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A02348 Summary:

BILL NOA02348
 
SAME ASSAME AS UNI. S02999
 
SPONSORThiele
 
COSPNSR
 
MLTSPNSR
 
Amd 137, Ec Dev L; add 1285-s, Pub Auth L; amd 16-m, UDC Act
 
Relates to financial assistance to small businesses for the purpose of pollution prevention, control and compliance.
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A02348 Actions:

BILL NOA02348
 
01/18/2017referred to small business
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A02348 Memo:

NEW YORK STATE ASSEMBLY
MEMORANDUM IN SUPPORT OF LEGISLATION
submitted in accordance with Assembly Rule III, Sec 1(f)
 
BILL NUMBER: A2348
 
SPONSOR: Thiele
  TITLE OF BILL: An act to amend the economic development law, the public authorities law and the New York state urban development corporation act, in relation to financial assistance to small businesses for the purpose of pollution prevention, control and compliance   PURPOSE OR GENERAL IDEA OF BILL: To amend the economic development law, the public authorities law and the New York State Urban Development Corporation Act, in relation to financial assistance to small businesses for the purpose of pollution prevention, control and compliance.   SUMMARY OF SPECIFIC PROVISIONS: Section 1. Amends Paragraphs 1 and m of subdivision 2 of section 137 of the economic development law are amended and a new paragraph n is added Section 2. The Public Authorities Law is amended by adding a new Section 1285-a relating to the Small Business Environmental Fund Section 3. The New York State Urban Development Act is amended by adding a new paragraph (o) relating to assistance to capitalize the Small Busi- ness Environmental Fund Section 4. Effective Date   JUSTIFICATION: Amendments to federal and state environmental laws, including the feder- al Clean Air Act of 1990 and State Clean Air Compliance Act of 1993, have imposed considerable new burdens on many small businesses across New York State. As a result of these new regulatory activities, many small firms must now invest in changes in production methods or equip- ment at a time when access to capital for small businesses is generally difficult. Both private and public sources of financing have historically avoided small business lending because of the relatively higher risks and admin- istrative costs of those loans. This bill would build upon existing relationships between the small business and the financial institution and involve the expenditure of State funds only in the event of default on the loan. The fund would not only assist small businesses and New York State in achieving compliance with environmental law, but would also assist many businesses in developing better credit relationships with private lenders. This bill explicitly fosters investment in pollution prevention activ- ities, since such activities are the most effective way to achieve compliance and enhance environmental performance. Often, pollution prevention projects undertaken in an effort to comply with environmental laws take a company beyond compliance, reducing or eliminating the discharge of pollutants into the environment and saving the company beyond compliance, reducing or eliminating the discharge of pollutants into the environment and saving the company considerable money through increased efficiency and productivity, and reduced waste treatment, storage, transportation, disposal and liability costs. For these reasons, the bill would enhance access to capital for small businesses seeking to pursue pollution prevention, even when compliance is not an immediate issue.   PRIOR LEGISLATIVE HISTORY: 2015-16: A.7518/S.5495 2014: A.5578   FISCAL IMPLICATIONS: To be determined   EFFECTIVE DATE: This act shall take effect on the 180th day after it shall have become a law; provided, however, that effective immediately, the addition, amend- ment and/or repeal of any rules or regulations necessary for the imple- mentation of this act on its effective date are authorized and directed to be made and completed on or before such date and provided further that the amendments to section 16-m of section 1 of chapter 174 of the laws of 1968, constituting the New York State Urban Development Corpo- ration Act, made by section three of this act, shall not affect the expiration of such section and shall be deemed to expire therewith.
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A02348 Text:



 
                STATE OF NEW YORK
        ________________________________________________________________________
 
            S. 2999                                                  A. 2348
 
                               2017-2018 Regular Sessions
 
                SENATE - ASSEMBLY
 
                                    January 18, 2017
                                       ___________
 
        IN SENATE -- Introduced by Sen. LAVALLE -- read twice and ordered print-
          ed,  and  when  printed  to be committed to the Committee on Commerce,
          Economic Development and Small Business
 
