S T A T E O F N E W Y O R K
________________________________________________________________________
5055
2023-2024 Regular Sessions
I N S E N A T E
February 22, 2023
___________
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.
LBD06627-01-3
S. 5055 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.
