NY State Senate Bill 2011-S5656

Senate Bill S5656

Signed By Governor

2011-2012 Legislative Session

Relates to the powers and duties of the dormitory authority relative to the establishment of subsidiaries for certain purposes

download bill text pdf

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

View Actions

	Assembly Actions - Lowercase Senate Actions - UPPERCASE
Sep 23, 2011	signed chap.584
Sep 12, 2011	delivered to governor
Jun 20, 2011	returned to senate passed assembly ordered to third reading rules cal.472 substituted for a6445
Jun 14, 2011	referred to ways and means delivered to assembly passed senate
Jun 13, 2011	ordered to third reading cal.1181
Jun 11, 2011	committee discharged and committed to rules
Jun 09, 2011	referred to corporations, authorities and commissions

Votes

- Jun 14, 2011 - Floor Vote
  S5656
  
  62
  
  Aye
  
  0
  
  Nay
  
  0
  
  Absent
  
  0
  
  Excused
  
  0
  
  Abstained
  - - Floor Vote: Jun 14, 2011
      
      aye (62)
      
      Adams
      
      Addabbo Jr.
      
      Alesi
      
      Avella
      
      Ball
      
      Bonacic
      
      Breslin
      
      Carlucci
      
      DeFrancisco
      
      Diaz
      
      Dilan
      
      Duane
      
      Espaillat
      
      Farley
      
      Flanagan
      
      Fuschillo
      
      Gallivan
      
      Gianaris
      
      Golden
      
      Griffo
      
      Grisanti
      
      Hannon
      
      Hassell-Thompson
      
      Huntley
      
      Johnson
      
      Kennedy
      
      Klein
      
      Krueger
      
      Kruger
      
      LaValle
      
      Lanza
      
      Larkin
      
      Libous
      
      Little
      
      Marcellino
      
      Martins
      
      Maziarz
      
      McDonald
      
      Montgomery
      
      Nozzolio
      
      O'Mara
      
      Oppenheimer
      
      Parker
      
      Peralta
      
      Perkins
      
      Ranzenhofer
      
      Ritchie
      
      Rivera
      
      Robach
      
      Saland
      
      Sampson
      
      Savino
      
      Serrano
      
      Seward
      
      Skelos
      
      Smith
      
      Squadron
      
      Stavisky
      
      Stewart-Cousins
      
      Valesky
      
      Young
      
      Zeldin
  Jun 13, 2011 - Rules Committee Vote
  S5656
  
  20
  
  Aye
  
  0
  
  Nay
  
  4
  
  Aye with Reservations
  
  0
  
  Absent
  
  0
  
  Excused
  
  0
  
  Abstained
  - - Rules Committee Vote: Jun 13, 2011
      
      aye (20)
      
      Alesi
      
      Breslin
      
      Dilan
      
      Farley
      
      Hannon
      
      Hassell-Thompson
      
      Johnson
      
      Larkin
      
      Libous
      
      Marcellino
      
      Maziarz
      
      Montgomery
      
      Nozzolio
      
      Parker
      
      Saland
      
      Sampson
      
      Seward
      
      Skelos
      
      Smith
      
      Stewart-Cousins
      
      aye wr (4)
      
      Duane
      
      Krueger
      
      LaValle
      
      Perkins

2011-S5656 (ACTIVE) - Details

See Assembly Version of this Bill:: A6445
Law Section:: Public Authorities Law
Laws Affected:: Amd §1678, Pub Auth L

2011-S5656 (ACTIVE) - Summary

Relates to the powers and duties of the dormitory authority relative to the establishment of subsidiaries for certain purposes.

2011-S5656 (ACTIVE) - Sponsor Memo

                                BILL NUMBER:S5656

TITLE OF BILL:
An act
to amend the public authorities law, in relation to the powers and
duties of the dormitory authority of the state of New York relative to
the establishment of subsidiaries for certain purposes;
and providing for the repeal of such provisions upon expiration thereof

PURPOSE OF BILL:
This bill would authorize the Dormitory Authority of the State of New
York (the "Authority") to form one or more subsidiaries for the
purpose of limiting the potential liability of the Authority when
exercising its powers and duties in pursuit of remedies against a
borrower that has defaulted in its obligations under a loan
agreement or mortgage with the Authority.

