S T A T E   O F   N E W   Y O R K
 ________________________________________________________________________
 
                                  8847--A
 
                             I N  S E N A T E
 
                               May 24, 2018
                                ___________
 
 Introduced  by  Sen.  FELDER -- read twice and ordered printed, and when
   printed to be committed  to  the  Committee  on  Cities  --  committee
   discharged, bill amended, ordered reprinted as amended and recommitted
   to said committee
 
 AN  ACT  redistributing bond volume allocations made pursuant to section
   146 of the federal tax reform act of 1986, relating to  allocation  of
   the unified state bond volume ceiling, and enacting the private activ-
   ity  bond  allocation  act  of  2018;  and providing for the repeal of
   certain provisions upon expiration thereof
 
   THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND  ASSEM-
 BLY, DO ENACT AS FOLLOWS:
 
   Section  1.  Short  title. This act shall be known and may be cited as
 the "private activity bond allocation act of 2018".
   § 2. Legislative findings  and  declaration.  The  legislature  hereby
 finds and declares that the federal tax reform act of 1986 established a
 statewide  bond  volume  ceiling  on  the issuance of certain tax exempt
 private activity bonds  and  notes  and,  under  certain  circumstances,
 governmental  use  bonds  and  notes  issued by the state and its public
 authorities, local governments, agencies which issue on behalf of  local
 governments,  and  certain  other  issuers.  The  federal tax reform act
 establishes a formula for the allocation  of  the  bond  volume  ceiling
 which  was  subject to temporary modification by gubernatorial executive
 order until December 31, 1987. That act also permits state  legislatures
 to  establish,  by  statute,  an  alternative formula for allocating the
 volume ceiling. Bonds and notes subject to the volume ceiling require an
 allocation from the state's annual volume ceiling in  order  to  qualify
 for federal tax exemption.
   It  is  hereby  declared to be the policy of the state to maximize the
 public benefit through the issuance of private activity  bonds  for  the
 purposes  of,  among  other  things, allocating a fair share of the bond
 volume ceiling upon initial allocation and from a bond reserve to  local
 agencies  and for needs identified by local governments; providing hous-
 ing and promoting economic  development;  job  creation;  an  economical
 energy  supply;  and resource recovery and to provide for an orderly and
 
  EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
              

                       [ ] is old law to be omitted.
                                                            LBD16060-03-8

 S. 8847--A                          2
 
 efficient volume ceiling allocation process for state and local agencies
 by establishing an alternative formula for making such allocations.
   §  3.  Definitions.  As  used in this act, unless the context requires
 otherwise:
   1. "Bonds" means bonds, notes or other obligations.
   2. "Carryforward" means an amount  of  unused  private  activity  bond
 ceiling  available  to  an issuer pursuant to an election filed with the
 internal revenue service pursuant to section 146(f) of the code.
   3. "Code" means the internal revenue code of 1986, as amended.
   4. "Commissioner" means the commissioner of the New York state depart-
 ment of economic development.
   5. "Covered bonds" means those tax exempt private activity  bonds  and
 that portion of the non-qualified amount of an issue of governmental use
 bonds  for  which an allocation of the statewide ceiling is required for
 the interest earned by holders of such bonds to  be  excluded  from  the
 gross  income  of such holders for federal income tax purposes under the
 code.
   6. "Director" means the director of the New York state division of the
 budget.
   7. "Issuer" means a local agency, state agency or other issuer.
   8. "Local agency" means an industrial development  agency  established
 or  operating pursuant to article 18-A of the general municipal law, the
 Troy industrial development authority and the Auburn industrial develop-
 ment authority.
   9. "Other issuer" means any agency,  political  subdivision  or  other
 entity, other than a local agency or state agency, that is authorized to
 issue covered bonds.
   10.  "Qualified  small issue bonds" means qualified small issue bonds,
 as defined in section 144(a) of the code.
   11. "State agency" means the state of New York,  the  New  York  state
 energy  research and development authority, the New York job development
 authority, the New York state environmental facilities corporation,  the
 New  York  state urban development corporation and its subsidiaries, the
 Battery Park city authority, the port authority  of  New  York  and  New
 Jersey,  the  power  authority  of  the state of New York, the dormitory
 authority of the state of New York, the New York state  housing  finance
 agency,  the  state  of  New  York mortgage agency, and any other public
 benefit corporation or public authority designated by the  governor  for
 the purposes of this act.
   12.  "Statewide ceiling" means for any calendar year the highest state
 ceiling (as such term is used in section 146 of the code) applicable  to
 New York state.
   13. "Future allocations" means allocations of statewide ceiling for up
 to two future years.
   14. "Multi-year housing development project" means a project (a) which
 qualifies  for covered bonds; (b) which is to be constructed over two or
 more years and (c) in which at least  twenty  percent  of  the  dwelling
 units will be occupied by persons and families of low income.
   §  4.  Local  agency  set-aside.  A set-aside of statewide ceiling for
 local agencies for any calendar year shall be an amount which bears  the
 same  ratio  to  one-third of the statewide ceiling as the population of
 the jurisdiction of such local agency bears to  the  population  of  the
 entire  state.  The  commissioner  shall  administer allocations of such
 set-aside to local agencies.
   § 5. State agency set-aside. A set-aside of statewide ceiling for  all
 state agencies for any calendar year shall be one-third of the statewide

