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

                                  5836

                       2011-2012 Regular Sessions

                          I N  A S S E M B L Y

                              March 2, 2011
                               ___________

Introduced  by M. of A. McENENY -- read once and referred to the Commit-
  tee on Economic Development

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:

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

 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                      [ ] is old law to be omitted.
                                                           LBD08345-02-1
              

A. 5836                             2

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