NY State Senate Bill 2009-S8367

Senate Bill S8367

Signed By Governor

2009-2010 Legislative Session

Enacts the "city of Newburgh fiscal recovery act" to authorize such city to issue bonds to liquidate certain deficits, and impose certain budgetary requirements

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Archive: Last Bill Status - Signed by Governor

Introduced
- In Committee Assembly
- In Committee Senate
- On Floor Calendar Assembly
- On Floor Calendar Senate
- Passed Assembly
- Passed Senate
Delivered to Governor
Signed By Governor

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Actions

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	Assembly Actions - Lowercase Senate Actions - UPPERCASE
Jul 15, 2010	signed chap.223
Jul 09, 2010	delivered to governor
Jul 01, 2010	returned to senate passed assembly home rule request ordered to third reading rules cal.563 substituted for a11558 referred to ways and means
Jun 30, 2010	delivered to assembly passed senate home rule request ordered to third reading cal.1417
Jun 25, 2010	referred to rules

Votes

- Jun 30, 2010 - Floor Vote
  S8367
  
  61
  
  Aye
  
  0
  
  Nay
  
  0
  
  Absent
  
  1
  
  Excused
  
  0
  
  Abstained
  - - Floor Vote: Jun 30, 2010
      
      aye (61)
      
      Adams
      
      Addabbo Jr.
      
      Alesi
      
      Aubertine
      
      Bonacic
      
      Breslin
      
      DeFrancisco
      
      Diaz
      
      Dilan
      
      Duane
      
      Espada
      
      Farley
      
      Flanagan
      
      Foley
      
      Fuschillo
      
      Golden
      
      Griffo
      
      Hannon
      
      Hassell-Thompson
      
      Huntley
      
      Johnson
      
      Johnson
      
      Klein
      
      Krueger
      
      Kruger
      
      LaValle
      
      Lanza
      
      Larkin
      
      Leibell
      
      Libous
      
      Little
      
      Marcellino
      
      Maziarz
      
      McDonald
      
      Montgomery
      
      Nozzolio
      
      Onorato
      
      Oppenheimer
      
      Padavan
      
      Parker
      
      Peralta
      
      Perkins
      
      Ranzenhofer
      
      Robach
      
      Saland
      
      Sampson
      
      Savino
      
      Schneiderman
      
      Serrano
      
      Seward
      
      Skelos
      
      Smith
      
      Squadron
      
      Stachowski
      
      Stavisky
      
      Stewart-Cousins
      
      Thompson
      
      Valesky
      
      Volker
      
      Winner
      
      Young
      
      excused (1)
      
      Morahan
  Jun 30, 2010 - Rules Committee Vote
  S8367
  
  21
  
  Aye
  
  0
  
  Nay
  
  2
  
  Aye with Reservations
  
  0
  
  Absent
  
  0
  
  Excused
  
  0
  
  Abstained
  - - Rules Committee Vote: Jun 30, 2010
      
      aye (21)
      
      Dilan
      
      Duane
      
      Espada
      
      Farley
      
      Hannon
      
      Hassell-Thompson
      
      Johnson
      
      Klein
      
      Krueger
      
      LaValle
      
      Larkin
      
      Montgomery
      
      Parker
      
      Serrano
      
      Seward
      
      Skelos
      
      Smith
      
      Stachowski
      
      Stewart-Cousins
      
      Valesky
      
      Volker
      
      aye wr (2)
      
      Padavan
      
      Saland

co-Sponsors

2009-S8367 (ACTIVE) - Details

See Assembly Version of this Bill:: A11558
Law Section:: Newburgh, City of

2009-S8367 (ACTIVE) - Summary

Enacts the " city of Newburgh fiscal recovery act" to authorize such city to issue bonds to liquidate certain deficits, and imposes certain budgetary requirements upon the city to restore fiscal integrity.

2009-S8367 (ACTIVE) - Sponsor Memo

                                BILL NUMBER:S8367

TITLE OF BILL:

An act
to authorize the city of Newburgh, in the county of Orange, to
issue bonds for the
purpose of liquidating certain deficits and imposing standards and
requirements as to budgetary
operations and fiscal management designed to restore such city to
fiscal integrity; and providing for the repeal of such provisions
upon expiration thereof

PURPOSE:

This bill would authorize the City of Newburgh ("City") to issue bonds
to liquidate certain deficits, impose on the City additional fiscal
accountability requirements, and
provide for the establishment of a Special Debt Service Fund for
the City to be held by the Comptroller of the State of New York
("State Comptroller"), in order to restore the City's fiscal
integrity and improve its ability to market bonds.

