STATE OF NEW YORK ________________________________________________________________________ 10256 IN ASSEMBLY May 18, 2016 ___________ Introduced by M. of A. MAGNARELLI -- read once and referred to the Committee on Local Governments AN ACT in relation to redistributing 2014 bond volume allocations made pursuant to section 146 of the federal tax reform act of 1986, allo- cation of the unified state bond volume ceiling, and enacting the private activity bond allocation act of 2016; and providing for the repeal of certain provisions upon expiration thereof The People of the State of New York, represented in Senate and Assem- bly, do enact as follows: 1 Section 1. Short title. This act shall be known and may be cited as 2 the "private activity bond allocation act of 2016". 3 § 2. Legislative findings and declaration. The legislature hereby 4 finds and declares that the federal tax reform act of 1986 established a 5 statewide bond volume ceiling on the issuance of certain tax exempt 6 private activity bonds and notes and, under certain circumstances, 7 governmental use bonds and notes issued by the state and its public 8 authorities, local governments, agencies which issue on behalf of local 9 governments, and certain other issuers. The federal tax reform act 10 establishes a formula for the allocation of the bond volume ceiling 11 which was subject to temporary modification by gubernatorial executive 12 order until December 31, 1987. That act also permits state legislatures 13 to establish, by statute, an alternative formula for allocating the 14 volume ceiling. Bonds and notes subject to the volume ceiling require 15 an allocation from the state's annual volume ceiling in order to qualify 16 for federal tax exemption. 17 It is hereby declared to be the policy of the state to maximize the 18 public benefit through the issuance of private activity bonds for the 19 purposes of, among other things, allocating a fair share of the bond 20 volume ceiling upon initial allocation and from a bond reserve to local 21 agencies and for needs identified by local governments; providing hous- 22 ing and promoting economic development; job creation; an economical 23 energy supply; and resource recovery and to provide for an orderly and 24 efficient volume ceiling allocation process for state and local agencies 25 by establishing an alternative formula for making such allocations. EXPLANATION--Matter in italics (underscored) is new; matter in brackets [] is old law to be omitted. LBD15286-01-6A. 10256 2 1 § 3. Definitions. As used in this act, unless the context requires 2 otherwise: 3 1. "Bonds" means bonds, notes or other obligations. 4 2. "Carryforward" means an amount of unused private activity bond 5 ceiling available to an issuer pursuant to an election filed with the 6 internal revenue service pursuant to section 146(f) of the code. 7 3. "Code" means the internal revenue code of 1986, as amended. 8 4. "Commissioner" means the commissioner of the New York state depart- 9 ment of economic development. 10 5. "Covered bonds" means those tax exempt private activity bonds and 11 that portion of the non-qualified amount of an issue of governmental use 12 bonds for which an allocation of the statewide ceiling is required for 13 the interest earned by holders of such bonds to be excluded from the 14 gross income of such holders for federal income tax purposes under the 15 code. 16 6. "Director" means the director of the New York state division of the 17 budget. 18 7. "Issuer" means a local agency, state agency or other issuer. 19 8. "Local agency" means an industrial development agency established 20 or operating pursuant to article 18-A of the general municipal law, the 21 Troy industrial development authority and the Auburn industrial develop- 22 ment authority. 23 9. "Other issuer" means any agency, political subdivision or other 24 entity, other than a local agency or state agency, that is authorized to 25 issue covered bonds. 26 10. "Qualified small issue bonds" means qualified small issue bonds, 27 as defined in section 144(a) of the code. 28 11. "State agency" means the state of New York, the New York state 29 energy research and development authority, the New York job development 30 authority, the New York state environmental facilities corporation, the 31 New York state urban development corporation and its subsidiaries, the 32 Battery Park city authority, the port authority of New York and New 33 Jersey, the power authority of the state of New York, the dormitory 34 authority of the state of New York, the New York state housing finance 35 agency, the state of New York mortgage agency, and any other public 36 benefit corporation or public authority designated by the governor for 37 the purposes of this act. 38 12. "Statewide ceiling" means for any calendar year the highest state 39 ceiling (as such term is used in section 146 of the code) applicable to 40 New York state. 41 13. "Future allocations" means allocations of statewide ceiling for up 42 to two future years. 43 14. "Multi-year housing development project" means a project (a) which 44 qualifies for covered bonds; 45 (b) which is to be constructed over two or more years; and 46 (c) in which at least twenty percent of the dwelling units will be 47 occupied by persons and families of low income. 48 § 4. Local agency set-aside. A set-aside of statewide ceiling for 49 local agencies for any calendar year shall be an amount which bears the 50 same ratio to one-third of the statewide ceiling as the population of 51 the jurisdiction of such local agency bears to the population of the 52 entire state. The commissioner shall administer allocations of such 53 set-aside to local agencies. 