S T A T E   O F   N E W   Y O R K
 ________________________________________________________________________
 
                                   7116
 
                        2023-2024 Regular Sessions
 
                             I N  S E N A T E
 
                               May 18, 2023
                                ___________
 
 Introduced by Sen. SEPULVEDA -- read twice and ordered printed, and when
   printed to be committed to the Committee on Cities 1
 
 AN  ACT to amend the local finance law, in relation to the sale of bonds
   and notes of the city of New York, the issuance of bonds or notes with
   variable rates of interest, interest rate exchange agreements  of  the
   city  of New York, the selling of bonds at private sale, the refunding
   of bonds, and the down payment for  projects  financed  by  bonds;  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 relat-
   ing to interest rate exchange agreements of the city of New  York  and
   refunding 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 362 of the laws of 2022, 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 [twenty-
 three] TWENTY-FOUR, 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:
   § 2. The closing paragraph of paragraph a  of  section  54.90  of  the
 local  finance  law,  as  amended by chapter 362 of the laws of 2022, 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  [twenty-three]TWEN-
 TY-FOUR,  with  interest rates that vary in accordance with a formula or
 procedure and are subject to a maximum rate of  interest  set  forth  or
 
  EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                       [ ] is old law to be omitted.
                                                            LBD10835-01-3
              

 S. 7116                             2
 
 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 ther-
 eof  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  deter-
 mine  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 para-
 graph (other than bonds and notes (1) bearing interest at rates and  for
 periods of time that are specified without reference to future events or
 contingencies,  or  (2)  described  in  section  136.00 of this article)
 exceed twenty-five percent of the limit prescribed by section 104.00  of
 this article.
   §  3. The opening paragraph of subdivision 1 of paragraph d of section
 54.90 of the local finance law, as amended by chapter 362 of the laws of
 2022, is amended to read as follows:
   On or before July fifteenth, two thousand  [twenty-three]  TWENTY-FOUR
 the mayor and comptroller of the city of New York may:
   §  4.  The  opening  paragraph  of paragraph a of section 57.00 of the
 local finance law, as amended by chapter 362 of the  laws  of  2022,  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
 district corporation selling such bonds, or, in the case of sales by the
 city  of New York prior to July first, two thousand [twenty-three] TWEN-
 TY-FOUR, 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  thousand  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 thir-
 ty-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 municipality 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 facility, 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 thou-
 sand  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 seventy-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 environmental 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
 S. 7116                             3
 
 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:
   § 5. Subdivision 3 of paragraph  g  of  section  90.00  of  the  local
 finance  law,  as amended by chapter 362 of the laws of 2022, 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 [twenty-
 three] TWENTY-FOUR, the annual payment required for principal and inter-
 est 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  [twenty-
 three]  TWENTY-FOUR  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.
   § 6. Subdivision 8 of paragraph d  of  section  107.00  of  the  local
 finance  law,  as amended by chapter 362 of the laws of 2022, is amended
 to read as follows:
   8. Notwithstanding any other provision of law, the  financing  by  the
 city  of New York prior to July first, two thousand [twenty-three] TWEN-
 TY-FOUR of any object or purpose which has a period of probable  useful-
 ness  determined 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 previously 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.
   §  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 362 of the laws of 2022,
 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, [2023] 2024, 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
 S. 7116                             4
 
 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
 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. 7116                             5
 
   §  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
 New York and refunding bonds of such city, as amended by chapter 362  of
 the laws of 2022, is amended to read as follows:
   §  5.  This  act shall take effect immediately, provided, that section
 three of this act shall expire and be deemed repealed  July  15,  [2023]
 2024.
   § 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.
   § 10. This act shall take effect immediately.