SUMMARY OF PROVISIONS:

Section 1 of the bill would set forth the short title of the act

as the City of Newburgh Fiscal Recovery Act ("NFEA").

Section 2 of the bill would set forth legislative findings.

Section 3 of the bill would establish the supremacy of the NFRA
relative to any inconsistent general, special or local law.

Section 4 of the bill would set forth definitions for the NFRA.

Section 5 of the bill would authorize the City to issue bonds on or
before December 31, 2011 in an aggregate principal amount not to
exceed $15,000,000, for the purpose of liquidating actual deficits in
its General Fund, Special Revenue Fund, and Capital Projects Fund
existing at the close of its 2010 fiscal year.

Section 6 of the bill would provide that the financing of the deficits
described in section 5 of the bill is a purpose of the City for which
indebtedness may be incurred, the period of probable usefulness of
which would be fixed at 15 years.

Section 7 of the bill would provide that no deficit bonds may be
issued unless and until the State Comptroller has first reviewed and
confirmed the existence of the deficits described in section 5 of the
bill and certified the amount of such deficits.

Section 8 of the bill would provide that deficit bonds may not be
issued in an amount exceeding the amount of the deficits certified by
the State Comptroller pursuant to section 7 of the bill. Any amount
of deficit notes issued in excess of the certified deficit amount
would need to be either redeemed or deposited in the Special Debt
Service Fund established in section 15 of the bill.

Section 9 of the bill would require the City Comptroller to prepare
quarterly reports comparing budgeted revenues and expenditures to
actual revenues and expenditures, along with a trial balance of
general ledger accounts. Each report would also include actions
recommended by the City Manager to resolve any unfavorable budget
variance.

Section 10 of the bill would require the State Comptroller to examine
the City's proposed budget and make recommendations thereon to the
City prior to the adoption of the budget. The City Council would be
required to make adjustments to the proposed budget consistent with
any such recommendations.

Section 11 of the bill would require the City Manager to prepare,
along with the proposed budget, a 3-year financial plan covering the
next succeeding fiscal year and the two fiscal years thereafter,
which would at a minimum contain: projected employment levels;
projected annual expenditures; reserve fund amounts; estimated annual
revenues; and the proposed use of onetime revenue sources. In
addition, the financial plan would identify actions necessary to
achieve and maintain long-term fiscal stability, including, but not
limited to, improved management practices, initiatives to minimize or
reduce operating expenses, and potential shared services agreements
with other municipalities. The City Manager would be required to
update the financial plan consistent with the adopted budget and
quarterly budget reports.

Section 12 of the bill would require the City Comptroller to notify
the State Comptroller at least 15 days prior to the issuance of any
bonds or notes or entering into any installment purchase contract,
and the State Comptroller may review and make recommendations
regarding the affordability to the City of any such proposed issuance
Or contract.

Section 13 of the bill would authorize the private sale of deficit
bonds, any refunding of such deficit bonds, and any other bonds
issued by the City on or before December 31, 2012, subject to the
approval of the State Comptroller of the terms and conditions of such
sales.

Section 14 of the bill would require all proceedings in connection with
the issuance of such deficit bonds or deficit notes to be taken in
accordance with the provisions of the Local Finance Law ("LFL");
provided, however, that the City's bond resolutions would not be
subject to (i) any mandatory or permissive referendum, (ii) LFL

§ 107.00 with respect to any requirements for a down payment,
and (iii)
the provisions applicable to municipalities authorized to incur debt
to liquidate operating deficits under LFL § 10.10.