54 § 5. State agency set-aside. A set-aside of statewide ceiling for all 55 state agencies for any calendar year shall be one-third of the statewide 56 ceiling. The director shall administer allocations of such set-aside toA. 10256 3 1 state agencies and may grant an allocation to any state agency upon 2 receipt of an application in such form as the director shall require. 3 § 6. Statewide bond reserve. One-third of the statewide ceiling is 4 hereby set aside as a statewide bond reserve to be administered by the 5 director. 1. Allocation of the statewide bond reserve among state agen- 6 cies, local agencies and other issuers. The director shall transfer a 7 portion of the statewide bond reserve to the commissioner for allocation 8 to and use by local agencies and other issuers in accordance with the 9 terms of this section. The remainder of the statewide bond reserve may 10 be allocated by the director to state agencies in accordance with the 11 terms of this section. 12 2. Allocation of statewide bond reserve to local agencies or other 13 issuers. (a) Local agencies or other issuers may at any time apply to 14 the commissioner for an allocation from the statewide bond reserve. Such 15 application shall demonstrate: 16 (i) that the requested allocation is required under the code for the 17 interest earned on the bonds to be excluded from the gross income of 18 bondholders for federal income tax purposes; 19 (ii) that the local agency's remaining unused allocation provided 20 pursuant to section four of this act, and other issuer's remaining 21 unused allocation, or any available carryforward will be insufficient 22 for the specific project or projects for which the reserve allocation is 23 requested; and 24 (iii) that, except for those allocations made pursuant to section 25 twelve of this act to enable carryforward elections, the requested allo- 26 cation is reasonably expected to be used during the calendar year, and 27 the requested future allocation is reasonably expected to be used in the 28 calendar year to which the future allocation relates. 29 (b) In reviewing and approving or disapproving applications, the 30 commissioner shall exercise discretion to ensure an equitable distrib- 31 ution of allocations from the statewide bond reserve to local agencies 32 and other issuers. Prior to making a determination on such applications, 33 the commissioner shall notify and seek the recommendation of the presi- 34 dent and chief executive officer of the New York state housing finance 35 agency in the case of an application related to the issuance of multi- 36 family housing or mortgage revenue bonds, and in the case of other 37 requests, such state officers, departments, divisions and agencies as 38 the commissioner deems appropriate. 39 (c) Applications for allocations shall be made in such form and 40 contain such information and reports as the commissioner shall require. 41 3. Allocation of statewide bond reserve to state agencies. The direc- 42 tor may make an allocation from the statewide bond reserve to any state 43 agency. Before making any allocation of statewide bond reserve to state 44 agencies the director shall be satisfied: (a) that the allocation is 45 required under the code for the interest earned on the bonds to be 46 excluded from the gross income of bondholders for federal income tax 47 purposes; 48 (b) that the state agency's remaining unused allocation provided 49 pursuant to section five of this act or any available carryforward will 50 be insufficient to accommodate the specific bond issue or issues for 51 which the reserve allocation is requested; and 52 (c) that, except for those allocations made pursuant to section twelve 53 of this act to enable carryforward elections, the requested allocation 54 is reasonably expected to be used during the calendar year, and the 55 requested future allocation is reasonably expected to be used in the 56 calendar year to which the future allocation relates.A. 10256 4 1 § 7. Access to employment opportunities. 1. All issuers shall require 2 that any new employment opportunities created in connection with the 3 industrial or manufacturing projects financed through the issuance of 4 qualified small issue bonds shall be listed with the New York state 5 department of labor and with the one-stop career center established 6 pursuant to the federal workforce investment act (Pub. L. No. 105-220) 7 serving the locality in which the employment opportunities are being 8 created. Such listing shall be in a manner and form prescribed by the 9 commissioner. All issuers shall further require that for any new employ- 10 ment opportunities created in connection with an industrial or manufac- 11 turing project financed through the issuance of qualified small issue 12 bonds by such issuer, industrial or manufacturing firms shall first 13 consider persons eligible to participate in workforce investment act 14 (Pub. L. No. 105-220) programs who shall be referred to the industrial 15 or manufacturing firm by one-stop centers in local workforce investment 16 areas or by the department of labor. Issuers of qualified small issue 17 bonds are required to monitor compliance with the provisions of this 18 section as prescribed by the commissioner. 19 2. Nothing in this section shall be construed to require users of 20 qualified small issue bonds to violate any existing collective bargain- 21 ing agreement with respect to the hiring of new employees. Failure on 22 the part of any user of qualified small issue bonds to comply with the 23 requirements of this section shall not affect the allocation of bonding 24 authority to the issuer of the bonds or the validity or tax exempt 25 status of such bonds. 