What's happening
This bill allows New York's water revolving funds to invest in highly rated, full faith and credit obligations of other states.
Why it matters
Increases investment flexibility for New York's clean water and drinking water funds, potentially allowing for higher returns. by permitting investments in highly rated, full faith and credit obligations of other states, rather than only New York or federal securities.
Could diversify risk in the funds’ investment portfolios. , since the funds would not be limited to New York-issued obligations, possibly reducing exposure to local fiscal downturns.
May encourage interstate financial cooperation and strengthen the municipal bond market. by allowing New York’s substantial environmental funds to serve as buyers of other states’ high-quality debt, potentially lowering borrowing costs for those states.
Introduces new oversight and risk considerations. , as New York fund managers will need to evaluate the creditworthiness and economic stability of other states, rather than relying solely on New York-based or federal obligations.
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Who cares
Headline styles
Broaden Environmental Fund Investments
Plain English, a few words. Used as the page title.
Sponsors
No co-sponsors yet.
History
- Committed to rules
- Advanced to third reading
- 2nd report cal.
- 1st report cal.511
- Referred to corporations, authorities and commissions
- Returned to senate
- Died in assembly
- Referred to environmental conservation
- Delivered to assembly
- Passed senateVote 60–1
- Ordered to third reading cal.1224
- Committee discharged and committed to rules
Show 1 earlier action
- Referred to corporations, authorities and commissions
Full text
2 pagesUnderlined is new[Struck] is removedOfficial text on nysenate.gov ↗
STATE OF NEW YORK
6162
2019-2020 Regular Sessions
IN SENATE
May 21, 2019
Introduced by Sen. HARCKHAM -- (at request of the Environmental Facilities Corporation) -- read twice and ordered printed, and when printed to be committed to the Committee on Corporations, Authorities and Commissions
AN ACT to amend the public authorities law, in relation to the special powers of the New York state environmental facilities corporation
The People of the State of New York, represented in Senate and Assembly, do enact as follows:
Section 1. Subdivision 6 of section 1285-j of the public authorities law, as amended by chapter 307 of the laws of 2005, is amended to read as follows:
6. Moneys in the water pollution control revolving fund may be invested as provided in subdivision four of section twelve hundred eighty-four of this title and may be further invested (a) in investment agreements continuously secured by obligations with any insurance or reinsurance company or corporate affiliate thereof rated by a nationally recognized rating agency in one of its two highest categories, any bank, trust company or broker or dealer, as defined by the securities exchange act of 1934, which is a dealer in government bonds, which reports to, trades with and is recognized as a primary dealer by a federal reserve bank and is a member of the securities [investors] investor protection corporation, if, (i) such obligations securing such investment agreements are obligations as set forth in section ten of the general municipal law, (ii) such obligations are delivered to a trustee for the benefit of the corporation or, with respect to moneys pledged under an indenture of trust relating to bonds or notes of the corporation, to the trustee under such indenture, or are supported by a safe keeping receipt issued by a depository satisfactory to the corporation as applicable, provided that such investment agreements must provide that the value of the underlying obligations shall be maintained at a current market value, calculated no less frequently than monthly, of not less than the
EXPLANATION--Matter in italics (underscored) is new; matter in brackets
[ ] is old law to be omitted.
LBD09425-01-9
S. 6162 2
amount deposited thereunder, (iii) a prior perfected security interest in the obligations which are securing such agreement has been granted to the corporation, as applicable, and (iv) such obligations are free and clear of adverse third party claims, [or] (b) in obligations as set forth in section ten of the general municipal law that are rated by a nationally recognized rating agency in one of its two highest rating categories, or (c) 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.
