Amd §§54.10, 54.90, 57.00, 90.00 & 107.00, Loc Fin L; amd §10-a, Chap 868 of 1975; amd §5, Chap 142 of 2004
Extends certain provisions relating 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 refunding of bonds, and the down payment for projects financed by bonds; extends the New York state financial emergency act for the city of New York; makes further amendments relating to the effectiveness thereof.
NEW YORK STATE ASSEMBLY MEMORANDUM IN SUPPORT OF LEGISLATION submitted in accordance with Assembly Rule III, Sec 1(f)
BILL NUMBER: A9671
SPONSOR: Braunstein TITLE OF BILL:
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 relating to
interest rate exchange agreements of the city of New York and refunding
bonds of such city, in relation to the effectiveness thereof
PURPOSE OR GENERAL IDEA OF BILL:
The purpose of this bill is to extend expiring provisions of the Local
Finance Law relating to New York City's financing authorizations.
SUMMARY OF PROVISIONS:
This bill would continue New York City's authority to:
* issue notes and bonds through June 30, 2025;
* issue notes with variable interest rates through July 15, 2025;
* enter into interest rate exchange agreements through July 15, 2025;
* sell bonds at private sale through June 30, 2025;
* exchange refunding bonds for outstanding bonds under certain circum-
stances through June 30, 2025;
* extend the inapplicability of certain bond and note down payment
provisions to June 30, 2025;
* include the pledge and agreement of the State in agreements with hold-
ers or guarantors of City obligations until June 30, 2025;
* extend certain bond refunding provisions.
JUSTIFICATION:
This bill includes several elements that are instrumental in ensuring
that the City of New York continues to have efficient and cost-effective
access to the capital markets. First, in 1978, the Legislature enacted
various provisions of the LFL and the FEA to respond to the financial
emergency existing in the City and to improve marketability of City
obligations by authorizing their sale on terms consistent with current
market practices. Certain of these provisions contained sunset
provisions, and in 1982, the Legislature extended certain sunset
provisions and introduced other changes necessary for the continued
successful marketing of City obligations, some of which were applicable
to other municipal issuers as well. Since 1986, the Legislature has
extended these sunset provisions at least annually.
PRIOR LEGISLATIVE HISTORY:
2023: A. 6592 (Braunstein) - Chapter 152 of the Laws of 2023
2022: A. 10215 (Braunstein) - Chapter 362 of the Laws of 2022
FISCAL IMPLICATIONS:
None to the State.
EFFECTIVE DATE:
This act would take effect immediately.
STATE OF NEW YORK
________________________________________________________________________
9671
IN ASSEMBLY
March 29, 2024
___________
Introduced by M. of A. BRAUNSTEIN -- read once and referred to the
Committee on Cities
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:
1 Section 1. The opening paragraph of paragraph (a) of section 54.10 of
2 the local finance law, as amended by chapter 152 of the laws of 2023, is
3 amended to read as follows:
4 To facilitate the marketing of any issue of bonds or notes of the city
5 of New York issued on or before June thirtieth, two thousand [twenty-
6 four] twenty-five, the mayor and comptroller of such city may, subject
7 to the approval of the state comptroller and the limitations on private
8 sales of bonds and notes, respectively, provided by law:
9 § 2. The closing paragraph of paragraph a of section 54.90 of the
10 local finance law, as amended by chapter 152 of the laws of 2023, is
11 amended to read as follows:
12 Notwithstanding the foregoing, whenever in the judgment of the finance
13 board of the city of New York the interest of such city would be served
14 thereby, the city of New York may without further approval issue bonds
15 or notes, on or before July fifteenth, two thousand [twenty-four] twen-
16 ty-five, with interest rates that vary in accordance with a formula or
17 procedure and are subject to a maximum rate of interest set forth or
18 referred to in the bonds or notes and may provide the holders thereof
19 with such rights to require the city or other persons to purchase such
20 bonds or notes or renewals thereof from the proceeds of the resale ther-
EXPLANATION--Matter in italics (underscored) is new; matter in brackets
[] is old law to be omitted.
LBD15085-01-4
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1 eof or otherwise from time to time prior to the final maturity of such
2 bonds or notes as the finance board of the city of New York may deter-
3 mine and the city may resell, at any time prior to final maturity, any
4 such bonds or notes acquired as a result of the exercise of such rights;
5 provided, however, that at no time shall the total principal amount of
6 bonds and notes issued by the city of New York pursuant to this para-
7 graph (other than bonds and notes (1) bearing interest at rates and for
8 periods of time that are specified without reference to future events or
9 contingencies, or (2) described in section 136.00 of this article)
10 exceed twenty-five percent of the limit prescribed by section 104.00 of
11 this article.
