Extends the special powers of the environmental facilities corporation

BILL NUMBER:S6978

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 the Bill:

This bill would extend for three years, to September 30, 2017, certain provisions of Sections 1285-j and 1285-m of the Public Authorities Law ("PAL") in relation to the special powers of the Environmental Facilities Corporation ("EFC").

Summary of Provisions:

Section 1 of this bill would extend the "sunset" provision of Section 3 of Chapter 307 of the Laws of 2005, thereby extending until September 30, 2017 the 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 provides for an immediate effective date.

Existing Law:

Currently, under PAL Sections 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. These provisions, however, will be deemed repealed as of September 30, 2014.

Prior Legislative History:

These provisions were extended until September 30, 2011 by Chapter 214 of the Laws of 2008, and until September 30, 2014 by Chapter 70 of the Laws of 2011.

Statement in Support:

The Legislature has in the past 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). More recently, 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 fall short of targets by expanding the universe of eligible providers and eligible collateral.

This bill would allow EFC to continue to invest CWSRF and DWSRF funds directly in security obligations under Section 10 of the GML. 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. This legislation 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 continue 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:

None.

Local Impact:

None.

Effective date:

The bill would take effect immediately.