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History
- Committed to rules
- Advanced to third reading
- 2nd report cal.
- 1st report cal.445
- Print number 6579a
- Amend and recommit to local government
- Referred to local government
Companion bill
The same bill in the other chamber. A bill becomes law when one version passes both houses and the governor signs it, so either number can carry it.
Establishes the electronic open auction public bond sale pilot program for counties, cities, towns, villages and school districts
In Assembly Committee · Local Governments · Sponsor Amy Paulin
Full text
The text isn't available here yet. Check nysenate.gov.
Sponsor's memo
BILL NUMBER:S6579A
Title of bill
An act to amend the local finance law, in relation to the establishment of an electronic open auction public bond sale pilot program for municipalities; and providing for the repeal of such provisions upon expiration thereof
Purpose or general idea of bill
The purpose of this bill is to establish a pilot program for all municipalities to sell municipal bonds via an open auction format instead of by a closed bid format. Such open auction would be conducted via an electronic means instead of being done in person. This three year pilot program would be used to assess the financial and administrative advantages of selling bonds via an open auction format by a nationally recognized electronic securities bidding platform.
Read the full memo (1,108 words)
Summary of specific provisions
Section 1: Adds a new Local Finance Law section, 58.20 to establish a statewide electronic open auction public bond sale pilot program for those municipalities that wish to participate. This bill is very similar to Chapter 304 of the Laws of 2009, (which established the Westchester County open and closed auction pilot program) except that it repositions the terms defined within this section of law to a new definitions section. This has been done for clarity within the statute. However, the remainder of the bill's provisions are essentially the same as Chapter 304. Chapter 304 was extended in 2012 by Chapter 143 of the Laws of 2012. This bill amendment to an "A" print makes a few technical changes to the definition of "closed auction" and "open auction".
The bill enacts a new Local Finance Law section 58.20 to establish a statewide pilot program for open auctions. The provisions of this bill are similar to Local Finance Law section 58.10 which currently applies only for Westchester County. Its provisions are as follows:
-Paragraph (a) adds a definitions section.
-Paragraph (b) establishes the open auction electronic public bond sale pilot program for municipalities, in addition to already existing statutory authority for the county of Westchester to conduct such sales.
-Paragraph (c) provides that open auction electronic bidding will be conducted through certain nationally recognized electronic securities bidding services.
-Paragraph (d) states that, with certain exceptions, where the notice of sale has specified that bids will only be accepted electronically, the municipality shall not be obligated to receive paper bids.
-Paragraph (e) and (f) provides that the program shall be administered by the municipality's chief fiscal officer.
- Paragraph (g) provides that the municipality's chief fiscal officer shall continue to review the program to ensure its functionality and profitability, and provides certain procedures and requirements for the program's evaluation.
Section 2: This provision sunsets this pilot program three years after it has been enacted.
Justification
Under current law, Westchester County is authorized to operate a pilot program to sell municipal bonds via electronic means (as opposed to paper bid submissions). Such electronic bond sales, under the pilot program, could be conducted by either an open or closed auction format. Before the enactment of Chapter 304 of the Laws of 2009, Westchester County (as all other municipalities in New York) had to conduct the sale of public bonds via paper bids (only a closed bid format could be used). Since then, Chapter 494 of the Laws of 2013 has been enacted so that now all municipalities in New York State can conduct their sales of bonds with only electronic submissions (and not paper bids).
Under the currently enacted pilot program, Westchester County can conduct an open auction to sell such municipal bonds via an electronic securities bidding service. Westchester County has realized both financial cost savings and a reduction in paperwork requirements to conduct such bond bids due to the enactment of Chapter 304 of the Laws of 2009.
This bill expands this program that was used by Westchester County for open auctions electronic bidding processes. This is because it has been recognized to increase the speed and efficiency of bidding for municipal bonds as well as reduce the administrative burden and costs of conducting a the paper bond bidding process. Further, it has enhanced this process for the County by allowing them to take advantage of the latest advances in internet bidding platforms operated by nationally recognized electronic securities bidding firms. This act was extended by Chapter 143 of the Laws of 2012.
According to Westchester County, not only has this new electronic bond bidding pilot program reduced the overhead costs for sponsoring a municipal bond offering, it has increased participation rates among those interested in purchasing such bonds. This increased participation rate among bidders helps to drive down the interest rate charged for such bonds, which provides for further municipal cost savings.
Currently, ten states, including New Jersey, Ohio and Texas, have enacted legislation that allow municipalities to conduct public bond sales through these nationally recognized bidding firms (many of them by the electronic bidding open auction format).
To further the concept of allowing municipalities to conduct their bond auctions via a means of: a) doing so by electronic bids instead of paper bids, and b) by closed auctions via electronic means and c) open auctions at all, Chapter 304 of the Laws of 2009 and Chapter 143
of the Laws of 2012 were enacted to authorize Westchester County to do so via the pilot project.
To further this progression in municipal finance to help lower municipal bond costs, Chapter 494 of the Laws of 2013 was enacted to ensure that all municipalities can have the option to exclusively accept bids electronically if they wish to do so. Hence under current law, since all bond auctions are done in a closed manner (each bidder submits one bid and the lowest bidder gets the contract to purchase those bonds) but can be done electronically, the final step in this process is to allow municipalities to accept electronic bids in a manner that allows for an open auction.
This is a non-controversial bill that merely extends this very successful program that is being operated by Westchester. County to every municipality in the State. This bill sunsets in 3 years so that the State Comptroller and Legislature can evaluate the operation of this program.
Legislative history
Similar to the demonstration program established by Chapter 304 of the Laws of 2009, extended by Chapter 143 of the Laws of 2012. A portion of this pilot project that allows for the electronic transmission of bids was extended to all municipalities by Chapter 494 of the Laws of 2013.
Fiscal implications
None to the State, but a demonstrated positive fiscal impact to Westchester County.
Effective date
Immediate, and shall sunset three years after it goes into effect.
Summaries, headlines and scores are AI-generated from the official bill text. How we score bills. Source: NYS Open Legislation.