Enacts the "City of Dunkirk Revenue Anticipation Note Refinancing Act" to authorize a loan to be made from the state to the city of Dunkirk (Part A); makes an appropriation therefor (Part B).
NEW YORK STATE ASSEMBLY MEMORANDUM IN SUPPORT OF LEGISLATION submitted in accordance with Assembly Rule III, Sec 1(f)
BILL NUMBER: A8870
SPONSOR: Pretlow TITLE OF BILL:
An act in relation to authorizing a loan from the state to the city of
Dunkirk (Part A); and making an appropriation therefor (Part B)
PURPOSE:
This bill would authorize an additional debt and financing option for
the city of Dunkirk (or the "City") as a matter of last resort, to amel-
iorate a condition of severe fiscal difficulty and potential lack of
market access by the city. Dunkirk presently has a $12.7 million princi-
pal revenue anticipation note with a maturity date of July 24, 2025 and
lacks sufficient cash and potentially lacks market access for financing
options to repay such note's principal and interest (totaling approxi-
mately $13.7 million). The inability to pay such revenue anticipation
note could have significant negative financial implications, including a
loss of credit access or increased costs of borrowing for not only the
City, but other municipal debt issuers throughout the State of New York.
SUMMARY OF PROVISIONS:
Bill Section 1 enacts into law components of legislation necessary to
authorization a loan for the city of Dunkirk and sets forth that each
component is contained within parts identified as Part A and Part B.
With respect to Part A:
Section 1 contains Legislative findings.
Section 2 contains the title of this act, the "City of Dunkirk Revenue
Anticipation Note Refinancing Act.
Section 3 contains definitions.
Section 4 would establish a State loan to the city of Dunkirk and would
clarify that any payment made to the City for an appropriation made,by
part B of this bill shall be used by the City for the repayment and
settlement of its anticipation note due July 24, 2025.
Section 5 of the bill would establish the amortization period of the
loan period of probable usefulness, which shall be 15 years. The rate of
interest shall be 7.5% per year. The Budget Director may modify the
terms of the loan, including the term and interest if the reduction of
any payment or payments made for the City pursuant to section 6 is
insufficient to satisfy the annual repayment amount set forth in the
loan repayment schedule.
Section 6 of the bill would obligate the City to repay the loan in
accordance with a loan repayment schedule provided by the Budget Direc-
tor, which reflects the amount and date of all loan payments made by the
State to the City for an appropriation pursuant to pth B. Such a loan
repayment schedule may be revised from time to time. By no later than
September 30 of any year while the loan is outstanding, the Budget
Director shall notify the Mayor, the City Council, the State Comp-
troller, the Chair of the Assembly Ways and Means Committee, and the
Chair of the Senate Finance Committee of any offset payments for the
City, and the principal and interest repayment schedule, reflecting the
remaining amount owed by the City to the State for each State fiscal
year.
Section 7 of the bill would establish that the Budget Director may
direct any department, agency, or instrumentality to reduce the amount
of any payment or payment owed in a fiscal year to the city of Dunkirk,
or any department, agency or instrumentality thereof, provided that such
reduction is in an amount no greater than the amount due for such year
as set in the loan repayment schedule.
Section 8 of the bill would establish that the State shall not require
the early termination of the loan or pre-payment of any amount set forth
in the loan repayment schedule, except that the mayor may do so subject
to the notice provisions and subject to the written confirmation of the
Budget Director of the calculated amount of principle and interest owed
by the City as of the proposed date of loan repayment.
Section 9 of the bill would treat the loan as indebtedness of the City
with respect to article 8 of the State Constitution. For purposes of
compensating and replenishing the City's all funds budget for the annual
withholding of State payments to the City pursuant to section 7 of the
bill, the amount of annual principal and interest shall be excluded from
the tax limit imposed by section 10 of article 8 of the state Constitu-
tion. For as long as the State loan shall remain outstanding, the City
shall comply with the provisions of the Dunkirk Fiscal Recovery Act. The
period of probable usefulness of the first issuance of deficit bonds or
notes pursuant to such act shall be computed from the date of the
payment referenced in section 10 of this bill. On or before July 9 of
each State fiscal year that the loan remains outstanding, the mayor
shall provide an attestation to the Budget Director, the State Comp-
troller, the Assembly ways and means committee and the Senate finance
committee that either the City has been unable to issue deficit financ-
ing notes or bonds despite its good faith efforts or that the City has
issued deficit notes or bonds and is able to use the proceeds to prepay
in whole the loan made pursuant to this act.
Section 10 of the bill provides that the foregoing, part A, shall take
effect on the same date and in the same manner as part B, takes effect.
