Enacts the city of Dunkirk fiscal recovery act; authorizes the issuance of deficit bonds and notes not to exceed eighteen million five hundred thousand dollars for the purpose of liquidating actual deficits in its general fund, water fund, and the capital projects fund of such city; requires review of city budgets and financial reports by the state comptroller; repeals provisions after 15 years.
STATE OF NEW YORK
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8941
IN SENATE
April 1, 2024
___________
Introduced by Sen. BORRELLO -- read twice and ordered printed, and when
printed to be committed to the Committee on Cities 2
AN ACT relating to the city of Dunkirk fiscal recovery act; and provid-
ing for the repeal of such provisions upon expiration thereof
The People of the State of New York, represented in Senate and Assem-bly, do enact as follows:
1 Section 1. Short title. This act shall be known and may be cited as
2 the "city of Dunkirk fiscal recovery act".
3 § 2. Definitions. As used in this act, the following words and terms
4 shall have the following meanings respectively, unless the text shall
5 indicate another or different meaning or intent:
6 (a) "Budget" means a current operating budget of the city prepared or
7 adopted pursuant to general, special or local law, being the annual
8 budget and estimate of expenditures to be made during a fiscal year for
9 the general support and current expenses of the government of the city
10 to be paid from taxes or assessments or other current revenues of the
11 city for such year.
12 (b) "City" means the city of Dunkirk, in the county of Chautauqua.
13 (c) "City treasurer" means the treasurer of the city.
14 (d) "City council" means the city council of the city.
15 (e) "City fiscal affairs officer" means the city fiscal affairs offi-
16 cer of the city.
17 (f) "City taxes" means and includes all taxes on real property levied
18 and assessed by the city, based on valuation thereof and shall not mean
19 any rent, rate, fee, special assessment or other charge based on benefit
20 or use.
21 (g) "Collecting officer" means the officer empowered to collect and
22 receive city taxes.
23 (h) "Deficit bonds" means the bonds authorized to be issued by section
24 three of this act.
25 (i) "Deficit notes" means bond anticipation notes issued in antic-
26 ipation of the issuance of deficit bonds.
27 (j) "Financial plan" means the three-year financial plan required by
28 section nine of this act.
EXPLANATION--Matter in italics (underscored) is new; matter in brackets
[] is old law to be omitted.
LBD14973-02-4
S. 8941 2
1 (k) "Fiscal year" means the fiscal year of the city.
2 (l) "Mayor" means the mayor of the city.
3 (m) "Outstanding", when used with respect to obligations of the city
4 as of any particular date, means all obligations of the city theretofore
5 issued and thereupon being issued except any obligation theretofore paid
6 and discharged or for the payment of the principal of and interest on
7 which money is held by or on behalf of the city, in trust solely and in
8 all events only for the purpose and sufficient to pay in full the prin-
9 cipal and redemption premium, if any, of and interest on such obli-
10 gations.
11 (n) "Special debt service" means, with respect to a fiscal year, the
12 amounts required for the timely payment of (i) all principal due or
13 becoming due and payable in said year with respect to any serial bonds,
14 tax anticipation notes, capital notes or budget notes of the city, and
15 all principal amortization for said year required by law with respect to
16 bond anticipation notes or other securities of the city, and not specif-
17 ically mentioned in paragraph (ii) of this subdivision, (ii) all inter-
18 est due or becoming due and payable in said year with respect to any
19 serial bonds, bond anticipation notes, tax anticipation notes, revenue
20 anticipation notes, capital notes, budget notes or other securities of
21 the city not specifically mentioned herein, and (iii) all sinking fund
22 contributions required in said year with respect to any sinking fund
23 bonds.
24 (o) "Special debt service fund" means the fund which is held by the
25 state comptroller and is described and provided for in section thirteen
26 of this act.
27 (p) "State aid" means all aid and incentives for municipalities pursu-
28 ant to section 54 of the state finance law, any successor type of aid
29 and any new aid appropriated by the state as local government assistance
30 for the benefit of the city.