26 § 8. Overlapping jurisdictions. In a geographic area represented by a 27 county local agency and one or more sub-county local agencies, the allo- 28 cation granted by section four of this act with respect to such area of 29 overlapping jurisdiction shall be apportioned one-half to the county 30 local agency and one-half to the sub-county local agency or agencies. 31 Where there is a local agency for the benefit of a village within the 32 geographic area of a town for the benefit of which there is a local 33 agency, the allocation of the village local agency shall be based on the 34 population of the geographic area of the village, and the allocation of 35 the town local agency shall be based upon the population of the 36 geographic area of the town outside of the village. Notwithstanding the 37 foregoing, a local agency may surrender all or part of its allocation 38 for such calendar year to another local agency with an overlapping 39 jurisdiction. Such surrender shall be made at such time and in such 40 manner as the commissioner shall prescribe. 41 § 9. Ineligible local agencies. To the extent that any allocation of 42 the local agency set-aside would be made by this act to a local agency 43 which is ineligible to receive such allocation under the code or under 44 regulations interpreting the state volume ceiling provisions of the 45 code, such allocation shall instead be made to the political subdivision 46 for whose benefit that local agency was created. 47 § 10. Municipal reallocation. The chief executive officer of any poli- 48 tical subdivision or, if such political subdivision has no chief execu- 49 tive officer, the governing board of the political subdivision for the 50 benefit of which a local agency has been established, may withdraw all 51 or any portion of the allocation granted by section four of this act to 52 such local agency. The political subdivision may then reallocate all or 53 any portion of such allocation, as well as all or any portion of the 54 allocation received pursuant to section nine of this act, to itself or 55 any other issuer established for the benefit of that political subdivi- 56 sion or may assign all or any portion of the allocation received pursu-A. 10256 5 1 ant to section nine of this act to the local agency created for its 2 benefit. The chief executive officer or governing board of the political 3 subdivision, as the case may be, shall notify the commissioner of any 4 such reallocation. 5 § 11. Future allocations for multi-year housing development projects. 6 1. In addition to other powers granted under this act, the commissioner 7 is authorized to make the following future allocations of statewide 8 ceiling for any multi-year housing development project for which the 9 commissioner also makes an allocation of statewide ceiling for the 10 current year under this act or for which, in the event of expiration of 11 provisions of this act described in section eighteen of this act, an 12 allocation of volume cap for a calendar year subsequent to such expira- 13 tion shall have been made under section 146 of the code: (a) to local 14 agencies from the local agency set-aside (but only with the approval of 15 the chief executive officer of the political subdivision to which the 16 local agency set-aside relates or the governing body of a political 17 subdivision having no chief executive officer) and 18 (b) to other issuers from that portion, if any, of the statewide bond 19 reserve transferred to the commissioner by the director. Any future 20 allocation made by the commissioner shall constitute an allocation of 21 statewide ceiling for the future year specified by the commissioner and 22 shall be deemed to have been made on the first day of the future year so 23 specified. 24 2. In addition to other powers granted under this act, the director is 25 authorized to make future allocations of statewide ceiling from the 26 state agency set-aside or from the statewide bond reserve to state agen- 27 cies for any multi-year housing development project for which the direc- 28 tor also makes an allocation of statewide ceiling from the current year 29 under this act or for which, in the event of expiration of provisions of 30 this act described in section eighteen of this act, an allocation of 31 volume cap for a calendar year subsequent to such expiration shall have 32 been made under section 146 of the code, and is authorized to make 33 transfers of the statewide bond reserve to the commissioner for future 34 allocations to other issuers for multi-year housing development projects 35 for which the commissioner has made an allocation of statewide ceiling 36 for the current year. Any such future allocation or transfer of the 37 statewide bond reserve for future allocation made by the director shall 38 constitute an allocation of statewide ceiling or transfer of the state- 39 wide bond reserve for the future years specified by the director and 40 shall be deemed to have been made on the first day of the future year so 41 specified. 42 3. (a) If an allocation made with respect to a multi-year housing 43 development project is not used by October fifteenth of the year to 44 which the allocation relates, the allocation with respect to the then 45 current year shall be subject to recapture in accordance with the 46 provisions of section twelve of this act, and in the event of such a 47 recapture, unless a carryforward election by another issuer shall have 48 been approved by the commissioner or a carryforward election by a state 49 agency shall have been approved by the director, all future allocations 50 made with respect to such project pursuant to subdivision one or two of 51 this section shall be canceled. 