Section 15 of the bill would require the City, upon the issuance of
any deficit bonds or deficit notes, to establish a Special Debt
Service Fund with the State Comptroller for the purpose of paying
City debt service due or becoming due in subsequent fiscal years. The
State
Comptroller would be authorized to deposit State aid payable to the
City and a portion of the City's property tax collections in the
Special Debt Service Fund as necessary to ensure sufficient moneys
are available to make scheduled debt service payments over the
succeeding twelve month period after accounting for the City's
receipt of taxes and State aid during such period.
As soon as practicable thereafter, the State Comptroller would be
required to pay over to the City any remaining amounts of State aid
and City property taxes that are not needed to reserve for debt
service.

Section 16 of the bill would set forth the State's pledge to the
holders of any bonds, notes or other obligations issued by the City
during the effective period of the NFRA that the State will not
limit, alter or impair the rights vested in the City to fulfill the
terms of any agreements made with bondholders pursuant to the NFRA,
and would clarify that nothing contained in the NFRA would obligate
the state to make any payments or impose any taxes to satisfy the
debt service obligations of the City or restrict any right of the
State to amend, modify, repeal or otherwise alter LFL § 54 or any
other provision relating to state aid, taxes or fees.

Section 17 of the bill would set forth the rights of bondholders and
the State Comptroller to commence an action in Orange County Supreme
Court if the City fails to comply with any provision of this bill.

Section 18 of the bill would set forth a severability clause.

Section 19 of the bill would make it effective immediately, and the
NFRA would remain in effect for a 15-year period following the first
issuance of deficit bonds or deficit notes pursuant to the NFRA.

PRIOR LEGISLATIVE HISTORY:

None.

EXISTING LAW:

LFL § 10.10 sets forth the uniform deficit financing process for
municipalities and school districts that are authorized by a special
or general law to incur debt to liquidate operating deficits.

STATEMENT IN SUPPORT:

The fiscal condition of the City of Newburgh has severely deteriorated
in recent years as a result of serious local economic and demographic
challenges, the City's inability to ensure proper financial
accounting procedures, improvident budgeting and taxing practices,
and significant turnover in positions responsible for the management
of city finances. These factors have led to a substantial structural
imbalance between revenues and expenditures;with a projected
cumulative deficit of approximately one-quarter of the City's
budgeted revenues. The ability of the City to regain fiscal stability
is impaired by a recent decline in the City's tax base and continuing
weakness in the local economy. These circumstances have caused an
independent
bond rating service to lower the City's bond rating below investment
grade, thereby making the City's ability to access the credit market
uncertain.

The combination of actions authorized in this Act is necessary to help
the City return to fiscal and economic stability and improve its
ability to market bonds. The bill would require enhanced budgetary
discipline and stronger oversight of City finances by the State,
establish a State-managed debt service fund to ensure required
payments to bondholders, and authorize short-term budgetary relief
with deficit financing to mitigate the impact on essential City
services and property taxes as the City seeks to regain fiscal
stability.

BUDGET IMPLICATIONS:

The State Comptroller's administrative responsibilities under this Act
could be accomplished within existing resources. By authorizing the
City to issue deficit bonds, this bill would help the City to restore
its fund balance without drastic reductions in essential services and
unsustainable increases in City property taxes. The bill's enhanced
fiscal oversight of the City and Special Debt Service Fund would
improve the City's ability to market future bond and note issues at a
lower cost.

EFFECTIVE DATE:

This bill would take effect immediately. The NFRA would remain in
effect for a 15-year period following the date of first issuance of
deficit bonds or deficit notes pursuant to the NFRA.

2009-S8367 (ACTIVE) - Bill Text download pdf

                            
                    S T A T E   O F   N E W   Y O R K
________________________________________________________________________

                                  8367

                            I N  S E N A T E

                              June 25, 2010
                               ___________

Introduced  by  Sen.  STEWART-COUSINS -- (at request of the Governor) --
  read twice and ordered printed, and when printed to  be  committed  to
  the Committee on Rules

AN  ACT  to  authorize the city of Newburgh, in the county of Orange, to
  issue bonds for the purpose of liquidating certain deficits and impos-
  ing standards and requirements as to budgetary operations  and  fiscal
  management  designed  to  restore  such  city to fiscal integrity; and
  providing 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:

