S T A T E   O F   N E W   Y O R K
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                                  1562

                       2015-2016 Regular Sessions

                            I N  S E N A T E

                            January 13, 2015
                               ___________

Introduced by Sens. PARKER, ESPAILLAT -- read twice and ordered printed,
  and when printed to be committed to the Committee on Banks

AN ACT in relation to alternative finance investment bonds

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

  Section 1. Legislative findings and intent. 1.  New York's  historical
prosperity  has  derived  from  the freedom and innovative nature of the
state's capital markets and New York's roles  as  a  center  of  foreign
trade  and  investment, which has helped build the industries and create
the jobs that earned the state the nickname of the Empire State.
  2.  The legislature finds that in order to bring more jobs to New York
in a global economy, and to increase the  state's  competitiveness,  the
state  must  find  new  sources of capital investment to create opportu-
nities throughout the state. An innovative way to accomplish  this  goal
would  be  to create alternate investment instruments that would attract
capital from investors who for personal, moral or religious reasons  are
unable  to  use conventional debt instruments such as bonds due to their
inability to purchase securities that generate interest.
  3. New York has the proud heritage of being a model for  the  rest  of
the  nation  in  the  areas  of  ethnic, national, racial, and religious
tolerance and diversity. However, over time large numbers of New Yorkers
have been unable to participate in investment opportunities  offered  by
the  state, or in public-private partnerships due to the lack of diverse
means of long term capital investments. Broadening the state's portfolio
of investment instruments would not only enfranchise large groups of New
Yorkers and lower the costs of state and local borrowing, but would also
aid in community renewal and  revitalization.  Creating  more  inclusive
forms of state financial opportunities would also broaden the streams of
capital  available to the state, lowering the cost of financing and once
again involving the world's investors in the development of our  state's
economy.

 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                      [ ] is old law to be omitted.
                                                           LBD06476-01-5
              

S. 1562                             2

  4.  The legislature therefore declares that expanding New York's tools
for economic development by creating new forms  of  alternative  invest-
ments  would enable it to participate in the multi-billion dollar market
for alternative investment vehicles akin  to  conventional  bonds,  thus
freeing  up  new  capital for business and job creation. The creation of
these innovative financial instruments will furthermore permit  individ-
uals  and institutions of all faiths to invest in and issue such instru-
ments, redressing historic wrongs and low  participation  rates  in  our
economy.
  S  2. (1) Definitions. (a) "Alternative finance investment bond" shall
mean a certificate of  equal  value  representing  undivided  shares  of
ownership  of  tangible assets, usufructs and services or (in the owner-
ship of) the assets of particular projects or special investment  activ-
ity.
  (b)  "Alternative  finance  investment  bond  agreement" shall mean an
agreement where:
  (i) the agreement provides for a person ("the bond holder") to  pay  a
sum of money ("the capital") to another ("the bond issuer"),
  (ii)  the agreement identifies assets, or a class of assets, which the
bond issuer will acquire for the purpose of generating income  or  gains
directly or indirectly ("bond assets"),
  (iii)  the agreement specifies a period at the end of which they cease
to have effect ("the bond term"),
  (iv) the bond issuer undertakes under the agreement:
  (A) to make a repayment of the capital ("the redemption  payment")  to
the bond holder during or at the end of the bond term (whether or not in
installments), and
  (B)  to pay to the bond holder other payments on one or more occasions
during or at the end of the bond term ("additional payments"), and
  (v) the amount of the additional payments does not  exceed  an  amount
which would be a reasonable commercial return on a loan of the capital.
  (2)  The chair of the dormitory authority, the director of the budget,
the superintendent of financial services and the commissioner  of  taxa-
tion  and finance are hereby authorized and directed to assist the chair
of the New York state urban development corporation in creating,  within
one  calendar  year  of  the  effective  date of this act, an investment
instrument for the state of New York that will  be  compliant  with  the
definition  of  alternative finance investment bonds, and regulated in a
manner consistent with traditional bonds and other debt instruments.
  (3) The chair of the New York state urban development  corporation  is
hereby  directed  to consult with the state comptroller and the attorney
general concerning the  regulation  of  alternative  finance  investment
bonds,  and whether such bonds may be issued by New York municipal enti-
ties in addition to any issuances by the state of New  York,  and  shall
provide  the  legislature  with language necessary for the regulation of
such security.
  (4) Within ninety days of the effective date of this act, the chair of
the New York state urban development corporation  shall  report  to  the
governor,  the temporary president of the senate, and the speaker of the
assembly, the minority leader of the senate and minority leader  of  the
assembly concerning the potential domestic and foreign market for alter-
native  finance investment bonds, and how such investment vehicles might
be  used  in  economic  development  generally,  and   specifically   in
distressed census tracts.
  S 3. This act shall take effect immediately.