        IN ASSEMBLY -- Introduced by M. of A. THIELE -- read once  and  referred
          to the Committee on Small Business

        AN ACT to amend the economic development law, the public authorities law
          and  the New York state urban development corporation act, in relation
          to financial  assistance  to  small  businesses  for  the  purpose  of
          pollution prevention, control and compliance
 
          The  People of the State of New York, represented in Senate and Assem-
        bly, do enact as follows:
 
     1    Section 1.  Paragraphs l and m of subdivision 2 of section 137 of  the
     2  economic  development  law,  paragraph  l  as amended and paragraph m as
     3  added by chapter 594 of the laws of 1994, are amended and  a  new  para-
     4  graph n is added to read as follows:
     5    l.  providing  information  to  small  business  stationary sources on
     6  state-sponsored programs offering financial  and  technical  assistance,
     7  and  in locating sources of funding for compliance with the requirements
     8  of article nineteen of the environmental conservation law and  the  Act;
     9  [and]
    10    m.  establishing procedures for assuring the confidentiality of infor-
    11  mation received from small business stationary sources[.]; and
    12    n. marketing the small business environmental fund established  pursu-
    13  ant  to  section  twelve hundred eighty-five-s of the public authorities
    14  law to small business stationary sources, assisting the New  York  state
    15  urban  development corporation in the projection of demand for financial
    16  assistance pursuant to section sixteen-m of the  New  York  state  urban
    17  development corporation act.
    18    §  2.  The  public  authorities law is amended by adding a new section
    19  1285-s to read as follows:

         EXPLANATION--Matter in italics (underscored) is new; matter in brackets
                              [ ] is old law to be omitted.
                                                                   LBD04119-01-7

        S. 2999                             2                            A. 2348
 
     1    § 1285-s. Small business environmental fund. 1. The corporation  shall
     2  undertake and provide assistance in support of a program to assist small
     3  businesses  in leveraging capital from financial institutions to achieve
     4  pollution prevention and/or compliance with federal  or  state  environ-
     5  mental laws.
     6    2.  There  is  hereby  established in the custody of the corporation a
     7  special fund to be known  as  the  small  business  environmental  fund.
     8  Moneys  in  such  fund shall be segregated from all other funds of or in
     9  the custody of the corporation subject  to  any  rights  of  holders  of
    10  corporation  bonds  or  notes  issued  for the purposes of this section.
    11  Moneys in such fund shall only be used in accordance with the provisions
    12  of this section. The moneys in such fund shall be applied to or paid out
    13  for authorized purposes of such fund on the direction of the chairman of
    14  the corporation in accordance with subdivision four of this section,  or
    15  such other person as the corporation shall authorize to make such direc-
    16  tion.
    17    3.  Such fund shall consist of all of the following: (a) moneys appro-
    18  priated by the state legislature for the purpose of such fund or  other-
    19  wise  transferred by the state for deposit therein by the comptroller as
    20  required by law; (b) payments of the  loan  origination  fee  authorized
    21  pursuant  to subdivision six of this section; (c) investment earnings on
    22  amounts in such fund; (d) the proceeds of bonds or notes issued  by  the
    23  corporation  for purposes of leveraging capital on behalf of small busi-
    24  nesses seeking to achieve pollution prevention and/or comply with feder-
    25  al or state environmental laws; and (e) any other payments received from
    26  the federal government or other sources for the purposes of the fund.
    27    4. (a) Moneys in such fund shall be applied by the  corporation  as  a
    28  loan  loss  reserve  fund,  to  provide  credit enhancement to encourage
    29  financial institutions to make pollution prevention or compliance  loans
    30  including  such loans as may be necessary to purchase, lease, install or
    31  acquire pollution control equipment to small businesses.
    32    (b) The corporation is hereby authorized to provide assistance in  the
    33  form  of a loan loss reserve fund for loans by financial institutions to
    34  small businesses that otherwise find it difficult to obtain bank financ-
    35  ing for pollution prevention or  compliance  activities  control.    The
    36  corporation may use moneys in the fund to guarantee up to ninety percent
    37  of  the  outstanding  principal  of  each loan to be made by a financial
    38  institution to a small business for pollution prevention  or  compliance
    39  activities,  provided,  however, that no loan by a financial institution
    40  pursuant to this section shall exceed five hundred thousand dollars.
    41    5. (a) The corporation shall  enter  into  agreements  with  financial
    42  institutions  governing  participation  in the fund which shall include,
    43  but not be limited to, the terms of the payment of  claims  pursuant  to
    44  subdivision  seven  of this section. Such agreements shall set forth any
    45  loan application fee to be charged by the financial institution  to  the
    46  applicant and the loan origination fee to be paid to the corporation for
    47  loans  pursuant to this section. In entering into agreements with finan-
    48  cial institutions, the corporation shall give priority to the  execution
    49  of  agreements  which  provide  for the participation of a consortium of
    50  financial institutions serving an entire economic development region  as
    51  defined in section two hundred thirty of the economic development law.
    52    (b) The corporation shall also establish procedures and other require-
    53  ments  for small business participation. Such procedures shall include a
    54  simplified application form for  small  businesses  seeking  assistance.
    55  Such  application  shall  require  a demonstration by the applicant that
    56  difficulty  in  obtaining  conventional  bank  financing  for  pollution

