N.Y. Comp. Codes R. & Regs. tit. 9 § 4.87

Current through Register Vol. 46, No. 25, June 18, 2024

Section 4.87 - Executive order no. 87: prescribing procedures to allocate the unified state bond volume ceiling under the tax reform act of 1986

WHEREAS, The Tax Reform Act of 1986 ("act") establishes a unified statewide bond ceiling ("statewide ceiling") for tax exempt private activity bonds and the private use portion of a governmental use bond on a per capita basis for New York State;

WHEREAS, The statewide ceiling applies to certain tax exempt private activity bonds and, under certain circumstances and to a certain extent, with respect to the nonqualified amount of an issue of governmental use bonds (together "covered bonds") issued by the State and its agencies ("State agencies"), agencies issuing on behalf of local governments ("local agencies") and other issuers ("other issuers");

WHEREAS, The statewide ceiling for covered bonds for New York State is $75 per resident for the balance of the calendar year 1986 and $75 per resident for calendar year 1987, based on the most recent population estimate provided by the United States Bureau of the Census before the beginning of the calendar year to which the limitation applies;

WHEREAS, The application of the statewide ceiling to projects and programs financed by covered bonds in New York State will require annual allocation authorizations to State and local agencies and other issuers which may limit the ability of certain issuers to finance projects and programs and will require that all issues of such bonds be coordinated in order to meet the requirements of the act relating to the ceiling;

WHEREAS, The State should maximize the public benefit of covered bond issues and minimize conflicts among issuing agencies;

WHEREAS, For certain issues the State should maximize the impact of business development and job development incentives particularly on distressed areas of the State; and

WHEREAS, The act authorizes the governor of each state to proclaim a formula for allocating the covered bond volume limit among such governmental units and other authorities in the state as have authority to issue covered bonds;

NOW, THEREFORE, I, Mario M. Cuomo, Governor of the State of New York, by virtue of the authority vested in me by the Constitution and laws of the State of New York and the Tax Reform Act of 1986, do hereby proclaim and order as follows:

I. Definitions

A. Code shall mean the Internal Revenue Code of 1986.

B. Covered bonds shall mean those tax exempt private activity bonds and that portion of the nonqualified amount of an issue of governmental use bonds to which an allocation of the statewide ceiling is necessary to preserve the tax exempt status of such bonds under the code.

C. Issuer shall mean a local agency, State agency or other issuer.

D. Local agency shall mean 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 Development Authority.

E. Other issuer shall mean any agency, political subdivision or other entity, other than a local agency or State agency, that is authorized to issue covered bonds.

F. Qualified small issue bonds shall mean qualified small issue bonds, as defined in section 144(a) of the code.

G. State agency shall mean the State of New York, New York State Energy Research and Development Authority, New York Job Development Authority, New York State Environmental Facilities Corporation, New York State Urban Development Corporation and its subsidiaries, Battery Park City Authority, Port Authority of New York and New Jersey, Power Authority of the State of New York, Dormitory Authority of the State of New York, New York State Housing Finance Agency, State of New York Mortgage Agency and any other State agency designated by the Governor.

H. Statewide ceiling shall mean for any calendar year the state ceiling (as such term is used in section 146 of the code) applicable to New York State.

II. Aggregate Amount of Covered Bonds

A. Covered bond limit for local agencies--in general. The covered bond limit for local agencies for any calendar year shall be an amount which bears the same ratio to two fifths (40 percent) of the statewide ceiling as the population of the jurisdiction of such local agency bears to the population of the entire State.

B. Covered bond limit for State agencies--in general. The covered bond limit for all State agencies for any calendar year shall be two fifths (40 percent) of the statewide ceiling. The Director of the Budget shall administer allocations under the State agency limit and may grant an allocation to any State agency.

C. Overlapping jurisdictions. In a geographic area represented by a county local agency and one or more subcounty local agencies, the allocation granted by paragraph A of this section with respect to such area shall be split one-half to the county local agency and one-half to the subcounty 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 elect to surrender all or part of its allocation for such calendar year to another local agency with an overlapping jurisdiction. Such election shall be made at such time and in such manner as the Commissioner of Commerce shall prescribe.

D. Ineligible local agencies. To the extent that any allocation of the covered bond limit would be made by this Order to a local agency which is ineligible to receive such allocation under the code or under regulations interpreting the state volume cap provisions of the code, such allocation shall instead be made to the political subdivision for whose benefit that local agency was created.