 S. 8847--A                          3
 
 ceiling.  The director shall administer allocations of such set-aside to
 state agencies and may grant an allocation  to  any  state  agency  upon
 receipt of an application in such form as the director shall require.
   §  6.  Statewide  bond  reserve. One-third of the statewide ceiling is
 hereby set aside as a statewide bond reserve to be administered  by  the
 director.
   1.  Allocation  of  the  statewide  bond reserve among state agencies,
 local agencies and other issuers.  The director shall transfer a portion
 of the statewide bond reserve to the commissioner for allocation to  and
 use  by local agencies and other issuers in accordance with the terms of
 this section. The remainder of the statewide bond reserve may  be  allo-
 cated  by the director to state agencies in accordance with the terms of
 this section.
   2. Allocation of statewide bond reserve to  local  agencies  or  other
 issuers.
   (a)  Local  agencies  or  other  issuers  may at any time apply to the
 commissioner for an allocation from the  statewide  bond  reserve.  Such
 application shall demonstrate:
   (i)  that  the requested allocation is required under the code for the
 interest earned on the bonds to be excluded from  the  gross  income  of
 bondholders for federal income tax purposes;
   (ii)  that  the  local  agency's  remaining unused allocation provided
 pursuant to section four of  this  act,  and  other  issuer's  remaining
 unused  allocation,  or  any available carryforward will be insufficient
 for the specific project or projects for which the reserve allocation is
 requested; and
   (iii) that, except for those  allocations  made  pursuant  to  section
 thirteen  of  this  act  to enable carryforward elections, the requested
 allocation is reasonably expected to be used during the  calendar  year,
 and the requested future allocation is reasonably expected to be used in
 the calendar year to which the future allocation relates.
   (b)  In  reviewing  and  approving  or  disapproving applications, the
 commissioner shall exercise discretion to ensure an  equitable  distrib-
 ution  of  allocations from the statewide bond reserve to local agencies
 and other issuers. Prior to making a determination on such applications,
 the commissioner shall notify and seek the recommendation of the  presi-
 dent  and  chief executive officer of the New York state housing finance
 agency in the case of an application related to the issuance  of  multi-
 family  housing  or  mortgage  revenue  bonds,  and in the case of other
 requests, such state officers, departments, divisions  and  agencies  as
 the commissioner deems appropriate.
   (c)  Applications  for  allocations  shall  be  made  in such form and
 contain such information and reports as the commissioner shall require.
   (d) On or before September fifteenth of each  year,  the  commissioner
 shall  publish  the total amount of local agency set-aside that has been
 recaptured pursuant to section twelve of this act for that year  on  the
 department of economic development's website.
   3.  Allocation of statewide bond reserve to state agencies. The direc-
 tor may make an allocation from the statewide bond reserve to any  state
 agency.  Before making any allocation of statewide bond reserve to state
 agencies the director shall be satisfied:
   (a) that the allocation is required under the code  for  the  interest
 earned  on the bonds to be excluded from the gross income of bondholders
 for federal income tax purposes;
   (b) that the  state  agency's  remaining  unused  allocation  provided
 pursuant  to section five of this act or any available carryforward will