§ 2. Subdivision 6 of section 1285-m of the public authorities law, as amended by chapter 307 of the laws of 2005, is amended to read as follows:
6. Moneys in the drinking water revolving fund may be invested as provided in subdivision four of section twelve hundred eighty-four of this title and may be further invested:
(a) in investment agreements continuously secured by obligations with any insurance company or reinsurance company or corporate affiliate thereof rated by a nationally recognized rating agency in one of its two highest categories, any bank, trust company or broker or dealer, as defined by the securities exchange act of 1934, which is a dealer in government bonds, which reports to, trades with and is recognized as a primary dealer by a federal reserve bank and is a member of the securities [investors] investor protection corporation, if such investment agreement provides that:
(i) such obligations securing such investment agreements are obligations as set forth in section ten of the general municipal law;
(ii) such obligations are to be delivered to a trustee for the benefit of the corporation or, with respect to moneys pledged under an indenture of trust or trust agreement relating to bonds or notes of the corporation, to the trustee under such indenture or trust agreement, or are supported by a safe keeping receipt issued by a depository satisfactory to the corporation as applicable, provided that such investment agreements must provide that the value of the underlying obligations shall be maintained at a current market value, calculated no less frequently than monthly, of not less than the amount deposited thereunder;
(iii) a prior perfected security interest in the obligations which are securing such agreement has been granted to the corporation, such trustee or such depository as applicable; and
(iv) such obligations are free and clear of adverse third party claims; [or]
(b) in obligations as set forth in section ten of the general municipal law that are rated by a nationally recognized rating agency in one of its two highest rating categories; or
(c) 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.
§ 3. This act shall take effect immediately; provided, however that the amendments to subdivision 6 of section 1285-j and subdivision 6 of section 1285-m of the public authorities law made by sections one and two of this act shall not affect the expiration and reversion of such subdivisions and shall expire and be deemed repealed therewith.
Reflowed for reading: line numbers and page breaks removed. Cite the official text.
Sponsor's memo
Title of bill
An act to amend the public authorities law, in relation to the special powers of the New York state environmental facilities corporation
Purpose of the bill
The bill would amend the Public Authorities Law ("PAL") to permit the Environmental Facilities Corporation ("EFC") to invest State Revolving Fund moneys in obligations of certain govern- mental entities of another state.
Summary of provisions
Section 1 of the bill would amend PAL § 1285-j(6) to permit EFC to invest the Clean Water State Revolving Fund ("CWSRF") moneys in obli- gations 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 organiza- tion.
Section 2 of the bill would amend PAL § 1285-m(6) to permit EFC to invest Drinking Water State Revolving Fund ("DWSRF") moneys in obli- gations 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 organiza- tion.
Section 3 of the bill states the effective date and expiration of the legislation.
Prior legislative history
2016: S.7284 of 2016 referred to the Corporations, Authorities and Commissions Committee. 2017: A.8400 referred to the Environmental Conservation Committee.
Justification
The PAL authorizes EFC to invest CWSRF and DWSRF moneys not required for immediate use or disbursement. The income from these investments contributes to the growth of the funds, enhances bondholder security, and helps to preserve EFC's AAA credit rating.
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're in one of the two highest rating categories by at least one nationally recognized statistical rating organization.
EFC can at present invest in the obligations of out-of-state govern- mental entities only if the entities are taxing authorities. PAL §§ 1285-j(6) and 1285-m(6) authorize EFC to invest in the obligations iden- tified in GML § 10(1Xf)(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
Several states have governmental entities that issue what are essential- ly General Obligation bonds on behalf of their states. These govern- mental entities, which do not levy taxes, nevertheless issue obligations that are backed by the full faith and credit of the state in which they're 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.
If EFC is permitted to invest CWSRF and DWSRF assets in these obli- gations, the SRF programs could benefit from higher investment returns, which would benefit municipalities throughout the State by making more capital available to finance critical environmental infrastructure projects.
Fiscal implications
This bill would have no budget implications to the State.
Effective date
This bill would take effect immediately.
Summaries, headlines and scores are AI-generated from the official bill text. How we score bills. Source: NYS Open Legislation.