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S07583 Text:



 
                STATE OF NEW YORK
        ________________________________________________________________________
 
                                          7583
 
                    IN SENATE
 
                                      June 5, 2012
                                       ___________
 
        Introduced  by  COMMITTEE  ON  RULES  --  (at request of the State Comp-
          troller) -- read twice and ordered printed, and  when  printed  to  be
          committed to the Committee on Rules
 
        AN ACT to amend the limited liability company law and the not-for-profit
          corporation  law,  in  relation  to the purposes, powers and duties of
          limited liability companies, and local  development  corporations  and

          other not-for-profit corporations; and to amend the local finance law,
          in relation to loans of credit and the exclusivity of such law
 
          The  People of the State of New York, represented in Senate and Assem-
        bly, do enact as follows:
 
     1    Section 1. Section 102 of the limited liability company law is amended
     2  by adding a new subdivision (r-1) to read as follows:
     3    (r-1) "Municipality" means  a  county,  city,  town,  village,  school
     4  district,  board of cooperative educational services, community college,
     5  public library or library district, district corporation, town or county
     6  improvement district, or other  special  district  established  for  the
     7  purpose of carrying on, performing or financing one or more improvements

     8  or  services  for  benefited  properties  or property owners within such
     9  special district.
    10    § 2. Section 201 of the limited liability company law  is  amended  to
    11  read as follows:
    12    §  201.  Purpose. A limited liability company may be formed under this
    13  chapter for any lawful business purpose or purposes except: (a) to do in
    14  this state any business for which another statute specifically  requires
    15  some  other  business  entity or natural person to be formed or used for
    16  such business; or (b) to finance directly or indirectly over a period of
    17  time a municipality's operations or the acquisition or improvement of an
    18  asset by or for the use of a municipality.
    19    § 3. The limited liability company law is  amended  by  adding  a  new
    20  section 202-a to read as follows:

    21    §  202-a.  Limitation  on  powers.  Notwithstanding  the provisions of
    22  section two hundred two of this article,  a  limited  liability  company
    23  shall  not  participate  in  any transaction or series of related trans-
    24  actions involving the payment of money over a period of time  by  or  on
 
         EXPLANATION--Matter in italics (underscored) is new; matter in brackets
                              [ ] is old law to be omitted.
                                                                   LBD10634-08-2

        S. 7583                             2
 
     1  behalf  of  a municipality located in this state and having as a purpose
     2  the direct or indirect financing of the municipality's operations or the

     3  acquisition or improvement of an asset by or for the use of the  munici-
     4  pality. Provided, however, that nothing in this section shall prohibit a
     5  limited liability company from entering into a true lease with a munici-
     6  pality,  entering  into  an  installment  purchase  contract pursuant to
     7  section one hundred nine-b of the general municipal  law  or  purchasing
     8  bonds or notes issued pursuant to the local finance law.
     9    §  4.  Subdivision  1  of  paragraph  a of section 101.00 of the local
    10  finance law, as amended by chapter 200 of the laws of 1960,  is  amended
    11  to read as follows:
    12    1.  Give  or loan its credit to or in aid of any individual, or public
    13  or private corporation or association, or private  undertaking,  includ-

    14  ing,  but  not  limited to, guaranteeing or assuming the indebtedness or
    15  obligations of  any  not-for-profit  corporation  or  limited  liability
    16  company  formed  by,  on  behalf  of,  for  the benefit of, or under the
    17  control of the municipality, school district or district corporation, or
    18    § 5. Section 176.00 of the local finance law, as  amended  by  chapter
    19  837 of the laws of 1945, is amended to read as follows:
    20    §  176.00  Local  finance  law  to  be the exclusive law. a. Except as
    21  otherwise provided in this article,  all  statutes,  local  laws,  ordi-
    22  nances,  rules  and  regulations,  insofar as they relate to the matters
    23  herein contained, are hereby superseded, it being the legislative intent
    24  that this chapter shall constitute the exclusive law on such matters.

    25    b. Unless expressly and specifically otherwise provided in  any  other
    26  general law or in a special law, the provisions of this chapter shall be
    27  the  exclusive  law governing the manner in which municipalities, school
    28  districts and district corporations finance over a period of time  their
    29  operations  and the acquisition or improvement of an asset by or for the
    30  use of a municipality, school district or district corporation.
    31    § 6. Paragraph (a) of section 102 of  the  not-for-profit  corporation
    32  law is amended by adding a new subparagraph 19 to read as follows:
    33    (19)  "Municipality"  means  a  county,  city,  town,  village, school
    34  district, board of cooperative educational services, community  college,

    35  public library or library district, district corporation, town or county
    36  improvement  district,  or  other  special  district established for the
    37  purpose of carrying on, performing or financing one or more improvements
    38  or services for benefited properties  or  property  owners  within  such
    39  special district.
    40    §  7.  Section 204 of the not-for-profit corporation law is amended to
    41  read as follows:
    42  § 204. Limitation on activities.
    43    Notwithstanding any other provision  of  this  chapter  or  any  other
    44  general  law,  a  corporation  of any type or kind to which this chapter
    45  applies shall: (a) conduct no activities for pecuniary profit or  finan-
    46  cial  gain,  whether  or  not  in furtherance of its corporate purposes,
    47  except to the extent that such activity supports its other lawful activ-

