BILL NUMBER: S8941
SPONSOR: BORRELLO
 
TITLE OF BILL:
An act relating to the city of Dunkirk fiscal recovery act; and provid-
ing for the repeal of such provisions upon expiration thereof
 
PURPOSE OR GENERAL IDEA OF BILL:
This bill would authorize the City of Dunkirk ("City") to issue bonds to
liquidate certain actual deficits, impose on the City additional fiscal
accountability requirements, and provide for the establishment of a
Special Debt Service Fund for the City to be held by the Comptroller of
the State of New York ("State Comptroller"), in order to restore the
City's fiscal integrity and improve its ability to market bonds.
 
SUMMARY OF PROVISIONS:
Section 1 of the bill would set forth the short title of the act as the
City of Dunkirk Fiscal Recovery Act ("DFRA").
Section 2 of the bill would set forth definitions for the DFRA.
Section 3 of the bill would authorize the City to issue bonds on or
before December 31, 2025 in an aggregate principal amount not to exceed
$18,500,000, for the purpose of liquidating actual deficits in its
General Fund, Water Fund, Sewer Fund, and Capital Projects Fund existing
at the close of its 2024 fiscal year.
Section 4 of the bill would provide that the financing of the deficits
described in section 3 of the bill is a purpose of the City for which
indebtedness may be incurred, the period of probable usefulness of which
would be fixed at 15 years.
Section 5 of the bill would provide that no deficit bonds may be issued
unless and until the State Comptroller has first reviewed and confirmed
the existence of the deficits described in section 3 of the bill and
certified the amount of such deficits.
Section 6 of the bill would provide that deficit bonds may not be issued
in an amount exceeding the amount of the deficits certified by the State
Comptroller pursuant to section 5 of the bill. Any amount of deficit
notes issued in excess of the certified deficit amount would need to be
either redeemed or deposited in the Special Debt Service Fund estab-
lished in section 13 of the bill.
Section 7 of the bill would require the City Treasurer to prepare quar-
terly reports comparing budgeted revenues and expenditures to actual
revenues and expenditures, along with a trial balance of general ledger
accounts. Each report would also include actions recommended by the City
Fiscal Affairs Officer to resolve any unfavorable budget variance.
Section 8 of the bill would require the State Comptroller to examine the
City's proposed budget and make recommendations thereon to the city
prior to the adoption of the budget. The City Council would be required
to adjust the proposed budget consistent with any such recommendations.
Section 9 of the bill would require the City Fiscal Affairs Officer to
prepare, along with the proposed budget, a 3-year financial plan cover-
ing the next succeeding fiscal year and the two fiscal years thereafter,
which would at a minimum contain: projected employment levels; projected
annual expenditures; reserve fund amounts; estimated annual revenues;
and the proposed use of onetime revenue sources. In addition, the finan-
cial plan would identify actions necessary to achieve and maintain long-
term fiscal stability, including, but not limited to, improved manage-
ment practices, initiatives to minimize or reduce operating expenses,
and potential shared services agreements with other municipalities. The
City Fiscal Affairs Officer would be required to update the financial
plan consistent with the adopted budget and quarterly budget reports.
Section 10 of the bill would require the City Treasurer to notify the
State Comptroller at least 15 days prior to the issuance of any bonds or
notes or entering into any installment purchase contract, and the State
Comptroller may review arid make recommendations regarding the afforda-
bility to the City of any such proposed issuance or contract.
Section 11 of the bill would authorize the private sale of deficit
bonds, any refunding of such deficit bonds, and any other bonds issued
by the City on or before December 31, 2025, subject to the approval of
the State Comptroller of the terms and conditions of such sales.
Section 12 of the bill would require all proceedings in connection with
the issuance of such deficit bonds or deficit notes to be taken in
accordance with the provisions of the Local Finance Law ("LFL");
provided, however, that the City's bond resolutions would not be subject
to (i) any mandatory or permissive referendum, (ii) LFL § 107.00 with
respect to any requirements for a down payment, and (iii) the provisions
applicable to municipalities authorized to incur debt to liquidate oper-
ating deficits under LFL § 10.10.
Section 13 of the bill would require the City, upon the issuance of any
deficit bonds or deficit notes, to establish a Special Debt Service Fund
with the State Comptroller for the purpose of paying City debt service
due or becoming due in subsequent fiscal years. The State Comptroller
would be authorized to deposit State aid payable to the City and a
portion of the City's property tax collections in the Special Debt
Service Fund as necessary to ensure sufficient moneys are available to
make scheduled debt service payments over the succeeding twelve-month
period after accounting for the City's receipt of taxes and State aid
during such period. As soon as practicable thereafter, the State Comp-
troller would be required to pay over to the City any remaining amounts
of State aid and City property taxes that are not needed to reserve for
debt service.
Section 14 of the bill would set forth the State's pledge to the holders
of any bonds, notes or other obligations issued by the City during the
effective period of the DFRA that the State will not limit, alter or
impair the rights vested in the City to fulfill the terms of any agree-
ments made with bondholders pursuant to the DFRA, and would clarify that
nothing contained in the DFRA would obligate the state to make any
payments or impose any taxes to satisfy the debt service obligations of
the City or restrict any right of the State to amend, modify, repeal or
otherwise alter LFL § 54 or any other provision relating to state aid,
taxes or fees.
Section 15 of the bill would set forth the rights of bondholders and the
State Comptroller to commence an action in Chautauqua County Supreme
Court if the City fails to comply with any provision of this bill.
Section 16 of the bill would set forth a severability clause.
Section 17 of the bill Would take effect immediately, and the DFRA would
remain in effect for a 15-year period following the first issuance of
deficit bonds or deficit notes pursuant to the DFRA.
 
JUSTIFICATION:
The fiscal health of the City of Dunkirk has significantly worsened in
recent years due to the closure of the NRG electric generation plant.
This has created a substantial imbalance between revenues and expendi-
tures, resulting in a deficit for the city.
The comprehensive measures outlined in this Act are essential for
restoring the City's fiscal health and bolstering its capacity to
attract bond investments. This legislation requires stricter budget
controls and heightened financial supervision by the State, introduces a
State-managed debt service fund to guarantee timely bondholder payments,
and allows for temporary deficit financing to safeguard critical City
services during the recovery phase aimed at achieving longterm fiscal
stability.
 
FISCAL IMPLICATIONS:
The State Comptroller's administrative responsibilities under this Act
could be accomplished within existing resources. By authorizing the City
to issue deficit bonds, this bill would help the City to restore its
fund balance while also maintaining adequate essential services. The
bill's enhanced fiscal oversight of the City and Special Debt Service
Fund would improve the City's ability to market future bond and note
issues at a lower cost.