  Section  1.  Short title.  This act shall be known and may be cited as
the "city of Newburgh fiscal recovery act".
  S 2. Legislative findings. The legislature hereby finds  and  declares
that  the  fiscal condition of the city of Newburgh has severely deteri-
orated in recent years as a result of serious local economic  and  demo-
graphic  challenges,  the  city's  inability  to ensure proper financial
accounting procedures, improvident budgeting and taxing  practices,  and
significant turnover in positions responsible for the management of city
finances.  These  factors have led to a substantial structural imbalance
between revenues and expenditures, with a projected  cumulative  deficit
of approximately one-quarter of the city's budgeted revenues.  The abil-
ity  of  the  city  to  regain  fiscal stability is impaired by a recent
decline in the city's tax base and  continuing  weakness  in  the  local
economy.  These  circumstances  have  caused  an independent bond rating
service to lower the city's bond rating below investment grade,  thereby
making the city's ability to access the credit market uncertain.
  It  is  hereby  found  and  declared that the city of Newburgh is in a
state of fiscal crisis, and that a  combination  of  enhanced  budgetary
discipline  and  short-term  budgetary relief is necessary to assist the
city in returning to  fiscal  and  economic  stability,  while  ensuring
adequate funding for the provision of essential services.
  It  is hereby acknowledged that a home rule message recommended by the
city manager of the city of Newburgh, approved by the city  council  and
endorsed  by the mayor of the city, requests the enactment of all of the

 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                      [ ] is old law to be omitted.

                                                           LBD12292-03-0

S. 8367                             2

provisions of this act as necessary and in the public interest to accom-
plish the objective of improving market reception for the necessary sale
of bonds and other obligations of the city by establishing standards and
requirements as to budgetary operations and fiscal management to restore
the city to fiscal integrity while retaining the city's right to operate
independently as a municipal corporation of the state of New York.
  S 3. Exclusivity of act. Based upon the foregoing findings, the legis-
lature  through this act hereby imposes on the city certain requirements
as to budgetary operations and fiscal management, including  the  elimi-
nation  of accumulated deficits of the city, and hereby declares that to
the extent the provisions of this act are inconsistent with any general,
special or local law, this act shall apply.
  S 4. Definitions. As used in this act, the following words  and  terms
shall  have  the  following meanings respectively, unless the text shall
indicate another or different meaning or intent:
  (a) "Budget" means a current operating budget of the city prepared  or
adopted  pursuant  to  general,  special  or local law, being the annual
budget and estimate of expenditures to be made during a fiscal year  for
the  general  support and current expenses of the government of the city
to be paid from taxes or assessments or other current  revenues  of  the
city for such year.
  (b) "City" means the city of Newburgh, in the county of Orange.
  (c) "City comptroller" means the comptroller of the city.
  (d) "City council" means the city council of the city.
  (e) "City manager" means the city manager of the city.
  (f)  "City taxes" means and includes all taxes on real property levied
and assessed by the city, based on valuation thereof and shall not  mean
any rent, rate, fee, special assessment or other charge based on benefit
or use.
  (g)  "Collecting  officer"  means the officer empowered to collect and
receive city taxes.
  (h) "Deficit bonds" means the bonds authorized to be issued by section
five of this act.
  (i) "Deficit notes" means bond anticipation  notes  issued  in  antic-
ipation of the issuance of deficit bonds.
  (j)  "Financial  plan" means the three-year financial plan required by
section eleven of this act.
  (k) "Fiscal year" means the fiscal year of the city.
  (l) "Mayor" means the mayor of the city.
  (m) "Outstanding", when used with respect to obligations of  the  city
as of any particular date, means all obligations of the city theretofore
issued and thereupon being issued except any obligation theretofore paid
and  discharged  or  for the payment of the principal of and interest on
which money is held by or on behalf of the city, in trust solely and  in
all  events only for the purpose and sufficient to pay in full the prin-
cipal and redemption premium, if any, of  and  interest  on  such  obli-
gations.
  (n)  "Special  debt service" means, with respect to a fiscal year, the
amounts required for the timely payment of  (i)  all  principal  due  or
becoming  due and payable in said year with respect to any serial bonds,
tax anticipation notes, capital notes or budget notes of the  city,  and
all principal amortization for said year required by law with respect to
bond anticipation notes or other securities of the city, and not specif-
ically  mentioned in paragraph (ii) of this subdivision, (ii) all inter-
est due or becoming due and payable in said year  with  respect  to  any
serial  bonds,  bond anticipation notes, tax anticipation notes, revenue

