S T A T E   O F   N E W   Y O R K
 ________________________________________________________________________
 
                                   5046
 
                        2021-2022 Regular Sessions
 
                             I N  S E N A T E
 
                             February 22, 2021
                                ___________
 
 Introduced  by  Sen.  PARKER -- read twice and ordered printed, and when
   printed to be committed to the Committee on Banks
 
 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.
              

                                                            LBD06102-01-1

 S. 5046                             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.
   §  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 financial services and the commissioner  of  taxa-
 tion  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  compliant  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.
   § 3. This act shall take effect immediately.