S T A T E   O F   N E W   Y O R K
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                                  10293

                          I N  A S S E M B L Y

                             March 16, 2010
                               ___________

Introduced by M. of A. HOYT -- (at request of the New York State Housing
  Finance  Agency)  --  read once and referred to the Committee on Local
  Governments

AN ACT relating to redistributing  2009  bond  volume  allocations  made
  pursuant  to  section  146  of  the federal tax reform act of 1986, in
  relation to allocation of the unified state bond volume  ceiling,  and
  in  relation  to  enacting the private activity bond allocation act of
  2010 and providing for the expiration of certain provisions thereof

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

  Section  1.  Short  title. This act shall be known and may be cited as
the "private activity bond allocation act of 2010".
  S 2. Legislative findings  and  declaration.  The  legislature  hereby
finds and declares that the federal tax reform act of 1986 established a
statewide  bond  volume  ceiling  on  the issuance of certain tax exempt
private activity bonds  and  notes  and,  under  certain  circumstances,
governmental  use  bonds  and  notes  issued by the state and its public
authorities, local governments, agencies which issue on behalf of  local
governments,  and  certain  other  issuers.  The  federal tax reform act
establishes a formula for the allocation  of  the  bond  volume  ceiling
which  was  subject to temporary modification by gubernatorial executive
order until December 31, 1987. That act also permits state  legislatures
to  establish,  by  statute,  an  alternative formula for allocating the
volume ceiling. Bonds and notes subject to the volume ceiling require an
allocation from the state's annual volume ceiling in  order  to  qualify
for federal tax exemption.
  It  is  hereby  declared to be the policy of the state to maximize the
public benefit through the issuance of private activity  bonds  for  the
purposes  of,  among  other  things, allocating a fair share of the bond
volume ceiling upon initial allocation and from a bond reserve to  local
agencies  and for needs identified by local governments; providing hous-
ing and promoting economic  development;  job  creation;  an  economical
energy  supply;  and resource recovery and to provide for an orderly and
efficient volume ceiling allocation process for state and local agencies
by establishing an alternative formula for making such allocations.
  S 3. Definitions. As used in this act,  unless  the  context  requires
otherwise:
              

 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                      [ ] is old law to be omitted.
                                                           LBD15679-01-0

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  1. "Bonds" means bonds, notes or other obligations.
  2.  "Carryforward"  means  an  amount  of unused private activity bond
ceiling available to an issuer pursuant to an election  filed  with  the
internal revenue service pursuant to section 146(f) of the code.
  3. "Code" means the internal revenue code of 1986, as amended.
  4. "Commissioner" means the commissioner of the New York state depart-
ment of economic development.
  5.  "Covered  bonds" means those tax exempt private activity bonds and
that portion of the non-qualified amount of an issue of governmental use
bonds for which an allocation of the statewide ceiling is  required  for
the  interest  earned  by  holders of such bonds to be excluded from the
gross income of such holders for federal income tax purposes  under  the
code.
  6. "Director" means the director of the New York state division of the
budget.
  7. "Issuer" means a local agency, state agency or other issuer.
  8.  "Local  agency" means an industrial development agency established
or operating pursuant to article 18-A of the general municipal law,  the
Troy industrial development authority and the Auburn industrial develop-
ment authority.
  9.  "Other  issuer"  means  any agency, political subdivision or other
entity, other than a local agency or state agency, that is authorized to
issue covered bonds.
  10. "Qualified small issue bonds" means qualified small  issue  bonds,
as defined in section 144(a) of the code.
  11.  "State  agency"  means  the state of New York, the New York state
energy research and development authority, the New York job  development
authority,  the New York state environmental facilities corporation, the
New York state urban development corporation and its  subsidiaries,  the
Battery  Park  city  authority,  the  port authority of New York and New
Jersey, the power authority of the state  of  New  York,  the  dormitory
authority  of  the state of New York, the New York state housing finance
agency, the state of New York mortgage  agency,  and  any  other  public
benefit  corporation  or public authority designated by the governor for
the purposes of this act.
  12. "Statewide ceiling" means for any calendar year the highest  state
ceiling  (as such term is used in section 146 of the code) applicable to
New York state.
  13. "Future allocations" means allocations of statewide ceiling for up
to two future years.
  14. "Multi-year housing development project" means a project (a) which
qualifies for covered bonds; (b) which is to be constructed over two  or
more  years  and  (c)  in  which at least twenty percent of the dwelling
units will be occupied by persons and families of low income.
  S 4. Local agency set-aside. A  set-aside  of  statewide  ceiling  for
local  agencies for any calendar year shall be an amount which bears the
same ratio to one-third of the statewide ceiling as  the  population  of
the  jurisdiction  of  such  local agency bears to the population of the
entire state. The commissioner  shall  administer  allocations  of  such
set-aside to local agencies.
  S  5. State agency set-aside. A set-aside of statewide ceiling for all
state agencies for any calendar year shall be one-third of the statewide
ceiling. The director shall administer allocations of such set-aside  to
state  agencies  and  may  grant  an allocation to any state agency upon
receipt of an application in such form as the director shall require.