12 § 3. The opening paragraph of subdivision 1 of paragraph d of section
13 54.90 of the local finance law, as amended by chapter 152 of the laws of
14 2023, is amended to read as follows:
15 On or before July fifteenth, two thousand [twenty-four] twenty-five
16 the mayor and comptroller of the city of New York may:
17 § 4. The opening paragraph of paragraph a of section 57.00 of the
18 local finance law, as amended by chapter 152 of the laws of 2023, is
19 amended to read as follows:
20 Bonds shall be sold only at public sale and in accordance with the
21 procedure set forth in this section and sections 58.00 and 59.00 of this
22 title, except as otherwise provided in this paragraph. Bonds may be sold
23 at private sale to the United States government or any agency or instru-
24 mentality thereof, the state of New York municipal bond bank agency, to
25 any sinking fund or pension fund of the municipality, school district or
26 district corporation selling such bonds, or, in the case of sales by the
27 city of New York prior to July first, two thousand [twenty-four] twen-
28 ty-five, also to the municipal assistance corporation for the city of
29 New York or to any other purchaser with the consent of the mayor and the
30 comptroller of such city and approval of the state comptroller, or, in
31 the case of sales by the county of Nassau prior to December thirty-
32 first, two thousand seven, also to the Nassau county interim finance
33 authority with the approval of the state comptroller, or, in the case of
34 sales by the city of Buffalo prior to June thirtieth, two thousand thir-
35 ty-seven, also to the Buffalo fiscal stability authority with the
36 approval of the state comptroller, or, in the case of bonds or other
37 obligations of a municipality issued for the construction of any sewage
38 treatment works, sewage collecting system, storm water collecting
39 system, water management facility, air pollution control facility or
40 solid waste disposal facility, also to the New York state environmental
41 facilities corporation, or, in the case of bonds or other obligations of
42 a school district or a city acting on behalf of a city school district
43 in a city having a population in excess of one hundred twenty-five thou-
44 sand but less than one million inhabitants according to the latest
45 federal census, issued to finance or refinance the cost of school
46 district capital facilities or school district capital equipment, as
47 defined in section sixteen hundred seventy-six of the public authorities
48 law, also to the dormitory authority of the state of New York. Bonds of
49 a river improvement or drainage district established by or under the
50 supervision of the department of environmental conservation may be sold
51 at private sale to the state of New York as investments for any funds of
52 the state which by law may be invested, provided, however, that the rate
53 of interest on any such bonds so sold shall be approved by the water
54 power and control commission and the state comptroller. Bonds may also
55 be sold at private sale as provided in section 63.00 of this title. No
56 bonds shall be sold on option or on a deferred payment plan, except that
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1 options to purchase, effective for a period not exceeding one year, may
2 be given:
3 § 5. Subdivision 3 of paragraph g of section 90.00 of the local
4 finance law, as amended by chapter 152 of the laws of 2023, is amended
5 to read as follows:
6 3. Outstanding bonds may, pursuant to a power to recall and redeem or
7 with the consent of the holders thereof, be exchanged for refunding
8 bonds (i) if the refunding bonds are to bear interest at a rate equal to
9 or lower than that borne by the bonds to be refunded or (ii) if, in the
10 case of the city of New York prior to July first, two thousand [twenty-
11 four] twenty-five, the annual payment required for principal and inter-
12 est on the refunding bond is less than the annual payment required for
13 principal and interest on the bond to be refunded, in each case such
14 annual payments to be determined by dividing the total principal and
15 interest payments due over the remaining life of the bond by the number
16 of years to maturity of the bond or (iii) if the bonds to be refunded
17 were issued by the city of New York after June thirtieth, nineteen
18 hundred seventy-eight and prior to July first, two thousand [twenty-
19 four] twenty-five and contain covenants referring to the existence of
20 the New York state financial control board for the city of New York or
21 any other covenants relating to matters other than the prompt payment of
22 principal and interest on the obligations when due and the refunding
23 bond omits or modifies any such covenant.
24 § 6. Subdivision 8 of paragraph d of section 107.00 of the local
25 finance law, as amended by chapter 152 of the laws of 2023, is amended
26 to read as follows:
27 8. Notwithstanding any other provision of law, the financing by the
28 city of New York prior to July first, two thousand [twenty-four] twen-
29 ty-five of any object or purpose which has a period of probable useful-
30 ness determined by law by the issuance of any bonds or notes, including
31 (i) the issuance of bonds or notes to obtain reimbursement for funds
32 heretofore advanced for the object or purpose for which the bonds or
33 notes are being issued, (ii) the issuance of bonds or notes to redeem
34 notes previously issued for the object or purpose for which the bonds or
35 notes are being issued or (iii) the issuance of bonds to refund bonds
36 previously issued for the object or purpose for which bonds are being
37 issued.