With respect to part B of this bill:
Section 1 would appropriate up to thirteen million, seven hundred thou-
sand dollars ($13,700,000) or so much thereof as may be necessary, from
the general fund for payment to the city of Dunkirk solely to refinance
its revenue anticipation note, with a final maturity and due date of
July 24, 2025. No payment shall be made without a written signed attes-
tation by the mayor of Dunkirk, sent to the Budget Director, the State
Comptroller, the Chair of the Assembly Ways and Means Committee and the
Chair of the Senate Finance Committee by no later than July 9, 2025,
stating that the City has, despite making good faith efforts to secure
the full amount of principal plus interest through a combination of cash
on hand, new City revenue or tax anticipation notes or issuances of new
deficit bonds or anticipation notes, and is unable to secure enough
funding to pay the total amount due, and is in need of, and is request-
ing, a specific dollar amount due to be loaned from the State to the
City, by means of this appropriation.
Section 2 of part B establishes that this act shall take effect upon the
receipt of the written, signed attestation submitted by the mayor of the
City of Dunkirk,
Bill Section 2 contains a severability provision.
Bill Section 3 sets forth an effective date of immediate, provided
however, that the applicable effective date of Parts A and B shall be
set forth in the last section of such Parts.
EXISTING LAW:
None. Part DD of Chapter 56 of the Laws of 2024 enacted the "Dunkirk
fiscal recovery act".
JUSTIFICATION:
Without financial assistance from the State, the city of Dunkirk is
likely unable to meet its obligation to repay a $12.7 million principal
revenue anticipation note, which has a due date of July 24, 2025. A
potential default may have significant negative financial implications
for the City as well as the taxpayers of New York State.
This bill would impose a seven and half (7.5) percent rate of annual
interest on the amount of the loan utilized. This matches the rate most
recently received by the City in the credit markets when it issued last
year the revenue anticipation in question - effectively continuing the
existing debt until the deficit financing authorization can be accessed.
For local governments previously experiencing severe financial difficul-
ty, the State Legislature has implemented various oversight and relief
mechanisms, including authorizing deficit financing and control boards.
Part DD of Chapter 56 of the Laws of 2024 authorized the city of Dunkirk
to issue deficit financing bonds with a term of 15 years for accumulated
deficits through 2025 totaling up to $18.5 million. However, the City is
presently unable to issue such bonds to repay the Revenue Anticipation
Note in question. This loan would serve a similar purpose until the City
is able to so issue.
Section nine of part A of this bill provides that the City shall comply
with the oversight requirements set forth in the Dunkirk Fiscal Recovery
Act as long as the State loan is outstanding. These requirements include
many which may be similar to those required by a control board:
* Preparation and reporting to State parties by the City treasurer,
within thirty days of each quarter end, of quarterly summaries of budget
variances and trial balances prepared in accordance with the uniform
system of accounts prescribed by the State Comptroller, accompanied by
recommendations from the City fiscal affairs officer setting forth any
remedial action necessary (section seven);
* Budget review and recommendations by the State Comptroller, including
the requirement that the City Council shall review and make adjustments
to the proposed budget consistent with any recommendations made by the
State Comptroller (section eight);
* Preparation and submission to State parties by the City fiscal affairs
officer of a three-year multiyear financial plan containing, at a mini-
mum, projected employment levels, projected annual expenditures for
personal service, fringe benefits, non-personal services and debt
service, appropriate reserve fund amounts, estimated annual revenues
including projection of property tax rates, the value of the taxable
real property and resulting tax levy, annual growth in sales tax and
non-property tax revenues, and the proposed use of one-time revenue
sources. The financial plan also must identify actions necessary to
achieve and maintain long-term fiscal stability, including, but not
limited to, improved management practices, initiatives to minimize or
reduce operating expenses, and potential shared services agreements with
other municipalities (section nine);
* Notification to and comment by the State Comptroller prior to the
issuance of any further debt issuance or installment purchase contract,
with such comments to include recommendations regarding the affordabili-
ty to the City (section ten).
Control boards have been authorized for the counties of Nassau and Erie,
and the cities of Buffalo and New York. First and foremost, implementing
a control board would not avert a likely default in July 2025, which is
the impetus of this legislation. A control board would not be estab-
lished in time and would not have a mechanism for repaying the revenue
anticipation note in question.