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  S 6. Statewide bond reserve. One-third of  the  statewide  ceiling  is
hereby  set  aside as a statewide bond reserve to be administered by the
director.
  1.  Allocation  of  the  statewide  bond reserve among state agencies,
local agencies and other issuers. The director shall transfer a  portion
of  the statewide bond reserve to the commissioner for allocation to and
use by local agencies and other issuers in accordance with the terms  of
this  section.  The remainder of the statewide bond reserve may be allo-
cated by the director to state agencies in accordance with the terms  of
this section.
  2.  Allocation  of  statewide  bond reserve to local agencies or other
issuers.
  (a) Local agencies or other issuers may  at  any  time  apply  to  the
commissioner  for  an  allocation  from the statewide bond reserve. Such
application shall demonstrate:
  (i) that the requested allocation is required under the code  for  the
interest  earned  on  the  bonds to be excluded from the gross income of
bondholders for federal income tax purposes;
  (ii) that the local  agency's  remaining  unused  allocation  provided
pursuant  to  section  four  of  this  act, and other issuer's remaining
unused allocation,  or any available carryforward will  be  insufficient
for the specific project or projects for which the reserve allocation is
requested; and
  (iii)  that,  except  for  those  allocations made pursuant to section
twelve of this act to enable carryforward elections, the requested allo-
cation is reasonably expected to be used during the calendar  year,  and
the requested future allocation is reasonably expected to be used in the
calendar year to which the future allocation relates.
  (b)  In  reviewing  and  approving  or  disapproving applications, the
commissioner shall exercise discretion to ensure an  equitable  distrib-
ution  of  allocations from the statewide bond reserve to local agencies
and other issuers. Prior to making a determination on such applications,
the commissioner shall notify and seek the recommendation of the  presi-
dent  and  chief executive officer of the New York state housing finance
agency in the case of an application related to the issuance  of  multi-
family  housing  or  mortgage  revenue  bonds,  and in the case of other
requests, such state officers, departments, divisions  and  agencies  as
the commissioner deems appropriate.
  (c)  Applications  for  allocations  shall  be  made  in such form and
contain such information and reports as the commissioner shall require.
  3. Allocation of statewide bond reserve to state agencies. The  direc-
tor  may make an allocation from the statewide bond reserve to any state
agency. Before making any allocation of statewide bond reserve to  state
agencies the director shall be satisfied:
  (a)  that  the  allocation is required under the code for the interest
earned on the bonds to be excluded from the gross income of  bondholders
for federal income tax purposes;
  (b)  that  the  state  agency's  remaining  unused allocation provided
pursuant to section five of this act or any available carryforward  will
be  insufficient  to  accommodate  the specific bond issue or issues for
which the reserve allocation is requested; and
  (c) that, except for those allocations made pursuant to section twelve
of this act to enable carryforward elections, the  requested  allocation
is  reasonably  expected  to  be  used during the calendar year, and the
requested future allocation is reasonably expected to  be  used  in  the
calendar year to which the future allocation relates.