S. 8367                             3

anticipation notes, capital notes, budget notes or other  securities  of
the  city  not specifically mentioned herein, and (iii) all sinking fund
contributions required in said year with respect  to  any  sinking  fund
bonds.
  (o)  "Special  debt  service fund" means the fund which is held by the
state comptroller and is described and provided for in  section  fifteen
of this act.
  (p) "State aid" means all aid and incentives for municipalities pursu-
ant  to  section  54 of the state finance law, any successor type of aid
and any new aid appropriated by the state as local government assistance
for the benefit of the city.
  (q) "State comptroller" means the comptroller of the  state,  pursuant
to  his  or  her  authority  to  supervise the accounts of any political
subdivision of the state.
  Unless the context specifically provides otherwise, any terms used  in
this  act  such as revenues, expenditures or expenses shall be construed
as such term is construed under applicable accounting principles  incor-
porated  in the uniform system of accounts prescribed by the state comp-
troller.
  S 5. Deficit bond and deficit note issuance authorization. The city is
hereby authorized to issue bonds, subject to the provisions of this act,
on or before December 31, 2011, in an aggregate principal amount not  to
exceed fifteen million dollars ($15,000,000) (exclusive of the costs and
expenses incidental to the issuance of the bonds authorized to be issued
by this section) for the specific object or purpose of liquidating actu-
al deficits in its general fund, the special revenue fund, and the capi-
tal  projects  fund  existing  at  the close of its 2010 fiscal year. In
anticipation of the issuance of such bonds,  deficit  notes  are  hereby
authorized to be issued.
  S  6.  Period  of probable usefulness established. It is hereby deter-
mined that the financing of the deficits described in  section  five  of
this  act is an object or purpose of the city for which indebtedness may
be incurred, the period of probable usefulness of which is hereby deter-
mined to be fifteen years, computed from the date of such deficit  bonds
or  from the date of the first deficit notes, whichever date is earlier.
Such deficit bonds and deficit notes shall be general obligations of the
city, to which the faith and credit of the city is pledged, and the city
shall make an annual appropriation sufficient to pay  the  principal  of
and interest on such obligations as the same shall become due.
  S  7.  Certification of deficit. No deficit bonds may be issued unless
and until the state comptroller  shall  first  review  and  confirm  the
existence of the deficits described in section five of this act, as well
as  certify the amount of the deficits. As soon as practicable after the
effective date of this act, but in no event prior to the  close  of  the
city's  2010  fiscal year, the city shall prepare a report detailing the
amount and cause of the deficit and submit to the state comptroller such
report,  together  with  the  independent  audit  report  for  its  last
completed  fiscal  year  and  such  other information as the state comp-
troller may deem necessary.  Within  thirty  days  after  receiving  all
necessary reports and information, the state comptroller shall:
  (a) perform such reviews as may be necessary;
  (b) confirm the existence and certify the amount of the deficits; and
  (c)  provide  notification  to the city manager, the city comptroller,
the mayor and the city council as to the existence  and  amount  of  any
such deficits.

