BILL NUMBER: S7837

SPONSOR: KENNEDY
 
TITLE OF BILL:

An act to amend the public authorities law, in relation to the total
amount of bonds the Buffalo sewer authority may issue

 
PURPOSE:

To enable the Buffalo Sewer Authority to issue bonds in the total amount
of Two Hundred Fifty Million Dollars.

 
SUMMARY OF PROVISIONS:

Section 1 amends Section 1187(1) of the Public Authorities Law to
authorize the Buffalo Sewer Authority to issue bonds in the total amount
of Two Hundred Fifty Million Dollars from its current authorization of
One Hundred Twenty-Five Million Dollars.

Section 2 sets the effective date immediately after it shall have become
              

law.

 
JUSTIFICATION:

The Buffalo Sewer Authority, is a body corporate and politic constitut-
ing a public benefit corporation created by Chapter 349 of the Laws of
1935 (now Title 8 of Article 5; Chapter 870 of the Laws of New York of
1939, the same being Public Authorities Law, Sections 1175 to 1195,
inclusive).

The Authority provides sewage and storm water collection, treatment and
disposal services for the City of Buffalo and neighboring communities.
It has approximately 850 miles of sewers and owns and operates the major
publicly owned treatment works ("POTW") in western New York with a major
industrial waste pretreatment program, and has a treatment plant capaci-
ty of 560 million gallons per day ("MGD").  All activities and functions
performed by the Authority are its direct responsibility.

The Authority's powers include fixing and collecting sewer rents and
rates, borrowing money and issuing negotiable bonds, acquiring, holding
and disposing of personal property for its corporate purposes. The
Authority's current bond authority of One Hundred Twenty-Five Million
Dollars ($125 Million) has been in effect since 1975, when it was
increased from Seventy-Five Million Dollars. As detailed below, the
Authority is now subject to a mandate by the Federal and State govern-
ments that will require the Authority to significantly increase capital
expenditures and its issuance of bonds to finance such expenditures.

The Authority currently has an outstanding bond indebtedness of approxi-
mately $46,800,000. In 2014, the Authority received approval of its
Combined Sewer Overflow ("CSO") Long Term Control Plan from the United
States Environmental Protection Agency ("EPA") and the New York State
Department of Environmental Conservation ("DEC"), and is subject to an
EPA Administrative Order to implement the CSO Long Term Control Plan
over approximately twenty years. This CSO Long Term Control Plan is
system wide, and assesses and prioritizes capital improvement projects
necessary to comply with the Administrative Order and the Clean Water
Act. The total cost of implementing the CSO Long Term Control Plan is
estimated in 2012 dollars at $380 Million Dollars, and compliance with
the EPA Administrative Order will require the Authority to finance the
CSO Long Term Control Plan capital projects with its own resources,
including bonds, notes, loans and sewer rents and other charges
collected from its system users. The Authority estimates that it will
need to issue bonds in an aggregate amount of approximately $220 Million
Dollars over the next twenty years, significantly in excess of its
current bonding authority. Currently, the Authority continues to plan
and complete projects as identified in the CSO Long Term Control Plan,
as well as in its five year capital budget. The capital plan expendi-
tures for 2018-2019 total approximately $38,955,000. Of this amount,
$16,830,000 is for the Authority's treatment facility rehabilitation and
improvement projects, and $22,125,000 is estimated for installation of
green infrastructure and collection system optimization. This increase
to the Authority's debt limit will help the Authority to avoid a series
of projected double-digit rate increases expected to begin in fiscal
year 2019.  The Authority continues to maintain sufficient operating
funds for debt service coverage. As the median household income in the
City of Buffalo is $33,119, with more than 30% of the residents living
in poverty, planned double-digit rate increases will present an undue
burden for the customer base.

 
PRIOR LEGISLATIVE HISTORY:

New bill.

 
FISCAL IMPLICATIONS:

The total amount of the Authority's bonds issued and outstanding is in
the aggregate amount of approximately $46,800,000. In addition, absent
any refunding, the Authority projects an estimated aggregate debt
service for its current capital improvement plan of approximately
$38,955,000, and a total debt service of approximately $85,755,000. As
noted, to fully implement the CSO Long Term Control Plan, the Authori-
ty's total debt service will need to increase significantly over the
next twenty years, and into the foreseeable future.

 
EFFECTIVE DATE:
This act shall take effect immediately.