Authorizes the issuance of federal tax credit sinking fund bonds for school purposes of the city of New York

BILL NUMBER:S8220

Title of bill

An act to authorize the issuance of federal tax credit sinking fund bonds for school purposes of the city of New York providing for substantially level or declining debt service

Summary of provisions

Section one of this bill would ensure that the City possesses authority to issue federal tax credit sinking fund bonds for school purposes that provide for substantially level or declining debt service.

Section two would make this bill take effect immediately.

Reasons for support

The enactment of the federal American Recovery and Reinvestment Act (the "Stimulus Law") permits tax-exempt issuers to issue taxable bonds with a federal subsidy of the interest costs that is paid directly to the issuer. This bill would ensure that the City has the authority to issue Qualified School Construction Bonds ("QSCBs") and Qualified Zone Academy Bonds ("QZABs") as sinking fund bonds, providing for substantially level or declining debt service, to take advantage of the substantial federal subsidy provided under the Stimulus Law. In general, properly managed sinking fund investments may allow the City to achieve lower actual interest rate costs than the costs that would result from a similar issue consisting of serial bonds. Indeed, the City could save as much as $78.5 million each year in debt service costs by issuing sinking fund bonds, rather than serial or term bonds, for the QSCBs and QZABs.

Accordingly, the Mayor urges the earliest possible favorable consideration of this proposal by the Legislature.

Effective date

Immediately.