Also, each municipality with a control board is significantly larger in
population and budget size than the city of Dunkirk, important elements
for the feasibility of maintaining a board quorum (a board typically has
seven members to ensure compliance with public authorities law and best
practice) as well as affordability. Each municipality pays for the staff
and operations of its control board. Even a modest $500,000 annual
operation, the cost of the cheapest control board, would comprise three
percent of the City's $18.7 million general fund budget. The most expen-
sive control board, over $2 million for the county of Nassau, would
comprise twelve percent of the City's budget. In addition, in the first
years of operation, most control boards have significantly higher
expenses due to start-up costs and potential litigation, which feasibly
total millions of dollars. Because the City is near its Constitutional
property tax limit, the City would likely be forced to make significant
operational cuts simply to fund its control board.
Dunkirk Buffalo Erie Nassau
Population (est.) 12,743 278,349 954,236 1,395,754
General Fund Budget $18,716,335$510,755,205 $1,968,183,452$2,227,406,146
Control Board Costs N/A $1,028,537 $512,096 $2,225,000
LEGISLATIVE HISTORY:
This is a new bill.
BUDGET IMPLICATIONS:
This bill would allow the City to defease the principal and interest it
owes on its $12.7 million Revenue Anticipation Note due July 24, 2025.
Given the City's lack of cash and potential lack of investors willing to
purchase City debt, a City default is probable, leaving the City with a
long term inability to secure future financing for its budgetary and
infrastructure needs. In addition to the direct impact to the City, a
default could have significant negative financial implications, includ-
ing a loss of credit access or higher cost of borrowing, for other
municipal debt issuers throughout the State of New York.
EFFECTIVE DATE:
This act shall take effect immediately, provided however that the appli-
cable effective date of Parts A through B are set forth as specified in
the last section of such Parts.
STATE OF NEW YORK
________________________________________________________________________
8870
2025-2026 Regular Sessions
IN ASSEMBLY
June 9, 2025
___________
Introduced by M. of A. PRETLOW -- (at request of the Governor) -- read
once and referred to the Committee on Ways and Means
AN ACT in relation to authorizing a loan from the state to the city of
Dunkirk (Part A); and making an appropriation therefor (Part B)
The People of the State of New York, represented in Senate and Assem-bly, do enact as follows:
1 Section 1. This act enacts into law components of legislation neces-
2 sary to authorize a loan for the city of Dunkirk. Each component is
3 wholly contained within a Part identified as Parts A through B. The
4 effective date for each particular provision contained within such Part
5 is set forth in the last section of such Part. Any provision in any
6 section contained within a Part, including the effective date of the
7 Part, which makes a reference to a section "of this act", when used in
8 connection with that particular component, shall be deemed to mean and
9 refer to the corresponding section of the Part in which it is found.
10 Section three of this act sets forth the general effective date of this
11 act.
12 PART A
13 Section 1. Legislative findings. The legislature hereby finds and
14 declares that a condition of severe fiscal difficulties exists in the
15 city of Dunkirk as a result of expenditures exceeding revenues over
16 numerous years, with the substantial accumulation of deficits expected
17 for the close of the city's fiscal year 2024. Such condition, including
18 late and overdue financial statements, has contributed to a current loss
19 of confidence by investors in short-term and long-term obligations of
20 the city of Dunkirk as demonstrated by major municipal credit rating
21 agencies withdrawing credit ratings of the city.
22 It is hereby further found and declared that the city of Dunkirk pres-
23 ently has a $12.7 million revenue anticipation note with a maturity date
EXPLANATION--Matter in italics (underscored) is new; matter in brackets
[] is old law to be omitted.
LBD12017-01-5
A. 8870 2
1 of July 24, 2025. The city has indicated that it would not have suffi-
2 cient cash to repay the revenue anticipation note's principal and inter-
3 est and has not attained the willingness of investors to purchase new
4 obligations of the city in time to provide for the repayment of such
5 $12.7 million note so owed.
6 It is hereby further found and declared that the inability to pay the
7 revenue anticipation note could have significant negative financial
8 implications for the city, other municipalities across the state, and
9 the people of the state through a loss of credit access or higher cost
10 for borrowing.
11 Based upon the fiscal condition of the city of Dunkirk and the state-
12 wide concerns of the financial implications that an inability to pay the
13 revenue anticipation note may result in, the legislature through this
14 act authorizes an additional debt option for the city of Dunkirk as a
15 matter of last resort.
16 § 2. Short title. This act shall be known and may be cited as the
17 "City of Dunkirk Revenue Anticipation Note Refinancing Act".
18 § 3. Definitions. As used in this act, the following words and terms
19 shall have the following meanings respectively, unless the text shall
20 indicate another or different meaning or intent:
21 (a) "Budget director" means the state director of the budget.
22 (b) "City" means the city of Dunkirk, in the county of Chautauqua.
