BILL NUMBER: S9902
SPONSOR: RYAN C
 
TITLE OF BILL:
An act to amend chapter 629 of the laws of 2005, amending the local
finance law relating to refunding bonds, in relation to extending the
effectiveness thereof
 
PURPOSE OF THE BILL:
The bill would extend to September 30, 2029 provisions relating to bonds
issued to the Environmental Facilities Corporation ("EFC") in connection
with hardship State Revolving Fund ("SRF") financing.
 
SUMMARY OF PROVISIONS:
Section 1 of the bill would extend until September 30, 2029 the "sunset"
provision of Section 2 of Chapter 629 of the Laws of 2005, thereby
extending for an additional three years the provisions of Local Finance
Law ("LFL") § 90.00(c)(2) which authorize municipalities with hardship
SRF financing who are seeking to extend the term of their existing loans
through refinancing through the SRF and whose current bonds or notes are
within 5 years of issuance, to sell their refunding bonds to EFC without
requiring a showing of savings.
Section 2 of the bill provides for an immediate effective date.
 
JUSTIFICATION:
EFC administers the Clean Water State Revolving Fund ("CWSRF") and the
Drinking Water State Revolving Fund ("DWSRF"). Under these SRF programs,
EFC provides low cost financial assistance to municipalities and other
entities for water and wastewater infrastructure and other environmental
projects. As of June 1, 2025, EFC has issued approximately $23 billion
in State Revolving Fund Bonds under the CWSRF program and the DWSRF
program for the purpose of providing financial assistance to local
governments and public benefit corporations. Under both the CWSRF and
the DWSRF, EFC is authorized to provide assistance in several forms to
recipients for the purpose of financing or refinancing their capital
projects.
Recipients with high cost projects that serve residential areas may
qualify for a reduced interest rate or interest-free financing through
either SRF program. Additionally, EFC's reduced interest rate financings
assist those recipients facing financial hardship. In order to expand
options available to the recipients of financial assistance from the
CWSRF and DWSRF, EFC expanded the forms of financing offered through the
programs including investing in, or purchasing of, municipal debt obli-
gations. Through this additional form of financing, EFC is able to
extend the term of the recipient's payment obligation on the EFC financ-
ing to up to 30 years for all SRF recipients facing fiscal hardship.
Therefore, fiscally distressed municipalities that qualify for hardship
financing under the CWSRF and DWSRF extended-term financing at a zero
percent interest rate may reduce their annual debt service by refihanc-
ing for a period of greater than 20 years. In addition to refunding
bonds extending the term of their SRF financings, some municipalities
may wish to refund bonds issued to lenders other than EFC with an EFC
hardship financing.
Municipalities wishing to refund serial bonds, however, are subject to
the requirements of LFL § 90.00. Prior to enactment of Chapter 629 of
the Laws of 2005, municipalities refunding notes or bonds within five
years of issuance were required to show net present value savings
computed in accordance with LFL § 90.10(b)(2)(a), which states that
refunding bonds shall only be issued in the event that the present value
of the total payments of both principal and interest to become due on
the refunding bonds shall be less than the present value of the princi-
pal and interest to become due at their stated maturities on the princi-
pal amount of the bonds to be refunded.
For refinancings involving an extension from 20 to 30 years, it was
impossible for the fiscally distressed municipality to show present
value savings because this type of refinancing merely trades one zero
interest financing for another. However, the reduction in annual debt
service can be dramatic. Therefore, these fiscally distressed munici-
palities were forced to delay valuable refinancing opportunities, which
would provide them with fiscal relief through a longer term, and lower
annual debt service payments. By remedying this anomaly and eliminating
the approval for refundings involving savings, Chapter 629 provided a
valuable and important financing mechanism for municipalities that this
bill would continue for an additional three years.
 
PRIOR LEGISLATIVE HISTORY:
These provisions were extended until September 30, 2011 by Chapter 277
of the Laws of 2008; until September 30, 2014 by Chapter 72 of the Laws
of 2011; until September 30, 2017 by Chapter 158 of the Laws of 2014;
until September 30, 2020 by Chapter 45 of the Laws of 2017; until
September 30, 2023 by Chapter 58 of the Laws of 2020; and until Septem-
ber 30, 2026 by Chapter 343 of the laws of 2023.
 
FISCAL IMPLICATIONS:
The bill would have no budget implications to the State.
 
EFFECTIVE DATE:
The bill would take effect immediately.