition, the interest on the bonds issued to finance the synthetic
turf field project is tax-exempt to the holders such bonds. Federal
tax laws applicable to tax-exempt bonds mandate the expenditure of
such bond proceeds within a prescribed period from the date of
issuance of such bonds. As a result, the ability of the District to
spend such bond proceeds to fund an alternative capital purpose within
the prescribed period is a desirable result for federal tax law
purposes.

Under current law there is no legal authority for a school district to
seek voter approval to transfer the proceeds of bonds issued for one
object or purpose to another object or purpose. This legislation is
needed to authorize the District to obtain voter approval to spend the
proceeds of the bonds issued to fund the synthetic turf field project
for another purpose.

 LEGISLATIVE HISTORY :

2016: New Legislation

 FISCAL IMPLICATIONS :

None to the State.

 EFFECTIVE DATE :
This act shall take effect immediately.