What's happening
This bill establishes a three-year pilot program allowing New York municipalities to conduct electronic open auction public bond sales.
Why it matters
Increases transparency and competitiveness in municipal bond sales. by allowing bidders to see their standing and improve their bids in real time, potentially leading to better pricing and savings for taxpayers.
Modernizes and streamlines the municipal bond sale process. , letting municipalities use nationally recognized online auction services, which could reduce administrative costs and errors compared to traditional methods.
Requires detailed evaluation and public reporting on outcomes. , mandating annual and final reports to the State Comptroller and legislature, which can inform future policy and ensure accountability regarding cost, participation rates, and any resulting savings.
Provides flexibility and local control. for municipalities to choose whether to participate in the pilot and how to structure their auctions, allowing for experimentation and adaptation to local needs without mandating statewide changes.
Albany, before your first meeting.
Every bill that moved yesterday, summarized in a sentence and ranked by impact. The Albany Scorecard follows on Sundays.
Free. Unsubscribe in one click. Want alerts on specific bills? Create an account.
Who cares
Headline styles
Allow Online Bond Auctions
Plain English, a few words. Used as the page title.
Sponsors
No co-sponsors yet.
History
- 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
In Assembly Committee · Local Governments · Sponsor Mark Walczyk
Full text
2 pagesUnderlined is new[Struck] is removedOfficial text on nysenate.gov ↗
STATE OF NEW YORK
7577
IN SENATE
January 28, 2020
Introduced by Sen. JORDAN -- read twice and ordered printed, and when printed to be committed to the Committee on Local Government
AN ACT to amend the local finance law, in relation to the establishment of an electronic open auction public bond sale pilot program for municipalities; 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 58.20 to read as follows:
§ 58.20 Electronic open auction public bond sale pilot program; municipalities. a. As used in this section:
1. "Closed auction" means a bond sale procedure that does not allow a bidder to receive information with respect to the status or rank of its bids prior to the conclusion of the bid submission period.
2. "Municipality" means a county, city, town, village or school district.
3. "Nationally recognized electronic securities bidding service" means a bidding service that is recognized nationally by the predominant users of electronic securities bidding services as providing an accurate, secure and reliable on-line bidding system.
4. "Open auction" means a bond sale procedure that allows a bidder to receive information with respect to the status or rank of its bids prior to the conclusion of the bid submission period and improve its bid as a result of the received information in accordance with the municipality's notice of such bond sale circulated in accordance with applicable requirements of this chapter.
5. "Program" means the electronic open auction public bond sale pilot program established pursuant to this section.
b. There is hereby established an electronic open auction public bond sale pilot program authorizing municipalities to conduct open auction public bond sales through any nationally recognized electronic securities bidding service.
EXPLANATION--Matter in italics (underscored) is new; matter in brackets
[ ] is old law to be omitted.
LBD10752-01-9
S. 7577 2
c. The finance commissioner of a municipality may accept electronic bids submitted in the form of open auctions conducted through a nationally recognized electronic securities bidding service which shall be deemed to be the designated receiving device. Notice of any bond sale shall provide for the manner in which the bid submission period may be extended and the basis for determination of the winning bidder.
d. Notwithstanding the provisions of section three hundred five of the state technology law or any other law, the notice of sale may contain a provision that bids will only be accepted electronically in the manner provided in such notice of sale.
e. The municipality's chief fiscal officer shall administer the program and shall publish its policies and procedures for the procurement of electronic securities bidding services on the municipality's internet website and in a nationally recognized publication used by professionals in the bond market. Except as modified by this section, each municipal program shall comply with this chapter and all other applicable laws 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 and the sale was completed without errors.
g. Each municipality, or two or more municipalities acting jointly or in cooperation with any entity representing municipalities, shall, on or before February first, conduct annual evaluations of their pilot program or programs with a summary evaluation at the end of the three year open auction pilot program. The municipality or municipalities will submit the evaluations to the state comptroller. 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 closed auction process, that the use of electronic open auctions resulted in an increased number of bids and whether the results achieved for public bond sales conducted through electronic open auctions achieved savings compared to the previous bid process used by the municipality. Annually, the state comptroller shall compile all the information received from municipalities pursuant to this paragraph, and, on or before April first, submit such compiled information to the legislature, the temporary president of the senate, the speaker of the assembly, the minority leader of the senate and the minority leader of the assembly.
§ 2. This act shall take effect immediately, and shall expire and be deemed repealed 3 years after such effective date.
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 the establishment of an electronic open auction public bond sale pilot program for munici- palities; and providing for the repeal of such provisions upon expira- tion thereof
Purpose or general idea of bill
The purpose of this bill is to establish a three year pilot program for all municipalities to sell municipal bonds via an open auction format instead of by a closed bid format. Such open auction would be conducted via an electronic means instead of being done in person. This pilot program would be used to assess the financial and administrative advan- tages of selling bonds via an open auction form at by a nationally recognized electronic securities bidding platform.
Summary of provisions
Section 1: Adds a new Local Finance Law section, 58.20 to establish a statewide electronic open auction public bond sale pilot program for those municipalities that wish to participate. This bill is very similar to Chapter 304 of the Laws of 2009, (Which established the Westchester County open and closed auction pilot program) except that it repositions the terms defined within this section of law to a new definitions section. This has been done for clarity within the statute. However, the remainder of the bill's provisions are essentially the same as Chapter 304. Chapter 304 was extended in 2012 by Chapter 143 of the Laws of 2012.
Read the full memo (672 words)
The bill enacts a new Local Finance Law section 58.20 to establish a statewide pilot program for open auctions. The provisions of this bill are similar to Local Finance Law section 58.10 which currently applies only for Westchester County. Its provisions are as follows:
- Paragraph (a) adds a definitions section.
- Paragraph (b) establishes the open auction electronic public bond sale pilot program for municipalities, in addition to already existing statu- tory authority for the county of Westchester to conduct such sales.
- 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 obligated to receive paper bids.
- Paragraph (e) and (f) provides that the program shall be administered by the municipality's chief fiscal officer.
- Paragraph (g) provides that the municipality's chief fiscal officer shall continue to review the program to ensure its functionality and profitability, and provides certain procedures and requirements for the program's evaluation. Section 2: This provision sunsets this pilot program three years after it has been enacted.
Justification
Currently, ten states, including California, New Jersey, Ohio and Texas, have enacted legislation that allow municipalities to conduct public bond sales through nationally recognized bidding firms (many of them by the electronic bidding open auction format).
Open auctions are a cost saving tool that has allowed municipalities to find lower interest rates and save money. With an average savings of 9 basis points per transaction, state such as California and
Pennsylvania that have the most experience with open auctions see savings as large as 21 basis points. When used with large bond offerings in other states, open auctions have translated into millions of dollars in savings for municipalities in other states that use open auctions. For example, the Hanover Park Regional High School District in New Jersey saved approximately $63,000 on a $9.75 million bond.
With the important focus throughout the state on insuring financial efficiencies, municipalities must be given every possible tool to save money. This program has no financial impact on the state and requires nothing of the a municipality, it simply grants the use of another tool that has been developed as technology evolves.
Prior legislative history
S6579 of 2013-14 committed to Rules.
S4142 of 2015-16 passed Senate.
S3849 of 2017-18 passed Senate.
Fiscal implications for state and local governments
None to the State.
Effective date
Immediately and shall sunset three years after it goes into effect.
Summaries, headlines and scores are AI-generated from the official bill text. How we score bills. Source: NYS Open Legislation.