31 (q) "State comptroller" means the comptroller of the state, pursuant
32 to their authority to supervise the accounts of any political subdivi-
33 sion of the state.
34 Unless the context specifically provides otherwise, any terms used in
35 this act such as revenues, expenditures or expenses shall be construed
36 as such term is construed under applicable accounting principles incor-
37 porated in the uniform system of accounts prescribed by the state comp-
38 troller.
39 § 3. Deficit bond and deficit note issuance authorization. The city is
40 hereby authorized to issue bonds, subject to the provisions of this act,
41 on or before December 31, 2025, in an aggregate principal amount not to
42 exceed eighteen million five hundred thousand dollars ($18,500,000)
43 (exclusive of the costs and expenses incidental to the issuance of the
44 bonds authorized to be issued by this section) for the specific object
45 or purpose of liquidating actual deficits in its general fund, water
46 fund, sewer fund, and the capital projects fund existing at the close of
47 its 2024 fiscal year. In anticipation of the issuance of such bonds,
48 deficit notes are hereby authorized to be issued.
49 § 4. Period of probable usefulness established. It is hereby deter-
50 mined that the financing of the deficits described in section three of
51 this act is an object or purpose of the city for which indebtedness may
52 be incurred, the period of probable usefulness of which is hereby deter-
53 mined to be fifteen years, computed from the date of such deficit bonds
54 or from the date of the first deficit notes, whichever date is earlier.
55 Such deficit bonds and deficit notes shall be general obligations of the
56 city, to which the faith and credit of the city is pledged, and the city
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1 shall make an annual appropriation sufficient to pay the principal of
2 and interest on such obligations as the same shall become due.
3 § 5. Certification of deficit. No deficit bonds may be issued unless
4 and until the state comptroller shall first review and confirm the
5 existence of the deficits described in section three of this act, as
6 well as certify the amount of the deficits. As soon as practicable after
7 the effective date of this act, but in no event prior to the close of
8 the city's 2024 fiscal year, the city shall prepare a report detailing
9 the amount and cause of the deficit and submit to the state comptroller
10 such report, together with the independent audit report for its last
11 completed fiscal year and such other information as the state comp-
12 troller may deem necessary. Within thirty days after receiving all
13 necessary reports and information, the state comptroller shall:
14 (a) perform such reviews as may be necessary;
15 (b) confirm the existence and certify the amount of the deficits; and
16 (c) provide notification to the city fiscal affairs officer, the city
17 treasurer, the mayor and the city council as to the existence and amount
18 of any such deficits.
19 § 6. Limit on amount of deficit bonds. Deficit bonds may not be issued
20 in an amount exceeding the amount of such deficits as certified by the
21 state comptroller. If the city issues deficit notes prior to a determi-
22 nation by the state comptroller pursuant to section five of this act in
23 an amount in excess of the amount of such deficits as confirmed by the
24 state comptroller, the city shall, from funds other than proceeds of
25 bonds or bond anticipation notes, either redeem such deficit notes in
26 the amount by which the amount of such deficit notes exceeds the amount
27 of such deficits as confirmed by the state comptroller or deposit a sum
28 equal to the amount by which such deficit notes exceed the amount of
29 such deficits as confirmed by the state comptroller into the special
30 debt service fund.
31 § 7. Quarterly budget reports and trial balances. For each fiscal year
32 during the effective period of this act, the city treasurer shall moni-
33 tor budgets of the city and, for each budget, prepare a quarterly report
34 of summarized budget data depicting overall trends of actual revenues
35 and budget expenditures for the entire budget rather than individual
36 line items. Such reports shall compare revenue estimates and appropri-
37 ations as set forth in such budget with the actual revenues and expendi-
38 tures made to date. All quarterly reports shall be accompanied by a
39 recommendation by the city fiscal affairs officer setting forth any
40 remedial action necessary to resolve any unfavorable budget variance
41 including the overestimation of revenues and the underestimation of
42 appropriations, and shall be completed within thirty days of the end of
43 each quarter. The city treasurer shall also prepare, as part of such
44 report, a quarterly trial balance of general ledger accounts. The above
45 quarterly budgetary reports and quarterly trial balances shall be
46 prepared in accordance with applicable accounting principles incorpo-
47 rated in the uniform system of accounts prescribed by the state comp-
48 troller. These reports shall be submitted to the city fiscal affairs
49 officer, the mayor, the city council, the state director of the budget,
50 the state comptroller, the chair of the assembly ways and means commit-
51 tee, and the chair of the senate finance committee.