23 (c) "City council" means the city council of the city.
24 (d) "Deficit bonds" means the bonds authorized by the Dunkirk fiscal
25 recovery act.
26 (e) "Deficit notes" means bond anticipation notes issued in antic-
27 ipation of the issuance of deficit bonds, as authorized by the Dunkirk
28 fiscal recovery act.
29 (f) "Dunkirk fiscal recovery act" means the act pursuant to part DD of
30 chapter 56 of the laws of 2024.
31 (g) "Mayor" means the mayor of the city.
32 § 4. Establishment of a state loan to the city. Any payment made to
33 the city from an appropriation made by part B of this chapter, enacted
34 by a chapter of the laws of 2025, shall be used by the city for the
35 repayment and settlement of its revenue anticipation note due July 24,
36 2025, and shall, notwithstanding any provision of the local finance law
37 to the contrary, constitute a loan from the state to the city to address
38 a budgetary deficit, the repayment of which by the city shall be a
39 general obligation of the city and which shall be backed by the full
40 faith and credit of the city, pursuant to the terms and structure set
41 forth in this act.
42 § 5. Authorized loan amortization period and interest rate. Notwith-
43 standing any provision of law to the contrary, the amortization period
44 of the loan and the period of probable usefulness shall be fifteen
45 years. The rate of interest applied to the principal amount owed on such
46 loan shall be seven and one-half percent per annum. If the reduction of
47 any payment or payments made on or on behalf of the city pursuant to
48 section six of this act is insufficient to satisfy the annual repayment
49 amount set forth in the loan repayment schedule, the budget director may
50 modify the terms of the loan, including term and interest.
51 § 6. Loan repayment by the city. The city shall be obligated to repay
52 the loan in accordance with a loan repayment schedule provided by the
53 budget director that reflects the amount and date of all loan payments
54 made by the state to the city from an appropriation pursuant to part B
55 of this chapter during the state fiscal year beginning April 1, 2025.
56 Such loan repayment schedule may be revised from time to time to reflect
A. 8870 3
1 any modification of the terms of the loan as provided in section five of
2 this act. By no later than September 30, of any year while such loan is
3 outstanding, the budget director shall notify the mayor, the city coun-
4 cil, the state comptroller, the chair of the assembly ways and means
5 committee, and the chair of the senate finance committee, of (a) any
6 offset payment deemed made by or on behalf of the city in accordance
7 with section seven of this act, and (b) the principal and interest
8 repayment schedule reflecting the remaining amounts owed by the city to
9 the state, for each state fiscal year, starting with the state fiscal
10 year that begins April 1, 2026.
11 § 7. City state aid withholding. For so long as the loan shall remain
12 outstanding, the budget director may direct any department, agency, or
13 instrumentality thereof, to reduce the amount of any payment or payments
14 owed in a fiscal year to the city of Dunkirk, or any department, agency,
15 or instrumentality thereof; provided however, that such reduction shall
16 be in an amount no greater than the amount due for such year as set
17 forth in the loan repayment schedule. The budget director shall effectu-
18 ate such reduction through a budget certification and authorization sent
19 to the office of the state comptroller. To the extent the city or any
20 department, agency, or instrumentality thereof is entitled to any cash
21 disbursement authorized by any appropriation, such entitlement shall be
22 reduced commensurate with the reductions determined pursuant to sections
23 four and five of this act.
24 § 8. Early termination and payoff of the loan. The state shall not
25 require the early termination of the loan or the prepayment of any
26 amounts set forth in the loan repayment schedule. The mayor, with sepa-
27 rate concurrence from a majority of the city council, may at any time,
28 upon fifteen days' notice to the budget director, the state comptroller,
29 the chair of the assembly ways and means committee, and the chair of the
30 senate finance committee, prepay the loan in whole or in part, and if in
31 whole, subject to the written confirmation of the budget director of the
32 calculated amount of principal and interest owed by the city as of the
33 proposed date of loan repayment.
34 § 9. Miscellaneous provisions. (a) This loan shall be treated as
35 indebtedness of the city with respect to article eight of the state
36 constitution, and, provided further, the amount of the annual principal
37 and interest of such loan necessary to be raised from a tax on city real
38 estate, in order to equally compensate and replenish the city's all
39 funds budget for the annual withholding of state payments to the city
40 pursuant to section seven of this act, shall be excluded from the tax
41 limit imposed by section ten of article eight of the New York state
42 constitution.
43 (b) For so long as the state loan shall remain outstanding, the city
44 shall comply with the requirements of sections seven, eight, nine, and
45 ten of the "Dunkirk fiscal recovery act", whether or not any deficit
46 bonds or deficit notes as authorized within such act shall be outstand-
47 ing.