    48  ities then being conducted; and (b) not participate in  any  transaction
    49  or  series of related transactions involving the payment of money over a
    50  period of time by or on behalf of a municipality and having as a purpose
    51  the direct or indirect financing of the  municipality's  operations,  or
    52  the  acquisition  or  improvement  of  an asset by or for the use of the
    53  municipality, provided, however, that  nothing  in  this  section  shall
    54  prohibit such a corporation from entering into a true lease with a muni-
    55  cipality  or  purchasing  bonds  or  notes  issued pursuant to the local
    56  finance law.

        S. 7583                             3
 
     1    § 8. Paragraphs (a), (c), (d) and (i) of section 1411 of the  not-for-

     2  profit  corporation  law, paragraph (a) as amended by chapter 847 of the
     3  laws of 1970, are amended and a new paragraph (d-1) is added to read  as
     4  follows:
     5    (a) Purposes.
     6    This  section  shall  provide  an  additional  and alternate method of
     7  incorporation or reincorporation of not-for-profit corporations for  any
     8  of  the purposes set forth in this paragraph [and shall not be deemed to
     9  alter, impair or diminish the purposes, rights, powers or privileges  of
    10  any  corporation heretofore or hereafter incorporated under this section
    11  or under the stock or business corporation laws].   Corporations may  be
    12  incorporated  or  reincorporated  under  this  section as not-for-profit
    13  local development corporations operated for the  exclusively  charitable
    14  or public purposes of relieving and reducing unemployment, promoting and

    15  providing for additional and maximum employment, bettering and maintain-
    16  ing job opportunities, instructing or training individuals to improve or
    17  develop  their  capabilities  for  such  jobs,  carrying  on  scientific
    18  research for the purpose of aiding a community or geographical  area  by
    19  attracting  new  industry to the community or area or by encouraging the
    20  development of, or retention of, an industry in the community  or  area,
    21  and  lessening the burdens of government and acting in the public inter-
    22  est, and any one or more counties, cities,  towns  or  villages  of  the
    23  state,  or  any  combination  thereof,  or  the New York job development
    24  authority in exercising its power under the public  authorities  law  to
    25  encourage  the organization of local development corporations, may cause
    26  such corporations to be incorporated by public officers or private indi-

    27  viduals or reincorporated upon compliance with the requirements of  this
    28  section,  and it is hereby found, determined and declared that in carry-
    29  ing out said purposes and in exercising the powers  conferred  by  para-
    30  graph (b) such corporations will be performing an essential governmental
    31  function.
    32    (c) Powers.
    33    In  furtherance of its purposes set forth in paragraph (a) but not for
    34  any other purposes, a  local  development  corporation  incorporated  or
    35  reincorporated  under  this section shall have the following powers:  to
    36  construct, acquire, rehabilitate and improve for use  by  others  indus-
    37  trial  or  manufacturing plants in the territory in which its operations
    38  are  principally  to  be  conducted,  to  assist  financially  in   such
    39  construction,  acquisition,  rehabilitation and improvement, to maintain

    40  such plants for others in such territory, to disseminate information and
    41  furnish advice, technical assistance and liaison with federal, state and
    42  local authorities with respect thereto, to acquire by  purchase,  lease,
    43  gift,  bequest,  devise or otherwise real or personal property or inter-
    44  ests therein, to borrow money and to issue negotiable bonds,  notes  and
    45  other obligations therefor, and notwithstanding section 510 (Disposition
    46  of all or substantially all assets) without leave of the court, to sell,
    47  lease,  mortgage  or otherwise dispose of or encumber any such plants or
    48  any of its real or personal property or any interest therein  upon  such
    49  terms  as  it  may  determine and, in connection with loans from the New
    50  York job development authority, to enter into covenants  and  agreements
    51  and to comply with all the terms, conditions and provisions thereof, and

    52  otherwise  to carry out its corporate purposes and to foster and encour-
    53  age the location or expansion of industrial or manufacturing  plants  in
    54  the territory in which the operations of such corporation are principal-
    55  ly  to  be conducted, provided, however, that no such corporation shall:
    56  (1) attempt to influence legislation  by  propaganda  or  otherwise,  or

        S. 7583                             4
 
     1  participate  or  intervene,  directly  or  indirectly,  in any political
     2  campaign on behalf of or in  opposition  to  any  candidate  for  public
     3  office;  (2)  participate in any transaction or series of related trans-
     4  actions  involving  the  payment of money over a period of time by or on
     5  behalf of a municipality and having as a purpose the direct or  indirect

     6  financing  of  the  municipality's  operations,  or  the  acquisition or
     7  improvement of an asset by or for the use of the municipality, provided,
     8  however, that nothing in this section shall prohibit a local development
     9  corporation from entering into a  true  lease  with  a  municipality  or
    10  purchasing  bonds or notes issued pursuant to the local finance law; and
    11  (3) in the case of a local development corporation, the incorporation of
    12  which was caused by a county, city, town  or  village,  provide  compen-
    13  sation to a person who serves as a director, officer or employee of such
    14  corporation when the person serves or has served within the previous two
    15  years as an officer or employee of such county, city, town or village.

