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A02348 Summary:

BILL NOA02348A
 
SAME ASSAME AS UNI. S02999-A
 
SPONSORThiele
 
COSPNSRBarron
 
MLTSPNSR
 
Amd 137, Ec Dev L; add 1285-v, 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 NOA02348A
 
01/18/2017referred to small business
06/07/2017reported referred to ways and means
06/08/2017amend and recommit to ways and means
06/08/2017print number 2348a
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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: A2348A
 
SPONSOR: Thiele
  TITLE OF BILL: An act to amend the economic development law, the public authorities law and the New York state urban development corpo- ration 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-v 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                                            A. 2348--A
 
                               2017-2018 Regular Sessions
 
                SENATE - ASSEMBLY
 
                                    January 18, 2017
                                       ___________
 
        IN  SENATE  --  Introduced  by  Sens. LAVALLE, KENNEDY -- read twice and
          ordered printed, and when printed to be committed to the Committee  on
          Commerce,  Economic Development and Small Business -- reported favora-
          bly from said committee and committed to the Committee on  Finance  --
          committee  discharged,  bill amended, ordered reprinted as amended and
          recommitted to said committee
 
        IN ASSEMBLY -- Introduced by M. of A. THIELE -- read once  and  referred
          to  the  Committee  on  Small Business -- reported and referred to the
          Committee on Ways and Means --  committee  discharged,  bill  amended,
          ordered reprinted as amended and recommitted to said committee
 
        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-v of the public authorities
    14  law to small business stationary sources, assisting the New  York  state
 
         EXPLANATION--Matter in italics (underscored) is new; matter in brackets
                              [ ] is old law to be omitted.
                                                                   LBD04119-02-7

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

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

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

        S. 2999--A                          5                         A. 2348--A
 
     1  senate and the speaker of the assembly a report on the fund. Such report
     2  shall include, but not be limited to:
     3    (a)  the  total  number  and amount of loans and the average amount of
     4  loans leveraged by the fund from financial institutions in each economic
     5  development region of the state as defined in section two hundred thirty
     6  of the economic development law;
     7    (b) the total number and amount of loans and  the  average  amount  of
     8  loans  leveraged  by  the  fund  from financial institutions pursuant to
     9  paragraph (d) of subdivision five of this section in each  such  region;
    10  and
    11    (c)  the  total  number  and  amount  of claims submitted by financial
    12  institutions for recovery of moneys through the fund, the  total  number
    13  and  amount  of  claims  paid from the fund and a summary of the circum-
    14  stances associated with claims on the fund.
    15    10. (a) On or before the first day of September following  the  effec-
    16  tive  date of this section, and on such date every two years thereafter,
    17  the corporation shall submit to the director of the budget, the chair of
    18  the senate finance committee and the chair  of  the  assembly  ways  and
    19  means  committee an evaluation of the effectiveness of the fund in real-
    20  izing pollution prevention by small businesses and securing the  compli-
    21  ance of such businesses with federal and state environmental laws.  Such
    22  evaluation shall be prepared by an entity independent of the corporation
    23  selected through a request for proposal process and shall include recom-
    24  mendations for improvements to the implementation of the fund to enhance
    25  small business pollution prevention, control and compliance.
    26    (b)  On  or  before the first day of September following the effective
    27  date of this section, and on such date every two years  thereafter,  the
    28  corporation shall submit to the director of the budget, the chair of the
    29  senate  finance  committee  and the chair of the assembly ways and means
    30  committee an evaluation of the effectiveness of the fund in securing the
    31  compliance of small businesses with  the  requirements  of  the  federal
    32  Clean Air Act (42 U.S.C. §7401 et seq. as amended by P.L.  101-549), the
    33  New  York  state  clean  air  compliance act, as established pursuant to
    34  chapter six hundred eight of the laws of nineteen hundred  ninety-three,
    35  the  provisions  of  article seventeen of the environmental conservation
    36  law relating to water pollution control, and  the  provisions  of  title
    37  nine  of  article  twenty-seven  of  the environmental conservation law,
    38  relating to industrial hazardous waste  management,  or  any  rules  and
    39  regulations  promulgated thereunder.   Such evaluation shall be prepared
    40  by an entity independent of the corporation selected through  a  request
    41  for  proposal process and shall include recommendations for improvements
    42  to the implementation of the fund to enhance  small  business  pollution
    43  prevention, control and compliance.
    44    11.  The corporation shall market the fund program to small businesses
    45  in cooperation with financial institutions, statewide trade associations
    46  representing financial institutions  and  small  businesses,  local  and
    47  regional  economic development agencies, and the small business station-
    48  ary source  ombudsman  program,  established  pursuant  to  section  one
    49  hundred  thirty-seven  of  the economic development law. The corporation
    50  shall develop a program to promote  awareness  of  the  program  in  all
    51  geographic  regions  of  the  state,  to ensure maximum participation by
    52  small businesses and financial institutions and the fiscal integrity  of
    53  the fund.  Agreements entered into by the corporation pursuant to subdi-
    54  vision  five  of  this  section  shall  require a plan by each financial
    55  institution for marketing the fund in highly  distressed  areas,  empire
    56  zones  and  to minority-owned business enterprises and women-owned busi-

        S. 2999--A                          6                         A. 2348--A

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

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