        S. 2999                             3                            A. 2348
 
     1  prevention or compliance activities in the purchase, lease, installation
     2  or acquisition of pollution control equipment impedes the ability of the
     3  applicant  to  achieve  pollution  prevention  or comply with federal or
     4  state  environmental  laws.    Such  application shall also include such
     5  specific information as the corporation may require, with regard to  the
     6  pollution  prevention  or  compliance activities proposed, and the esti-
     7  mated cost of financing such activities.
     8    (c) Within twenty-eight days of receipt of an application pursuant  to
     9  this section, the corporation shall either approve or reject such appli-
    10  cation.  The  corporation shall approve an application pursuant to para-
    11  graph (b) of this subdivision based upon a determination that:
    12    (1) the proposed pollution prevention or  compliance  activities  will
    13  assist  the small business in achieving pollution prevention and/or full
    14  compliance with federal or state environmental laws;
    15    (2) a loan is required to finance the pollution prevention or  compli-
    16  ance activities or to finance the purchase, lease, installment or acqui-
    17  sition of pollution control equipment;
    18    (3)  approval is not sought for an outstanding loan previously made by
    19  a financial institution to the small business; and
    20    (4) no concurrent loan has been made to the small business pursuant to
    21  this section.
    22    (d) In the approval of applications, the corporation shall give  pref-
    23  erence to those small businesses which are:
    24    (1)  seeking  to  comply with new requirements imposed pursuant to the
    25  federal Clean Air Act (42 U.S.C.  7401 et seq. as amended by P.L.   101-
    26  549), the New York state clean air compliance act as, established pursu-
    27  ant  to  chapter six hundred eight of the laws of nineteen hundred nine-
    28  ty-three, the provisions  of  article  seventeen  of  the  environmental
    29  conservation law relating to water pollution control, and the provisions
    30  of  title nine of article twenty-seven of the environmental conservation
    31  law, relating to industrial hazardous waste management, or any rules and
    32  regulations promulgated thereunder; and are
    33    (2) seeking to comply with new requirements imposed pursuant to feder-
    34  al or state environmental laws; and are
    35    (3) in highly distressed areas or minority-owned business  enterprises
    36  or women-owned business enterprises.
    37    (e)  Upon  approval or denial of an application, the corporation shall
    38  notify the applicant of such action by regular mail. The corporation may
    39  also notify any financial institution of the approval or  denial  of  an
    40  application.
    41    6.  (a)  Decisions to execute a loan pursuant to this section shall be
    42  made solely by the financial institution and may provide for such inter-
    43  est rate, fees and other terms and conditions as the financial  institu-
    44  tion and borrower may agree, provided, however, that:
    45    (1) unless approved by the corporation, the term of the loan shall not
    46  exceed  seven years or the estimated useful life of any financed changes
    47  in pollution prevention or control methods or  equipment,  whichever  is
    48  less; and
    49    (2)  if the amount of the loan is determined by a commitment agreement
    50  that establishes a line of credit, the amount of the actual loan is  the
    51  maximum amount available to the borrower under the agreement.
    52    (b)  A  small business, in receipt of a loan pursuant to this section,
    53  shall pay an origination fee to the  corporation  upon  distribution  of
    54  loan  proceeds.  Moneys  from such a fee shall be deposited in the fund;
    55  provided, however, that the corporation, in consultation with the direc-
    56  tor of the division of the budget, may use a portion of such moneys  for