E. Municipal reallocation. The chief executive officer of any political subdivision or, if such political subdivision has no chief executive 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 paragraph A of this section to such local agency and reallocate all or any portion of such allocation, as well as all or any portion of the allocation received pursuant to paragraph D of this section, to the political subdivision or other issuer established for the benefit of that political subdivision or may assign all or any portion of the allocation received pursuant to paragraph D of this section 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 Commerce of any such reallocation.

F. Statewide bond reserve. One fifth (20 percent) of the statewide ceiling is hereby allocated to the Division of the Budget for a statewide bond reserve to be administered by the Director of the Budget.

1. Allocation of the statewide bond reserve among State and local agencies and other issuers. The Director of the Budget shall transfer a portion of the statewide bond reserve to the Commissioner of Commerce 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 allocated by the Director of the Budget to State agencies, in accordance with the terms of this section.

2. Allocation of statewide bond reserve to local agencies or other issuers.

Local agencies or other issuers may at any time apply to the Commissioner of Commerce for an allocation from the statewide bond reserve. Such application shall demonstrate:

that in the case of an issue of governmental use bonds, the requested allocation is necessary to preserve its tax-exempt status;

that in the case of an issue of covered bonds to be issued by a local agency or other issuer prior to the close of the calendar year for which the allocation is requested, the local agency's or other issuer's remaining unused allocation will be insufficient to finance the specific project or projects; and

that in the case of an issue of covered bonds (other than governmental use bonds), the proposed project or projects for which the allocation is requested constitute a valid public purpose and, in the case of qualified small issue bonds, would contribute to economic development in New York State.

The Commissioner of Commerce shall not approve any allocation from the statewide bond reserve for an issue the proceeds of which are to be used directly or indirectly for:

a commercial facility more than 25 percent of which is used to make retail sales of goods or services to customers who personally visit such facility to obtain goods or services, unless such facility is to be located in a chronically depressed area as defined by the Commissioner of Commerce;

a commercial facility more than 25 percent of which is used by doctors, lawyers or similar professionals in the course of a business which principally serves local markets, unless such facility is located in a chronically depressed area as defined by the Commissioner of Commerce;

a commercial facility primarily used for overnight lodging, unless such facility is located in a chronically depressed area as defined by the Commissioner of Commerce, or unless such facility is primarily used in support of tourism development as defined by the Commissioner of Commerce; or

a facility licensed and regulated pursuant to article 28 of the Public Health Law.

In reviewing and approving or disapproving applications, the Commissioner of Commerce shall exercise discretion to ensure an equitable distribution of allocations from the statewide bond reserve to local agencies and other issuers.

Applications for allocations shall be made in such form and contain such information and reports as the Commissioner of Commerce shall require.

3. Allocation of statewide bond reserve to State agencies. The Director of the Budget may grant an allocation from the statewide bond reserve to any State agency.

4. Year-end allocation adjustment. On or before November 5th of each year, each State agency shall report to the Director of the Budget, and each local agency and each other issuer shall report to the Commissioner of Commerce, the amount of bonds subject to allocation that will be issued prior to the end of the then current calendar year, and the amount of the issuer's allocation that will remain unused. As of November 20th of each year, the unused portion of each issuer's allocation as reported and the unallocated portion of the covered bond limit for State agencies shall be added to the statewide bond reserve and shall no longer be available to the issuers except as otherwise provided herein. On or before December 1st of each year, each issuer shall update its report on its bond issuance plans and any additional portion of each issuer's allocation that will remain unused as so reported shall be added to the statewide bond reserve as of December 1st of such year. Notwithstanding the foregoing, if the Commissioner of Commerce determines that a local agency or other issuer has overestimated the amount of bonds subject to allocation that will be issued prior to the end of the calendar year, he may withdraw 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.

G. Carry-forward of allocation.

1. No local agency or other issuer shall exercise its option to carry forward a portion of its annual allocation for use in future years (pursuant to section 146[f] of the code) without the prior approval of the Commissioner of Commerce. No State agency shall exercise such an option or elect to issue or carry forward mortgage credit certificates without the prior approval of the Director of the Budget.

2. On or before November 20th of each year, each State agency seeking to carry forward an allocation for use in future years shall make a request for such a carry-forward to the Director of the Budget. A later request may also be considered by the director. The director may authorize or file a carry-forward for any State agency.

3. On or before November 20th of each year, each local agency or other issuer seeking to carry forward an allocation for use in future years shall make a request for such a carry-forward to the Commissioner of Commerce. A later request may also be considered by the commissioner. The commissioner may authorize a carry-forward for any local agency or other issuer.