52 (b) The commissioner and the director shall have the authority to make 53 future allocations from recaptured current year allocations and canceled 54 future allocations to multi-year housing development projects in a 55 manner consistent with the provisions of this act. Any such future allo- 56 cation shall, unless a carryforward election by another issuer shallA. 10256 6 1 have been approved by the commissioner or a carryforward election by a 2 state agency shall have been approved by the director, be canceled if 3 the current year allocation for the project is not used by December 31, 4 2017. 5 (c) The commissioner and the director shall establish procedures 6 consistent with the provisions of this act relating to carryforward of 7 future allocations. 8 4. The aggregate future allocations from either of the two succeeding 9 years shall not exceed six hundred fifty million dollars for each such 10 year. 11 § 12. Year end allocation recapture. On or before October first of 12 each year, each state agency shall report to the director and each local 13 agency and each other issuer shall report to the commissioner the amount 14 of bonds subject to allocation under this act that will be issued prior 15 to the end of the then current calendar year, and the amount of the 16 issuer's then total allocation that will remain unused. As of October 17 fifteenth of each year, the unused portion of each local agency's and 18 other issuer's then total allocation as reported and the unallocated 19 portion of the set-aside for state agencies shall be recaptured and 20 added to the statewide bond reserve and shall no longer be available to 21 covered bond issuers except as otherwise provided herein. From October 22 fifteenth through the end of the year, each local agency or other issuer 23 having an allocation shall immediately report to the commissioner and 24 each state agency having an allocation shall immediately report to the 25 director any changes to the status of its allocation or the status of 26 projects for which allocations have been made which should affect the 27 timing or likelihood of the issuance of covered bonds therefor. If the 28 commissioner determines that a local agency or other issuer has overes- 29 timated the amount of covered bonds subject to allocation that will be 30 issued prior to the end of the calendar year, the commissioner may 31 recapture the amount of the allocation to such local agency or other 32 issuer represented by such overestimation by notice to the local agency 33 or other issuer, and add such allocation to the statewide bond reserve. 34 The director may likewise make such determination and recapture with 35 respect to state agency allocations. 36 § 13. Allocation carryforward. 1. No local agency or other issuer 37 shall make a carryforward election utilizing any unused allocation 38 (pursuant to section 146(f) of the code) without the prior approval of 39 the commissioner. Likewise no state agency shall make or file such an 40 election, or elect to issue or carryforward mortgage credit certif- 41 icates, without the prior approval of the director. 42 2. On or before November fifteenth of each year, each state agency 43 seeking unused statewide ceiling for use in future years shall make a 44 request for an allocation for a carryforward to the director, whose 45 approval shall be required before a carryforward election is filed by or 46 on behalf of any state agency. A later request may also be considered by 47 the director, who may file a carryforward election for any state agency 48 with the consent of such agency. 49 3. On or before November fifteenth of each year, each local agency or 50 other issuer seeking unused statewide ceiling for use in future years 51 shall make a request for an allocation for a carryforward to the commis- 52 sioner, whose approval shall be required before a carryforward election 53 is filed by or on behalf of any local or other agency. A later request 54 may also be considered by the commissioner. 55 § 14. New York state bond allocation policy advisory panel. 1. There 56 is hereby created a policy advisory panel and process to provide policyA. 10256 7 1 advice regarding the priorities for distribution of the statewide ceil- 2 ing. 3 2. The panel shall consist of five members, one designee being 4 appointed by each of the following: the governor, the temporary presi- 5 dent of the senate, the speaker of the assembly, the minority leader of 6 the senate and the minority leader of the assembly. The designee of the 7 governor shall chair the panel. The panel shall monitor the allocation 8 process through the year, and in that regard, the division of the budget 9 and the department of economic development shall assist and cooperate 10 with the panel as provided in this section. The advisory process shall 11 operate through the issuance of advisory opinions by members of the 12 panel as provided in subdivisions six and seven of this section. A meet- 13 ing may be held at the call of the chair with the unanimous consent of 14 the members. 15 3.(a) Upon receipt of a request for allocation or a request for 16 approval of a carryforward election from the statewide reserve from a 17 local agency or other issuer, the commissioner shall, within five work- 18 ing days, notify the panel of such request and provide the panel with 19 copies of all application materials submitted by the applicant. 20 (b) Upon receipt of a request for allocation or a request for approval 21 of carryforward election from the statewide reserve from a state agency, 22 the director shall, within five working days, notify the panel of such 23 request and provide the panel with copies of all application materials 24 submitted by the applicant. 