Relates to the notice of sale of bonds.
Ayes (61): Adams, Addabbo, Avella, Ball, Bonacic, Boyle, Breslin, Carlucci, DeFrancisco, Diaz, Dilan, Espaillat, Farley, Felder, Flanagan, Fuschillo, Gallivan, Gianaris, Gipson, Golden, Grisanti, Hannon, Hassell-Thomps, Hoylman, Kennedy, Klein, Krueger, Lanza, Larkin, Latimer, LaValle, Libous, Little, Marcellino, Marchione, Martins, Maziarz, Montgomery, Nozzolio, O'Brien, O'Mara, Parker, Perkins, Ranzenhofer, Ritchie, Rivera, Robach, Sampson, Sanders, Savino, Serrano, Seward, Skelos, Smith, Squadron, Stavisky, Stewart-Cousin, Tkaczyk, Valesky, Young, Zeldin
Excused (2): Griffo, Peralta
TITLE OF BILL: An act to amend the local finance law, in relation to the establishment of an electronic public bond sale pilot program for municipalities; and providing for the repeal of such provisions upon expiration thereof
PURPOSE OR GENERAL IDEA OF BILL: The purpose of this bill is to establish a pilot program for all municipalities to sell municipal bonds via electronic means (as opposed to paper bid Submissions) and to assess the financial and administrative advantages of selling bonds via a nationally recognized electronic securities bidding platforms pursuant to this program.
Under current law, Westchester County is authorized to operate a pilot program to sell municipal bonds via electronic means (as opposed to paper bid submissions). Before the enactment of Chapter 304 of the Laws of 2009, Westchester County (as all other municipalities) had to conduct the sale of public bonds via paper bids. Under the currently enacted pilot program, Westchester County can conduct an open auction to sell such municipal bonds via an electronic securities bidding service. Westchester County has realized both financial cost savings and a reduction in paperwork requirements to conduct such bond bids due to the enactment of Chapter 304 of the Laws of 2009.
SUMMARY OF SPECIFIC PROVISIONS:
Section 1: Adds a new Local Finance Law section, 58.20 to establish a state-wide electronic 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, 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.
The bill enacts a new Local Finance Law section 58.20 to establish a statewide pilot program. 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 electronic public bond sale pilot program for municipalities, in addition to already existing statutory authority for the county of Westchester to conduct such sales.
- Paragraph (c) provides that electronic bidding will be conducted through certain nationally recognized electronic securities bidding services, and may be used for both open and closed auctions.
- 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: Electronic bidding processes have been recognized to increase the speed and efficiency of bidding for municipal bonds as well as reduce the administrative burden and costs of conducting a the paper bond bidding process. A similar program, which was enacted by Chapter 304 of the Laws of 2009, has enhanced the efficiency and profitability of Westchester County's sale of public bonds by allowing them to conduct such sales electronically. Further, it has enhanced this process for the County by allowing them to take advantage of the latest advances in internet bidding platforms operated by nationally recognized electronic securities bidding firms. This act was extended by Chapter 143 of the Laws of 2012.
According to Westchester County, not only has this new electronic bond bidding pilot program reduced the overhead costs for sponsoring a municipal bond offering, it has increased participation rates among those interested in purchasing such bonds. This increased participation rate among bidders helps to drive down the interest rate charged for such bonds, which provides for further municipal cost savings.
Currently, ten states, including New Jersey, Ohio and Texas, have enacted legislation that allow municipalities to conduct public bond sales through these nationally recognized bidding firms.
This is a non-controversial bill that merely extends this very successful program that is being operated by Westchester County to every municipality in the State. This bill sunsets in 3 years so that the State Comptroller and Legislature can evaluate the operation of this program.
LEGISLATIVE HISTORY: Similar to the demonstration program established by Chapter 304 of the Laws of 2009, extended by Chapter 143 of the Laws of 2012. Same as S. 6372 of 2012.
FISCAL IMPLICATIONS: None to the State, but a demonstrated positive fiscal impact to Westchester County.
EFFECTIVE DATE: Immediate, and shall sunset three years after it goes into effect.
STATE OF NEW YORK ________________________________________________________________________ 2369 2013-2014 Regular Sessions IN SENATE January 16, 2013 ___________Introduced by Sen. KLEIN -- 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 public bond sale pilot program for municipalities; and providing for the repeal of such provisions upon expiration there- of THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM- BLY, DO ENACT AS FOLLOWS: Section 1. The local finance law is amended by adding a new section 58.20 to read as follows: S 58.20 ELECTRONIC PUBLIC BOND SALE 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 RANKING OF ITS BIDS PRIOR TO THE CONCLUSION OF THE BIDDING 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 RANKING OF ITS BIDS PRIOR TO THE CONCLUSION OF THE BIDDING PERIOD 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 PUBLIC BOND SALE PILOT PROGRAM ESTABLISHED PURSUANT TO THIS SECTION. B. THERE IS HEREBY ESTABLISHED AN ELECTRONIC PUBLIC BOND SALE PILOT PROGRAM AUTHORIZING MUNICIPALITIES TO CONDUCT 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. LBD05062-01-3 S. 2369 2
C. IF THE FINANCE COMMISSIONER OF A MUNICIPALITY HAS AUTHORIZED THE RECEIPT OF BIDS IN ELECTRONIC FORMAT, SUCH ELECTRONIC BIDS MAY BE SUBMITTED IN THE FORM OF OPEN AUCTIONS OR CLOSED 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 BIDDING 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, IF THE NOTICE OF SALE CONTAINS A PROVISION THAT BIDS WILL ONLY BE ACCEPTED ELECTRONICALLY IN THE MANNER PROVIDED IN SUCH NOTICE OF SALE, THE MUNICIPALITY SHALL NOT BE REQUIRED TO ACCEPT NON-ELECTRONIC BIDS IN ANY FORM. E. THE MUNICIPALITY'S CHIEF FISCAL OFFICER SHALL ADMINISTER THE PROGRAM AND SHALL PUBLISH ITS POLICIES AND PROCEDURES FOR THE PROCURE- MENT 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, RULES AND REGULATIONS RELATED TO THE SALE OF BONDS. F. THE MUNICIPALITY'S CHIEF FISCAL OFFICER SHALL REVIEW THE ELECTRONIC BIDDING PROCESS TO ENSURE THAT THE BOND SALE WAS COMPLETED IN A TIMELY FASHION; THE SALE WAS COMPLETED WITHOUT ERRORS; AND THE RESULTS ACHIEVED WERE FAVORABLE AS COMPARED TO THE MANUAL METHOD CURRENTLY USED BY THE MUNICIPALITY. 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 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 AUCTIONS IS COMPARABLE TO THE COST OF ISSUING PUBLIC BONDS THROUGH THE CURRENT SEALED BID PROCESS, THAT THE USE OF ELECTRONIC AUCTIONS RESULTED IN AN INCREASED NUMBER OF BIDDERS AND WHETHER THE RESULTS ACHIEVED FOR PUBLIC BOND SALES CONDUCTED THROUGH ELECTRONIC AUCTIONS ACHIEVED SAVINGS COMPARED TO THE CURRENT 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 TEMPO- RARY PRESIDENT OF THE SENATE, THE SPEAKER OF THE ASSEMBLY, THE MINORITY LEADER OF THE SENATE AND THE MINORITY LEADER OF THE ASSEMBLY. S 2. This act shall take effect immediately, and shall expire and be deemed repealed 3 years after such effective date.