 S. 8847--A                          4
 
 be insufficient to accommodate the specific bond  issue  or  issues  for
 which the reserve allocation is requested; and
   (c)  that, except for those allocations made pursuant to section thir-
 teen of this act to enable carryforward elections, the  requested  allo-
 cation  is  reasonably expected to be used during the calendar year, and
 the requested future allocation is reasonably expected to be used in the
 calendar year to which the future allocation relates.
   § 7. Access to employment opportunities. 1. All issuers shall  require
 that  any new employment opportunities created in connection with indus-
 trial or manufacturing projects financed through the issuance of  quali-
 fied  small  issue bonds shall be listed with the New York state depart-
 ment of labor and with the one-stop career center  established  pursuant
 to  the  federal  Workforce  Innovation and Opportunity Act (Pub. L. No.
 113-128) serving the locality in which the employment opportunities  are
 being  created. Such listing shall be in a manner and form prescribed by
 the commissioner. All issuers shall further require  that  for  any  new
 employment  opportunities  created  in  connection with an industrial or
 manufacturing project financed through the issuance of  qualified  small
 issue  bonds  by  such  issuer,  industrial or manufacturing firms shall
 first consider persons eligible to participate in  the  Workforce  Inno-
 vation  and  Opportunity Act (Pub. L. No. 113-128) programs who shall be
 referred to the industrial or manufacturing firm by one-stop centers  in
 local  workforce investment areas or by the department of labor. Issuers
 of qualified small issue bonds are required to monitor  compliance  with
 the provisions of this section as prescribed by the commissioner.
   2.  Nothing  in  this  section  shall be construed to require users of
 qualified small issue bonds to violate any existing collective  bargain-
 ing  agreement  with  respect to the hiring of new employees. Failure on
 the part of any user of qualified small issue bonds to comply  with  the
 requirements  of this section shall not affect the allocation of bonding
 authority to the issuer of the bonds  or  the  validity  or  tax  exempt
 status of such bonds.
   §  8. Overlapping jurisdictions. In a geographic area represented by a
 county local agency and one or more sub-county local agencies, the allo-
 cation granted by section four of this act with respect to such area  of
 overlapping  jurisdiction  shall  be  apportioned one-half to the county
 local agency and one-half to the sub-county local  agency  or  agencies.
 Where  there  is  a local agency for the benefit of a village within the
 geographic area of a town for the benefit of  which  there  is  a  local
 agency, the allocation of the village local agency shall be based on the
 population  of the geographic area of the village, and the allocation of
 the town local  agency  shall  be  based  upon  the  population  of  the
 geographic area of the town outside of the village.  Notwithstanding the
 foregoing,  a  local  agency may surrender all or part of its allocation
 for such calendar year to  another  local  agency  with  an  overlapping
 jurisdiction.  Such  surrender  shall  be  made at such time and in such
 manner as the commissioner shall prescribe.
   § 9. Ineligible local agencies. To the extent that any  allocation  of
 the  local  agency set-aside would be made by this act to a local agency
 which is ineligible to receive such allocation under the code  or  under
 regulations  interpreting  the  state  volume  ceiling provisions of the
 code, such allocation shall instead be made to the political subdivision
 for whose benefit that local agency was created.
   § 10. Municipal reallocation. The chief executive officer of any poli-
 tical subdivision or, if such political subdivision has no chief  execu-
 tive  officer,  the governing board of the political subdivision for the