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  S  7. Access to employment opportunities. 1. All issuers shall require
that any new employment opportunities created in connection with  indus-
trial  or manufacturing projects financed through the issuance of quali-
fied small issue bonds shall be listed with the New York  state  depart-
ment  of  labor and with the one-stop career center established pursuant
to the federal Workforce Investment Act (Pub.L. No. 105-220) serving the
locality in which the employment opportunities are being  created.  Such
listing  shall  be  in a manner and form prescribed by the commissioner.
All issuers shall further require that for any new  employment  opportu-
nities created in connection with an industrial or manufacturing project
financed  through  the  issuance  of qualified small issue bonds by such
issuer, industrial or manufacturing firms shall first  consider  persons
eligible to participate in Workforce Investment Act (Pub.L. No. 105-220)
programs  who  shall be referred to the industrial or manufacturing firm
by one-stop centers in  local  workforce  investment  areas  or  by  the
department of labor. Issuers of qualified small issue bonds are required
to  monitor compliance with the provisions of this section as prescribed
by the commissioner.
  2. Nothing in this section shall be  construed  to  require  users  of
qualified  small issue bonds to violate any existing collective bargain-
ing agreement with respect to the hiring of new  employees.  Failure  on
the  part  of any user of qualified small issue bonds to comply with the
requirements of this section shall not affect the allocation of  bonding
authority  to  the  issuer  of  the  bonds or the validity or tax exempt
status of such bonds.
  S 8. Overlapping jurisdictions. In a geographic area represented by  a
county local agency and one or more sub-county local agencies, the allo-
cation  granted by section four of this act with respect to such area of
overlapping jurisdiction shall be apportioned  one-half  to  the  county
local  agency  and  one-half to the sub-county local agency or agencies.
Where there is a local agency for the benefit of a  village  within  the
geographic  area  of  a  town  for the benefit of which there is a local
agency, the allocation of the village local agency shall be based on the
population of the geographic area of the village, and the allocation  of
the  town  local  agency  shall  be  based  upon  the  population of the
geographic area of the town outside of the village.  Notwithstanding the
foregoing, a local agency may surrender all or part  of  its  allocation
for  such  calendar  year  to  another  local agency with an overlapping
jurisdiction. Such surrender shall be made at  such  time  and  in  such
manner as the commissioner shall prescribe.
  S  9.  Ineligible local agencies. To the extent that any allocation of
the local agency set-aside would be made by this act to a  local  agency
which  is  ineligible to receive such allocation under the code or under
regulations interpreting the state  volume  ceiling  provisions  of  the
code, such allocation shall instead be made to the political subdivision
for whose benefit that local agency was created.
  S 10. Municipal reallocation. The chief executive officer of any poli-
tical  subdivision or, if such political subdivision has no chief execu-
tive officer, the governing board of the political subdivision  for  the
benefit  of  which a local agency has been established, may withdraw all
or any portion of the allocation granted by section four of this act  to
such  local agency. The political subdivision may then reallocate all or
any portion of such allocation, as well as all or  any  portion  of  the
allocation  received  pursuant to section nine of this act, to itself or
any other issuer established for the benefit of that political  subdivi-
sion  or may assign all or any portion of the allocation received pursu-

