NY State Senate Bill 2019-S7577

Senate Bill S7577

2019-2020 Legislative Session

Establishes the electronic open auction public bond sale pilot program for counties, cities, towns, villages and school districts

download bill text pdf

Archive: Last Bill Status - In Senate Committee Local Government Committee

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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	Assembly Actions - Lowercase Senate Actions - UPPERCASE
Jan 28, 2020	referred to local government

2019-S7577 (ACTIVE) - Details

See Assembly Version of this Bill:: A6756
Current Committee:: Senate Local Government
Law Section:: Local Finance Law
Laws Affected:: Add §58.20, Loc Fin L
Versions Introduced in Other Legislative Sessions:: 2013-2014: S6579, A9270
2015-2016: S4142, A1625
2017-2018: S3849, A2536
2021-2022: S2295, A4416
2023-2024: S4284, A5137
2025-2026: S47

2019-S7577 (ACTIVE) - Summary

Establishes the electronic open auction public bond sale pilot program for counties, cities, towns, villages and school districts; such provisions shall remain in effect for 3 years.

2019-S7577 (ACTIVE) - Sponsor Memo

                                
 
BILL NUMBER: S7577

SPONSOR: JORDAN
 
TITLE OF BILL:

An act to amend the local finance law, in relation to the establishment
of an electronic open auction public bond sale pilot program for munici-
palities; and providing for the repeal of such provisions upon expira-
tion thereof

 
PURPOSE OR GENERAL IDEA OF BILL:

The purpose of this bill is to establish a three year pilot program for
all municipalities to sell municipal bonds via an open auction format
instead of by a closed bid format. Such open auction would be conducted
via an electronic means instead of being done in person.  This pilot
program would be used to assess the financial and administrative advan-
tages of selling bonds via an open auction form at by a nationally
recognized electronic securities bidding platform.

 
SUMMARY OF PROVISIONS:

Section 1: Adds a new Local Finance Law section, 58.20 to establish a
statewide electronic open auction public bond sale pilot program for
those municipalities that wish to participate. This bill is very similar
to Chapter 304 of the Laws of 2009, (Which established the Westchester
County open and closed auction pilot program) except that it repositions
the terms defined within this section of law to a new definitions
section. This has been done for clarity within the statute. However, the
remainder of the bill's provisions are essentially the same as Chapter
304. Chapter 304 was extended in 2012 by Chapter 143 of the Laws of
2012.

The bill enacts a new Local Finance Law section 58.20 to establish a
statewide pilot program for open auctions. The provisions of this bill
are similar to Local Finance Law section 58.10 which currently applies
only for Westchester County. Its provisions are as follows:

- Paragraph (a) adds a definitions section.

- Paragraph (b) establishes the open auction electronic public bond sale
pilot program for municipalities, in addition to already existing statu-
tory authority for the county of Westchester to conduct such sales.

- Paragraph (c) provides that open auction electronic bidding will be
conducted through certain nationally recognized electronic securities
bidding services.

- Paragraph (d) states that, with certain exceptions, where the notice
of sale has specified that bids will only be accepted electronically,
the municipality shall not be obligated to receive paper bids.

- Paragraph (e) and (f) provides that the program shall be administered
by the municipality's chief fiscal officer.

- Paragraph (g) provides that the municipality's chief fiscal officer
shall continue to review the program to ensure its functionality and
profitability, and provides certain procedures and requirements for the
program's evaluation.
Section 2: This provision sunsets this pilot program three years after
it has been enacted.

 
JUSTIFICATION:

Currently, ten states, including California, New Jersey, Ohio and Texas,
have enacted legislation that allow municipalities to conduct public
bond sales through nationally recognized bidding firms (many of them by
the electronic bidding open auction format).

Open auctions are a cost saving tool that has allowed municipalities to
find lower interest rates and save money. With an average savings of 9
basis points per transaction, state such as California and

Pennsylvania that have the most experience with open auctions see
savings as large as 21 basis points. When used with large bond offerings
in other states, open auctions have translated into millions of dollars
in savings for municipalities in other states that use open auctions.
For example, the Hanover Park Regional High School District in New
Jersey saved approximately $63,000 on a $9.75 million bond.

With the important focus throughout the state on insuring financial
efficiencies, municipalities must be given every possible tool to save
money. This program has no financial impact on the state and requires
nothing of the a municipality, it simply grants the use of another tool
that has been developed as technology evolves.