    16    (d)   Purchase or lease of real property owned by a county, city, town
    17  or village.
    18    (1)  The local legislative body of a county,  city,  town  or  village
    19  [or,  if there is a board of estimate in a city, then the board of esti-
    20  mate,] may by resolution  determine  that  specifically  described  real
    21  property  owned by the county, city, town or village is not required for
    22  use by such county, city, town or  village  and  authorize  the  county,
    23  city,  town  or  village  to sell or lease such real property to a local
    24  development corporation incorporated or reincorporated under this  arti-
    25  cle;  provided,  however,  that:  (i) title to such land be not declared
    26  inalienable as a forest preserve or a parkland; and (ii)  that  no  such
    27  sale  or  lease shall have as a purpose the direct or indirect financing

    28  over a period of time of the operations of the  county,  city,  town  or
    29  village, or the acquisition or improvement of an asset by or for the use
    30  of the county, city, town or village.
    31    (2)    Notwithstanding the provisions of any general, special or local
    32  law, charter or ordinance to the contrary, such sale  or  lease  may  be
    33  made  without  appraisal, public notice, (except as provided in subpara-
    34  graph (4)) or public  bidding  for  [such  price  or  rental]  fair  and
    35  adequate  consideration  and upon such other terms as may be agreed upon
    36  between the county, city, town or village  and  said  local  development
    37  corporation; provided, however, that in case of a lease the term may not
    38  exceed  ninety-nine years and provided, further, that in cities having a

    39  population of one million or more, no such sale or lease shall  be  made
    40  without  the  approval  of  a  majority  of  the  members of the borough
    41  [improvement] board of the  borough  in  which  such  real  property  is
    42  located.
    43    (3)    Before  any  sale  or  lease to a local development corporation
    44  incorporated or reincorporated under this article shall be authorized, a
    45  public hearing shall be held by the local legislative body[, or  by  the
    46  board of estimate, as the case may be,] to consider the proposed sale or
    47  lease.
    48    (4)    Notice  of  such  hearing  shall be published at least ten days
    49  before the date set for the hearing in  such  publication  and  in  such
    50  manner as may be designated by the local legislative body[, or the board

    51  of estimate as the case may be]. Such notice shall include a description
    52  of  the  real property proposed to be sold or leased, and a statement of
    53  (i) the estimated fair market value of the real property proposed to  be
    54  sold  or  leased,  (ii)  the consideration to be received by the county,
    55  city, town or village on account of such sale  or  lease,  and  (iii)  a

        S. 7583                             5
 
     1  statement  of  the  intended use or disposition of such real property by
     2  the local development corporation.
     3    (5)    A local development corporation, incorporated or reincorporated
     4  under this section, which purchases or leases real property from a coun-
     5  ty, city, town or village, shall not, without the  written  approval  of

     6  the  county,  city,  town  or  village,  use  such real property for any
     7  purpose except the purposes set forth in  the  certificate  of  incorpo-
     8  ration or reincorporation of said local development corporation.  In the
     9  event  such  real  property  is used in violation of the restrictions of
    10  this paragraph, the attorney-general may  bring  an  action  or  special
    11  proceeding to enjoin the unauthorized use.
    12    (d-1) Contracts with municipalities.
    13    Any  contract  or  other  agreement between a local development corpo-
    14  ration and a municipality shall: (i) provide  for  the  municipality  to
    15  receive fair and adequate consideration, (ii) be subject to the require-
    16  ments of article five-A of the general municipal law, (iii) except for a
    17  real  property  lease  agreement,  have a term not to exceed five years,

    18  subject to one or more renewals for a term not to exceed five years upon
    19  the mutual consent of the parties, and (iv) be made for a proper munici-
    20  pal purpose, which shall not include the direct  or  indirect  financing
    21  over  a  period of time of the municipality's operations or the acquisi-
    22  tion or improvement of an asset by or for the use of the municipality.
    23    (i) Effect of section.
    24    Corporations incorporated or reincorporated under this  section  shall
    25  be  organized  and  operated  exclusively  for the purposes set forth in
    26  paragraph (a), shall have, in addition to the powers otherwise conferred
    27  by law, the powers conferred by paragraph (c) and shall  be  subject  to
    28  all  the  restrictions and limitations imposed by [paragraph] paragraphs

    29  (c), (d), (d-1), (e) and [paragraph] (g).  In so far as  the  provisions
    30  of  this  section are inconsistent with the provisions of any other law,
    31  general or special, the provisions of this section shall be  controlling
    32  as to corporations incorporated or reincorporated hereunder.
    33    §  9.    This act shall take effect immediately and shall apply to any
    34  transaction occurring on or after such effective date.
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