S04745 Summary:

Relates to alternative finance investment bonds.
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S04745 Actions:

06/04/2019referred to economic development
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S04745 Committee Votes:

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S04745 Floor Votes:

There are no votes for this bill in this legislative session.
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S04745 Text:

                STATE OF NEW YORK
                               2019-2020 Regular Sessions
                    IN SENATE
                                     March 22, 2019
        Introduced  by  Sen.  PARKER -- read twice and ordered printed, and when
          printed to be committed to the Committee on Banks
        AN ACT in relation to alternative finance investment bonds
          The People of the State of New York, represented in Senate and  Assem-
        bly, do enact as follows:

     1    Section  1. Legislative findings and intent. 1.  New York's historical
     2  prosperity has derived from the freedom and  innovative  nature  of  the
     3  state's  capital  markets  and  New  York's roles as a center of foreign
     4  trade and investment, which has helped build the industries  and  create
     5  the jobs that earned the state the nickname of the Empire State.
     6    2.  The legislature finds that in order to bring more jobs to New York
     7  in  a  global  economy, and to increase the state's competitiveness, the
     8  state must find new sources of capital  investment  to  create  opportu-
     9  nities  throughout  the state. An innovative way to accomplish this goal
    10  would be to create alternate investment instruments that  would  attract
    11  capital  from investors who for personal, moral or religious reasons are
    12  unable to use conventional debt instruments such as bonds due  to  their
    13  inability to purchase securities that generate interest.
    14    3.  New  York  has the proud heritage of being a model for the rest of
    15  the nation in the areas  of  ethnic,  national,  racial,  and  religious
    16  tolerance and diversity. However, over time large numbers of New Yorkers
    17  have  been  unable to participate in investment opportunities offered by
    18  the state, or in public-private partnerships due to the lack of  diverse
    19  means of long term capital investments. Broadening the state's portfolio
    20  of investment instruments would not only enfranchise large groups of New
    21  Yorkers and lower the costs of state and local borrowing, but would also
    22  aid  in  community  renewal  and revitalization. Creating more inclusive
    23  forms of state financial opportunities would also broaden the streams of
    24  capital available to the state, lowering the cost of financing and  once
    25  again  involving the world's investors in the development of our state's
    26  economy.
         EXPLANATION--Matter in italics (underscored) is new; matter in brackets
                              [ ] is old law to be omitted.

        S. 4745                             2
     1    4. The legislature therefore declares that expanding New York's  tools
     2  for  economic  development  by creating new forms of alternative invest-
     3  ments would enable it to participate in the multi-billion dollar  market
     4  for  alternative  investment  vehicles  akin to conventional bonds, thus
     5  freeing  up  new  capital for business and job creation. The creation of
     6  these innovative financial instruments will furthermore permit  individ-
     7  uals  and institutions of all faiths to invest in and issue such instru-
     8  ments, redressing historic wrongs and low  participation  rates  in  our
     9  economy.
    10    §  2.  1. Definitions. (a) "Alternative finance investment bond" shall
    11  mean a certificate of  equal  value  representing  undivided  shares  of
    12  ownership  of  tangible assets, usufructs and services or (in the owner-
    13  ship of) the assets of particular projects or special investment  activ-
    14  ity.
    15    (b)  "Alternative  finance  investment  bond  agreement" shall mean an
    16  agreement where:
    17    (i) the agreement provides for a person ("the bond holder") to  pay  a
    18  sum of money ("the capital") to another ("the bond issuer"),
    19    (ii)  the agreement identifies assets, or a class of assets, which the
    20  bond issuer will acquire for the purpose of generating income  or  gains
    21  directly or indirectly ("bond assets"),
    22    (iii)  the agreement specifies a period at the end of which they cease
    23  to have effect ("the bond term"),
    24    (iv) the bond issuer undertakes under the agreement:
    25    (A) to make a repayment of the capital ("the redemption  payment")  to
    26  the bond holder during or at the end of the bond term (whether or not in
    27  installments), and
    28    (B)  to pay to the bond holder other payments on one or more occasions
    29  during or at the end of the bond term ("additional payments"), and
    30    (v) the amount of the additional payments does not  exceed  an  amount
    31  which would be a reasonable commercial return on a loan of the capital.
    32    2.  The  chair of the dormitory authority, the director of the budget,
    33  the superintendent of financial services and the commissioner  of  taxa-
    34  tion  and finance are hereby authorized and directed to assist the chair
    35  of the New York state urban development corporation in creating,  within
    36  one  calendar  year  of  the  effective  date of this act, an investment
    37  instrument for the state of New York that will  be  compliant  with  the
    38  definition  of  alternative finance investment bonds, and regulated in a
    39  manner consistent with traditional bonds and other debt instruments.
    40    3. The chair of the New York state urban  development  corporation  is
    41  hereby  directed  to consult with the state comptroller and the attorney
    42  general concerning the  regulation  of  alternative  finance  investment
    43  bonds,  and whether such bonds may be issued by New York municipal enti-
    44  ties in addition to any issuances by the state of New  York,  and  shall
    45  provide  the  legislature  with language necessary for the regulation of
    46  such security.
    47    4. Within ninety days of the effective date of this act, the chair  of
    48  the  New  York  state  urban development corporation shall report to the
    49  governor, the temporary president of the senate, and the speaker of  the
    50  assembly,  the  minority leader of the senate and minority leader of the
    51  assembly concerning the potential domestic and foreign market for alter-
    52  native finance investment bonds, and how such investment vehicles  might
    53  be   used   in  economic  development  generally,  and  specifically  in
    54  distressed census tracts.
    55    § 3. This act shall take effect immediately.
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