        S. 2999                             4                            A. 2348
 
     1  the  administration of the fund. Nothing contained in this section shall
     2  prohibit the financing of the origination fee in the terms of the loan.
     3    7.  (a)  Upon  the  default of a loan made pursuant to this section, a
     4  financial institution  may  file  contemporaneously  with  a  notice  of
     5  default  to  the small business, a claim with the corporation to recover
     6  the outstanding principal plus accrued  interest  and  one-half  of  the
     7  documented  out-of-pocket  expenses incurred in pursuing loan collection
     8  efforts, including preservation of collateral. The amount  of  principal
     9  and  accrued interest included in the claim may not exceed the principal
    10  amount agreed upon at the time of closing, plus accrued interest attrib-
    11  utable to such agreed upon amounts, consistent with the requirements  of
    12  this section.
    13    (b) For loans made pursuant to this section, the financial institution
    14  shall  determine  a  loan  to  be in default in a manner consistent with
    15  methods employed by the financial institution for similar loans not made
    16  pursuant to this section.
    17    (c) The corporation is authorized and  directed  to  adopt  rules  and
    18  regulations  governing  the  payment of claims from the fund. Such rules
    19  and regulations shall provide that upon receipt of a claim  filed  by  a
    20  financial  institution, the corporation shall, within ten business days,
    21  pay from the fund the amount of the claim as submitted, unless  informa-
    22  tion  provided  by the financial institution is found by the corporation
    23  to be incomplete or was known by the financial institution to  be  false
    24  at  the closing of the loan. The terms of the payment of claims from the
    25  fund shall be included in the agreement entered into by the  corporation
    26  and  the  financial  institution  pursuant  to  subdivision five of this
    27  section.
    28    (d) Upon payment of a claim, the corporation shall report the claim to
    29  the office of the attorney general, who then shall exercise  the  rights
    30  of subrogation. The financial institution thereafter shall assign to the
    31  attorney  general any right, title, or interest to any collateral, secu-
    32  rity, or other right of recovery in connection with the loan. Any  money
    33  received  by  the  attorney  general  as a result of enforcement actions
    34  taken with respect to any collateral, security or other rights of recov-
    35  ery shall be promptly deposited by  the  attorney  general  through  the
    36  corporation in the fund, less any out-of-pocket expenses incurred by the
    37  attorney general in taking such enforcement actions.
    38    8.  Pursuant  to  rules and regulations of the corporation, the corpo-
    39  ration may terminate the participation of a financial institution in the
    40  fund upon a determination that such institution is  not  in  substantial
    41  compliance with the requirements of this section or the provisions of an
    42  agreement  executed  pursuant  to subdivision five of this section.  The
    43  corporation shall provide notice to a  financial  institution  at  least
    44  ninety days in advance of such termination.
    45    9.  The  corporation  shall  monitor  the  activities of participating
    46  financial institutions and small businesses and may require such period-
    47  ic reports or other information as deemed  necessary  from  such  insti-
    48  tutions  and  businesses  on  the  status of loans made pursuant to this
    49  section. On or before the first day of  March  following  the  effective
    50  date  of  this section, and on such date annually thereafter, the corpo-
    51  ration shall submit to the governor,  the  temporary  president  of  the
    52  senate and the speaker of the assembly a report on the fund. Such report
    53  shall include, but not be limited to:
    54    (a)  the  total  number  and amount of loans and the average amount of
    55  loans leveraged by the fund from financial institutions in each economic

