Senate Bill S9901

                                 
BILL NUMBER: S9901

SPONSOR: RYAN C
 
TITLE OF BILL:

An act to amend chapter 492 of the laws of 1993 amending the local
finance law relating to installment loans and obligations evidencing
installment loans, in relation to extending the effectiveness thereof

 
PURPOSE OF THE BILL:

The bill would extend to September 30, 2029 provisions relating to bonds
or notes bonds issued to the New York State Environmental Facilities
Corporation ("EFC") evidencing installment loans from the Clean Water
State Revolving Fund ("CWSRF") and the Drinking Water State Revolving
Fund ("DWSRF").

 
SUMMARY OF PROVISIONS:

Section 1 of the bill would extend until September 30, 2029 the "sunset"
provision of Section 3 of Chapter 492 of the Laws of 1993, thereby
extending for an additional three years the provisions of Local Finance
              

Law ("LFL") § 169.00 which authorizes municipalities to issue their
bonds or notes evidencing installment loans to EFC in order to obtain
financial assistance from the CWSRF and the DWSRF.

Section 2 of the bill provides for an immediate effective date.

 
JUSTIFICATION:

EFC administers the CWSRF and the DWSRF. Under these revolving fund
programs, EFC provides low cost financial assistance to municipalities
and other entities for water and wastewater infrastructure and other
environmental projects. As of June 1, 2025, EFC has issued approximately
$23 billion in State Revolving Fund Bonds under the CWSRF program and
the DWSRF program for the purpose of providing financial assistance to
local governments and public benefit corporations.

Under both the CWSRF and the DWSRF, EFC is authorized to provide assist-
ance in several forms to recipients for the purpose of financing or
refinancing their capital projects. Normally, when financing is provided
to a municipality under either the CWSRF or the DWSRF, EFC receives a
general obligation bond or note from the municipality as evidence of its
obligation to repay such financing.  Installment loans, through the use
of a grid note, allow municipalities to draw financing proceeds on a
cost-incurred basis without having to issue a separate bond or note to
EFC for each amount advanced. Without grid notes, a municipality would
be required to "close" a new loan each time it requested funds. The
resultant transactional costs could be prohibitive. The use of grid
notes was authorized for the CWSRF by Chapter 492 of the Laws of 1993,
and for the DWSRF by Chapter 304 of the Laws of 1997.

The use of grid notes in EFC's short-term financing program has been an
unqualified success in saving municipalities money. Hundreds of coun-
ties, cities, towns and villages throughout New York have successfully
utilized grid notes to secure short-term CWSRF or DWSRF financing. The
use of grid notes has provided recipients with flexibility and savings,
and helped make low-cost financing readily available for financing plan-
ning and design costs, as well as actual construction, and, in many
cases, interest-free "bridge" financing for municipalities which antic-
ipate receiving grants or other funding for a project.

 
PRIOR LEGISLATIVE HISTORY:

Chapter 492 of the Laws of 1993 enacted LFL 169.00 and applied initially
only to the CWSRF. Chapter 304 of the Laws of 1997 extended the applica-
tion of LFL 169.00 to the DWSRF. By its terms, Chapter 304 of the Laws
of 1997 expires the same date as Chapter 492 of the Laws of 1993. Chap-
ter 492 of the Laws of 1993, which would have expired on June 30, 1996,
was extended until June 30, 1999 by Chapter 250 of the Laws of 1996. It
has been extended every three years since 1999, until September 30, 2002
by Chapter 122 of the Laws of 1999; until September 30, 2005 by Chapter
339 of the Laws of 2002; until September 30, 2008 by Chapter 628 of the
Laws of 2005; until September 30, 2011 by Chapter 212 of the Laws of
2008; until September 30, 2014 by Chapter 41 of the Laws of 2011; until
September 30, 2017 by Chapter 111 of the Laws of 2014; until September
30, 2020 by Chapter 46 of the Laws of 2017; until September 30, 2023 by
Chapter 58 of the Laws of 2020; and until September 30, 2026 by Chapter
342 of the Laws of 2023.

 
FISCAL IMPLICATIONS:

The bill would have no budget implications to the State.

 
EFFECTIVE DATE:
The bill would take effect immediately.