Relates to establishing the empire state public bank

Section 1. The state finance law is amended by adding a new article 17 to read as follows:

ARTICLE 17

EMPIRE STATE PUBLIC BANK Section 254. Legislative intent.

255. Definitions.

256. Creation.

257. Commission.

258. Transition board.

259. Deposit of public funds.

260. Investment of state moneys.

261. Infrastructure loans.

262. Student loans.

263. Business, non-profit and individual loans.

264. Treasury and banking services.

265. Management.

266. Advisory board.

267. Financial regulation.

268. Reporting requirements.

269. Ethical requirements.

270. Fees and taxes.

271. Bank records.

272. Capitalization.

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

[ ] is old law to be omitted.

LBD03596-01-9

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273. Public depositary.

274. Application of this chapter to the president.

275. Cash and demand deposits available.

276. Permitted investments.

277. Severability.

§ 254. Legislative intent. 1. The legislature finds that there are significant public infrastructure, higher education and business development needs of the state that are unmet. The legislature further finds that there are opportunities to use the state's depository assets to generate additional benefit for the people and the economy of the state. Therefore, the legislature intends to create the empire state public bank as a legacy institution that amasses sufficient capital reserves to address opportunities now and in the future.

2. The legislature intends that the public bank may:

(a) Facilitate investment in, and financing of, public infrastructure systems that will increase public health, safety, and quality of life, improve environmental conditions, and promote community vitality and economic growth;

(b) Assist students who are in need of additional low-cost student loans in order to finance the cost of higher education;

(c) Provide businesses, communities and low income areas of our state access to low-interest capital; and

(d) Leverage New York's financial capital and resources, and work in partnership with financial institutions, community-based organizations, economic development organizations, guaranty agencies, and other similar organizations.

3. The mission of the bank is to use New York's depository assets in ways that afford most efficient use of taxpayer revenues and public resources for the benefit of the people and economy of the state. The legislature intends for the bank to apply business strategies to manage taxpayer revenues while concurrently meeting identified needs and strategic opportunities across the state. In achieving its purpose of improving public infrastructure and increasing access to higher education, the legislature intends for the bank to adhere to the following priorities:

(a) Institutional safety and soundness;

(b) Long-term viability;

(c) Social return and monetary return on investments;

(d) Prudent and best banking and business practices;

(e) Highest ethical, accountability, and transparency standards; and

(f) Insulation from political influence.

§ 255. Definitions. The definitions in this section apply throughout this article unless the context clearly requires otherwise.

1. "Board" means the advisory board of the empire state public bank.

2. "Commission" means the empire state public bank commission.

3. "Department" means the department of financial services.

4. "Director" means the director of the department of financial services.

5."Superintendent" means the superintendent of the department of financial services.

6. "Public infrastructure system" means a system of a local government or political subdivision, a special purpose district, a public school district, an institution of higher education, a federally recognized Indian tribe, or the state, including but not limited to a system involving: Wastewater treatment; storm water management; solid waste disposal; drinking water treatment; flood control levees; energy effi-

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ciency enhancements; roads, streets, and bridges; transportation infrastructure, including freight and passenger rail and public transit; broadband and telecommunications infrastructure; outdoor recreation and habitat protection facilities; community, social service, or public safety facilities; schools and educational facilities; and affordable housing.

7. "State-chartered bank" means any corporation organized under the laws of this state that is engaged in banking, other than a trust company, savings association, or a mutual savings bank. It does not include the empire state public bank.

8. "State moneys" means all moneys or funds belonging to or in the custody of the state under the control of the state comptroller shall be considered as state moneys or funds.

9. "Comptroller" means the comptroller of the state of New York.

10. "Bank" means the empire state public bank.

§ 256. Creation. The empire state public bank is created.

§ 257. Commission. 1. The empire state public bank commission is created as the primary governing authority of the bank. The commission shall consist of the governor, the lieutenant governor, the chair of the assembly banking committee, the chair of senate banking committee, and the state comptroller.

2. The commission shall adopt rules regarding the:

(a) Safety and soundness standards of the bank;

(b) Criteria for evaluating, approving, and monitoring loans;

(c) Eligibility requirements and limits for borrowing;

(d) Transparency requirements for bank operations;

(e) Ethics and conflict of interest requirements for the commission, the board, and officers and employees of the bank, including rules to ensure that they perform their functions in compliance with the public officers law; and

(f) Other topics as needed for efficient administration of the bank.

3. The commission shall commence bank operations by April first, two thousand twenty.

4. The commission may delegate to the bank president such duties and powers as deemed necessary to carry on the business of the bank and enforce this article efficiently and effectively. The commission may not delegate its rule-making or policy-making authority.

