Set Rules for Bond Allocations

Section 1. Short title. This act shall be known and may be cited as the "private activity bond allocation act of 2018".

§ 2. Legislative findings and declaration. The legislature hereby finds and declares that the federal tax reform act of 1986 established a statewide bond volume ceiling on the issuance of certain tax exempt private activity bonds and notes and, under certain circumstances, governmental use bonds and notes issued by the state and its public authorities, local governments, agencies which issue on behalf of local governments, and certain other issuers. The federal tax reform act establishes a formula for the allocation of the bond volume ceiling which was subject to temporary modification by gubernatorial executive order until December 31, 1987. That act also permits state legislatures to establish, by statute, an alternative formula for allocating the volume ceiling. Bonds and notes subject to the volume ceiling require an allocation from the state's annual volume ceiling in order to qualify for federal tax exemption.

It is hereby declared to be the policy of the state to maximize the public benefit through the issuance of private activity bonds for the purposes of, among other things, allocating a fair share of the bond volume ceiling upon initial allocation and from a bond reserve to local agencies and for needs identified by local governments; providing housing and promoting economic development; job creation; an economical

EXPLANATION--Matter in italics (underscored) is new; matter in brackets

[ ] is old law to be omitted.

LBD16080-02-8

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energy supply; and resource recovery and to provide for an orderly and efficient volume ceiling allocation process for state and local agencies by establishing an alternative formula for making such allocations.

§ 3. Definitions. As used in this act, unless the context requires otherwise:

1. "Bonds" means bonds, notes or other obligations.

2. "Carryforward" means an amount of unused private activity bond ceiling available to an issuer pursuant to an election filed with the internal revenue service pursuant to section 146(f) of the code.

3. "Code" means the internal revenue code of 1986, as amended.

4. "Commissioner" means the commissioner of the New York state department of economic development.

5. "Covered bonds" means those tax exempt private activity bonds and that portion of the non-qualified amount of an issue of governmental use bonds for which an allocation of the statewide ceiling is required for the interest earned by holders of such bonds to be excluded from the gross income of such holders for federal income tax purposes under the code.

6. "Director" means the director of the New York state division of the budget.

7. "Issuer" means a local agency, state agency or other issuer.

8. "Local agency" means an industrial development agency established or operating pursuant to article 18-A of the general municipal law, the Troy industrial development authority and the Auburn industrial development authority.

9. "Other issuer" means any agency, political subdivision or other entity, other than a local agency or state agency, that is authorized to issue covered bonds.

10. "Qualified small issue bonds" means qualified small issue bonds, as defined in section 144(a) of the code.

11. "State agency" means the state of New York, the New York state energy research and development authority, the New York job development authority, the New York state environmental facilities corporation, the New York state urban development corporation and its subsidiaries, the Battery Park city authority, the port authority of New York and New Jersey, the power authority of the state of New York, the dormitory authority of the state of New York, the New York state housing finance agency, the state of New York mortgage agency, and any other public benefit corporation or public authority designated by the governor for the purposes of this act.

12. "Statewide ceiling" means for any calendar year the highest state ceiling (as such term is used in section 146 of the code) applicable to New York state.

13. "Future allocations" means allocations of statewide ceiling for up to two future years.

14. "Multi-year housing development project" means a project (a) which qualifies for covered bonds; (b) which is to be constructed over two or more years and (c) in which at least twenty percent of the dwelling units will be occupied by persons and families of low income.

§ 4. Local agency set-aside. A set-aside of statewide ceiling for local agencies for any calendar year shall be an amount which bears the same ratio to one-third of the statewide ceiling as the population of the jurisdiction of such local agency bears to the population of the entire state. The commissioner shall administer allocations of such set-aside to local agencies.

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§ 5. State agency set-aside. A set-aside of statewide ceiling for all state agencies for any calendar year shall be one-third of the statewide ceiling. The director shall administer allocations of such set-aside to state agencies and may grant an allocation to any state agency upon receipt of an application in such form as the director shall require.

§ 6. Statewide bond reserve. One-third of the statewide ceiling is hereby set aside as a statewide bond reserve to be administered by the director.

1. Allocation of the statewide bond reserve among state agencies, local agencies and other issuers. The director shall transfer a portion of the statewide bond reserve to the commissioner for allocation to and use by local agencies and other issuers in accordance with the terms of this section. The remainder of the statewide bond reserve may be allocated by the director to state agencies in accordance with the terms of this section.