52 § 8. Budget review by state comptroller. During the effective period
53 of this act, the city fiscal affairs officer shall submit the proposed
54 budget for the next succeeding fiscal year to the state comptroller no
55 later than thirty days before the date scheduled for the city council's
56 vote on the adoption of the final budget or the last date on which the
S. 8941 4
1 budget may be finally adopted, whichever is sooner. The state comp-
2 troller shall examine such proposed budget and make such recommendations
3 as deemed appropriate thereon to the city prior to the adoption of the
4 budget, but no later than ten days before the date scheduled for the
5 city council's vote on the adoption of the final budget or the last date
6 on which the budget must be adopted, whichever is sooner. Such recommen-
7 dations shall be made after examination into the estimates of revenues
8 and expenditures of the city. The city council, no later than five days
9 prior to the adoption of the budget, shall review any such recommenda-
10 tions and make adjustments to the proposed budget consistent with any
11 recommendations made by the state comptroller.
12 § 9. Multiyear financial plans. During the effective period of this
13 act, the city fiscal affairs officer shall prepare, along with the
14 proposed budget for the next succeeding fiscal year, a three-year finan-
15 cial plan covering the next succeeding fiscal year and the two fiscal
16 years thereafter. The financial plan shall, at a minimum, contain
17 projected employment levels, projected annual expenditures for personal
18 service, fringe benefits, non-personal services and debt service; appro-
19 priate reserve fund amounts; estimated annual revenues including projec-
20 tion of property tax rates, the value of the taxable real property and
21 resulting tax levy, annual growth in sales tax and non-property tax
22 revenues; and the proposed use of one-time revenue sources. The finan-
23 cial plan shall also identify actions necessary to achieve and maintain
24 long-term fiscal stability, including, but not limited to, improved
25 management practices, initiatives to minimize or reduce operating
26 expenses, and potential shared services agreements with other munici-
27 palities. Within thirty days following the adoption by the city council
28 of the budget for the next succeeding fiscal year and upon the
29 completion of each quarterly budget report pursuant to section seven of
30 this act, the city fiscal affairs officer shall update the financial
31 plan consistent with such adopted budget or such quarterly budget
32 report. Copies of the financial plan and any update shall be provided to
33 the city treasurer, the mayor, the city council, the state director of
34 the budget, the state comptroller, the chair of the assembly ways and
35 means committee, and the chair of the senate finance committee.
36 § 10. State comptroller to comment on further debt issuance. During
37 the effective period of this act, the city treasurer shall notify the
38 state comptroller at least fifteen days prior to the issuance of any
39 bonds or notes or entering into any installment purchase contract, and
40 the state comptroller may review and make recommendations regarding the
41 affordability to the city of any such proposed issuance or contract.
42 § 11. Private sale of bonds authorized. To facilitate the marketing of
43 (a) deficit bonds, (b) any bonds issued to refund such deficit bonds,
44 and (c) any other bonds to be issued on or before December 31, 2025, the
45 city may, notwithstanding any limitation on the private sales of bonds
46 provided by law and subject to the approval of the state comptroller of
47 the terms and conditions of such sales:
48 (1) arrange for the underwriting of such bonds at private sale through
49 negotiated fees or by sale of such bonds to an underwriter; or
50 (2) arrange for the private sale of such bonds through negotiated
51 agreement, with compensation for such sales to be provided by negotiated
52 agreement and/or negotiated fee, if required.
53 The cost of such underwriting or private placement shall be deemed to
54 be a preliminary cost for purposes of section 11.00 of the local finance
55 law.
