What's happening
This bill creates a two-year pilot program allowing large New York municipalities to sell bonds through electronic open auction platforms.
Why it matters
Increases transparency and competition. by requiring auctions to provide real-time ranking feedback to bidders, potentially attracting more participants and ensuring municipalities get the best possible deal.
Modernizes the bond sale process. for large municipalities, allowing them to use secure, state-approved electronic platforms instead of traditional, slower sealed-bid paper processes.
Mandates oversight and fraud prevention. , with the state comptroller approving platforms and municipal fiscal officers publishing policies and reviewing outcomes, aiming to reduce errors and abuse.
Requires annual evaluations and a final report. on whether electronic auctions are as cost-effective and favorable as traditional methods, which could inform permanent changes to municipal finance practices.
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Who cares
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Test Online Bond Auctions
Plain English, a few words. Used as the page title.
Sponsors
No co-sponsors yet.
History
- Signed chap.643
- Delivered to governor
- Returned to senate
- Passed assembly
- Ordered to third reading rules cal.568
- Substituted for A8336A
- Referred to ways and means
- Delivered to assembly
- Passed senateVote 62–0
- Ordered to third reading cal.1698
- Committee discharged and committed to rules
- Print number 5886a
Show 2 earlier actions
- Amend (t) 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.
Test Online Bond Auctions
Assembly Floor Calendar · Sponsor Fred Thiele
Full text
3 pagesUnderlined is new[Struck] is removedOfficial text on nysenate.gov ↗
STATE OF NEW YORK
5886--A
2019-2020 Regular Sessions
IN SENATE
May 16, 2019
Introduced by Sen. GAUGHRAN -- read twice and ordered printed, and when printed to be committed to the Committee on Local Government -committee discharged, bill amended, ordered reprinted as amended and recommitted to said committee
AN ACT to amend the local finance law, in relation to establishing an electronic open auction bond sale pilot program and providing for the repeal of such provisions upon expiration thereof
The People of the State of New York, represented in Senate and Assembly, do enact as follows:
Section 1. The local finance law is amended by adding a new section 58.10 to read as follows:
§ 58.10 Electronic open auction public bond sale pilot program. a. As used in this section:
1. "Municipality" means a county with a population of four hundred thousand or more, or a city or town with a population of one hundred thousand or more that has issued at least twenty-five million dollars in bonds within at least one of the preceding three years.
2. "Nationally recognized electronic securities bidding service" means a bidding service that is approved by the state comptroller pursuant to subdivision b of this section.
3. "Open auction" means a bond sale procedure that allows a bidder to receive information with respect to the ranking of its bids prior to the conclusion of the bidding period in accordance with the municipality's notice of such bond sale circulated in accordance with applicable requirements of this chapter.
4. "Program" means the electronic open auction public bond sale pilot program established pursuant to this section.
b. 1. There is hereby established an electronic open auction bond sale pilot program authorizing municipalities to conduct open auction public bond sales through any nationally recognized electronic securities bidding service approved by the state comptroller. Nationally recognized
EXPLANATION--Matter in italics (underscored) is new; matter in brackets
[ ] is old law to be omitted.
LBD11659-02-9
S. 5886--A 2
electronic securities bidding services desiring to operate an electronic open auction shall apply to the state comptroller for authorization to do so by filing an application with the state comptroller. The state comptroller shall make available an application form that provides the state comptroller with information regarding the technology and security practices maintained by the nationally recognized electronic securities bidding service, the requirements to be established for bidding by bidders, the methods by which auction sales are conducted, the experience of the nationally recognized electronic securities bidding service in conducting electronic open auctions of bonds, and other information the state comptroller may deem relevant.
2. If the state comptroller determines that the requirements and conditions of the open auction are in accordance with the provisions of this chapter and the bidding service provides a secure, open and competitive opportunity for qualified bidders to submit proposals, the application shall be deemed approved.
