Extends, until January 1, 2017, the expiration of the electronic public bond sale pilot program for the county of Westchester; and makes technical corrections to the provisions of such program.
TITLE OF BILL: An act to amend the local finance law, in relation to the electronic public bond sale pilot program; and to amend chapter 304 of the laws of 2009, amending the local finance law relating to the establishment of an electronic public bond sale pilot program for Westchester county, in relation to extending the expiration date of the provisions thereof
PURPOSE OR GENERAL IDEA OF BILL: The purpose of this bill is to extend the statutory authority to allow for the continuation of the ability of Westchester County to operate a pilot program to sell municipal bonds via electronic means (as opposed to paper bid submissions) and to assess the advantages of selling public bonds via nationally recognized electronic securities bidding platforms pursuant to that program.
Before the enactment of Chapter 304 of the Laws of 2009, Westchester County 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.
SUMMARY OF SPECIFIC PROVISIONS: Section 1: Amends Local Finance Law section, 58.10 by repositioning terms defined within this section of law to a new definitions section of the provision of law. This has been done for clarity within the statute.
The bill further extends as it is written, currently existing provisions of Local Finance law section 58.10 as follows:
- Paragraph (b) extends the effective date for the recently established electronic public bond sale pilot program for the county of Westchester. - 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 county shall not be obligated to receive paper bids. - Paragraph (e) and (f) provides that the program shall be administered by the County's chief fiscal officer. Paragraph (g) provides that the County'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 extends this pilot program's effective date from August 2012 to January 1, 2017.
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. This 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.
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. This bill extends the program for an additional four years, and continues the obligation of the county to prepare reports for the Legislature to evaluate the operation of this program. This bill has been requested by Westchester County.
LEGISLATIVE HISTORY: Extension of Chapter 304 of the Laws of 2009.
FISCAL IMPLICATIONS: None to the State, but a demonstrated positive fiscal impact to Westchester County.
EFFECTIVE DATE: Extends the provisions of Chapter 304 of the Laws of 2009, which now sunsets on August 11, 2012.
STATE OF NEW YORK ________________________________________________________________________ 6371 IN SENATE February 1, 2012 ___________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 electronic public bond sale pilot program; and to amend chapter 304 of the laws of 2009, amending the local finance law relating to the establishment of an electronic public bond sale pilot program for Westchester coun- ty, in relation to extending the expiration date of the provisions thereof THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM- BLY, DO ENACT AS FOLLOWS: Section 1. Section 58.10 of the local finance law, as added by chapter 304 of the laws of 2009, is amended to read as follows: S 58.10 Electronic public bond sale pilot program. a. AS USED IN THIS SECTION, THE FOLLOWING TERMS SHALL MEAN: 1. "CLOSED AUCTION" MEANS A BOND SALE PROCEDURE THAT DOES NOT ALLOW A BIDDER TO RECEIVE INFORMATION WITH RESPECT TO THE RANKING OR ITS BIDS PRIOR TO THE CONCLUSION OF THE BIDDING PERIOD. 2. "COUNTY" MEANS THE COUNTY OF WESTCHESTER. 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 COUNTY'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
[(referred to in this section as the "program")]solely for the county [of Westchester (referred to in this section as the "county")]authorizing the county to conduct public bond sales through any [bidding services that are recognized nationally by the predominant users of electronic securities bidding services as providing an accurate, secure and reliable on-line bidding system (referred to in this section as "a]nationally recognized electronic securities bidding [service")]SERVICE.EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets [ ] is old law to be omitted. LBD14217-01-2 S. 6371 2
[b.]C. If the finance board of the county 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. ["Open auction" shall mean 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 provisions of the county's notice of such bond sale circulated in accordance with applicable requirements of this chapter. "Closed auction" shall mean a bond sale procedure that does not allow a bidder to receive information with respect to the rank- ing of its bids prior to the conclusion of the bidding period. Such]THE notice OF SUCH BOND SALE shall provide for the manner in which the bidding period may be extended and the basis for determination of the winning bidder. [c.]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 county shall not be required to accept non-electronic bids in any form. [d.]E. The county's chief fiscal officer shall administer the program and shall publish its policies and procedures for the procurement of electronic securities bidding services on the county's internet website and in a nationally recognized publication used by professionals in the bond market. Except as modified by this section, the county program shall comply with this chapter and all other applicable laws, rules and regulations related to the sale of bonds. [e.]F. The county'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 county. [f.]G. The county shall conduct evaluations of the pilot program [annually]BIENNIALLY with a summary evaluation [at]ON OR BEFORE THE FIRST OF APRIL PRECEDING the end of the [three year]pilot program. The county will submit the evaluations to the state comptroller, the tempo- rary president of the senate and the speaker of the assembly. 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 county. S 2. Section 2 of chapter 304 of the laws of 2009, amending the local finance law relating to the establishment of an electronic public bond sale pilot program for Westchester county, is amended to read as follows: S 2. This act shall take effect immediately and shall expire [3 years after such effective date]JANUARY 1, 2017, when upon such date the provisions of this act shall be deemed repealed. S 3. This act shall take effect immediately; provided that the amend- ments to section 58.10 of the local finance law, made by section one of this act, shall not affect the expiration and repeal of such section pursuant to section 2 of chapter 304 of the laws of 2009, as amended, and shall expire and be deemed repealed therewith.