 S. 8847--A                          5
 
 benefit of which a local agency has been established, may  withdraw  all
 or  any portion of the allocation granted by section four of this act to
 such local agency. The political subdivision may then reallocate all  or
 any  portion  of  such  allocation, as well as all or any portion of the
 allocation received pursuant to section nine of this act, to  itself  or
 any  other issuer established for the benefit of that political subdivi-
 sion or may assign all or any portion of the allocation received  pursu-
 ant  to  section  nine  of  this act to the local agency created for its
 benefit. The chief executive officer or governing board of the political
 subdivision, as the case may be, shall notify the  commissioner  of  any
 such reallocation.
   §  11. Future allocations for multi-year housing development projects.
 1. In addition to other powers granted under this act, the  commissioner
 is  authorized  to  make  the  following future allocations of statewide
 ceiling for any multi-year housing development  project  for  which  the
 commissioner  also  makes  an  allocation  of  statewide ceiling for the
 current year under this act or for which, in the event of expiration  of
 provisions  of  this  act  described in section eighteen of this act, an
 allocation of volume cap for a calendar year subsequent to such  expira-
 tion  shall  have been made under section 146 of the code:  (a) to local
 agencies from the local agency set-aside (but only with the approval  of
 the  chief  executive  officer of the political subdivision to which the
 local agency set-aside relates or the  governing  body  of  a  political
 subdivision  having no chief executive officer) and (b) to other issuers
 from that portion, if any, of the statewide bond reserve transferred  to
 the  commissioner  by  the  director.  Any future allocation made by the
 commissioner shall constitute an allocation of statewide ceiling for the
 future year specified by the commissioner and shall be  deemed  to  have
 been made on the first day of the future year so specified.
   2. In addition to other powers granted under this act, the director is
 authorized  to  make  future  allocations  of statewide ceiling from the
 state agency set-aside or from the statewide bond reserve to state agen-
 cies for any multi-year housing development project for which the direc-
 tor also makes an allocation of statewide ceiling from the current  year
 under this act or for which, in the event of expiration of provisions of
 this  act  described  in  section eighteen of this act, an allocation of
 volume cap for a calendar year subsequent to such expiration shall  have
 been  made  under  section  146  of  the code, and is authorized to make
 transfers of the statewide bond reserve to the commissioner  for  future
 allocations to other issuers for multi-year housing development projects
 for  which  the commissioner has made an allocation of statewide ceiling
 for the current year. Any such future  allocation  or  transfer  of  the
 statewide  bond reserve for future allocation made by the director shall
 constitute an allocation of statewide ceiling or transfer of the  state-
 wide  bond  reserve  for  the future years specified by the director and
 shall be deemed to have been made on the first day of the future year so
 specified.
   3. (a) If an allocation made with  respect  to  a  multi-year  housing
 development  project  is  not used by September fifteenth of the year to
 which the allocation relates, the allocation with respect  to  the  then
 current  year  shall  be  subject  to  recapture  in accordance with the
 provisions of section twelve of this act, and in the  event  of  such  a
 recapture,  unless  a carryforward election by another issuer shall have
 been approved by the commissioner or a carryforward election by a  state
 agency  shall have been approved by the director, all future allocations