3. The state comptroller shall post information regarding the nationally recognized electronic securities bidding services that have been approved for use by municipalities on the state comptroller website.
c. If the chief fiscal officer of the municipality has authorized the receipt of bids in an electronic open auction format, such electronic bids may be submitted in the form of open auctions conducted through a nationally recognized electronic securities bidding service which entity shall be deemed to be the designated receiving device pursuant to section 58.00 of this title. Notice of any bond sale shall provide for the manner in which the bidding period may be extended and the basis for determination of the winning bidder.
d. Notwithstanding the provisions of subdivision one of section three hundred five of the state technology law, if the notice of sale for the open auction public bond contains a provision that bids will only be accepted electronically in the manner provided in such notice of sale, the municipality shall not be required to accept non-electronic bids in any form.
e. The municipality's chief fiscal officer shall administer the program and shall publish its policies and procedures for the procurement of nationally recognized electronic securities bidding services on the municipality's internet website. Such policies and procedures shall include policies to prevent fraud. Except as modified by this section, the municipal program shall comply with this chapter and all other applicable laws, rules and regulations related to the sale of bonds.
f. The municipality's chief fiscal officer shall review the electronic open auction bidding process to ensure that the bond sale was completed in a timely fashion; the sale was completed without errors; and the process was favorable as compared to the method currently used by the municipality.
g. The municipality shall conduct evaluations of the program annually with a summary evaluation at the end of the two year program. The municipality shall submit the evaluations to the state comptroller, the temporary president of the senate and the speaker of the assembly. Such report shall include, but not be limited to, any demonstrated evidence that sale of public bonds using electronic open auctions is comparable to the cost of issuing public bonds through the current sealed bid process, the fees associated with nationally recognized electronic securities bidding services, whether the use of electronic open auctions
S. 5886--A 3
resulted in an increased number of bidders and whether the process was favorable as compared to the method currently used by the municipality.
§ 2. This act shall take effect on the first of January next succeeding the date on which it shall have become a law and shall expire two years after such effective date, when upon such date the provisions of this act shall be deemed repealed.
Reflowed for reading: line numbers and page breaks removed. Cite the official text.
Sponsor's memo
Title of bill
An act to amend the local finance law, in relation to establishing an electronic open auction bond sale pilot program and providing for the repeal of such provisions upon expiration thereof
Purpose or general idea of bill
This legislation would establish a two year electronic open auction bond sale pilot program to allow municipalities the option to sell municipal bonds in an open electronic auction format instead of by a closed elec- tronic bid format. This pilot program would be used to assess the finan- cial and administrative advantages of selling bonds via an open auction format by a nationally recognized electronic securities bidding plat- form.
Summary of specific provisions
Section 1 amends the local finance law by adding a new section 58.10.
- Paragraph (a) adds a definition section
- Paragraph (b) establishes an electronic open auction bond sale pilot program, authorizing municipalities to conduct open auction public bond sales operated through nationally recognized electronic securities bidding services, approved by the State Comptroller through an applica- tion process, for use by municipalities. Information regarding the approved nationally recognized electronic securities bidding services will subsequently be posted on the website of the State Comptroller
- 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 required to accept non-electronic bids
-Paragraphs (e) and (f) provide that the program shall be administered by the municipality's chief fiscal officer, who will subsequently evalu- ate its favorability over the method previously utilized by the munici- pality
-Paragraph (g) provides that the municipality's chief fiscal officer shall annually review the program to ensure its functionality and prof- itability, and provides certain procedures and requirements for the program's evaluation
Section 2 sets the effective date of January 1st next succeeding the date it has become law, expiring two years after such effective date
Justification
Electronic bidding processes have been recognized to increase the speed and efficiency of bidding as well as reduce the administrative burden and costs of the paper bidding process. Currently, New York authorizes electronic bidding through section 58 of the Local Finance Law, but only permits closed bidding. There are now forty states, including Califor- nia, New Jersey, Ohio and Texas that have enacted legislation to allow municipalities to conduct public bond sales through nationally recog- nized bidding firms, many of them by the electronic bidding open auction format.
Open auctions are a cost saving tool that have allowed municipalities to find lower interest rates and save money. When used with large bond offerings in other states, open auctions have translated into millions of dollars in savings for municipalities. With the focus on insuring financial efficiencies, throughout the state, municipalities must be given every possible option to save money.
This legislation would establish a two year pilot program for eligible municipalities, would have no financial impact on the state an d require nothing of the municipality. Simply, it allows for the use of another tool that has been developed through evolving technology, should munici- palities choose to utilize it.
Prior legislative history
New bill.
Fiscal implications
None.
Effective date
This act shall take effect on the first of January next succeeding the date on which it shall have become a law and shall sunset 2 years after such date.
Summaries, headlines and scores are AI-generated from the official bill text. How we score bills. Source: NYS Open Legislation.