Relates to the special powers of the New York state environmental facilities corporation; repealer

Section 2 of the bill would amend PAL § 1285-m(6) to permit EFC to invest Drinking Water State Revolving Fund ("DWSRF") moneys in obligations of governmental entities of another state that are backed by the full faith and credit of that state and rated in one of the two highest rating categories by at least one nationally recognized rating organization.

Section 3 of the bill would provide the effective date and expiration of the legislation.

Justification

The CWSRF and DWSRF provide financing to municipalities and other eligible entities in the State to construct clean water and drinking water infrastructure projects. With combined assets of more than $11.9 billion, the two funds are the largest state revolving funds in the country and play a crucial role in financing the State's water and wastewater infrastructure.

The PAL authorizes EFC to invest CWSRF and DWSRF moneys not required for immediate use or disbursement. EFC's investment portfolio exceeds $2.5 billion and income from EFC's investments contributes directly and significantly to the continued growth of the State's revolving funds, the security of EFC's bondholders, and EFC's strong AAA credit rating.

To advance these goals, EFC should have available to it the most productive investment opportunities. This bill would provide a sensible enhancement of EFC's investment authority to make prudent investments in the obligations of certain out-of-state entities that are currently out of reach.

EFC can at present invest in the obligations of out-of-state governmental entities only if the entities are taxing authorities. PAL §§ 1285j(6) and 1285-m(6) authorize EFC to invest in the obligations identified in GML § 10(1)(f)(vii): "obligations of counties, cities and other governmental entities of another state having the power to levy taxes that are backed by the full faith and credit of such governmental entity and rated in one of the three highest rating categories by at least one nationally recognized statistical rating organization. (emphasis added)

The bill would amend PAL §§ 1285-j(6) and 1285-m(6) to authorize EFC to invest in obligations of governmental entities of another state that are backed by the full faith and credit of that state, but which do not themselves have the power to levy taxes. The bill would permit EFC to invest in these obligations only if they are in one of the two highest rating categories by at least one nationally recognized statistical rating organization. If EFC is permitted to invest CWSRF and DWSRF assets in these obligations, the SRF programs (including the participating municipalities) could benefit from higher investment returns and greater investment portfolio diversification.

Moreover, several states have governmental entities that issue what are essentially General Obligation bonds on behalf of their states. These governmental entities, which do not levy taxes, nevertheless issue obligations that are backed by the full faith and credit of the state in which they are located. This bill would enable EFC to invest in the obligations of these entities, which, in terms of their credit risk, are the same as obligations issued by the states themselves, whose obligations EFC can already invest in.

Prior legislative history

This is a new bill.

Fiscal implications

None.

Effective date

The bill would take effect immediately.