H. Access to employment opportunities. It is the policy of New York State to assure that the use of qualified small issue bonds results in the creation of new job opportunities for poor and chronically unemployed New Yorkers.

1. All issuers shall require that any new employment opportunities created in connection with industrial or commercial projects financed through the issuance of qualified small issue bonds shall be listed with the New York State Department of Labor, Job Service Division, and with the administrative entity of the service delivery area created pursuant to the Job Training Partnership Act ( P.L. 97-300 ) in which the project is located. Such listing shall be in a manner and form prescribed by the Commissioner of Commerce.

2. Each State agency shall further require that, to the extent practicable and feasible, at least 10 percent of any new jobs created in connection with an industrial or commercial project financed through the issuance of qualified small issue bonds by such agency in amounts of $1 million or more shall be filled by persons eligible for service under the Job Training Partnership Act.

3. Issuers of qualified small issue bonds are required to monitor compliance with the provisions of this section as prescribed by the Commissioner of Commerce.

4. Nothing in this section shall be construed to require users of qualified small issue bonds to violate any existing collective bargaining agreement with respect to the hiring of new employees.

5. 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 issuing agency or the validity or tax-exempt status of such bonds.

III. Procedures and Guidelines

The Director of the Budget and Commissioner of Commerce are authorized and directed to establish procedures and guidelines to implement the provisions of this Order. Such procedures and guidelines shall set forth the amount of the statewide ceiling and provide guidance for issuers, procedures for making applications, standards and criteria for granting approvals, allocations, carry-forwards of allocations and certifications, and a method for tracking the issuance of covered bonds by issuers. Such procedures and guidelines may address any other matters the Director of the Budget and Commissioner of Commerce deem appropriate.

IV. Effectiveness

This Order shall take effect immediately. Nothing contained in this Order shall be deemed to supersede, alter or impair any provision of (i) the Executive Order prescribing procedures to allocate the private activity bond volume ceiling under the Deficit Reduction Act of 1984 or (ii) the Tax Reform Act of 1986 (other than the provisions of section 146[b] and [c] of the code) or any regulations promulgated thereunder. If any provision of this Order is adjudged or ruled invalid, such judgment or ruling shall not affect any other provisions of this Order.

V. Retroactivity

A. Prior issues. For covered bonds subject to allocation which were issued by an issuer after August 15, 1986 and prior to the effective date of this Order, there shall be allocated to such issuer the amount of such covered bonds in accordance with the terms of this section. There shall be allocated to a local agency, pursuant to paragraph A of section II of this Order, the amount of covered bonds subject to allocation which were issued by such local agency after August 15, 1986 and prior to the effective date of this Order. Any allocation to a local agency pursuant to paragraph A of section II of this Order shall be reduced by the amount of covered bonds subject to allocation which were issued by such local agency after August 15, 1986 and prior to the effective date of this Order. There shall be allocated to a State agency pursuant to paragraph B of section II of this Order the amount of covered bonds subject to allocation which were issued by such State agency after August 15, 1986 and prior to the effective date of this Order. If the amount of covered bonds issued after August 15, 1986 and prior to the effective date of this Order by a local agency exceeds the allocation pursuant to such paragraph A, or in the case of such covered bonds issued by a State agency the allocation pursuant to such paragraph B, there shall be allocated to such local agency or State agency, as the case may be, from the statewide bond reserve the amount of such excess. There shall also be allocated to any other issuer from the statewide bond reserve the amount of any covered bonds subject to allocation which were issued by such other issuer after August 15, 1986 and prior to the effective date of this Order.

B. Reports. On or before November 1, 1986, each State agency shall report to the Director of Budget, and each local agency and other issuer shall report to the Commissioner of Commerce, the amount of covered bonds subject to allocation in accordance with the terms of this section which were issued after August 15, 1986 and prior to the effective date of this Order.

VI. Amendments

This Order may be amended or modified from time to time.

VII. Expiration

The provisions of this Order shall expire on the earlier of the effective date of legislation enacted into law for the purpose of allocating the statewide ceiling under the Tax Reform Act of 1986, or December 31, 1987, and be of no further effect after that date.

Signed: Mario M. CuomoDated: October 24, 1986

[FN*] [Revoked by Executive Order No. 29 (George E. Pataki), infra.]

[FN[DAGGER]] [Revoked by Executive Order No. 5 (Eliot Spitzer), infra.]

[Revoked by Executive Order No. 9 (David A. Paterson), infra.]

[Revoked by Executive Order No. 2 (Andrew M. Cuomo), infra.]

N.Y. Comp. Codes R. & Regs. Tit. 9 § 4.87