48 (c) Notwithstanding section four of the Dunkirk fiscal recovery act,
49 or any other law to the contrary, the period of probable usefulness of
50 the first issuance of deficit bonds or deficit notes pursuant to such
51 act shall be computed from the effective date of this act.
52 (d) On or before July 9 of each state fiscal year for which the loan
53 is still outstanding, beginning with state fiscal year 2026, the mayor
54 shall attest and provide notice of such attestation to the state direc-
55 tor of the budget, the state comptroller, the chair of the assembly ways
56 and means committee, and the chair of the senate finance committee, that
A. 8870 4
1 either: (i) the city, after a good faith effort, has been unable to
2 issue deficit notes or deficit bonds pursuant to the Dunkirk fiscal
3 recovery act, in order to prepay in whole or in part the loan made
4 pursuant to this act, or (ii) the city has issued deficit notes or defi-
5 cit bonds and is able to use such proceeds to prepay in whole the loan
6 made pursuant to this act.
7 § 10. This act shall take effect on the same date and in the same
8 manner as part B of this chapter, takes effect.
9 PART B
10 Section 1. The sum of up to thirteen million, seven hundred thousand
11 dollars ($13,700,000), or so much thereof as may be necessary, is hereby
12 appropriated from any moneys in the state treasury in the general fund
13 for payment to the city of Dunkirk solely to refinance its revenue
14 anticipation note with a final maturity and due date of July 24, 2025.
15 No payment shall be made from this appropriation without a written,
16 signed attestation by the mayor of the city of Dunkirk sent electron-
17 ically to the budget director, the state comptroller, the chair of the
18 assembly ways and means committee, and the chair of the senate finance
19 committee by no later than July 9, 2025, stating that the city of
20 Dunkirk has made good faith efforts, to date, to secure the full amount
21 of principal and interest due on the city of Dunkirk's revenue antic-
22 ipation note due on July 24, 2025 through and including any combination
23 of city cash on hand, issuances of new city revenue or tax anticipation
24 notes, or issuances of new deficit bonds or deficit bond anticipation
25 notes, yet the city is unable to secure enough funding to pay the full
26 amount of principal and interest owed, and is in need of a specified
27 dollar amount of the full principal and interest amount due to be loaned
28 from the state on behalf of the city of Dunkirk by means of this appro-
29 priation. Such attestation and request shall also include, on behalf of
30 the city of Dunkirk, a pledge that the repayment of such loan shall be
31 met with the full faith and credit of the city of Dunkirk. If the amount
32 of the state loan so requested by the mayor of the city of Dunkirk is
33 less than the total principal and interest owed on the revenue antic-
34 ipation note, the mayor shall further attest and certify, within such
35 communication to the state no later than July 9, 2025, that the city of
36 Dunkirk has secured and shall cause to be deposited no later than July
37 24, 2025, sufficient funds that, together with the requested state loan
38 amount paid to the city of Dunkirk, shall completely pay off and settle
39 the principal and interest of the note so due, thus avoiding a city
40 default of non-payment. Such funds shall be payable on the audit and
41 warrant of the state comptroller on vouchers certified or approved in
42 the manner provided by law.
43 § 2. This act shall take effect upon receipt of the written, signed
44 attestation submitted by the mayor of the city of Dunkirk required by
45 section one of this act; provided, however, that the state director of
46 the budget, state comptroller, chair of the assembly ways and means
47 committee, and chair of the senate finance committee shall notify the
48 legislative bill drafting commission upon receipt of such written,
49 signed attestation in order that the commission may maintain an accurate
50 and timely effective data base of the official text of the laws of the
51 state of New York in furtherance of effectuating the provisions of
52 section 44 of the legislative law and section 70-b of the public offi-
53 cers law.
A. 8870 5
1 § 2. Severability clause. If any clause, sentence, paragraph, subdivi-
2 sion, section or part of this act shall be adjudged by any court of
3 competent jurisdiction to be invalid, such judgment shall not affect,
4 impair, or invalidate the remainder thereof, but shall be confined in
5 its operation to the clause, sentence, paragraph, subdivision, section
6 or part thereof directly involved in the controversy in which such judg-
7 ment shall have been rendered. It is hereby declared to be the intent of
8 the legislature that this act would have been enacted even if such
9 invalid provisions had not been included herein.
10 § 3. This act shall take effect immediately; provided, however, that
11 the applicable effective date of Parts A through B of this act shall be
12 as specifically set forth in the last section of such Parts.