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ant to section nine of this act to the  local  agency  created  for  its
benefit. The chief executive officer or governing board of the political
subdivision,  as  the  case may be, shall notify the commissioner of any
such reallocation.
  S  11. Future allocations for multi-year housing development projects.
1.  In addition to other powers granted under this act, the commissioner
is authorized to make the  following  future  allocations  of  statewide
ceiling  for  any  multi-year  housing development project for which the
commissioner also makes an  allocation  of  statewide  ceiling  for  the
current  year under this act or for which, in the event of expiration of
provisions of this act described in section seventeen of  this  act,  an
allocation  of volume cap for a calendar year subsequent to such expira-
tion shall have been made under section 146 of the code:  (a)  to  local
agencies  from the local agency set-aside (but only with the approval of
the chief executive officer of the political subdivision  to  which  the
local  agency  set-aside  relates  or  the governing body of a political
subdivision having no chief executive officer) and (b) to other  issuers
from  that portion, if any, of the statewide bond reserve transferred to
the commissioner by the director. Any  future  allocation  made  by  the
commissioner shall constitute an allocation of statewide ceiling for the
future  year  specified  by the commissioner and shall be deemed to have
been made on the first day of the future year so specified.
  2. In addition to other powers granted under this act, the director is
authorized to make future allocations  of  statewide  ceiling  from  the
state agency set-aside or from the statewide bond reserve to state agen-
cies for any multi-year housing development project for which the direc-
tor  also makes an allocation of statewide ceiling from the current year
under this act or for which, in the event of expiration of provisions of
this act described in section seventeen of this act, and  allocation  of
volume  cap for a calendar year subsequent to such expiration shall have
been made under section 146 of the  code,  and  is  authorized  to  make
transfers  of  the statewide bond reserve to the commissioner for future
allocations to other issuers for multi-year housing development projects
for which the commissioner has made an allocation of  statewide  ceiling
for  the  current  year.  Any  such future allocation or transfer of the
statewide bond reserve for future allocation made by the director  shall
constitute  an allocation of statewide ceiling or transfer of the state-
wide bond reserve for the future years specified  by  the  director  and
shall be deemed to have been made on the first day of the future year so
specified.
  3.  (a)  If  an  allocation  made with respect to a multi-year housing
development project is not used by October  fifteenth  of  the  year  to
which  the  allocation  relates, the allocation with respect to the then
current year shall be  subject  to  recapture  in  accordance  with  the
provisions  of  section  eleven  of this act, and in the event of such a
recapture, unless a carryforward election by another issuer  shall  have
been  approved by the commissioner or a carryforward election by a state
agency shall have been approved by the director, all future  allocations
made  with respect to such project pursuant to subdivision one or two of
this section shall be canceled.
  (b) The commissioner and the director shall have the authority to make
future allocations from recaptured current year allocations and canceled
future allocations to  multi-year  housing  development  projects  in  a
manner consistent with the provisions of this act. Any such future allo-
cation  shall,  unless  a  carryforward election by another issuer shall
have been approved by the commissioner or a carryforward election  by  a