SUMMARY OF PROVISIONS:
Section 1 of the bill would amend Public Authorities Law ("PAL")
§1678(25), which specifically authorizes the Authority to form a
subsidiary in connection with the exercise of its remedies as a
mortgagee against mortgagor North General Hospital, to authorize the
Authority to create one or more subsidiaries for the purpose of
limiting its potential liability when exercising its powers and
duties in pursuit of remedies against any borrower that has defaulted
in its obligations under a loan agreement or mortgage with the

Authority.

Section 1 of the bill would authorize each such subsidiary to perform
one or more of the purposes, powers, duties, functions, rights and
responsibilities of the Authority, other than the issuance of
indebtedness, including: (i) bidding for, taking, holding, selling,
conveying, assigning or transferring title to the mortgaged property;
(ii) entering into leases, subleases, operating agreements, security
agreements, loan agreements or other encumbrances or arrangements
with regard to such property; or (iii) assuming any indebtedness or
other liabilities secured by the mortgaged property.

Section 2 of this bill would make it effective immediately.

EXISTING LAW:
Chapter 561 of the Laws of 2010 ("Chapter 561") added subdivision 25 to
PAL § 1678 to authorize the Authority to form a subsidiary in
connection with the exercise of remedies against North General
Hospital ("North General"), a borrower that had defaulted on a loan
from the Authority. Chapter 561 was necessary because PAL § 2827-a,
enacted in Chapter 506 of the
laws of 2009, severely limits the ability of public authorities to
create subsidiary corporations without legislative approval. Prior to
Chapter 561, the Authority had no power to create subsidiaries.

PRIOR LEGISLATIVE HISTORY:
This is a new bill.

STATEMENT IN SUPPORT:


PAL § 2827-a provides that, except under certain limited
circumstances, no state authority will have the power to organize any
subsidiary corporation unless the legislature has enacted a law
granting an authority that power.

Consistent with this provision, the legislature enacted Chapter 561 of
the laws of 2010 to grant legislative authorization to the Authority
to create a subsidiary for the limited purpose of exercising its
remedies against North General Hospital ("North General"), a borrower
that had defaulted on a loan from the Authority and filed for
bankruptcy under Chapter 11 of the Bankruptcy Code. Chapter 561
enabled the Authority to create a subsidiary for the purpose of
taking title to North General's mortgaged property, in satisfaction
of the Authority's security interest therein, to insulate the
Authority and its assets from any potential liability that could
arise from accepting title to this property.

The purpose of the bill is to provide the Authority a general
authorization to form similarly purposed subsidiaries in the future.
Where the Authority acquires title to property as a remedy when a
borrower defaults in its obligations under a loan agreement or
mortgage with the Authority, the potential exists for the Authority,
as the owner of the property, to be sued in connection with incidents
occurring thereon. In addition, it is possible that the Authority
could be exposed to potential liabilities from the presence of
hazardous substances on any such property. The Authority can avoid
these and certain other potential liabilities by having title to the
mortgaged property transferred to a subsidiary that the Authority
would be authorized to create under this bill.

This bill would sunset on July 1,2012. This would ensure that the
Legislature retain oversight DASNY's creation of such subsidiaries,
and could review the manner in which this was accomplished prior to
any reauthorization of such authority.

BUDGET IMPLICATIONS:
There are no budget implications from this bill, but it may shield the
Authority from certain liabilities.

EFFECTIVE DATE:
The bill would take effect immediately upon enactment, and expire and
be deemed repealed on July 1, 2012; with provisions.