        S. 2999                             5                            A. 2348
 
     1  development region of the state as defined in section two hundred thirty
     2  of the economic development law;
     3    (b)  the  total  number  and amount of loans and the average amount of
     4  loans leveraged by the fund  from  financial  institutions  pursuant  to
     5  paragraph  (d)  of subdivision five of this section in each such region;
     6  and
     7    (c) the total number and  amount  of  claims  submitted  by  financial
     8  institutions  for  recovery of moneys through the fund, the total number
     9  and amount of claims paid from the fund and a  summary  of  the  circum-
    10  stances associated with claims on the fund.
    11    10.  (a)  On or before the first day of September following the effec-
    12  tive date of this section, and on such date every two years  thereafter,
    13  the corporation shall submit to the director of the budget, the chair of
    14  the  senate  finance  committee  and  the chair of the assembly ways and
    15  means committee an evaluation of the effectiveness of the fund in  real-
    16  izing  pollution prevention by small businesses and securing the compli-
    17  ance of such businesses with federal and state environmental laws.  Such
    18  evaluation shall be prepared by an entity independent of the corporation
    19  selected through a request for proposal process and shall include recom-
    20  mendations for improvements to the implementation of the fund to enhance
    21  small business pollution prevention, control and compliance.
    22    (b) On or before the first day of September  following  the  effective
    23  date  of  this section, and on such date every two years thereafter, the
    24  corporation shall submit to the director of the budget, the chair of the
    25  senate finance committee and the chair of the assembly  ways  and  means
    26  committee an evaluation of the effectiveness of the fund in securing the
    27  compliance  of  small  businesses  with  the requirements of the federal
    28  Clean Air Act (42 U.S.C. §7401 et seq. as amended by P.L.  101-549), the
    29  New York state clean air compliance  act,  as  established  pursuant  to
    30  chapter  six hundred eight of the laws of nineteen hundred ninety-three,
    31  the provisions of article seventeen of  the  environmental  conservation
    32  law  relating  to  water  pollution control, and the provisions of title
    33  nine of article twenty-seven  of  the  environmental  conservation  law,
    34  relating  to  industrial  hazardous  waste  management, or any rules and
    35  regulations promulgated thereunder.  Such evaluation shall  be  prepared
    36  by  an  entity independent of the corporation selected through a request
    37  for proposal process and shall include recommendations for  improvements
    38  to  the  implementation  of the fund to enhance small business pollution
    39  prevention, control and compliance.
    40    11. The corporation shall market the fund program to small  businesses
    41  in cooperation with financial institutions, statewide trade associations
    42  representing  financial  institutions  and  small  businesses, local and
    43  regional economic development agencies, and the small business  station-
    44  ary  source  ombudsman  program,  established  pursuant  to  section one
    45  hundred thirty-seven of the economic development  law.  The  corporation
    46  shall  develop  a  program  to  promote  awareness of the program in all
    47  geographic regions of the state,  to  ensure  maximum  participation  by
    48  small  businesses and financial institutions and the fiscal integrity of
    49  the fund.  Agreements entered into by the corporation pursuant to subdi-
    50  vision five of this section shall  require  a  plan  by  each  financial
    51  institution  for  marketing  the fund in highly distressed areas, empire
    52  zones and to minority-owned business enterprises and  women-owned  busi-
    53  ness enterprises, with appropriate lending objectives identified by each
    54  financial institution for such areas and businesses.
    55    12.  The  corporation  is  authorized  and directed to adopt rules and
    56  regulations for the establishment and administration  of  the  fund,  in