 
PRIOR LEGISLATIVE HISTORY:

S6579 of 2013-14 committed to Rules.

S4142 of 2015-16 passed Senate.

S3849 of 2017-18 passed Senate.

 
FISCAL IMPLICATIONS FOR STATE AND LOCAL GOVERNMENTS:

None to the State.

 
EFFECTIVE DATE:
Immediately and shall sunset three years after it goes into effect.

2019-S7577 (ACTIVE) - Bill Text download pdf

                            
 
                     S T A T E   O F   N E W   Y O R K
 ________________________________________________________________________
 
                                   7577
 
                             I N  S E N A T E
 
                             January 28, 2020
                                ___________
 
 Introduced  by  Sen.  JORDAN -- read twice and ordered printed, and when
   printed to be committed to the Committee on Local Government
 
 AN ACT to amend the local finance law, in relation to the  establishment
   of an electronic open auction public bond sale pilot program for muni-
   cipalities; and providing for the repeal of such provisions upon expi-
   ration thereof

   THE  PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM-
 BLY, DO ENACT AS FOLLOWS:
 
   Section 1. The local finance law is amended by adding  a  new  section
 58.20 to read as follows:
   §  58.20 ELECTRONIC OPEN AUCTION PUBLIC BOND SALE PILOT PROGRAM; MUNI-
 CIPALITIES. A.  AS USED IN THIS SECTION:
   1. "CLOSED AUCTION" MEANS A BOND SALE PROCEDURE THAT DOES NOT ALLOW  A
 BIDDER  TO RECEIVE INFORMATION WITH RESPECT TO THE STATUS OR RANK OF ITS
 BIDS PRIOR TO THE CONCLUSION OF THE BID SUBMISSION PERIOD.
   2. "MUNICIPALITY" MEANS  A  COUNTY,  CITY,  TOWN,  VILLAGE  OR  SCHOOL
 DISTRICT.
   3. "NATIONALLY RECOGNIZED ELECTRONIC SECURITIES BIDDING SERVICE" MEANS
 A BIDDING SERVICE THAT IS RECOGNIZED NATIONALLY BY THE PREDOMINANT USERS
 OF  ELECTRONIC  SECURITIES  BIDDING  SERVICES  AS PROVIDING AN ACCURATE,
 SECURE AND RELIABLE ON-LINE BIDDING SYSTEM.
   4. "OPEN AUCTION" MEANS A BOND SALE PROCEDURE THAT ALLOWS A BIDDER  TO
 RECEIVE INFORMATION WITH RESPECT TO THE STATUS OR RANK OF ITS BIDS PRIOR
 TO  THE CONCLUSION OF THE BID SUBMISSION PERIOD AND IMPROVE ITS BID AS A
 RESULT OF THE RECEIVED INFORMATION IN ACCORDANCE WITH THE MUNICIPALITY'S
 NOTICE OF SUCH  BOND  SALE  CIRCULATED  IN  ACCORDANCE  WITH  APPLICABLE
 REQUIREMENTS OF THIS CHAPTER.
   5.  "PROGRAM" MEANS THE ELECTRONIC OPEN AUCTION PUBLIC BOND SALE PILOT
 PROGRAM ESTABLISHED PURSUANT TO THIS SECTION.
   B. THERE IS HEREBY ESTABLISHED AN ELECTRONIC OPEN AUCTION PUBLIC  BOND
 SALE  PILOT  PROGRAM  AUTHORIZING MUNICIPALITIES TO CONDUCT OPEN AUCTION
 PUBLIC BOND SALES THROUGH ANY NATIONALLY RECOGNIZED  ELECTRONIC  SECURI-
 TIES BIDDING SERVICE.
 
  EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                       [ ] is old law to be omitted.

