NEW YORK STATE ASSEMBLY MEMORANDUM IN SUPPORT OF LEGISLATION submitted in accordance with Assembly Rule III, Sec 1(f)
 
BILL NUMBER: A9691
SPONSOR: Magnarelli
 
TITLE OF BILL: CONCURRENT RESOLUTION OF THE SENATE AND ASSEMBLY
proposing an amendment to section 5 of article 8 of the constitution, in
relation to the exclusion of indebtedness contracted for sewage facili-
ties
 
PURPOSE: To enable counties, cities, towns and villages to finance
construction and reconstruction of sewage facilities without impairing
their ability to finance other essential capital requirements.
 
SUMMARY OF PROVISIONS: Section 1 of this bill amends Paragraph E of
Section 5 of Article 8 of the Constitution to extend, until January 1,
2024, the authority of counties, cities, towns and villages to exclude
from their constitutional debt limits indebtedness contracted for the
construction and reconstruction of facilities for the conveyance, treat-
ment and disposal of sewage by eliminating the expiration provision.
 
PRIOR LEGISLATIVE HISTORY: New bill.
 
JUSTIFICATION: The exclusion of sewer debt from the constitutional
debt limits of counties, cities, towns and villages was originally
authorized in 1963 for a ten-year period. When first enacted, the gener-
al purpose of the exclusion was to encourage and enable municipalities
to participate in the State's then-new sewer construction assistance
plan without fear that, by incurring indebtedness for sewer purposes,
they would diminish their power to incur debt for other capital improve-
ments which they desired to undertake and finance.
It initially was believed that limiting the exclusion to indebtedness
incurred during a 10-year period would encourage municipalities to take
action during such 10-year period, and that thus the exclusion would
assist in accomplishing the purposes of the State's water anti-pollution
program. Reflecting the fact that these pollution concerns are continu-
ing and require an ongoing effort, however, the exclusion has been
subsequently extended for four successive ten-year periods. Without a
further extension, the exclusion will apply only to debt contracted
through the end of 2013. This amendment would permit the exclusion of
such indebtedness until January 1, 2024.
The concerns addressed in 1963 and by subsequent extensions of the
exclusion are still valid today. Although many pollution problems have
been abated, there are still significant concerns that need to be
addressed. Technology continues to evolve to make more efficient systems
available, additional development necessitates the construction of new
systems, and existing sewage treatment facilities age, necessitating
reconstruction and refurbishment.
Further, municipalities have been able to benefit from the State's
current loan program -the Clean Water State Revolving Fund ("CWSRF"),
administered by the State Department of Environmental Conservation
("DEC") and the Environmental Facilities Corporation ("EFC"). This
program provides loans at below-market interest rates to municipalities
for a variety of projects relating to water pollution, including waste-
water treatment facilities and sewer systems. Since its inception in
1990, the CWSRF program has loaned more than $12.1 billion for 1,500
projects across the State. According to the 2012 intended use plan
prepared with respect to the CWSRF, DEC and EFC anticipate financing
approximately $705 million in diverse projects, including many for the
conveyance, treatment and disposal of sewage in New York State.
These numbers are indicative of the continuing efforts by the State and
municipalities to help manage sewage in the State. In addition, certain
federal agencies, such as the U.S. Department of Agriculture Rural
Development, may make loans at below-market rates, along with grants,
available. Under these programs, however, municipalities generally still
must issue their own indebtedness and, therefore, the need for debt
contracting capacity continues.
The constitutional exclusion has been implemented by Local Finance Law §
124A 0, which requires that applications for the exclusion of sewer
indebtedness be filed with the State Comptroller. The Office of the
State Comptroller's records indicates that from January of 2001 through
the close of 2011, municipalities have applied for and were granted 178
exclusions of sewer debt. Each applicant derived benefit from its exclu-
sion by virtue of protecting its debt contracting margin, thereby
preserving the ability to issue debt for other capital projects and
needs. This bill would continue the exclusion of sewer debt from debt
limitations and so maintain the resulting significant benefits to muni-
cipalities throughout the State.
The current authorization for excluding indebtedness for sewage
construction from municipal debt limitations will expire on December 31,
2013. Since a constitutional amendment requires passage by two consec-
utively elected legislatures and approval by the voters, the current
authorization will expire unless the Legislature extends the sunset date
by passing an amendment during the current 2012 legislative session and
again in 2013.
The Comptroller urges the passage of this proposed legislation.
 
FISCAL IMPLICATIONS FOR STATE: This bill has no significant State
fiscal impact.
 
EFFECTIVE DATE: This amendment would become effective on the first
clay of January next succeeding approval of both houses of two consec-
utively elected legislatures and approval of the people in the subse-
quent general election.