S. 8367                             4

  S 8. Limit on amount of deficit bonds. Deficit bonds may not be issued
in  an  amount exceeding the amount of such deficits as certified by the
state comptroller. If the city issues deficit notes prior to a  determi-
nation by the state comptroller pursuant to section seven of this act in
an  amount  in excess of the amount of such deficits as confirmed by the
state comptroller, the city shall, from funds  other  than  proceeds  of
bonds  or  bond  anticipation notes, either redeem such deficit notes in
the amount by which the amount of such deficit notes exceeds the  amount
of  such deficits as confirmed by the state comptroller or deposit a sum
equal to the amount by which such deficit notes  exceed  the  amount  of
such  deficits  as  confirmed  by the state comptroller into the special
debt service fund.
  S 9. Quarterly budget reports and trial balances. For each fiscal year
during the effective period of this  act,  the  city  comptroller  shall
monitor  budgets  of  the city and, for each budget, prepare a quarterly
report of summarized budget data  depicting  overall  trends  of  actual
revenues and budget expenditures for the entire budget rather than indi-
vidual  line  items.  Such  reports  shall compare revenue estimates and
appropriations as set forth in such budget with the actual revenues  and
expenditures made to date. All quarterly reports shall be accompanied by
a  recommendation  by the city manager setting forth any remedial action
necessary to resolve any unfavorable budget variance including the over-
estimation of revenues and the underestimation  of  appropriations,  and
shall  be  completed  within thirty days of the end of each quarter. The
city comptroller shall also prepare, as part of such report, a quarterly
trial balance of general ledger accounts. The above quarterly  budgetary
reports  and  quarterly  trial  balances shall be prepared in accordance
with applicable accounting principles incorporated in the uniform system
of accounts prescribed by the state comptroller.  These reports shall be
submitted to the city manager, the mayor, the city  council,  the  state
director of the budget, the state comptroller, the chair of the assembly
ways and means committee, and the chair of the senate finance committee.
  S  10. Budget review by state comptroller. During the effective period
of this act, the city manager shall submit the proposed budget  for  the
next succeeding fiscal year to the state comptroller no later than thir-
ty  days  before  the  date scheduled for the city council's vote on the
adoption of the final budget or the last date on which the budget may be
finally adopted, whichever is sooner. The state comptroller shall  exam-
ine  such proposed budget and make such recommendations as deemed appro-
priate thereon to the city prior to the adoption of the budget,  but  no
later  than  ten  days  before the date scheduled for the city council's
vote on the adoption of the final budget or the last date on  which  the
budget  must be adopted, whichever is sooner. Such recommendations shall
be made after examination into the estimates of  revenues  and  expendi-
tures  of  the  city. The city council, no later than five days prior to
the adoption of the budget, shall review any  such  recommendations  and
make  adjustments to the proposed budget consistent with any recommenda-
tions made by the state comptroller.
  S 11. Multiyear financial plans. During the effective period  of  this
act,  the city manager shall prepare, along with the proposed budget for
the next succeeding fiscal year, a three-year  financial  plan  covering
the next succeeding fiscal year and the two fiscal years thereafter. The
financial plan shall, at a minimum, contain projected employment levels,
projected  annual  expenditures  for  personal service, fringe benefits,
non-personal  services  and  debt  service;  appropriate  reserve   fund
amounts;  estimated annual revenues including projection of property tax

S. 8367                             5

rates, the value of the taxable real property and  resulting  tax  levy,
annual  growth  in  sales  tax  and  non-property  tax revenues; and the
proposed use of one-time revenue sources. The financial plan shall  also
identify  actions  necessary  to  achieve  and maintain long-term fiscal
stability, including, but not limited to, improved management practices,
initiatives to minimize or  reduce  operating  expenses,  and  potential
shared services agreements with other municipalities. Within thirty days
following  the  adoption  by the city council of the budget for the next
succeeding fiscal year and upon the completion of each quarterly  budget
report  pursuant  to  section  nine  of this act, the city manager shall
update the financial plan consistent with such adopted  budget  or  such
quarterly  budget  report.   Copies of the financial plan and any update
shall be provided to the city comptroller, the mayor, the city  council,
the  state  director  of the budget, the state comptroller, the chair of
the assembly ways and means committee,  and  the  chair  of  the  senate
finance committee.
  S  12.  State comptroller to comment on further debt issuance.  During
the effective period of this act, the city comptroller shall notify  the
state  comptroller  at  least  fifteen days prior to the issuance of any
bonds or notes or entering into any installment purchase  contract,  and
the  state comptroller may review and make recommendations regarding the
affordability to the city of any such proposed issuance or contract.
  S 13. Private sale of bonds authorized. To facilitate the marketing of
(a) deficit bonds, (b) any bonds issued to refund  such  deficit  bonds,
and (c) any other bonds to be issued on or before December 31, 2012, the
city  may,  notwithstanding any limitation on the private sales of bonds
provided by law and subject to the approval of the state comptroller  of
the terms and conditions of such sales:
  (1) arrange for the underwriting of such bonds at private sale through
negotiated fees or by sale of such bonds to an underwriter; or
  (2)  arrange  for  the  private  sale of such bonds through negotiated
agreement, with compensation for such sales to be provided by negotiated
agreement and/or negotiated fee, if required.
  The cost of such underwriting or private placement shall be deemed  to
be a preliminary cost for purposes of section 11.00 of the local finance
law.
  S  14. Exceptions to the local finance law. Except as provided in this
act, all proceedings in connection with the  issuance  of  such  deficit
bonds  or  deficit  notes  shall be had and taken in accordance with the
provisions of the local finance law, provided, however, that any  resol-
ution  or  resolutions  authorizing  the  issuance of such bonds or bond
anticipation notes shall not be subject to (a) any mandatory or  permis-
sive  referendum,  (b)  the  provisions  of  section 107.00 of the local
finance law with respect to any requirements for a down payment and  (c)
the provisions of section 10.10 of the local finance law.
  S  15. Special debt service fund. (a) Upon the issuance of any deficit
bonds or deficit notes, the city council shall establish and  thereafter
maintain  a special debt service fund with the state comptroller for the
purpose of paying the special debt service due or becoming due in subse-
quent fiscal years. Such special debt service fund shall be discontinued
upon the expiration of the effectiveness of this act,  and  any  balance
remaining in the special debt service fund at that time shall be paid by
the state comptroller to the city comptroller for use by the city in the
manner provided by law.
  (b)  The state comptroller shall deposit and pay into the special debt
service fund any portion of state aid as the  state  comptroller  deter-

