S T A T E   O F   N E W   Y O R K
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                                  10243

                          I N  A S S E M B L Y

                              May 16, 2012
                               ___________

Introduced  by M. of A. FARRELL -- read once and referred to the Commit-
  tee on Cities

AN ACT to amend the local finance law, in relation to the sale of  bonds
  and  notes  of  the city of New York, the refunding of bonds, the down
  payment for projects financed by bonds, variable rate debt, and inter-
  est rate exchange agreements of the city of New York; to amend the New
  York state financial emergency act  for  the  city  of  New  York,  in
  relation  to a pledge and agreement of the state; and to amend chapter
  142 of the laws of 2004, amending the local finance  law  relating  to
  interest  rate exchange agreements of the city of New York and refund-
  ing bonds of such city, in relation to the effectiveness thereof

  THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND  ASSEM-
BLY, DO ENACT AS FOLLOWS:

  Section  1. The opening paragraph of paragraph (a) of section 54.10 of
the local finance law, as amended by chapter 141 of the laws of 2011, is
amended to read as follows:
  To facilitate the marketing of any issue of bonds or notes of the city
of New York issued on or before June thirtieth,  two  thousand  [twelve]
THIRTEEN,  the  mayor  and  comptroller of such city may, subject to the
approval of the state comptroller and the limitations on  private  sales
of bonds and notes, respectively, provided by law:
  S  2.  The  opening  paragraph  of paragraph a of section 57.00 of the
local finance law, as amended by chapter 141 of the  laws  of  2011,  is
amended to read as follows:
  Bonds  shall  be  sold  only at public sale and in accordance with the
procedure set forth in this section and sections 58.00 and 59.00 of this
title, except as otherwise provided in this paragraph. Bonds may be sold
at private sale to the United States government or any agency or instru-
mentality thereof, the state of New York municipal bond bank agency,  to
any sinking fund or pension fund of the municipality, school district or
district corporation selling such bonds, or, in the case of sales by the
city  of  New  York prior to July first, two thousand [twelve] THIRTEEN,
also to the municipal assistance corporation for the city of New York or
to any other purchaser with the consent of the mayor and the comptroller

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

                                                           LBD15815-01-2

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of such city and approval of the state comptroller, or, in the  case  of
sales  by the county of Nassau prior to December thirty-first, two thou-
sand seven, also to the Nassau county interim finance authority with the
approval  of the state comptroller, or, in the case of sales by the city
of Buffalo prior to June thirtieth, two thousand thirty-seven,  also  to
the  Buffalo  fiscal  stability authority with the approval of the state
comptroller, or, in the case of bonds or other obligations of a  munici-
pality issued for the construction of any sewage treatment works, sewage
collecting  system,  storm  water  collecting  system,  water management
facility, air pollution control facility or solid waste disposal facili-
ty, also to the New York state environmental facilities corporation, or,
in the case of bonds or other obligations of a school district or a city
acting on behalf of a city school district in a city having a population
in excess of one hundred twenty-five thousand but less than one  million
inhabitants according to the latest federal census, issued to finance or
refinance  the  cost  of  school  district  capital facilities or school
district capital equipment, as defined in section sixteen hundred seven-
ty-six of the public authorities law, also to the dormitory authority of
the state of New York. Bonds of a river improvement or drainage district
established by or under the supervision of the  department  of  environ-
mental conservation may be sold at private sale to the state of New York
as  investments for any funds of the state which by law may be invested,
provided, however, that the rate of interest on any such bonds  so  sold
shall  be  approved  by  the  water power and control commission and the
state comptroller. Bonds may also be sold at private sale as provided in
section 63.00 of this title. No bonds shall be sold on option  or  on  a
deferred  payment plan, except that options to purchase, effective for a
period not exceeding one year, may be given:
  S 3. Subdivision 3 of paragraph  g  of  section  90.00  of  the  local
finance  law,  as amended by chapter 141 of the laws of 2011, is amended
to read as follows:
  3. Outstanding bonds may, pursuant to a power to recall and redeem  or
with  the  consent  of  the  holders thereof, be exchanged for refunding
bonds (i) if the refunding bonds are to bear interest at a rate equal to
or lower than that borne by the bonds to be refunded or (ii) if, in  the
case  of the city of New York prior to July first, two thousand [twelve]
THIRTEEN, the annual payment required for principal and interest on  the
refunding  bond  is  less than the annual payment required for principal
and interest on the bond to  be  refunded,  in  each  case  such  annual
payments  to  be determined by dividing the total principal and interest
payments due over the remaining life of the bond by the number of  years
to maturity of the bond or (iii) if the bonds to be refunded were issued
by  the city of New York after June thirtieth, nineteen hundred seventy-
eight and prior to  July  first,  two  thousand  [twelve]  THIRTEEN  and
contain  covenants  referring  to  the  existence  of the New York state
financial control board for the city of New York or any other  covenants
relating  to  matters  other  than  the  prompt payment of principal and
interest on the obligations when due and the  refunding  bond  omits  or
modifies any such covenant.
  S  4.  Subdivision  8  of  paragraph  d of section 107.00 of the local
finance law, as amended by chapter 141 of the laws of 2011,  is  amended
to read as follows:
  8.  Notwithstanding  any  other provision of law, the financing by the
city of New York prior to July first, two thousand [twelve] THIRTEEN  of
any  object  or purpose which has a period of probable usefulness deter-
mined by law by the issuance of any bonds or notes,  including  (i)  the