5. The commission shall adopt policies and procedures for its own governance.

6. The commission may establish technical advisory committees or consult with public and private sector experts in substantive areas related to the bank's mission, objectives, and duties.

§ 258. Transition board. 1. (a) The bank transition board is established, with members as provided in this section.

(i) The temporary president of the senate shall appoint one member from each of the two largest caucuses of the senate.

(ii) The speaker of the assembly shall appoint one member from each of the two largest caucuses of the assembly.

(iii) The temporary president of the senate and the speaker of the assembly jointly shall appoint seven citizen members with a substantial background in banking or financial issues.

(b) The temporary president of the senate and the speaker of the assembly jointly shall select the chair from among the citizen membership. The chair shall convene the initial meeting of the bank transition board within forty-five days after the effective date of this section.

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2. The bank transition board shall develop and recommend the following to the commission within the timeline established by the commission:

(a) A start-up business plan for the bank that includes plans and timelines for functions that are new and functions transitioning to the bank that were previously performed by another entity;

(b) Initial capital requirements of the bank;

(c) Options for capitalizing the bank; and

(d) Other items requested by the commission in order to commence bank operations by April first, two thousand twenty.

3. Legislative members of the bank transition board must be reimbursed for travel expenses in accordance with the rules of their respective houses. Non-legislative members are entitled to be reimbursed for expenses incurred in the discharge of their duties under this article.

4. The bank transition board may appoint an interim president and other necessary staff who are exempt from the provisions of this chapter, and who serve at the board's pleasure on such terms and conditions as the board determines. The department must provide technical assistance to the bank transition board. The board may also contract with additional persons who have specific technical expertise if the expertise is necessary to carry out the requirements of this section.

§ 259. Deposit of public funds. 1. (a) The bank shall serve as the depository for state moneys once the bank has built sufficient capacity to accept and manage state moneys, as determined by the commission. The commission shall establish a process and time frame for the deposit of state moneys into the bank.

(b) The comptroller shall deposit state moneys in the bank in accordance with the time frame and guidelines determined by the commission under this section.

2. All deposits in the bank are guaranteed by the state.

3. All income earned by the bank on state moneys that are deposited in or invested with the bank must be credited to and become a part of the revenues and income of the bank.

4. The bank may accept deposits of public funds, but is exempt from the requirements of section one hundred five of this chapter.

5. The bank may accept funds from any source, including federal funds or other public funds.

6. The commission shall review state accounts that contain public funds that are not state moneys, such as the state insurance fund, and make recommendations to the governor and the appropriate committees of the legislature as to which accounts should be deposited in the bank.

7. The bank shall make disbursements to the state funds as necessary for the function of state government.

§ 260. Investment of state moneys. The bank may invest state moneys deposited in the bank that are not reasonably expected to be necessary to meet the short or intermediate-term liquidity needs of the state. The state comptroller retains authority to manage and invest the amount of funds necessary to meet the operational needs of state government.

§ 261. Infrastructure loans. The bank is authorized to facilitate investment in, and financing of, construction, rehabilitation, replacement, and improvement of new and existing public infrastructure systems. Before initiating operations, the commission must present an implementation plan and any necessary legislation to the governor and appropriate legislative committees, that:

1. Identifies the public infrastructure systems that the bank plans to target initially;

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2. Identifies any existing state programs that the bank recommends be transferred under its umbrella, and the steps and timelines for the transitions;

3. Describes additional financing products and services the bank plans to offer, the target markets, anticipated rates, terms, and conditions;

4. Demonstrates how bank products and services will increase access to capital for public infrastructure systems and complement those of existing public and private sources; and

5. Demonstrates how the bank plans to maximize revenues and public benefit.

§ 262. Student loans. The bank is authorized to administer a state guarantee loan program to assist students in need of low-cost student loans and related loan benefits to address educational needs as necessary to support student success. The commission shall develop an implementation plan that:

1. Identifies the needs and benefits to selected students that the program will target initially;

2. Demonstrates how the bank plans to maximize revenues and public benefit while minimizing public risk;

3. Demonstrates how the bank will coordinate with the office of student financial assistance; and

4. Identifies the ways that the program will address the following issues related to loans:

(a) Qualification criteria for students;

(b) Obligations and options for loan repayment;

(c) Requirements for loan guarantees and reserves;

(d) Fee and interest rate structure;

(e) Maximum loan amounts; and

(f) Ensuring student awareness of grants, federal loans, and other financial aid programs.