S. 8367                             6

mines necessary to ensure sufficient moneys are available to make sched-
uled  special  debt  service payments from the special debt service fund
over the succeeding twelve month period taking  account  of  the  city's
receipt  of city taxes and state aid during such twelve month period and
the availability of other amounts appropriated or set aside by the  city
to  make such payments. Thereafter, the state comptroller shall, as soon
as practicable, pay over the remainder of any such state aid to the city
comptroller for use by the city in the manner provided by law.
  (c) Not later than the first day of each fiscal year  beginning  after
issuance  of  any  deficit  bonds or deficit notes, the city comptroller
shall certify to the state comptroller the percentage obtained by divid-
ing the balance obtained by subtracting the amount of the  appropriation
for  such year for a reserve for uncollected taxes from the total amount
of city taxes levied and assessed for such year, into the  total  appro-
priation  in  the  budget of such year for special debt service, and the
percentage so certified shall constitute the debt service percentage for
such fiscal year. Immediately upon receipt of any  payment  during  such
fiscal year of or on account of any city taxes, the city, its collecting
officer and any agent receiving the same shall remit such payment to the
state  comptroller. Of each sum so received, the state comptroller shall
deposit and pay into the special debt service fund the  portion  thereof
equal to the debt service percentage of the total sum, and shall deposit
and  pay  into the fund such additional amounts as the state comptroller
determines necessary to ensure sufficient moneys are available  to  make
scheduled  special  debt  service payments from the special debt service
fund over the succeeding twelve  month  period  taking  account  of  the
timing  of  the  city's  receipt of city taxes and state aid during such
twelve month period and the availability of other  amounts  appropriated
or  set  aside  by the city to make such payments. Thereafter, the state
comptroller shall, as soon as practicable, pay  over  the  remainder  of
such  sum  to  the  city  comptroller  for use by the city in the manner
provided by law.
  (d) The moneys in the special debt service fund shall be  invested  in
the  manner  provided  by  section  11  of  the  general  municipal law,
provided, however, that the investments shall be made for and on  behalf
of  the  city  by the state comptroller upon instructions from the chief
fiscal officer of the city which shall be  consistent  with  the  city's
investment  policy adopted pursuant to section 39 of the general munici-
pal law.
  (e) The state comptroller shall from time to time during  each  fiscal
year  withdraw  from  the special debt service fund all amounts required
for the payment as the same becomes due of all special debt  service  of
such  fiscal  year  and  cause the amounts so withdrawn to be applied to
such payments as and when due.
  (f) The special debt service fund and all monies or securities therein
or payable thereto in accordance with this section is hereby declared to
be city property devoted to essential governmental purposes and  accord-
ingly, shall not be applied to any purpose other than as provided herein
and  shall  not  be  subject  to  any  order, judgment, lien, execution,
attachment, setoff or counterclaim by any creditor  of  the  city  other
than  a  creditor  for  whose benefit such fund is established and main-
tained and entitled thereto under and pursuant to this act.
  S 16.  Agreement with the state. (a) The state does hereby  pledge  to
and  agree  with  the  holders  of any bonds, notes or other obligations
issued by the city during the effective period of this act  and  secured
by  such  a  pledge  that  the state will not limit, alter or impair the