2011-S5656 (ACTIVE) - Bill Text download pdf

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

                                  5656

                       2011-2012 Regular Sessions

                            I N  S E N A T E

                              June 9, 2011
                               ___________

Introduced  by  Sen. HANNON -- (at request of the Dormitory Authority of
  the State of New York) -- read twice and  ordered  printed,  and  when
  printed  to be committed to the Committee on Corporations, Authorities
  and Commissions

AN ACT to amend the public authorities law, in relation  to  the  powers
  and  duties  of the dormitory authority of the state of New York rela-
  tive to the establishment of subsidiaries for  certain  purposes;  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. Subdivision 25 of section 1678 of  the  public  authorities
law,  as added by chapter 561 of the laws of 2010, is amended to read as
follows:
  25. (a) To form [a  subsidiary]  ONE  OR  MORE  SUBSIDIARIES  for  the
purpose  of limiting the potential liability of the authority when exer-
cising the powers and duties conferred upon  the  authority  by  article
eight of this chapter in connection with the exercise of remedies by the
authority  against  [North  General  Hospital,  an eligible secured] ANY
borrower [(as defined in chapter five hundred ninety of the laws of  two
thousand  two)  located  in the borough of Manhattan, New York] that has
defaulted in its obligations under its loan agreement or  mortgage  with
the authority and for which an event of default has been declared by the
authority.   [Such] EACH SUCH subsidiary created pursuant to this subdi-
vision may exercise and perform one or more  of  the  purposes,  powers,
duties,  functions,  rights and responsibilities of the authority (other
than the issuance  of  indebtedness[,])  in  connection  with  real  and
personal  property  with  respect to which the authority holds or held a
mortgage, security interest or other collateral interest including:  (i)
bidding  for,  taking,  holding, selling, conveying, assigning or trans-
ferring title to such property; (ii) entering  into  leases,  subleases,
operating  agreements,  security  agreements,  loan  agreements or other

 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                      [ ] is old law to be omitted.
                                                           LBD09251-03-1

S. 5656                             2

encumbrances or arrangements with regard to such property and acting  in
a  manner consistent with the rights, obligations or responsibilities of
the owner of such property pursuant to such agreements or  encumbrances;
(iii)  assuming  any  indebtedness  or other liabilities secured by such
property.  Notwithstanding any other provision of law to  the  contrary,
but  in  all  instances  subject  to the provisions of any contract with
bondholders, the transfer of title to ANY such subsidiary or  any  other
actions  taken  by the authority or [the] SUCH subsidiary to enforce the
authority's rights under the mortgage, security interest or other colla-
teral interest or to protect, acquire, manage or dispose of the property
shall be deemed to be a corporate purpose of the authority and shall not
impair the validity of any bonds, notes  or  other  obligations  of  the
authority  to  which the mortgage, security interest or other collateral
interest relates.
  (b) [Such] EACH SUCH subsidiary authorized by paragraph  (a)  of  this
subdivision  shall be established in the form of a public benefit corpo-
ration by executing and filing with the secretary of state a certificate
of incorporation which shall identify the authority as the entity organ-
izing such subsidiary and set forth the name of such  subsidiary  public
benefit  corporation, its duration, the location of its principal office
and its corporate purposes as provided in  this  subdivision  and  which
certificate may be amended from time to time by the filing of amendments
thereto  with the secretary of state.  [Such] EACH SUCH subsidiary shall
be organized as a public benefit corporation, shall be  a  body  politic
and  corporate,  and  shall  have  all  the  privileges, immunities, tax
exemptions and other exemptions of the authority. The  members  of  EACH
such  subsidiary  shall  be the same as the members of the authority and
the provisions of subdivision two of section sixteen hundred  ninety-one
of this title shall in all respects apply to such members when acting in
such capacity.
  (c)  Nothing  in  this  subdivision  shall  be construed to impose any
liabilities, obligations or responsibilities of ANY such subsidiary upon
the authority and the authority shall have no liability or  responsibil-
ity therefor unless the authority expressly agrees to assume the same.
  (d)  [Such]  EACH SUCH subsidiary created pursuant to this subdivision
shall be subject to any other provision of this  chapter  pertaining  to
subsidiaries of public authorities.
  S  2.  This  act shall take effect immediately and shall expire and be
deemed repealed July 1, 2012; provided however, that the  expiration  of
this act shall not impair or otherwise affect any of the powers, duties,
responsibilities,  functions,  rights  or  liabilities of any subsidiary
duly created pursuant to subdivision twenty-five of section 1678 of  the
public authorities law prior to such expiration.

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