Authorizes the city of Newburgh to issue deficit bonds and notes until December 31, 2012 pursuant to the city of Newburgh fiscal recovery act

BILL NUMBER:S4938A

Title of bill

An act to amend the city of Newburgh fiscal recovery act, in relation to extending the final authorized date of issuance of deficit bonds and notes by such city

Purpose

The purpose of this bill is to provide that the City of Newburgh (the "City") may provide interim financing to liquidate its projected deficits over a one year period by issuing bond anticipation notes until such liquidation is permanently financed by the issuance of bonds on or before December 31, 2012.

Summary of provisions

This bill, which would be effective immediately upon enactment, would amend Section 5 of Chapter 223 of the Laws of 2010 in order to provide that the City is authorized to issue bonds on or before December 31, 2012, rather than December 31, 2011, for the purpose of liquidating certain deficits. This change in date would permit the City to finance such deficits on an interim basis through the issuance of bond anticipation notes maturing no later than December 31, 2012, in accordance with applicable provisions of the Local Finance Law.

Existing law

Chapter 223 of the Laws of 2010 authorized the City to issue bonds on or before December 32, 2011, in an aggregate principal amount not to exceed fifteen million dollars ($15,000,000) (exclusive of the costs and expenses incidental to the issuance of the bonds authorized to be issued by such chapter) for the specific object or purpose of liquidating actual deficits in the City's general fund, special revenue fund, and capital projects fund existing at the close of the City's 2010 fiscal year. In anticipation of the issuance of such bonds, bond anticipation notes are authorized to be issued, however such notes have to mature no later than December 31, 2011.

Justification

The City's financial advisor has advised that the cost of financing liquidation of such deficits can be minimized if the City can issue bond anticipation notes during the first five year period starting with the initial borrowing on August 30, 2010, since interest rates on such notes are significantly less than bonds. The total savings to the City if bond anticipation notes can be issued in 2012, rather than bonds, is currently estimated to be approximately $200,000 for the 2012 fiscal year.

The City issued $12,000,000 bond anticipation notes on August 30, 2010 to provide interim financing pursuant to Chapter 223 of the Laws of 2010. Once the City's audited financial statements for the 2010 fiscal year are complete, the City will submit its required report on the deficits together with such financial statements to the State Comptroller so he can verify the amount of such deficits. It may be necessary to borrow up to $3,000,000 in addition to the previous $12,000,000 to finance the entire authorized amount, therefore any

achievable savings on interim financing will help the City finance such deficits in the most cost-effective manner.

Legislative history

New Bill.

Fiscal implications

None.

Effective date

This act shall take effect immediately.