S. 8367                             7

rights hereby vested in the city to fulfill the terms of any  agreements
made  with  such  holders pursuant to this act, or in any way impair the
rights and remedies of such holders or  the  security  for  such  bonds,
notes  or other obligations until such bonds, notes or other obligations
together with the  interest  thereon  and  all  costs  and  expenses  in
connection  with  any action or proceeding by or on behalf of such hold-
ers, are fully paid and discharged. The city is  authorized  to  include
this pledge and agreement of the state in any agreement with the holders
of such bonds, notes or other obligations. Nothing contained in this act
shall be deemed to (i) obligate the state to make any payments or impose
any  taxes  to  satisfy  the  debt service obligations of the city, (ii)
restrict any right of the state to amend, modify,  repeal  or  otherwise
alter  (A)  section  54  of the state finance law or any other provision
relating to state aid, or (B) statutes imposing or relating to taxes  or
fees,  or appropriations relating thereto, or (iii) create a debt of the
state within the meaning of any constitutional or statutory  provisions.
The city shall not include in any resolution, contract or agreement with
holders  of  such  bonds, notes or other obligations any provision which
provides that an event of default occurs as a result of the state  exer-
cising its rights described in paragraph (ii) of this subdivision.
  (b)  Any provision with respect to state aid shall be deemed executory
only to the extent of  moneys  available,  and  no  liability  shall  be
incurred  by the state beyond the moneys available for that purpose, and
any such payment by the state comptroller of state aid shall be  subject
to annual appropriation of state aid by the state legislature.
  S  17.  Rights  of  the  state comptroller and bondholders. (a) In the
event that the city shall fail to comply with any provision of this act,
and such non-compliance shall continue for a period of 30 days, (1)  the
state  comptroller  acting alone, or (2) a duly appointed representative
of the holders of at least 25 per centum in aggregate  principal  amount
of  (i) any series of deficit bonds or deficit notes, (ii) any series of
bonds issued to refund such deficit bonds or deficit notes, or (iii) any
other series of notes or bonds issued by the city during  the  effective
period  of this act, by instrument or instruments filed in the office of
the clerk of Orange county and proved or acknowledged in the same manner
as a deed to be recorded, may bring an action or commence  a  proceeding
in  accordance  with the civil practice law and rules to (A) require the
city to carry out any of its obligations under this act  or  (B)  enjoin
any  acts  or  things which may be unlawful or in violation of the obli-
gations imposed on the city  under  this  act.  In  addition,  the  duly
appointed  representative of the bondholders of any such series of notes
or bonds may bring an action or commence a proceeding in accordance with
the civil practice law and rules to enforce the rights of the holders of
such series of notes or bonds.
  (b) The supreme court in the county of Orange shall have  jurisdiction
of  any  action  or proceeding by the state comptroller or the represen-
tative of such bondholders.
  S 18. Severability clause. If any clause, sentence, paragraph, section
or part of this title shall be adjudged by any court of competent juris-
diction to be invalid, such judgment shall not affect, impair or invali-
date the remainder thereof, but shall be confined in  its  operation  to
the clause, sentence, paragraph, section or part involved in the contro-
versy in which such judgment shall have been rendered. The provisions of
this  act shall be liberally construed to assist the effectuation of the
public purposes furthered hereby.

S. 8367                             8

  S 19. This act shall take effect immediately; and shall remain in full
force and effect until the fifteenth anniversary of the  date  of  first
issuance  of  deficit  bonds or deficit notes pursuant to this act, when
upon such date the provisions of this act shall be deemed repealed;  and
provided,  however, that the state comptroller shall notify the legisla-
tive bill drafting commission upon the occurrence of this act  in  order
that  the  commission may maintain an accurate and timely effective data
base of the official text of the laws of the state of New York in furth-
erance of effectuating the provisions of section 44 of  the  legislative
law and section 70-b of the public officers law.

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Senate Bill S8367

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Sponsored By

Andrea Stewart-Cousins