S T A T E   O F   N E W   Y O R K
________________________________________________________________________

                                   525

                       2015-2016 Regular Sessions

                          I N  A S S E M B L Y

                               (PREFILED)

                             January 7, 2015
                               ___________

Introduced by M. of A. HEVESI -- read once and referred to the Committee
  on Local Governments

AN  ACT  to  amend the general municipal law, in relation to installment
  contracts for the financing of technology

  THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND  ASSEM-
BLY, DO ENACT AS FOLLOWS:

  Section  1.  Paragraph (b) of subdivision 1, paragraphs (c) and (d) of
subdivision 2, paragraph (a) of subdivision 3, paragraph (a) of subdivi-
sion 4, paragraphs (a) and (b) of subdivision 5 and paragraphs  (a)  and
(b)  of  subdivision 6 of section 109-b of the general municipal law, as
amended by chapter 258 of the laws of  1994,  are  amended  to  read  as
follows:
  (b)  "Installment  purchase  contract"  shall  mean any lease purchase
agreement,  installment  sales  agreement  or  other  similar  agreement
providing  for  periodic payments between a corporation, person or other
entity and a political subdivision which has as its purpose the  financ-
ing of equipment, machinery, TECHNOLOGY or apparatus.
  (c)  Subject  to  the  provisions of subdivision five of this section,
where the financing of equipment,  machinery,  TECHNOLOGY  or  apparatus
pursuant to an installment purchase contract is to be provided by agency
certificates of participation, the governing board of a political subdi-
vision  shall  adopt  a resolution authorizing the written contract with
the agency setting forth the rights and liabilities of  the  agency  and
the political subdivision as provided for in section twenty-four hundred
thirty-five-a of the public authorities law.
  (d)  The  term  of  such  installment purchase contract, including all
renewals thereof, shall not exceed the  period  of  probable  usefulness
prescribed  by section 11.00 of the local finance law for the equipment,
machinery, TECHNOLOGY or apparatus being financed under the  installment
purchase contract.

 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                      [ ] is old law to be omitted.
              

                                                           LBD02382-01-5

A. 525                              2

  (a) Installment purchase contracts for equipment, machinery, TECHNOLO-
GY  or  apparatus shall constitute purchase contracts for public bidding
purposes and shall be subject to  public  bidding  requirements  to  the
extent  applicable  by law. For purposes of determining whether the cost
of  the  equipment, machinery, TECHNOLOGY or apparatus exceeds the mone-
tary threshold fixed in section one hundred three of this  article,  the
cost  of the equipment, machinery, TECHNOLOGY or apparatus, exclusive of
the cost of financing, shall be considered. If the equipment, machinery,
TECHNOLOGY or apparatus is to be financed by  a  party  other  than  the
party  submitting  the  bid, the bid specifications may provide that the
political subdivision may assign its right to purchase to a third  party
without  the  necessity  of approval by the other party to the contract.
Nothing herein shall preclude a political subdivision  from  advertising
for bids in the alternative with and without financing.
  (a)  The proceeds of certificates of participation executed and deliv-
ered in connection with the installment purchase contract made  pursuant
to  this  section,  in addition to being applied towards the cost of the
equipment, machinery, TECHNOLOGY or apparatus, may also be used for  the
establishment  of reserve funds to secure such certificates, the cost or
premium of letters of credit, insurance or  other  credit  enhancements,
the  costs  of  bond counsel, a financial advisor, underwriter, trustees
and paying agent, and  other  actual  and  necessary  expenses  directly
related to the issuance of such certificates. The foregoing shall not be
construed  to  authorize  the  use  of  such proceeds for the payment of
personal service expenses of the  political  subdivision.  Where  agency
certificates  are  executed  and  delivered,  proceeds  may  be used for
payment by the political subdivision of the  expenses  incurred  by  the
agency  in  connection  with the execution and delivery and sale of such
certificates.
  (a) If an authorization for the issuance of obligations to finance the
equipment, machinery, TECHNOLOGY or apparatus would have  been  required
by  law  to be subject to a permissive or mandatory referendum, then the
authorization to enter into an installment purchase  contract  shall  be
subject  to a permissive or mandatory referendum, as the case may be, in
the same manner as provided for such referendum on the issuance of obli-
gations.
  (b) If the authorization for the issuance of  obligations  to  finance
the  equipment,  machinery,  TECHNOLOGY  or  apparatus  would  have been
required by law to be subject to: (i) a certain  supermajority  vote  of
the governing board, (ii) a mandatory or permissive referendum, or (iii)
both,  then  the  authorization  to  enter  into an installment purchase
contract for equipment, machinery,  TECHNOLOGY  or  apparatus  shall  be
subject  to  such  vote,  referendum or such referendum and vote, as the
case may be, in the same manner as provided for such vote and/or  refer-
endum on the issuance of obligations.
  (a)  Installment  purchase  contracts  made  pursuant to this section,
together with any certificates of participation executed  and  delivered
or  caused  to  be executed and delivered in connection therewith, shall
not constitute or create indebtedness of the state or a political subdi-
vision for purposes of article seven or eight of the state  constitution
or  section  20.00 of the local finance law, nor shall they constitute a
contractual obligation in excess of the amounts  appropriated  therefor.
Neither  the  state nor a political subdivision has any continuing legal
or moral obligation to appropriate money  for  said  payments  or  other
obligations  due under the installment purchase contract. No installment
purchase contract shall contain any provision which,  in  the  event  of

A. 525                              3

non-appropriation,  precludes  a  political  subdivision  from acquiring
equipment, machinery, TECHNOLOGY or apparatus for the  same  or  similar
purpose as the equipment, machinery, TECHNOLOGY or apparatus included in
the  installment  purchase contract for a period of more than sixty days
from the  date  of  expiration,  termination  or  cancellation  of  such
contract,  provided,  however,  that  in  no  case  shall an installment
purchase contract contain any provision which would preclude a political
subdivision from performing any statutorily or constitutionally required
duties or functions, or require the political subdivision to pay  liqui-
dated damages.
  (b)  In  the  case  of  the failure to appropriate, the sole security,
apart from any security  provided  by  a  credit  enhancement,  for  any
remaining periodic payments shall be the equipment, machinery, TECHNOLO-
GY  or  apparatus  subject  to the installment purchase contract, and if
certificates of participation are executed and delivered or caused to be
executed and delivered, reserve funds, if any, or any remaining proceeds
from certificates executed and delivered by or on behalf  of  the  poli-
tical  subdivision.  Any  installment purchase contract or any agreement
for the execution and delivery of certificates of participation to  fund
an  installment  purchase  contract  may  provide  that  the installment
purchase contract or certificates of participation are  secured  by  the
underlying  equipment,  machinery,  TECHNOLOGY or apparatus and that, in
the event the political subdivision fails to  appropriate  funds  suffi-
cient  for payments required under the contract, the financed equipment,
machinery, TECHNOLOGY or apparatus may be sold on behalf of the  holders
of  the  certificates or other person entitled to receive payments under
the installment purchase contract, provided  that  any  excess  proceeds
from  such a sale, after deduction for and payment of fees, expenses and
any taxes levied on the sale, and distribution to  the  holders  of  the
certificates  in  the  amount of the face value of the certificates plus
accrued interest shall be paid to the political subdivision.
  S 2. This act shall take effect on the sixtieth  day  after  it  shall
have  become  a  law;  provided, however, that the amendments to section
109-b of the general municipal law made by section one of this act shall
not affect the repeal of such section and shall be deemed repealed ther-
ewith.