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issuance  of bonds or notes to obtain reimbursement for funds heretofore
advanced for the object or purpose for which  the  bonds  or  notes  are
being issued, (ii) the issuance of bonds or notes to redeem notes previ-
ously  issued for the object or purpose for which the bonds or notes are
being issued or (iii) the issuance of bonds to refund  bonds  previously
issued for the object or purpose for which bonds are being issued.
  S  5.  The  closing  paragraph  of paragraph a of section 54.90 of the
local finance law, as amended by chapter 141 of the  laws  of  2011,  is
amended to read as follows:
  Notwithstanding the foregoing, whenever in the judgment of the finance
board  of the city of New York the interest of such city would be served
thereby, the city of New York may without further approval  issue  bonds
or  notes,  on or before July fifteenth, two thousand [twelve] THIRTEEN,
with interest rates that vary in accordance with a formula or  procedure
and  are  subject to a maximum rate of interest set forth or referred to
in the bonds or notes and may provide  the  holders  thereof  with  such
rights  to  require  the city or other persons to purchase such bonds or
notes or renewals thereof from the proceeds of  the  resale  thereof  or
otherwise from time to time prior to the final maturity of such bonds or
notes as the finance board of the city of New York may determine and the
city  may resell, at any time prior to final maturity, any such bonds or
notes acquired as a result of the exercise  of  such  rights;  provided,
however,  that  at no time shall the total principal amount of bonds and
notes issued by the city of New York pursuant to this  paragraph  (other
than  bonds  and  notes (1) bearing interest at rates and for periods of
time that are specified without reference to future events or contingen-
cies, or (2) described in section 136.00 of this article)  exceed  twen-
ty-five  percent of the limit prescribed by section 104.00 of this arti-
cle.
  S 6. The opening paragraph of subdivision 1 of paragraph d of  section
54.90 of the local finance law, as amended by chapter 141 of the laws of
2011, is amended to read as follows:
  On  or before July fifteenth, two thousand [twelve] THIRTEEN the mayor
and comptroller of the city of New York may:
  S 7. Subdivision 1 of section 10-a of section 2 of chapter 868 of  the
laws  of  1975,  constituting the New York state financial emergency act
for the city of New York, as amended by chapter 141 of the laws of 2011,
is amended to read as follows:
  1. In the event that after the date on which the  provisions  of  this
act become operative, any notes or bonds are issued by the city prior to
July  1, [2012] 2013, or any bonds are issued by a state financing agen-
cy, the state of New York hereby authorizes the city and authorizes  and
requires  such  state financing agency to include a pledge and agreement
of the state of New York in any agreement made by the city or such state
financing agency with holders or guarantors of such notes or bonds  that
the  state  will not take any action which will (a) substantially impair
the authority of the board during a control period, as defined in subdi-
vision twelve of section two of this act as in effect on the  date  such
notes  or  bonds  are  issued  (i) to approve, disapprove, or modify any
financial plan or financial plan  modification,  including  the  revenue
projections  (or  any  item  thereof)  contained therein, subject to the
standards set forth in paragraphs a, c, d, e and f of subdivision one of
section eight of this act as in effect on the date such notes  or  bonds
are issued and paragraph b of such subdivision as in effect from time to
time,  (ii)  to disapprove a contract of the city or a covered organiza-
tion if the performance of such contract would be inconsistent with  the