38 § 7. Subdivision 1 of section 10-a of section 2 of chapter 868 of the
39 laws of 1975, constituting the New York state financial emergency act
40 for the city of New York, as amended by chapter 152 of the laws of 2023,
41 is amended to read as follows:
42 1. In the event that after the date on which the provisions of this
43 act become operative, any notes or bonds are issued by the city prior to
44 July 1, [2024] 2025, or any bonds are issued by a state financing agen-
45 cy, the state of New York hereby authorizes the city and authorizes and
46 requires such state financing agency to include a pledge and agreement
47 of the state of New York in any agreement made by the city or such state
48 financing agency with holders or guarantors of such notes or bonds that
49 the state will not take any action which will (a) substantially impair
50 the authority of the board during a control period, as defined in subdi-
51 vision twelve of section two of this act as in effect on the date such
52 notes or bonds are issued (i) to approve, disapprove, or modify any
53 financial plan or financial plan modification, including the revenue
54 projections (or any item thereof) contained therein, subject to the
55 standards set forth in paragraphs a, c, d, e and f of subdivision one of
56 section eight of this act as in effect on the date such notes or bonds
A. 9671 4
1 are issued and paragraph b of such subdivision as in effect from time to
2 time, (ii) to disapprove a contract of the city or a covered organiza-
3 tion if the performance of such contract would be inconsistent with the
4 financial plan or to approve or disapprove proposed short-term or long-
5 term borrowing of the city or a covered organization or any agreement or
6 other arrangement referred to in subdivision four of section seven of
7 this act, or (iii) to establish and adopt procedures with respect to the
8 deposit in and disbursement from the board fund of city revenues; (b)
9 substantially impair the authority of the board to review financial
10 plans, financial plan modifications, contracts of the city or the
11 covered organizations and proposed short-term or long-term borrowings of
12 the city and the covered organizations; (c) substantially impair the
13 independent maintenance of a separate fund for the payment of debt
14 service on bonds and notes of the city; (d) alter the composition of the
15 board so that the majority of the voting members of the board are not
16 officials of the state of New York elected in a state-wide election or
17 appointees of the governor; (e) terminate the existence of the board
18 prior to the time to be determined in accordance with section thirteen
19 of this act as in effect on the date such notes or bonds are issued; (f)
20 substantially modify the requirement that the city's financial state-
21 ments be audited by a nationally recognized independent certified public
22 accounting firm or consortium of firms and that a report on such audit
23 be furnished to the board; or (g) alter the definition of a control
24 period set forth in subdivision twelve of section two of this act, as in
25 effect on the date such notes or bonds are issued, or substantially
26 alter the authority of the board, as set forth in said subdivision to
27 reimpose or terminate a control period; provided, however, that the
28 foregoing pledge and agreement shall be of no further force and effect
29 if at any time (i) there is on deposit in a separate trust account with
30 a bank, trust company or other fiduciary sufficient moneys or direct
31 obligations of the United States or obligations guaranteed by the United
32 States, the principal of and/or interest on which will provide moneys to
33 pay punctually when due at maturity or prior to maturity by redemption,
34 in accordance with their terms, all principal of and interest on all
35 outstanding notes and bonds of the city or such state financing agency
36 containing this pledge and agreement and irrevocable instructions from
37 the city or such state financing agency to such bank, trust company or
38 other fiduciary for such payment of such principal and interest with
39 such moneys shall have been given, or (ii) such notes and bonds, togeth-
40 er with interest thereon, have been paid in full at maturity or have
41 otherwise been refunded, redeemed, defeased, or discharged; and provided
42 further that the foregoing pledge and agreement shall be of full force
43 and effect upon its inclusion in any agreement made by the city or state
44 financing agency with holders or guarantors of such notes or bonds.
45 Upon payment for such obligations issued pursuant to this act by the
46 original and all subsequent holders inclusion of the foregoing covenant
47 shall be deemed conclusive evidence of valuable consideration received
48 by the state and city for such covenant and of reliance upon such pledge
49 and agreement by any such holder. The state hereby grants any such bene-
50 fited holder the right to sue the state in a court of competent juris-
51 diction and enforce this covenant and agreement and waives all rights of
52 defense based on sovereign immunity in such an action or suit.
53 § 8. Section 5 of chapter 142 of the laws of 2004, amending the local
54 finance law relating to interest rate exchange agreements of the city of
55 New York and refunding bonds of such city, as amended by chapter 152 of
56 the laws of 2023, is amended to read as follows:
A. 9671 5
1 § 5. This act shall take effect immediately, provided, that section
2 three of this act shall expire and be deemed repealed July 15, [2024]
3 2025.
4 § 9. Separability. If any clause, sentence, paragraph, section or part
5 of this act shall be adjudged by any court of competent jurisdiction to
6 be invalid, such judgment shall not affect, impair or invalidate the
7 remainder thereof, but shall be confined in its operation to the clause,
8 sentence, paragraph, section or part thereof directly involved in the
9 controversy in which such judgment shall have been rendered.
10 § 10. This act shall take effect immediately.
