BILL NUMBER: S47
SPONSOR: WALCZYK
 
TITLE OF BILL:
An act to amend the local finance law, in relation to the establishment
of an electronic open auction public bond sale pilot program for munici-
palities; and providing for the repeal of such provisions upon expira-
tion thereof
 
PURPOSE OR GENERAL IDEA OF BILL:
The purpose of this bill is to establish a three year pilot program for
all municipalities to sell municipal bonds via an open auction format
instead of by a closed bid format. Such open auction would be conducted
via an electronic means instead of being done in person. This pilot
program would be used to assess the financial and administrative advan-
tages of selling bonds via an open auction form at by a nationally
recognized electronic securities bidding platform.
 
SUMMARY OF PROVISIONS:
Section 1: Adds a new Local Finance Law section, 58.20 to establish a
statewide electronic open auction 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, (Which established the Westchester
County open and closed auction pilot program) 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 for open auctions. 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 open auction electronic public bond sale
pilot program for municipalities, in addition to already existing statu-
tory authority for the county of Westchester to conduct such s ales.
-Paragraph (c) provides that open auction electronic bidding will be
conducted through certain nationally recognized electronic securities
bidding services.
-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:
Currently, ten states, including California, New Jersey, Ohio and Texas,
have enacted legislation that allow municipalities to conduct public
bond sales through nationally recognized bidding firms (many of them by
the electronic bidding open auction format).
Open auctions are a cost saving tool that has allowed municipalities to
find lower interest rates and save money. With an average savings of 9
basis points per transaction, state such as California and Pennsylvania
that have the most experience with open auctions see savings as large as
21 basis points. When used with large bond offerings in other states,
open auctions have translated into millions of dollars in savings for
municipalities in other states that use open auctions. For example, the
Hanover Park Regional High School District in New Jersey saved approxi-
mately $63,000 on a $9.75 million bond.
With the important focus throughout the state on insuring financial
efficiencies, municipalities must be given every possible tool to save
money. This program has no financial impact on the state and requires
nothing of the a municipality, it simply grants the use of another tool
that has been developed as technology evolves.
 
PRIOR LEGISLATIVE HISTORY:
A9270/S6579-A (2013): Referred to Local Government
A1625/S4142 (2015): Referred to Local Government
A2536/S3849 (2017): Referred to Local Government
A6756/S7577 (2019): Referred to Local Government
A4416/S2295 (2021): Referred to Local Government
A5137/S4284 (2023): Referred to Local Government
 
FISCAL IMPLICATIONS FOR STATE AND LOCAL GOVERNMENTS:
None to the State.
 
EFFECTIVE DATE:
Immediately and shall sunset three years after it goes into effect.