25 4. (a) Following receipt of a request for allocation from a local 26 agency or other issuer, the commissioner shall notify the panel of a 27 decision to approve or exclude from further consideration such request, 28 and the commissioner shall state the reasons. Such notification shall be 29 made with or after the transmittal of the information specified in 30 subdivision three of this section and at least five working days before 31 formal notification is made to the applicant. 32 (b) Following receipt of a request for allocation from a state agency, 33 the director shall notify the panel of a decision to approve or exclude 34 from further consideration such request, and shall state the reasons. 35 Such notification shall be made with or after the transmission of the 36 information specified in subdivision three of this section and at least 37 five working days before formal notification is made to the state agen- 38 cy. 39 5. The requirements of subdivisions three and four of this section 40 shall not apply to adjustments to allocations due to bond sizing chang- 41 es. 42 6. In the event that any decision to approve or to exclude from 43 further consideration a request for allocation is made within ten work- 44 ing days of the end of the calendar year and in the case of all requests 45 for consent to a carryforward election, the commissioner or director, as 46 is appropriate, shall provide the panel with the longest possible 47 advance notification of the action, consistent with the requirements of 48 the code, and shall, wherever possible, solicit the opinions of the 49 members of the panel before formally notifying any applicant of the 50 action. Such notification may be made by means of telephone communi- 51 cation to the members or by written notice delivered to the Albany 52 office of the appointing authority of the respective members. 53 7. Upon notification by the director or the commissioner, any member 54 of the panel may, within five working days, notify the commissioner or 55 the director of any policy objection concerning the expected action. If 56 three or more members of the panel shall submit policy objections inA. 10256 8 1 writing to the intended action, the commissioner or the director shall 2 respond in writing to the objection prior to taking the intended action 3 unless exigent circumstances make it necessary to respond after the 4 action has been taken. 5 8. On or before the first day of July, in any year, the director shall 6 report to the members of the New York state bond allocation policy advi- 7 sory panel on the actual utilization of volume cap for the issuance of 8 bonds during the prior calendar year and the amount of such cap allo- 9 cated for carryforwards for future bond issuance. The report shall 10 include, for each local agency or other issuer and each state agency the 11 initial allocation, the amount of bonds issued subject to the allo- 12 cation, the amount of the issuer's allocation that remained unused, the 13 allocation of the statewide bond reserve, carryforward allocations and 14 recapture of allocations. Further, the report shall include projections 15 regarding private activity bond issuance for state and local issuers for 16 the calendar year, as well as any recommendations for legislative 17 action. 18 § 15. Severability. If any clause, sentence, paragraph, section, or 19 part of this act shall be adjudged by any court of competent jurisdic- 20 tion to be invalid, such judgment shall not affect, impair, or invali- 21 date the remainder thereof, but shall be confined in its operation to 22 the clause, sentence, paragraph, section, or part thereof directly 23 involved in the controversy in which such judgment shall have been 24 rendered. 25 § 16. Notwithstanding any provisions of this act to the contrary (1) 26 provided that a local agency or other issuer certifies to the commis- 27 sioner on or before October 1, 2016 that it has issued private activity 28 bonds described in this act and the amount thereof which used statewide 29 ceiling, a commitment or allocation of statewide ceiling to a local 30 agency or other issuer made to or so used by such local agency or other 31 issuer pursuant to the federal tax reform act of 1986 on or after Janu- 32 ary 1, 2016 and prior to the effective date of this act, in an amount 33 which exceeds the local agency set-aside established by section four of 34 this act, shall be first chargeable to the statewide bond reserve estab- 35 lished pursuant to section six of this act, and 36 (2) a commitment or allocation of statewide ceiling to a state agency 37 made to or used by such agency pursuant to the internal revenue code, as 38 amended, on or after January 1, 2016 and prior to the effective date of 39 this act, shall be first chargeable to the state agency set-aside estab- 40 lished pursuant to section five of this act, and, thereafter, to the 41 statewide bond reserve established by section six of this act. 42 § 17. Nothing contained in this act shall be deemed to supersede, 43 alter or impair any allocation used by or committed by the director or 44 commissioner to a state or local agency or other issuer pursuant to the 45 federal tax reform act of 1986 and prior to the effective date of this 46 act. 47 § 18. This act shall take effect immediately; provided, however, that 48 sections three, four, five, six, seven, eight, nine, ten, twelve, thir- 49 teen and fourteen of this act shall expire July 1, 2018 when upon such 50 date the provisions of such sections shall be deemed repealed; except 51 that the provisions of subdivisions 2 and 3 of section thirteen of this 52 act shall expire and be deemed repealed February 15, 2018.