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state  agency  shall  have been approved by the director, be canceled if
the current year allocation for the project is not used by December  31,
2010.
  (c)  The  commissioner  and  the  director  shall establish procedures
consistent with the provisions of this act relating to  carryforward  of
future allocations.
  4.  The aggregate future allocations from either of the two succeeding
years shall not exceed six hundred fifty million dollars for  each  such
year.
  S  12.  Year  end  allocation recapture. On or before October first of
each year, each state agency shall report to the director and each local
agency and each other issuer shall report to the commissioner the amount
of bonds subject to allocation under this act that will be issued  prior
to  the  end  of  the  then current calendar year, and the amount of the
issuer's then total allocation that will remain unused.  As  of  October
fifteenth  of  each  year, the unused portion of each local agency's and
other issuer's then total allocation as  reported  and  the  unallocated
portion  of  the  set-aside  for  state agencies shall be recaptured and
added to the statewide bond reserve and shall no longer be available  to
covered  bond  issuers except as otherwise provided herein. From October
fifteenth through the end of the year, each local agency or other issuer
having an allocation shall immediately report to  the  commissioner  and
each  state  agency having an allocation shall immediately report to the
director any changes to the status of its allocation or  the  status  of
projects  for  which  allocations have been made which should affect the
timing or likelihood of the issuance of covered bonds therefor.  If  the
commissioner  determines that a local agency or other issuer has overes-
timated the amount of covered bonds subject to allocation that  will  be
issued  prior  to  the  end  of  the calendar year, the commissioner may
recapture the amount of the allocation to such  local  agency  or  other
issuer  represented by such overestimation by notice to the local agency
or other issuer, and add such allocation to the statewide bond  reserve.
The  director  may  likewise  make such determination and recapture with
respect to state agency allocations.
  S 13. Allocation carryforward. 1. No  local  agency  or  other  issuer
shall  make  a  carryforward  election  utilizing  any unused allocation
(pursuant to section 146(f) of the code) without the prior  approval  of
the  commissioner.  Likewise  no state agency shall make or file such an
election, or elect to issue  or  carryforward  mortgage  credit  certif-
icates, without the prior approval of the director.
  2.  On  or  before  November fifteenth of each year, each state agency
seeking unused statewide ceiling for use in future years  shall  make  a
request  for  an  allocation  for  a carryforward to the director, whose
approval shall be required before a carryforward election is filed by or
on behalf of any state agency. A later request may also be considered by
the director, who may file a carryforward election for any state  agency
with the consent of such agency.
  3.  On or before November fifteenth of each year, each local agency or
other issuer seeking unused statewide ceiling for use  in  future  years
shall make a request for an allocation for a carryforward to the commis-
sioner,  whose approval shall be required before a carryforward election
is filed by or on behalf of any local or other agency. A  later  request
may also be considered by the commissioner.
  S  14.  New York state bond allocation policy advisory panel. 1. There
is hereby created a policy advisory panel and process to provide  policy

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advice  regarding the priorities for distribution of the statewide ceil-
ing.
  2.  The  panel  shall  consist  of  five  members,  one designee being
appointed by each of the following: the governor, the  temporary  presi-
dent  of the senate, the speaker of the assembly, the minority leader of
the senate and the minority leader of the assembly. The designee of  the
governor  shall  chair the panel. The panel shall monitor the allocation
process through the year, and in that regard, the division of the budget
and the department of economic development shall  assist  and  cooperate
with  the  panel as provided in this section. The advisory process shall
operate through the issuance of advisory  opinions  by  members  of  the
panel as provided in subdivisions six and seven of this section. A meet-
ing  may  be held at the call of the chair with the unanimous consent of
the members.
  3. (a) Upon receipt of a request  for  allocation  or  a  request  for
approval  of  a  carryforward election from the statewide reserve from a
local agency or other issuer, the commissioner shall, within five  work-
ing  days,  notify  the panel of such request and provide the panel with
copies of all application materials submitted by the applicant.
  (b) Upon receipt of a request for allocation or a request for approval
of carryforward election from the statewide reserve from a state agency,
the director shall, within five working days, notify the panel  of  such
request  and  provide the panel with copies of all application materials
submitted by the applicant.
  4. (a) Following receipt of a request  for  allocation  from  a  local
agency  or  other  issuer,  the commissioner shall notify the panel of a
decision to approve or exclude from further consideration such  request,
and the commissioner shall state the reasons. Such notification shall be
made  with  or  after  the  transmittal  of the information specified in
subdivision three of this section and at least five working days  before
formal notification is made to the applicant.
  (b) Following receipt of a request for allocation from a state agency,
the  director shall notify the panel of a decision to approve or exclude
from further consideration such request, and shall  state  the  reasons.
Such  notification  shall  be made with or after the transmission of the
information specified in subdivision three of this section and at  least
five  working days before formal notification is made to the state agen-
cy.
  5. The requirements of subdivisions three and  four  of  this  section
shall  not apply to adjustments to allocations due to bond sizing chang-
es.
  6. In the event that any  decision  to  approve  or  to  exclude  from
further  consideration a request for allocation is made within ten work-
ing days of the end of the calendar year and in the case of all requests
for consent to a carryforward election, the commissioner or director, as
is appropriate, shall  provide  the  panel  with  the  longest  possible
advance  notification of the action, consistent with the requirements of
the code, and shall, wherever possible,  solicit  the  opinions  of  the
members  of  the  penal  before  formally notifying any applicant of the
action. Such notification may be made by  means  of  telephone  communi-
cation  to  the  members  or  by  written notice delivered to the Albany
office of the appointing authority of the respective members.
  7. Upon notification by the director or the commissioner,  any  member
of  the  panel may, within five working days, notify the commissioner or
the director of any policy objection concerning the expected action.  If
three  or  more  members  of the panel shall submit policy objections in

