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A01618 Summary:

BILL NOA01618
 
SAME ASNo Same As
 
SPONSORHevesi
 
COSPNSR
 
MLTSPNSR
 
Amd 109-b, Gen Muni L
 
Authorizes installment purchase contracts by political subdivisions for the financing of technology.
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A01618 Actions:

BILL NOA01618
 
01/12/2017referred to local governments
01/03/2018referred to local governments
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A01618 Memo:

NEW YORK STATE ASSEMBLY
MEMORANDUM IN SUPPORT OF LEGISLATION
submitted in accordance with Assembly Rule III, Sec 1(f)
 
BILL NUMBER: A1618
 
SPONSOR: Hevesi
  TITLE OF BILL: An act to amend the general municipal law, in relation to installment contracts for the financing of technology   PURPOSE: The purpose of this bill is to expand and extend the content of install- ment purchase contracts to include technology.   SUMMARY OF PROVISIONS: This bill amends paragraph (b) of subdivision 1, paragraphs (c) and (d) of subdivision 2, paragraph (a) of subdivision 3, paragraph (a) of subdivision 4, paragraphs (a) and (b) of subdivision 5 and paragraphs (a) and (b) of subdivision 6 of section 109-b of the general municipal law, as amended by chapter 258 of the law of 1994. Section 2 denotes the effective date.   JUSTIFICATION: Extending installment purchase contracts shall permit political subdivi- sions and agencies better access to technological assets. Any leasing/financing program provides budgetary flexibility for the agency acquiring assets. Although there are different types of leasing/financing programs, the objectives for all are similar: to acquire commodities through financing and to obtain the best interest rate possible. Installment purchase contracts for technology would allow access to technological products and services in a timelier manner. Additionally, financing technology through installment purchase contracts allows constant advancement and development in this area as the term of such installment purchase contract shall not exceed the period of probable usefulness of the technology assets being funded. Thus, political subdivisions, such as municipalities and school districts, as well as state agencies would be able to constantly improve the technology used to provide services at a more efficient rate.   LEGISLATIVE HISTORY: A.6953 (2013-2014); A.525 (2015-2016)   FISCAL IMPLICATIONS: None   EFFECTIVE DATE: This act shall take effect on the sixtieth day after it shall have become a law: provided, however, that the amendments to the section 109-b of the general municipal law made by section one of this act shall not affect the repeal of such section and shall be deemed repealed ther- ewith.
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A01618 Text:



 
                STATE OF NEW YORK
        ________________________________________________________________________
 
                                          1618
 
                               2017-2018 Regular Sessions
 
                   IN ASSEMBLY
 
                                    January 12, 2017
                                       ___________
 
        Introduced by M. of A. HEVESI -- read once and referred to the Committee
          on Local Governments
 
        AN  ACT  to  amend the general municipal law, in relation to installment
          contracts for the financing of technology
 
          The People of the State of New York, represented in Senate and  Assem-
        bly, do enact as follows:

     1    Section  1.  Paragraph (b) of subdivision 1, paragraphs (c) and (d) of
     2  subdivision 2, paragraph (a) of subdivision 3, paragraph (a) of subdivi-
     3  sion 4, paragraphs (a) and (b) of subdivision 5 and paragraphs  (a)  and
     4  (b)  of  subdivision 6 of section 109-b of the general municipal law, as
     5  amended by chapter 258 of the laws of  1994,  are  amended  to  read  as
     6  follows:
     7    (b)  "Installment  purchase  contract"  shall  mean any lease purchase
     8  agreement,  installment  sales  agreement  or  other  similar  agreement
     9  providing  for  periodic payments between a corporation, person or other
    10  entity and a political subdivision which has as its purpose the  financ-
    11  ing of equipment, machinery, technology or apparatus.
    12    (c)  Subject  to  the  provisions of subdivision five of this section,
    13  where the financing of equipment,  machinery,  technology  or  apparatus
    14  pursuant to an installment purchase contract is to be provided by agency
    15  certificates of participation, the governing board of a political subdi-
    16  vision  shall  adopt  a resolution authorizing the written contract with
    17  the agency setting forth the rights and liabilities of  the  agency  and
    18  the political subdivision as provided for in section twenty-four hundred
    19  thirty-five-a of the public authorities law.
    20    (d)  The  term  of  such  installment purchase contract, including all
    21  renewals thereof, shall not exceed the  period  of  probable  usefulness
    22  prescribed  by section 11.00 of the local finance law for the equipment,
    23  machinery, technology or apparatus being financed under the  installment
    24  purchase contract.
 
         EXPLANATION--Matter in italics (underscored) is new; matter in brackets
                              [ ] is old law to be omitted.
                                                                   LBD02474-01-7

