Extends effectiveness of provisions relating to the special powers of the New York state environmental facilities corporation

BILL NUMBER:S3918

Title of bill

An act to amend chapter 307 of the laws of 2005, amending the public authorities law relating to the special powers of the New York state environmental facilities corporation, in relation to extending the effectiveness thereof

Purpose of bill

This bill would extend for three years, to September 30, 2014, certain provisions of sections 1285-j and 1285-m of the Public Authorities Law ("PAL") relating to the special powers of the Environmental Facilities Corporation ("EFC").

Summary of provisions

Section 1 of the bill would extend the "sunset" provision of Chapter 307 of the Laws of 2005 through September 30, 2014, thereby continuing the existing authority of EFC to directly invest Clean Water State Revolving Fund ("CWSRF") monies and Drinking Water State Revolving Fund ("DWSRF") monies in any security obligation available to municipalities under the General Municipal Law ("GML").

Section 2 of the bill would provide an immediate effective date.

Existing law

Currently under PAL §§ 1285-j(6)(b) and 1285-m(6)(b), certain monies held in the CWSRF and DWSRF may be invested in obligations permitted under section 10 of the GML. However, these provisions will be deemed repealed as of September 30, 2011.

Prior legislative history

Chapter 307 of the Laws of 2005, which would have expired on September 30, 2008, was extended through September 30, 2011 by Chapter 214 of the Laws of 2008.

Statement in support

Over the past decade, the Legislature has assisted EFC in expanding its investment authorization, in particular with regard to the collateral eligible to secure public deposits. (See Chapter 413 of the Laws of 1996, Chapter 327 of the Laws of 1998, and Chapter 121 of the Laws of 2000, all of which expanded the scope of eligible investment providers). Chapter 155 of the Laws of 2003 and Chapter 307 of the Laws of 2005 permitted EFC to expand the security available for certain investments made on behalf of municipalities to include

any security obligation available to municipalities under the GML. Each of these statutory amendments reduced the risk to participating municipalities that interest subsidies would fail short of targets by expanding the universe of eligible providers and eligible collateral. By continuing Chapter 307, the bill would continue to reduce this risk and, in addition, would directly boost the prospect for increased annualized program earnings. Program earnings are immediately available to support additional projects. Because federal appropriations for these programs may decline in the future, the bill is necessary to boost program earnings in order to continue supporting the future project needs of New York's municipalities.

This bill would allow EFC to continue to invest SRF funds directly in security obligations under GML § 10. Previously, EFC only had the authority to invest directly in obligations the interest on which is excludable from gross income under the Internal Revenue Code. The bill would allow EFC to continue to enhance its investment options by taking advantage of the growing market for municipal taxable securities. By allowing CWSRF and DWSRF assets to be invested in taxable municipal obligations as well as tax-exempt municipal obligations, these programs, including the participating municipalities will benefit from higher investment returns without diminishing investment credit quality. Continued authorization to invest CWSRF and DWSRF assets in taxable investments will also broaden the demand for taxable municipal bonds, including taxable bonds issued by New York State municipalities.

Budget implications

The bill would have no impact on the State budget.

Effective date

The bill would take effect immediately.