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writing to the intended action, the commissioner or the  director  shall
respond  in writing to the objection prior to taking the intended action
unless exigent circumstances make it  necessary  to  respond  after  the
action has been taken.
  8.  On  or  before  the  first day of March, in any year, the director
shall report to the members of the New York state bond allocation policy
advisory panel on the actual utilization of volume cap for the  issuance
of bonds during the prior calendar year and the amount of such cap allo-
cated  for  carryforward  for  future  bonds  issuance. The report shall
include, for each local agency or other issuer and each state agency the
initial allocation, the amount of bonds  issued  subject  to  the  allo-
cation,  the amount of the issuer's allocation that remained unused, the
allocation of the statewide bond reserve, carryforward  allocations  and
recapture of allocations.  Further, the report shall include projections
regarding private activity bond issuance for state and local issuers for
the  calendar  year,  as  well  as  any  recommendations for legislative
action.
  S 15. Severability. If any clause, sentence,  paragraph,  section,  or
part  of  this act shall be adjudged by any court of competent jurisdic-
tion to be invalid, such judgment shall not affect, impair,  or  invali-
date  the  remainder  thereof, but shall be confined in its operation to
the clause, sentence,  paragraph,  section,  or  part  thereof  directly
involved  in  the  controversy  in  which  such judgment shall have been
rendered.
  S 16. Notwithstanding any provisions of this act to the  contrary  (1)
provided  that  a  local agency or other issuer certifies to the commis-
sioner on or before October 1, 2010 that it has issued private  activity
bonds described in this section and the amount thereof which used state-
wide ceiling, a commitment or allocation of statewide ceiling to a local
agency  or other issuer made to or so used by such local agency or other
issuer pursuant to the federal tax reform act of 1986 on or after  Janu-
ary  1,  2010  and prior to the effective date of this act, in an amount
which exceeds the local agency set-aside established by section four  of
this act, shall be first chargeable to the statewide bond reserve estab-
lished  pursuant  to  section  six  of this act, and (2) a commitment or
allocation of statewide ceiling to a state agency made  to  or  used  by
such  agency  pursuant  to  the internal revenue code, as amended, on or
after January 1, 2010 and prior to the effective date of this act, shall
be first chargeable to the state agency set-aside  established  pursuant
to  section  five  of  this  act, and, thereafter, to the statewide bond
reserve established by section six of this act.
  S 17. Nothing contained in this act  shall  be  deemed  to  supersede,
alter  or  impair any allocation used by or committed by the director or
commissioner to a state or local agency or other issuer pursuant to  the
federal  tax  reform act of 1986 and prior to the effective date of this
act.
  S 18. This act shall take effect immediately; provided, however,  that
sections  three  through  fourteen  of  this act shall expire January 1,
2011; except that the provisions of subdivision eight of  section  four-
teen of this act shall expire March 1, 2011 and the provisions of subdi-
visions  two  and  three  of  section  thirteen of this act shall expire
February 15, 2011, and, provided further that section eleven of this act
shall continue in full force and effect and  shall  be  subject  to  the
applicable provisions of this act notwithstanding the expirations of law
set forth in this section.