 S. 8847--A                          6
 
 made with respect to such project pursuant to subdivision one or two  of
 this section shall be canceled.
   (b) The commissioner and the director shall have the authority to make
 future allocations from recaptured current year allocations and canceled
 future  allocations  to  multi-year  housing  development  projects in a
 manner consistent with the provisions of this act. Any such future allo-
 cation shall, unless a carryforward election  by  another  issuer  shall
 have  been  approved by the commissioner or a carryforward election by a
 state agency shall have been approved by the director,  be  canceled  if
 the  current year allocation for the project is not used by December 31,
 2019.
   (c) The commissioner  and  the  director  shall  establish  procedures
 consistent  with  the provisions of this act relating to carryforward of
 future allocations.
   4. The aggregate future allocations from either of the two  succeeding
 years  shall  not exceed six hundred fifty million dollars for each such
 year.
   § 12. Year end allocation recapture. On or before September  first  of
 each year, each state agency shall report to the director and each local
 agency and each other issuer shall report to the commissioner the amount
 of  bonds subject to allocation under this act that will be issued prior
 to the end of the then current calendar year,  and  the  amount  of  the
 issuer's  then total allocation that will remain unused. As of September
 fifteenth of each year, the unused portion of each  local  agency's  and
 other  issuer's  then  total  allocation as reported and the unallocated
 portion of the set-aside for state  agencies  shall  be  recaptured  and
 added  to the statewide bond reserve and shall no longer be available to
 covered bond issuers except as otherwise provided herein. From September
 fifteenth through the end of the year, each local agency or other issuer
 having an allocation shall immediately report to  the  commissioner  and
 each  state  agency having an allocation shall immediately report to the
 director any changes to the status of its allocation or  the  status  of
 projects  for  which  allocations have been made which should affect the
 timing or likelihood of the issuance of covered bonds therefor.  If  the
 commissioner  determines that a local agency or other issuer has overes-
 timated the amount of covered bonds subject to allocation that  will  be
 issued  prior  to  the  end  of  the calendar year, the commissioner may
 recapture the amount of the allocation to such  local  agency  or  other
 issuer  represented by such overestimation by notice to the local agency
 or other issuer, and add such allocation to the statewide bond  reserve.
 The  director  may  likewise  make such determination and recapture with
 respect to state agency allocations.
   § 13. Allocation carryforward. 1. No  local  agency  or  other  issuer
 shall  make  a  carryforward  election  utilizing  any unused allocation
 (pursuant to section 146(f) of the code) without the prior  approval  of
 the  commissioner.  Likewise  no state agency shall make or file such an
 election, or elect to issue  or  carryforward  mortgage  credit  certif-
 icates, without the prior approval of the director.
   2.  On  or  before  November fifteenth of each year, each state agency
 seeking unused statewide ceiling for use in future years  shall  make  a
 request  for  an  allocation  for  a carryforward to the director, whose
 approval shall be required before a carryforward election is filed by or
 on behalf of any state agency. A later request may also be considered by
 the director, who may file a carryforward election for any state  agency
 with the consent of such agency.

 S. 8847--A                          7
 
   3.  On or before November fifteenth of each year, each local agency or
 other issuer seeking unused statewide ceiling for use  in  future  years
 shall make a request for an allocation for a carryforward to the commis-
 sioner,  whose approval shall be required before a carryforward election
 is  filed  by or on behalf of any local or other agency. A later request
 may also be considered by the commissioner.
   4. On or before January fifteenth of each  year,  the  director  shall
 publish the total amount of unused statewide ceiling from the prior year
 on the division of budget's website.
   §  14. New York state bond allocation policy advisory panel. 1.  There
 is hereby created a policy advisory panel and process to provide  policy
 advice  regarding the priorities for distribution of the statewide ceil-
 ing.
   2. The panel  shall  consist  of  five  members,  one  designee  being
 appointed  by each of the following:  the governor, the temporary presi-
 dent of the senate, the speaker of the assembly, the minority leader  of
 the  senate and the minority leader of the assembly. The designee of the
 governor shall chair the panel. The panel shall monitor  the  allocation
 process through the year, and in that regard, the division of the budget
 and  the  department  of economic development shall assist and cooperate
 with the panel as provided in this section. The advisory  process  shall
 operate  through  the  issuance  of  advisory opinions by members of the
 panel as provided in subdivisions six and seven of this section. A meet-
 ing may be held at the call of the chair with the unanimous  consent  of
 the members.
   3.  (a)  Upon  receipt  of  a  request for allocation or a request for
 approval of a carryforward election from the statewide  reserve  from  a
 local  agency or other issuer, the commissioner shall, within five work-
 ing days, notify the panel of such request and provide  the  panel  with
 copies of all application materials submitted by the applicant.
   (b) Upon receipt of a request for allocation or a request for approval
 of carryforward election from the statewide reserve from a state agency,
 the  director  shall, within five working days, notify the panel of such
 request and provide the panel with copies of all  application  materials
 submitted by the applicant.
   4.  (a)  Following  receipt  of  a request for allocation from a local
 agency or other issuer, the commissioner shall notify  the  panel  of  a
 decision  to approve or exclude from further consideration such request,
 and the commissioner shall state the reasons. Such notification shall be
 made with or after the  transmittal  of  the  information  specified  in
 subdivision  three of this section and at least five working days before
 formal notification is made to the applicant.
   (b) Following receipt of a request for allocation from a state agency,
 the director shall notify the panel of a decision to approve or  exclude
 from  further  consideration  such request, and shall state the reasons.
 Such notification shall be made with or after the  transmission  of  the
 information  specified in subdivision three of this section and at least
 five working days before formal notification is made to the state  agen-
 cy.
   5.  The  requirements  of  subdivisions three and four of this section
 shall not apply to adjustments to allocations due to bond sizing  chang-
 es.
   6.  In  the  event  that  any  decision  to approve or to exclude from
 further consideration a request for allocation is made within ten  work-
 ing days of the end of the calendar year and in the case of all requests
 for consent to a carryforward election, the commissioner or director, as

