N.Y. Comp. Codes R. & Regs. tit. 9 § 1643-2.7

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

Section 1643-2.7 - Permanent financing

(a) Sale of bonds.

(1) Aside from the source of the funds and the manner of borrowing, the feature which distinguishes short-term borrowing by the State for the benefit of a local agency from the issue of bonds is that there is, generally speaking, a lapse of time between the effective date of the sale of the bond issue by the Comptroller and the receipt of the proceeds thereof by the local agency. Two accounts are provided to record the issue of the bonds on the books of the local agency, pending the receipt of the proceeds by the local agency, viz: account 1123, State Housing Fund, and account 2314, Certificates of Indebtedness Subscribed. When bonds are issued, the local agency will be advised by the division as to the principal amount of the issue allocated to each project participating therein, the effective date of the issue, the maturity, interest rate, etc. Upon receipt of this information, the following journal entry is made:

Entry (11):

Debit: Account 1123, State Housing Fund $XXX

Credit: Account 2314, Certificate of Indebtedness

Subscribed $XXX

Explanation:To record the issuance of housing bonds by the State of New York, bond issue no. ________, dated (insert date of issue), 19 ________as per letter from Division of Housing, dated ________, ________.

(2) If the project is already indebted to the State, by virtue of having borrowed money from the State for temporary financing prior to the issuance of housing bonds, this entry will reflect only the difference between the amount of such indebtedness and the amount of the bond issue. The local agency will, of course, have issued its certificates of indebtedness as evidence of such prior indebtedness and the State Comptroller will apply the proceeds directly to the payment of the short-term notes issued by the State in connection therewith. Entry (11) above should not reflect any part of the premium, if any, on the housing bond issue. Recording of the premium is discussed in subdivision (e) of this section.

(b) Receipt of proceeds of bond issue.

(1) As has been previously noted, there is, generally speaking, some lapse of time between the sale of the bonds and the receipt of the proceeds thereof by the local agency. The State Comptroller, depending on the circumstances, may remit the proceeds in one lump sum, or in installments, as required. He may, further, apply the proceeds directly to retire short-term notes issued by the State and also withhold a balance, representing the excess of the bond issue over the development cost to date, in the State Housing Fund for a longer period of time. Remittances are made by way of the division, which will transmit the check to the local agency with a request that a certificate of indebtedness be issued for the amount of the remittance, together with the requisition and closing papers. When a remittance for any part of the proceeds is received for deposit by the local agency, the following entry is made through the cash receipts register:

Entry (12):

Debit: Account 1111, Development Fund $XXX

Credit: Account 1123, State Housing Fund $XXX

(2) When the certificate of indebtedness is issued, the following journal entry is made:

Entry (13):

Debit: Account 2314, Certificates of Indebtedness

Subscribed $XXX

Credit: Account 2312, Certificate of Indebtedness Unissued $XXX

Explanation:To record the issue of certificate of indebtedness no. ________for proceeds received on account of housing bond issue no. ________.

(c) Payment of temporary loan notes outstanding.

(1) The application of the proceeds of the bond issue by the local agency to the payment of the agency's temporary loan notes will be reflected in the following entries:

Entry (14): Through the Cash Disbursements-Voucher Register:

Debit: Account 2120, Temporary Loan Notes Payable $XXX

Debit: Account 2132.2, Accrued Interest Payable

Temporary Loan Notes $XXX

Credit: Account 1111, Development Fund $XXX

Explanation:To record payment and cancellation of temporary loan notes nos. ________.

(2) The local agency should hold the cancelled requisition agreement and advance loan note returned by the escrow agent in its files. No accounting entry is made to reflect the cancellation.

(3) As in the case of the payment of temporary loan notes out of the proceeds of an issue of short-term notes (see §1463-2.5[g] ), a representative of the division may, under certain circumstances, deliver the State's check, for the proceeds of a bond issue, directly to the paying agent for the maturing issue of temporary loan. In this event, the remittance for the proceeds of the bond issue will not pass through the project's development fund and the following journal entry will be made, in lieu of entry (12) above:

Entry (15):

Debit: Account 2120, Temporary Loan Notes Payable $XXX

Debit: Account 2132.2, Accrued Interest Payable--

Temporary Loan Notes $XXX

Credit: Account 1123, State Housing Fund $XXX

Explanation:To record the application of the proceeds of housing bond issue no. ________, to the payment of principal and interest on temporary loan notes no.________.

(4) Entry (13) is then made in the usual manner and the division will hold the advance loan note against the receipt of the certificate of indebtedness.

(d) Disposition of balance of certificates of indebtedness unissued. After the final development cost has been determined, and the definitive amount of the loan established, a resolution amending the original debt authorizing resolution should be adopted conforming the authorization to the definitive amount of the loan. A journal entry, adjusting account 2311, Certificates of Indebtedness Authorized, and account 2312, Certificates of Indebtedness Unissued, accordingly, should be made.

(e) Premiums on State housing bonds.

(1) The Comptroller may receive from purchasers of housing bonds amounts over and above the face value of the bonds. These amounts represent the premium on the bonds and are paid into the State Housing Debt Fund. This fund is operated by the Comptroller as a debt service fund to receive payments of interest and amortization on the bond issue from the local agency and to disburse the same to bond holders. The State Housing Debt Fund should not be confused with the State Housing Fund into which is paid the proceeds of a bond issue, exclusive of premiums, if any, thereon. The division is notified by the Comptroller as to the amount of the premium, if any, allocable to each project participating in the issue and will, in turn, notify the local agency likewise. The premium is then recorded by the following journal entry.

Entry (16):

Debit: Account 1124, State Housing Debt Fund $XXX

Credit: Account 1420.8, Premium on State Housing Bonds $XXX

Explanation:To record the premium on housing bond issue no. ________, as per letter from Division on Housing, dated ________, 19________.

(2) The full amount of the premium is credited to development costs whether the bonds have been issued prior or subsequent to the date of substantial completion. For the application of the premium to the payments of interest on the bonds, see Part 1644, Debt Service. No allocation of premium on State housing bonds should be made to the related programs.

(f) Cost of borrowing. In connection with each issue of bonds, the State Comptroller incurs expenses for advertising for bids, printing, engraving, etc. The Comptroller, ordinarily pays these expenses out of the State Housing Fund and advises the division as to the portion applicable to each project participating in the issue. The division, in turn, will notify the local agency, which will draw a check on the project's development fund. Expenses incurred by the Comptroller in connection with the issuance of bonds are charged to account 1420.7, Cost of Borrowing, through the cash disbursements-voucher register. Account 1420.7 is charged for the cost of borrowing whether the bonds have been issued prior or subsequent to the date of substantial completion. No allocation of the cost of borrowing should be made to the related programs. Where, however, expenses are incurred by the Comptroller in connection with the issuance of bonds after physical completion, the account to be charged is 4140, Project Office Expense.

N.Y. Comp. Codes R. & Regs. Tit. 9 § 1643-2.7