2. Allocation of statewide bond reserve to local agencies or other issuers.

(a) Local agencies or other issuers may at any time apply to the commissioner for an allocation from the statewide bond reserve. Such application shall demonstrate:

(i) that the requested allocation is required under the code for the interest earned on the bonds to be excluded from the gross income of bondholders for federal income tax purposes;

(ii) that the local agency's remaining unused allocation provided pursuant to section four of this act, and other issuer's remaining unused allocation, or any available carryforward will be insufficient for the specific project or projects for which the reserve allocation is requested; and

(iii) that, except for those allocations made pursuant to section thirteen of this act to enable carryforward elections, the requested allocation is reasonably expected to be used during the calendar year, and the requested future allocation is reasonably expected to be used in the calendar year to which the future allocation relates.

(b) In reviewing and approving or disapproving applications, the commissioner shall exercise discretion to ensure an equitable distribution of allocations from the statewide bond reserve to local agencies and other issuers. Prior to making a determination on such applications, the commissioner shall notify and seek the recommendation of the president and chief executive officer of the New York state housing finance agency in the case of an application related to the issuance of multifamily housing or mortgage revenue bonds, and in the case of other requests, such state officers, departments, divisions and agencies as the commissioner deems appropriate.

(c) Applications for allocations shall be made in such form and contain such information and reports as the commissioner shall require.

(d) On or before September fifteenth of each year, the commissioner shall publish the total amount of local agency set-aside that has been recaptured pursuant to section twelve of this act for that year on the department of economic development's website.

3. Allocation of statewide bond reserve to state agencies. The director may make an allocation from the statewide bond reserve to any state agency. Before making any allocation of statewide bond reserve to state agencies the director shall be satisfied:

(a) that the allocation is required under the code for the interest earned on the bonds to be excluded from the gross income of bondholders for federal income tax purposes;

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(b) that the state agency's remaining unused allocation provided pursuant to section five of this act or any available carryforward will be insufficient to accommodate the specific bond issue or issues for which the reserve allocation is requested; and

(c) that, except for those allocations made pursuant to section thirteen of this act to enable carryforward elections, the requested allocation is reasonably expected to be used during the calendar year, and the requested future allocation is reasonably expected to be used in the calendar year to which the future allocation relates.

§ 7. Access to employment opportunities. 1. All issuers shall require that any new employment opportunities created in connection with industrial or manufacturing projects financed through the issuance of qualified small issue bonds shall be listed with the New York state department of labor and with the one-stop career center established pursuant to the federal Workforce Innovation and Opportunity Act (Pub. L. No. 113-128) serving the locality in which the employment opportunities are being created. Such listing shall be in a manner and form prescribed by the commissioner. All issuers shall further require that for any new employment opportunities created in connection with an industrial or manufacturing project financed through the issuance of qualified small issue bonds by such issuer, industrial or manufacturing firms shall first consider persons eligible to participate in the Workforce Innovation and Opportunity Act (Pub. L. No. 113-128) programs who shall be referred to the industrial or manufacturing firm by one-stop centers in local workforce investment areas or by the department of labor. Issuers of qualified small issue bonds are required to monitor compliance with the provisions of this section as prescribed by the commissioner.

2. Nothing in this section shall be construed to require users of qualified small issue bonds to violate any existing collective bargaining agreement with respect to the hiring of new employees. Failure on the part of any user of qualified small issue bonds to comply with the requirements of this section shall not affect the allocation of bonding authority to the issuer of the bonds or the validity or tax exempt status of such bonds.

§ 8. Overlapping jurisdictions. In a geographic area represented by a county local agency and one or more sub-county local agencies, the allocation granted by section four of this act with respect to such area of overlapping jurisdiction shall be apportioned one-half to the county local agency and one-half to the sub-county local agency or agencies. Where there is a local agency for the benefit of a village within the geographic area of a town for the benefit of which there is a local agency, the allocation of the village local agency shall be based on the population of the geographic area of the village, and the allocation of the town local agency shall be based upon the population of the geographic area of the town outside of the village. Notwithstanding the foregoing, a local agency may surrender all or part of its allocation for such calendar year to another local agency with an overlapping jurisdiction. Such surrender shall be made at such time and in such manner as the commissioner shall prescribe.

§ 9. Ineligible local agencies. To the extent that any allocation of the local agency set-aside would be made by this act to a local agency which is ineligible to receive such allocation under the code or under regulations interpreting the state volume ceiling provisions of the code, such allocation shall instead be made to the political subdivision for whose benefit that local agency was created.

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§ 10. Municipal reallocation. The chief executive officer of any political subdivision or, if such political subdivision has no chief executive officer, the governing board of the political subdivision for the benefit of which a local agency has been established, may withdraw all or any portion of the allocation granted by section four of this act to such local agency. The political subdivision may then reallocate all or any portion of such allocation, as well as all or any portion of the allocation received pursuant to section nine of this act, to itself or any other issuer established for the benefit of that political subdivision or may assign all or any portion of the allocation received pursuant to section nine of this act to the local agency created for its benefit. The chief executive officer or governing board of the political subdivision, as the case may be, shall notify the commissioner of any such reallocation.