Extends date of certain provisions relating to participation in the banking development districts program to January 1, 2017.
Ayes (62): Adams, Addabbo, Alesi, Avella, Ball, Bonacic, Breslin, Carlucci, DeFrancisco, Diaz, Dilan, Duane, Espaillat, Farley, Flanagan, Fuschillo, Gallivan, Gianaris, Golden, Griffo, Grisanti, Hannon, Hassell-Thomps, Huntley, Johnson, Kennedy, Klein, Krueger, Kruger, Lanza, Larkin, LaValle, Libous, Little, Marcellino, Martins, Maziarz, McDonald, Montgomery, Nozzolio, O'Mara, Oppenheimer, Parker, Peralta, Perkins, Ranzenhofer, Ritchie, Rivera, Robach, Saland, Sampson, Savino, Serrano, Seward, Skelos, Smith, Squadron, Stavisky, Stewart-Cousin, Valesky, Young, Zeldin
TITLE OF BILL: An act to amend chapter 526 of the laws of 1998, amending the banking law relating to participation in the banking development districts program, in relation to extending the effectiveness of certain provisions thereof
PURPOSE: To extend, for an additional five years, the provisions of Chapter 526 of 1998 which authorize savings institutions to participate in the Banking Development District program.
SUMMARY OF PROVISIONS: The bill amends the effective date of Chapter 526 of 1998 to extend the provisions of this law for another 5 years (to January 1, 2017).
JUSTIFICATION: The Banking Development District Program was created in 1997. This program enables municipalities to offer certain incentives in order to encourage the establishment of bank branches in underserved areas. Under the program, a municipality and a banking institution may jointly apply to designate a "Banking Development District." By establishing a branch in such a district, the bank would be eligible -- at local and state option -- to receive municipal and state deposits at reduced rates, and to receive a partial exemption on municipal property taxes.
In 1998, the program was amended to authorize participation by thrift institutions, and to waive the branch application fee for branches established in a banking development district. However, these 1998 amendments were made subject to a January 1, 2005 sunset date. These provisions were subsequently extended to January 1, 2012 by Chapter 300 of 2004.
About 40 Bank Development Districts have been established, with several of these being created by savings banks. This bill is necessary to allow thrift institutions to continue to participate in the program. The creation of local bank offices should help provide needed banking services and easier access to capital, thereby fostering economic activity and development in these areas.
FISCAL IMPLICATIONS: The Banking Development District program is a local option program. If a local government chooses to enter into an agreement with a participating banking institution in which it would earn interest at a rate lower than the institution's posted two-year CD rate, then the local government would forgo some interest income on those municipal funds. However, because the banking development district program is intended to spur the establishment of a bank facility which would not otherwise exist, any branches established by thrift institutions should result in a net increase in property tax revenue. Such increase would grow each year as the partial property tax exemption declines. If the State chooses to enter into an agreement with a participating bank in which it would earn interest at a rate lower than the
institution's posted two year CD rate, then the State would forgo some interest income on those deposits. The State would also forgo a minimal amount of revenue by waiving the application fee for establishing a branch.
EFFECTIVE DATE: Immediately.
STATE OF NEW YORK ________________________________________________________________________ 5478 2011-2012 Regular Sessions IN SENATE May 25, 2011 ___________Introduced by Sens. GRIFFO, FARLEY -- read twice and ordered printed, and when printed to be committed to the Committee on Banks AN ACT to amend chapter 526 of the laws of 1998, amending the banking law relating to participation in the banking development districts program, in relation to extending the effectiveness of certain provisions thereof THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM- BLY, DO ENACT AS FOLLOWS: Section 1. Section 4 of chapter 526 of the laws of 1998, amending the banking law relating to participation in the banking development districts program, as amended by chapter 300 of the laws of 2004, is amended to read as follows: S 4. This act shall take effect on the first day of January next succeeding the date on which it shall have become a law and shall remain in effect until January 1,
2017 when upon such date it shall expire and be deemed repealed; provided however that any branch estab- lished prior to the expiration and repeal of this act by a savings bank, savings and loan association, federal savings bank or federal savings and loan association in a banking development district pursuant to this act shall continue to operate in accordance with this act and remain eligible for all the rights and privileges authorized by this act. S 2. This act shall take effect immediately.EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets [ ] is old law to be omitted. LBD11838-01-1