        S. 2999                             6                            A. 2348
 
     1  accordance  with  the state administrative procedure act. No funds shall
     2  be disbursed from this program until such  rules  and  regulations  have
     3  been promulgated by the corporation.
     4    13.  For  the  purposes  of this section, the following words or terms
     5  shall mean:
     6    (a) "financial institution" shall  mean  a  banking  organization,  as
     7  defined  pursuant  to  section  two of the banking law, a New York small
     8  business investment company and a New York  specialized  small  business
     9  investment  company,  as defined pursuant to section two hundred twenty-
    10  eight-a of the banking law, a local development corporation, as  defined
    11  in  subdivision  eight  of section eighteen hundred one of this chapter,
    12  and the New York business development corporation  established  pursuant
    13  to section two hundred ten of the banking law.
    14    (b)  "fund"  shall  mean  the small business environmental fund estab-
    15  lished pursuant to this section.
    16    (c) "highly distressed area" shall mean an area meeting  the  criteria
    17  as  set  forth under subdivision (a) of section nine hundred fifty-eight
    18  of the general municipal law.
    19    (d) "minority-owned business enterprise" shall have the  same  meaning
    20  as  defined  in  subdivision  seven  of section three hundred ten of the
    21  executive law.
    22    (e) "pollution control equipment" shall mean any equipment approved by
    23  the corporation as necessary for compliance with new requirements of the
    24  federal Clean Air Act (42 U.S.C. § 7401 et seq. as amended by P.L.  101-
    25  549), the New York state clean air compliance act, as established pursu-
    26  ant  to  chapter six hundred eight of the laws of nineteen hundred nine-
    27  ty-three, the provisions  of  article  seventeen  of  the  environmental
    28  conservation law relating to water pollution control, and the provisions
    29  of  title nine of article twenty-seven of the environmental conservation
    30  law, relating to industrial hazardous waste management, or any rules and
    31  regulations promulgated thereunder.
    32    (f) "pollutant" shall mean any substance, contaminant, waste or  emis-
    33  sion  which  contributes  to  pollution as defined in article one of the
    34  environmental conservation law.
    35    (g) "pollution prevention" shall mean changes in production methods or
    36  raw materials that reduce, avoid, or  eliminate  the  use  of  toxic  or
    37  hazardous  substances or the generation of such substances or pollutants
    38  per unit of product, so as to reduce risks to  the  health  of  workers,
    39  consumers,  or  the environment, without shifting risks between workers,
    40  consumers, or environmental media.  Pollution  prevention  includes  the
    41  redesign,  modification, upgrade or replacement of production processes,
    42  equipment or technology; reformulation or redesign of products;  substi-
    43  tution of inputs or raw materials; improvements in housekeeping, mainte-
    44  nance,  training,  or  inventory  control;  and extended use or reuse of
    45  materials through methods integral to the production  process,  such  as
    46  in-process,  closed-loop  recycling.  It  does not include incineration,
    47  transfer from one medium of release or discharge to another media,  off-
    48  site  or out-of-production recycling, end-of-pipe treatment or pollution
    49  control.
    50    (h) "toxic or hazardous substance" shall mean any substance listed  as
    51  a  substance  hazardous  to  public health, safety or the environment in
    52  regulations promulgated pursuant to article thirty-seven of the environ-
    53  mental conservation law.
    54    (i) "small business" shall have the same meaning as defined in section
    55  one hundred thirty-one of the economic development law.

        S. 2999                             7                            A. 2348
 
     1    (j) "women-owned business enterprise" shall have the same  meaning  as
     2  subdivision fifteen of section three hundred ten of the executive law.
     3    §  3. Subdivision 1 of section 16-m of section 1 of chapter 174 of the
     4  laws of 1968, constituting the New York state urban  development  corpo-
     5  ration act, is amended by adding a new paragraph (o) to read as follows:
     6    (o)  Assistance  to  capitalize the small business environmental fund,
     7  established pursuant to section  twelve  hundred  eighty-five-s  of  the
     8  public authorities law.
     9    § 4. This act shall take effect on the one hundred eightieth day after
    10  it shall have become a law; provided, however, that effective immediate-
    11  ly,  the  addition,  amendment and/or repeal of any rules or regulations
    12  necessary for the implementation of this act on its effective  date  are
    13  authorized  and directed to be made and completed on or before such date
    14  and provided further that the amendments to section 16-m of section 1 of
    15  chapter 174 of the laws of 1968, constituting the New York  state  urban
    16  development  corporation  act,  made by section three of this act, shall
    17  not affect the expiration of such section and shall be deemed to  expire
    18  therewith.
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