                                                            LBD10752-01-9

 S. 7577                             2
 
   C.  THE  FINANCE  COMMISSIONER OF A MUNICIPALITY MAY ACCEPT ELECTRONIC
 BIDS SUBMITTED  IN  THE  FORM  OF  OPEN  AUCTIONS  CONDUCTED  THROUGH  A
 NATIONALLY  RECOGNIZED ELECTRONIC SECURITIES BIDDING SERVICE WHICH SHALL
 BE DEEMED TO BE THE DESIGNATED RECEIVING DEVICE.   NOTICE  OF  ANY  BOND
 SALE SHALL PROVIDE FOR THE MANNER IN WHICH THE BID SUBMISSION PERIOD MAY
 BE EXTENDED AND THE BASIS FOR DETERMINATION OF THE WINNING BIDDER.
   D. NOTWITHSTANDING THE PROVISIONS OF SECTION THREE HUNDRED FIVE OF THE
 STATE  TECHNOLOGY LAW OR ANY OTHER LAW, THE NOTICE OF SALE MAY CONTAIN A
 PROVISION THAT BIDS WILL ONLY BE ACCEPTED ELECTRONICALLY IN  THE  MANNER
 PROVIDED IN SUCH NOTICE OF SALE.
   E.  THE  MUNICIPALITY'S  CHIEF  FISCAL  OFFICER  SHALL  ADMINISTER THE
 PROGRAM AND SHALL PUBLISH ITS POLICIES AND PROCEDURES FOR  THE  PROCURE-
 MENT  OF  ELECTRONIC  SECURITIES  BIDDING SERVICES ON THE MUNICIPALITY'S
 INTERNET WEBSITE AND IN A  NATIONALLY  RECOGNIZED  PUBLICATION  USED  BY
 PROFESSIONALS  IN  THE  BOND MARKET. EXCEPT AS MODIFIED BY THIS SECTION,
 EACH MUNICIPAL PROGRAM SHALL COMPLY WITH  THIS  CHAPTER  AND  ALL  OTHER
 APPLICABLE LAWS RELATED TO THE SALE OF BONDS.
   F. THE MUNICIPALITY'S CHIEF FISCAL OFFICER SHALL REVIEW THE ELECTRONIC
 OPEN  AUCTION BIDDING PROCESS TO ENSURE THAT THE BOND SALE WAS COMPLETED
 IN A TIMELY FASHION AND THE SALE WAS COMPLETED WITHOUT ERRORS.
   G. EACH MUNICIPALITY, OR TWO OR MORE MUNICIPALITIES ACTING JOINTLY  OR
 IN COOPERATION WITH ANY ENTITY REPRESENTING MUNICIPALITIES, SHALL, ON OR
 BEFORE FEBRUARY FIRST, CONDUCT ANNUAL EVALUATIONS OF THEIR PILOT PROGRAM
 OR  PROGRAMS WITH A SUMMARY EVALUATION AT THE END OF THE THREE YEAR OPEN
 AUCTION PILOT PROGRAM.  THE MUNICIPALITY OR MUNICIPALITIES  WILL  SUBMIT
 THE  EVALUATIONS  TO  THE STATE COMPTROLLER.  SUCH REPORT SHALL INCLUDE,
 BUT NOT BE LIMITED TO, ANY DEMONSTRATED EVIDENCE  THAT  SALE  OF  PUBLIC
 BONDS  USING ELECTRONIC OPEN AUCTIONS IS COMPARABLE TO THE COST OF ISSU-
 ING PUBLIC BONDS THROUGH THE CURRENT CLOSED AUCTION  PROCESS,  THAT  THE
 USE  OF ELECTRONIC OPEN AUCTIONS RESULTED IN AN INCREASED NUMBER OF BIDS
 AND WHETHER THE RESULTS ACHIEVED FOR PUBLIC BOND SALES CONDUCTED THROUGH
 ELECTRONIC OPEN AUCTIONS ACHIEVED SAVINGS COMPARED TO THE  PREVIOUS  BID
 PROCESS USED BY THE MUNICIPALITY.  ANNUALLY, THE STATE COMPTROLLER SHALL
 COMPILE  ALL  THE  INFORMATION  RECEIVED FROM MUNICIPALITIES PURSUANT TO
 THIS PARAGRAPH, AND, ON OR BEFORE  APRIL  FIRST,  SUBMIT  SUCH  COMPILED
 INFORMATION  TO  THE LEGISLATURE, THE TEMPORARY PRESIDENT OF THE SENATE,
 THE SPEAKER OF THE ASSEMBLY, THE MINORITY LEADER OF THE SENATE  AND  THE
 MINORITY LEADER OF THE ASSEMBLY.
   §  2.  This act shall take effect immediately, and shall expire and be
 deemed repealed 3 years after such effective date.

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