 S. 8847--A                          8

 is  appropriate,  shall  provide  the  panel  with  the longest possible
 advance notification of the action, consistent with the requirements  of
 the  code,  and  shall,  wherever  possible, solicit the opinions of the
 members  of  the  panel  before  formally notifying any applicant of the
 action. Such notification may be made by  means  of  telephone  communi-
 cation  to  the  members  or  by  written notice delivered to the Albany
 office of the appointing authority of the respective members.
   7. Upon notification by the director or the commissioner,  any  member
 of  the  panel may, within five working days, notify the commissioner or
 the director of any policy objection concerning the expected action.  If
 three or more members of the panel shall  submit  policy  objections  in
 writing  to  the intended action, the commissioner or the director shall
 respond in writing to the objection prior to taking the intended  action
 unless  exigent  circumstances  make  it  necessary to respond after the
 action has been taken.
   8. On or before the first day of July, in any year, the director shall
 report to the members of the New York state bond allocation policy advi-
 sory panel on the actual utilization of volume cap for the  issuance  of
 bonds  during  the  prior calendar year and the amount of such cap allo-
 cated for carryforwards for  future  bond  issuance.  The  report  shall
 include, for each local agency or other issuer and each state agency the
 initial  allocation,  the  amount  of  bonds issued subject to the allo-
 cation, the amount of the issuer's allocation that remained unused,  the
 allocation  of  the statewide bond reserve, carryforward allocations and
 recapture of allocations. Further, the report shall include  projections
 regarding private activity bond issuance for state and local issuers for
 the  calendar  year,  as  well  as  any  recommendations for legislative
 action. The director shall publish the report on the division  of  budg-
 et's website concurrently with the release of the report to the panel.
   §  15.  Severability.  If any clause, sentence, paragraph, section, or
 part of this act shall be adjudged by any court of  competent  jurisdic-
 tion  to  be invalid, such judgment shall not affect, impair, or invali-
 date 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.
   §  16.  Notwithstanding any provisions of this act to the contrary (1)
 provided that a local agency or other issuer certifies  to  the  commis-
 sioner  on or before October 1, 2018 that it has issued private activity
 bonds described in this act and the amount thereof which used  statewide
 ceiling,  a  commitment  or  allocation  of statewide ceiling to a local
 agency or other issuer made to or so used by such local agency or  other
 issuer  pursuant to the federal tax reform act of 1986 on or after Janu-
 ary 1, 2018 and prior to the effective date of this act,  in  an  amount
 which  exceeds the local agency set-aside established by section four of
 this act, shall be first chargeable to the statewide bond reserve estab-
 lished pursuant to section six of this act,  and  (2)  a  commitment  or
 allocation  of  statewide  ceiling  to a state agency made to or used by
 such agency pursuant to the internal revenue code,  as  amended,  on  or
 after January 1, 2018 and prior to the effective date of this act, shall
 be  first  chargeable to the state agency set-aside established pursuant
 to section five of this act, and,  thereafter,  to  the  statewide  bond
 reserve established by section six of this act.
   §  17.  Nothing  contained  in  this act shall be deemed to supersede,
 alter or impair any allocation used by or committed by the  director  or
 commissioner  to a state or local agency or other issuer pursuant to the

 S. 8847--A                          9
 
 federal tax reform act of 1986 and prior to the effective date  of  this
 act.
   §  18. This act shall take effect immediately; provided, however, that
 sections three, four, five, six, seven, eight, nine, ten, twelve,  thir-
 teen  and  fourteen of this act shall expire July 1, 2020 when upon such
 date the provisions of such sections shall be  deemed  repealed;  except
 that the provisions of subdivisions two and three of section thirteen of
 this act shall expire and be deemed repealed February 15, 2020.