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1 § 12. Exceptions to the local finance law. Except as provided in this
2 act, all proceedings in connection with the issuance of such deficit
3 bonds or deficit notes shall be had and taken in accordance with the
4 provisions of the local finance law, provided, however, that any resol-
5 ution or resolutions authorizing the issuance of such bonds or bond
6 anticipation notes shall not be subject to (a) any mandatory or permis-
7 sive referendum, (b) the provisions of section 107.00 of the local
8 finance law with respect to any requirements for a down payment and (c)
9 the provisions of section 10.10 of the local finance law.
10 § 13. Special debt service fund. (a) Upon the issuance of any deficit
11 bonds or deficit notes, the city council shall establish and thereafter
12 maintain a special debt service fund with the state comptroller for the
13 purpose of paying the special debt service due or becoming due in subse-
14 quent fiscal years. Such special debt service fund shall be discontinued
15 upon the expiration of the effectiveness of this act, and any balance
16 remaining in the special debt service fund at that time shall be paid by
17 the state comptroller to the city treasurer for use by the city in the
18 manner provided by law.
19 (b) The state comptroller shall deposit and pay into the special debt
20 service fund any portion of state aid as the state comptroller deter-
21 mines necessary to ensure sufficient moneys are available to make sched-
22 uled special debt service payments from the special debt service fund
23 over the succeeding twelve month period taking account of the city's
24 receipt of city taxes and state aid during such twelve month period and
25 the availability of other amounts appropriated or set aside by the city
26 to make such payments. Thereafter, the state comptroller shall, as soon
27 as practicable, pay over the remainder of any such state aid to the city
28 treasurer for use by the city in the manner provided by law.
29 (c) Not later than the first day of each fiscal year beginning after
30 issuance of any deficit bonds or deficit notes, the city treasurer shall
31 certify to the state comptroller the percentage obtained by dividing the
32 balance obtained by subtracting the amount of the appropriation for such
33 year for a reserve for uncollected taxes from the total amount of city
34 taxes levied and assessed for such year, into the total appropriation in
35 the budget of such year for special debt service, and the percentage so
36 certified shall constitute the debt service percentage for such fiscal
37 year. Immediately upon receipt of any payment during such fiscal year of
38 or on account of any city taxes, the city, its collecting officer and
39 any agent receiving the same shall remit such payment to the state comp-
40 troller. Of each sum so received, the state comptroller shall deposit
41 and pay into the special debt service fund the portion thereof equal to
42 the debt service percentage of the total sum, and shall deposit and pay
43 into the fund such additional amounts as the state comptroller deter-
44 mines necessary to ensure sufficient moneys are available to make sched-
45 uled special debt service payments from the special debt service fund
46 over the succeeding twelve month period taking account of the timing of
47 the city's receipt of city taxes and state aid during such twelve month
48 period and the availability of other amounts appropriated or set aside
49 by the city to make such payments. Thereafter, the state comptroller
50 shall, as soon as practicable, pay over the remainder of such sum to the
51 city treasurer for use by the city in the manner provided by law.
52 (d) The moneys in the special debt service fund shall be invested in
53 the manner provided by section 11 of the general municipal law,
54 provided, however, that the investments shall be made for and on behalf
55 of the city by the state comptroller upon instructions from the chief
56 fiscal officer of the city which shall be consistent with the city's
S. 8941 6
1 investment policy adopted pursuant to section 39 of the general munici-
2 pal law.
3 (e) The state comptroller shall from time to time during each fiscal
4 year withdraw from the special debt service fund all amounts required
5 for the payment as the same becomes due of all special debt service of
6 such fiscal year and cause the amounts so withdrawn to be applied to
7 such payments as and when due.
8 (f) The special debt service fund and all monies or securities therein
9 or payable thereto in accordance with this section is hereby declared to
10 be city property devoted to essential governmental purposes and accord-
11 ingly, shall not be applied to any purpose other than as provided herein
12 and shall not be subject to any order, judgment, lien, execution,
13 attachment, setoff or counterclaim by any creditor of the city other
14 than a creditor for whose benefit such fund is established and main-
15 tained and entitled thereto under and pursuant to this act.
