Senate Bill S6769

                                
 
BILL NUMBER: S6769

SPONSOR: KENNEDY
 
TITLE OF BILL:

An act to amend the public authorities law, in relation to increasing
the total amount of bonds the Buffalo sewer authority may issue

 
PURPOSE OR GENERAL IDEA OF BILL:

The purpose of this bill is to allow the Buffalo Sewer Authority to have
bonds issued and outstanding at any one time shall not exceed in the
aggregate the sum of five hundred million dollars.

 
SUMMARY OF PROVISIONS:

Section 1 provides that the Buffalo Sewer Authority may have bonds
issued and outstanding at any one time not exceed in the aggregate the
sum of $500 million dollars, excluding bonds or notes for the payment or
redemption of which there has been set aside and held in trust either
moneys, or direct and general obligations of, or obligations guaranteed
              

by, the United States of America, or obligations secured by such obli-
gations, or any combination thereof, which are or will be sufficient to
pay when due the principal or applicable redemption price and all
accrued interest thereon and, if such bonds or notes are to be redeemed,
for which notice of redemption has been given or satisfactory provision
has been made for the giving of such notice.

Section 2 provides for an immediate effective date.

 
JUSTIFICATION:

The Buffalo Sewer Authority protects public health and the Great Lakes
waterways, while striving to maintain affordability of its services and
build greater equity in Western New York. The Authority's State Pollu-
tant Discharge Elimination System permit authorized the implementation
of an abatement plan to address the City's stormwater challenge that
results in sewer overflows to area waterways. In partnership with the US
Environmental Protection Agency and NYS Department of Environmental
Conservation, the Authority developed a Long-Term Control Plan (LTCP),
the enforcement of which is governed by a federal Administrative Order.
In December 2020, the Authority had a Financial Capability Assessment
(FCA) completed to help plan for future funding of the remaining work to
be done under the LTCP, as well as other Authority operations. Due to
unforeseen challenges in implementing certain components of the LTCP,
the estimated cost to complete it has greatly escalated.

Whereas the cost to complete the LTCP was initially estimated to be $380
million in 2014, the FCA shows that the Authority will need an addi-
tional $537 million in 2019 dollars to fulfill its LTCP requirements.
The Authority estimates it will have an annual average of about $4.5
million over the next five years available as pay-as-you-go funding for
all capital projects, inclusive of those required under the LTCP. This
projection accounts for an 11% decrease in revenue the Authority has
experienced due to the COVID-19 pandemic.

The Authority acknowledges and appreciates that the State increased the
Authority's bond limit to $250 million in 2018. However, the updated FCA
shows that the Authority will need this debt limit doubled to meet its
obligations under the LTCP. Furthermore, given current historically low
interest rates and limited anticipated pay-as-you go funding in the
coming years, the Authority believes it most prudent to finance LTCP
projects with bonds. Therefore, it is necessary to amend Section 1187 of
the Public Authorities Law so that the total amount of bonds issued and
outstanding at any one time shall not exceed $500 million, rather than
the current limit of $250 million.

 
PRIOR LEGISLATIVE HISTORY:

This is a new bill.

 
FISCAL IMPLICATIONS FOR STATE AND LOCAL GOVERNMENTS:

To be determined.

 
EFFECTIVE DATE:
Immediately.