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financial  plan or to approve or disapprove proposed short-term or long-
term borrowing of the city or a covered organization or any agreement or
other arrangement referred to in subdivision four of  section  seven  of
this act, or (iii) to establish and adopt procedures with respect to the
deposit  in  and  disbursement from the board fund of city revenues; (b)
substantially impair the authority of  the  board  to  review  financial
plans,  financial  plan  modifications,  contracts  of  the  city or the
covered organizations and proposed short-term or long-term borrowings of
the city and the covered organizations;  (c)  substantially  impair  the
independent  maintenance  of  a  separate  fund  for the payment of debt
service on bonds and notes of the city; (d) alter the composition of the
board so that the majority of the voting members of the  board  are  not
officials  of  the state of New York elected in a state-wide election or
appointees of the governor; (e) terminate the  existence  of  the  board
prior  to  the time to be determined in accordance with section thirteen
of this act as in effect on the date such notes or bonds are issued; (f)
substantially modify the requirement that the  city's  financial  state-
ments be audited by a nationally recognized independent certified public
accounting  firm  or consortium of firms and that a report on such audit
be furnished to the board; or (g) alter  the  definition  of  a  control
period set forth in subdivision twelve of section two of this act, as in
effect  on  the  date  such  notes or bonds are issued, or substantially
alter the authority of the board, as set forth in  said  subdivision  to
reimpose  or  terminate  a  control  period; provided, however, that the
foregoing pledge and agreement shall be of no further force  and  effect
if  at any time (i) there is on deposit in a separate trust account with
a bank, trust company or other fiduciary  sufficient  moneys  or  direct
obligations of the United States or obligations guaranteed by the United
States, the principal of and/or interest on which will provide moneys to
pay  punctually when due at maturity or prior to maturity by redemption,
in accordance with their terms, all principal of  and  interest  on  all
outstanding  notes  and bonds of the city or such state financing agency
containing this pledge and agreement and irrevocable  instructions  from
the  city  or such state financing agency to such bank, trust company or
other fiduciary for such payment of such  principal  and  interest  with
such moneys shall have been given, or (ii) such notes and bonds, togeth-
er  with  interest  thereon,  have been paid in full at maturity or have
otherwise been refunded, redeemed, defeased, or discharged; and provided
further that the foregoing pledge and agreement shall be of  full  force
and effect upon its inclusion in any agreement made by the city or state
financing agency with holders or guarantors of such notes or bonds.
  Upon  payment  for such obligations issued pursuant to this act by the
original and all subsequent holders inclusion of the foregoing  covenant
shall  be  deemed conclusive evidence of valuable consideration received
by the state and city for such covenant and of reliance upon such pledge
and agreement by any such holder. The state hereby grants any such bene-
fited holder the right to sue the state in a court of  competent  juris-
diction and enforce this covenant and agreement and waives all rights of
defense based on sovereign immunity in such an action or suit.
  S  8. Section 5 of chapter 142 of the laws of 2004, amending the local
finance law relating to interest rate exchange agreements of the city of
New York and refunding bonds of such city, as amended by chapter 141  of
the laws of 2011, is amended to read as follows:
  S  5.  This  act shall take effect immediately, provided, that section
three of this act shall expire and be deemed repealed  July  15,  [2012]
2013.

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  S 9. Separability. If any clause, sentence, paragraph, section or part
of  this act shall be adjudged by any court of competent jurisdiction to
be invalid, such judgment shall not affect,  impair  or  invalidate  the
remainder thereof, but shall be confined in its operation to the clause,
sentence,  paragraph,  section  or part thereof directly involved in the
controversy in which such judgment shall have been rendered.
  S 10. This act shall take effect immediately.