16 § 14. Agreement with the state. (a) The state does hereby pledge to
17 and agree with the holders of any bonds, notes or other obligations
18 issued by the city during the effective period of this act and secured
19 by such a pledge that the state will not limit, alter or impair the
20 rights hereby vested in the city to fulfill the terms of any agreements
21 made with such holders pursuant to this act, or in any way impair the
22 rights and remedies of such holders or the security for such bonds,
23 notes or other obligations until such bonds, notes or other obligations
24 together with the interest thereon and all costs and expenses in
25 connection with any action or proceeding by or on behalf of such hold-
26 ers, are fully paid and discharged. The city is authorized to include
27 this pledge and agreement of the state in any agreement with the holders
28 of such bonds, notes or other obligations. Nothing contained in this act
29 shall be deemed to (i) obligate the state to make any payments or impose
30 any taxes to satisfy the debt service obligations of the city, (ii)
31 restrict any right of the state to amend, modify, repeal or otherwise
32 alter (A) section 54 of the state finance law or any other provision
33 relating to state aid, or (B) statutes imposing or relating to taxes or
34 fees, or appropriations relating thereto, or (iii) create a debt of the
35 state within the meaning of any constitutional or statutory provisions.
36 The city shall not include in any resolution, contract or agreement with
37 holders of such bonds, notes or other obligations any provision which
38 provides that an event of default occurs as a result of the state exer-
39 cising its rights described in paragraph (ii) of this subdivision.
40 (b) Any provision with respect to state aid shall be deemed executory
41 only to the extent of moneys available, and no liability shall be
42 incurred by the state beyond the moneys available for that purpose, and
43 any such payment by the state comptroller of state aid shall be subject
44 to annual appropriation of state aid by the state legislature.
45 § 15. Rights of the state comptroller and bondholders. (a) In the
46 event that the city shall fail to comply with any provision of this act,
47 and such non-compliance shall continue for a period of 30 days, (1) the
48 state comptroller acting alone, or (2) a duly appointed representative
49 of the holders of at least 25 per centum in aggregate principal amount
50 of (i) any series of deficit bonds or deficit notes, (ii) any series of
51 bonds issued to refund such deficit bonds or deficit notes, or (iii) any
52 other series of notes or bonds issued by the city during the effective
53 period of this act, by instrument or instruments filed in the office of
54 the clerk of Chautauqua county and proved or acknowledged in the same
55 manner as a deed to be recorded, may bring an action or commence a
56 proceeding in accordance with the civil practice law and rules to (A)
S. 8941 7
1 require the city to carry out any of its obligations under this act or
2 (B) enjoin any acts or things which may be unlawful or in violation of
3 the obligations imposed on the city under this act. In addition, the
4 duly appointed representative of the bondholders of any such series of
5 notes or bonds may bring an action or commence a proceeding in accord-
6 ance with the civil practice law and rules to enforce the rights of the
7 holders of such series of notes or bonds.
8 (b) The supreme court in the county of Chautauqua shall have jurisdic-
9 tion of any action or proceeding by the state comptroller or the repre-
10 sentative of such bondholders.
11 § 16. Severability clause. If any clause, sentence, paragraph, section
12 or part of this act shall be adjudged by any court of competent juris-
13 diction to be invalid, such judgment shall not affect, impair or invali-
14 date the remainder thereof, but shall be confined in its operation to
15 the clause, sentence, paragraph, section or part involved in the contro-
16 versy in which such judgment shall have been rendered. The provisions of
17 this act shall be liberally construed to assist the effectuation of the
18 public purposes furthered hereby.
19 § 17. This act shall take effect immediately; and shall remain in full
20 force and effect until the fifteenth anniversary of the date of first
21 issuance of deficit bonds or deficit notes pursuant to this act, when
22 upon such date the provisions of this act shall be deemed repealed; and
23 provided, however, that the state comptroller shall notify the legisla-
24 tive bill drafting commission upon the occurrence of this act in order
25 that the commission may maintain an accurate and timely effective data
26 base of the official text of the laws of the state of New York in furth-
27 erance of effectuating the provisions of section 44 of the legislative
28 law and section 70-b of the public officers law.