        A. 1618                             2
 
     1    (a) Installment purchase contracts for equipment, machinery, technolo-
     2  gy  or  apparatus shall constitute purchase contracts for public bidding
     3  purposes and shall be subject to  public  bidding  requirements  to  the
     4  extent  applicable  by law. For purposes of determining whether the cost
     5  of  the  equipment, machinery, technology or apparatus exceeds the mone-
     6  tary threshold fixed in section one hundred three of this  article,  the
     7  cost  of the equipment, machinery, technology or apparatus, exclusive of
     8  the cost of financing, shall be considered. If the equipment, machinery,
     9  technology or apparatus is to be financed by  a  party  other  than  the
    10  party  submitting  the  bid, the bid specifications may provide that the
    11  political subdivision may assign its right to purchase to a third  party
    12  without  the  necessity  of approval by the other party to the contract.
    13  Nothing herein shall preclude a political subdivision  from  advertising
    14  for bids in the alternative with and without financing.
    15    (a)  The proceeds of certificates of participation executed and deliv-
    16  ered in connection with the installment purchase contract made  pursuant
    17  to  this  section,  in addition to being applied towards the cost of the
    18  equipment, machinery, technology or apparatus, may also be used for  the
    19  establishment  of reserve funds to secure such certificates, the cost or
    20  premium of letters of credit, insurance or  other  credit  enhancements,
    21  the  costs  of  bond counsel, a financial advisor, underwriter, trustees
    22  and paying agent, and  other  actual  and  necessary  expenses  directly
    23  related to the issuance of such certificates. The foregoing shall not be
    24  construed  to  authorize  the  use  of  such proceeds for the payment of
    25  personal service expenses of the  political  subdivision.  Where  agency
    26  certificates  are  executed  and  delivered,  proceeds  may  be used for
    27  payment by the political subdivision of the  expenses  incurred  by  the
    28  agency  in  connection  with the execution and delivery and sale of such
    29  certificates.
    30    (a) If an authorization for the issuance of obligations to finance the
    31  equipment, machinery, technology or apparatus would have  been  required
    32  by  law  to be subject to a permissive or mandatory referendum, then the
    33  authorization to enter into an installment purchase  contract  shall  be
    34  subject  to a permissive or mandatory referendum, as the case may be, in
    35  the same manner as provided for such referendum on the issuance of obli-
    36  gations.
    37    (b) If the authorization for the issuance of  obligations  to  finance
    38  the  equipment,  machinery,  technology  or  apparatus  would  have been
    39  required by law to be subject to: (i) a certain  supermajority  vote  of
    40  the governing board, (ii) a mandatory or permissive referendum, or (iii)
    41  both,  then  the  authorization  to  enter  into an installment purchase
    42  contract for equipment, machinery,  technology  or  apparatus  shall  be
    43  subject  to  such  vote,  referendum or such referendum and vote, as the
    44  case may be, in the same manner as provided for such vote and/or  refer-
    45  endum on the issuance of obligations.
    46    (a)  Installment  purchase  contracts  made  pursuant to this section,
    47  together with any certificates of participation executed  and  delivered
    48  or  caused  to  be executed and delivered in connection therewith, shall
    49  not constitute or create indebtedness of the state or a political subdi-
    50  vision for purposes of article seven or eight of the state  constitution
    51  or  section  20.00 of the local finance law, nor shall they constitute a
    52  contractual obligation in excess of the amounts  appropriated  therefor.
    53  Neither  the  state nor a political subdivision has any continuing legal
    54  or moral obligation to appropriate money  for  said  payments  or  other
    55  obligations  due under the installment purchase contract. No installment
    56  purchase contract shall contain any provision which,  in  the  event  of

        A. 1618                             3
 
     1  non-appropriation,  precludes  a  political  subdivision  from acquiring
     2  equipment, machinery, technology or apparatus for the  same  or  similar
     3  purpose as the equipment, machinery, technology or apparatus included in
     4  the  installment  purchase contract for a period of more than sixty days
     5  from the  date  of  expiration,  termination  or  cancellation  of  such
     6  contract,  provided,  however,  that  in  no  case  shall an installment
     7  purchase contract contain any provision which would preclude a political
     8  subdivision from performing any statutorily or constitutionally required
     9  duties or functions, or require the political subdivision to pay  liqui-
    10  dated damages.
    11    (b)  In  the  case  of  the failure to appropriate, the sole security,
    12  apart from any security  provided  by  a  credit  enhancement,  for  any
    13  remaining periodic payments shall be the equipment, machinery, technolo-
    14  gy  or  apparatus  subject  to the installment purchase contract, and if
    15  certificates of participation are executed and delivered or caused to be
    16  executed and delivered, reserve funds, if any, or any remaining proceeds
    17  from certificates executed and delivered by or on behalf  of  the  poli-
    18  tical  subdivision.  Any  installment purchase contract or any agreement
    19  for the execution and delivery of certificates of participation to  fund
    20  an  installment  purchase  contract  may  provide  that  the installment
    21  purchase contract or certificates of participation are  secured  by  the
    22  underlying  equipment,  machinery,  technology or apparatus and that, in
    23  the event the political subdivision fails to  appropriate  funds  suffi-
    24  cient  for payments required under the contract, the financed equipment,
    25  machinery, technology or apparatus may be sold on behalf of the  holders
    26  of  the  certificates or other person entitled to receive payments under
    27  the installment purchase contract, provided  that  any  excess  proceeds
    28  from  such a sale, after deduction for and payment of fees, expenses and
    29  any taxes levied on the sale, and distribution to  the  holders  of  the
    30  certificates  in  the  amount of the face value of the certificates plus
    31  accrued interest shall be paid to the political subdivision.
    32    § 2. This act shall take effect on the sixtieth  day  after  it  shall
    33  have  become  a  law;  provided, however, that the amendments to section
    34  109-b of the general municipal law made by section one of this act shall
    35  not affect the repeal of such section and shall be deemed repealed ther-
    36  ewith.
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