N.Y. Local Finance Law § 123.00: Exclusion of self-liquidating indebtedness in ascertaining the power of a municipality to contract indebtedness

§ 123.00 Exclusion of self-liquidating indebtedness in ascertaining

the power of a municipality to contract indebtedness. a. As used in this

section: 1. The term "outstanding indebtedness", shall mean indebtedness

evidenced by bonds and bond anticipation notes.

2. The term "public improvement" shall mean either a single

improvement or a group of improvements, which are maintained for the

same purpose, including improvements used primarily in connection

therewith, and which are producing or are intended to produce revenue.

b. 1. In ascertaining the power of a municipality to contract

indebtedness, there may be excluded, to the extent permitted in

paragraph e of this section, the outstanding indebtedness contracted by

any such municipality for a public improvement or part thereof, or

service, owned or rendered by such municipality if such public

improvement or part thereof, or service, shall have yielded net revenue

to such municipality during the preceding fiscal year in a sum equal to

twenty-five per centum or more of the amount required in such year for

the payment of the interest on and amortization of, or payment of, such

outstanding indebtedness.

2. The outstanding indebtedness of a district corporation, as the term

"district corporation" is defined in paragraph a of section 102.00 of

this chapter, contracted on or after January first, nineteen hundred

thirty-nine, may be excluded, to the extent permitted in paragraph e of

this section, in ascertaining the indebtedness of a city or village

within which, or of a town within the unincorporated area of which, such

district corporation is situated in whole or in part, if such

outstanding indebtedness was contracted for a public improvement or part

thereof, or service, owned or rendered by such district corporation and

if such public improvement or part thereof, or service, shall have

yielded net revenue to such district corporation during the preceding

fiscal year of the district corporation in a sum equal to twenty-five

per centum or more of the amount required in such year for the payment

of the interest on and amortization of, or payment of, such outstanding

indebtedness.

3. In ascertaining the power of a county or town to contract

indebtedness, there may be excluded, to the extent permitted in

paragraph e of this section, the outstanding indebtedness contracted by

any such county or town on behalf of an improvement district for a

public improvement or part thereof, or service, owned or rendered by

such district if such public improvement or part thereof, or service,

shall have yielded net revenue to such district during the preceding

fiscal year in a sum equal to twenty-five per centum or more of the

amount required in such year for the payment of the interest on and

amortization of, or payment of, such outstanding indebtedness.

c. 1. A proportionate exclusion of indebtedness contracted or proposed

to be contracted also may be granted for the period from the date when

such indebtedness is first contracted or to be contracted for a public

improvement or part thereof, or service, owned or rendered or to be

owned or rendered by a municipality, district corporation, or county or

town improvement district through the first year of operation of such

public improvement or part thereof, or service. The amount of such

exclusion shall be computed in the manner provided in this section on

the basis of estimated net revenue for the first year of operation. Such

estimated net revenue shall be determined by deducting from the gross

revenues estimated to be received during the first year of operation of

such public improvement or part thereof, or service, all estimated costs

of operation, maintenance and repairs for such year. The amount of any

such proportionate exclusion shall not exceed seventy-five per centum of

the amount which would be excluded if the computation were made on the

basis of net revenue instead of estimated net revenue. The term

"indebtedness," as used in this subdivision means indebtedness which

would be included in ascertaining the power of a municipality to

contract indebtedness, including indebtedness evidenced or to be

evidenced by bonds or bond anticipation notes.

2. A proportionate exclusion of outstanding indebtedness may be

granted, to the extent permitted in paragraph e of this section, in the

fiscal year in which the first year of operation of a public improvement

or part thereof, or service, is completed if the improvement or part

thereof, or service, shall have yielded net revenue during the first

year of operation in a sum equal to twenty-five per centum or more of

the amount required in such year for the payment of the interest on and

amortization of, or payment of, such indebtedness.

d. The net revenue of a public improvement or part thereof, or

service, shall be determined by deducting from its gross revenues of a

year all costs of operation, maintenance and repairs for such year.

Taxes, assessments, and subsidies by the municipality or district

corporation, shall not be included in computing gross revenues.

e. The maximum amount of any such outstanding indebtedness which may

be so excluded shall be in the same proportion to the total amount of

any such indebtedness as the amount of any such net revenue shall bear

to the amount required in any such year for the payment of the interest

on and amortization of, or payment of, any such indebtedness.

f. Where an exclusion has been granted pursuant to this section, the

revenues of such public improvement or part thereof, or service, for the

period for which the exclusion is granted, shall be applied to and

actually used for payment of all costs of operation, maintenance and

repairs for such period, and payment of the amounts required in such

period for interest on and amortization of or redemption of the

indebtedness excluded, or such revenues shall be deposited in a special

fund to be used solely for such payments. The application and use of

such payments or the deposits required therefor shall not prohibit a

municipality, district corporation or improvement district from using

any such revenues, in excess of such payments or deposits, for any

lawful purpose of the municipality, district corporation or improvement

district.

g. An application may be filed with the state comptroller for the

purpose of obtaining an exclusion of such indebtedness. Such application

shall be made on behalf of any municipality by its chief fiscal officer

in his discretion, or by its chief fiscal officer on the direction of

its finance board, and on behalf of any district corporation by its

finance board. If the finance board of a district corporation shall

refuse or fail to make such application, the application may be made by

the municipality seeking an exclusion of indebtedness. The application

shall be verified by the chief fiscal officer or finance board making

the application. The application shall be in such form and shall contain

such information as shall be prescribed by the state comptroller.

h. Within fifteen days after the filing of such application with the

state comptroller, such chief fiscal officer or such finance board

making the application shall cause a notice to be published that such

application has been filed with the state comptroller. Such notice shall

be published in the official newspaper or newspapers of the municipality

or district corporation, or if there be no such newspaper or newspapers,

then the finance board of the municipality or district corporation shall

designate one or more newspapers having a general circulation in such

municipality or district corporation for the publication of such notice.

The notice also shall contain a statement of the amount of indebtedness

for which a proportionate exclusion is sought and a brief description of

the public improvement or part thereof, or service. Proof of publication

of such notice shall be filed in the office of the state comptroller. A

copy of the application and of all financial statements, documents,

computations and other data and information which will be submitted by

the chief fiscal officer of such municipality or the finance board of

such district corporation to the state comptroller in support of such

application shall be filed in the office of such chief fiscal officer or

finance board and shall be public records.

i. After the filing of such application, the state comptroller shall

review the facts set forth therein. The state comptroller shall have the

power to examine the accounts and records of the municipality, district

corporation or improvement district with respect to such public

improvement or part thereof, or service. He may also require the chief

fiscal officer and other public officers, boards and agencies of such

municipality, district corporation or improvement district to furnish

such additional data and information in their possession as he deems

necessary to enable him to make his determination.

j. In the case of a municipality, the state comptroller shall issue a

written certificate setting forth his determination as to the extent to

which any such indebtedness may be excluded. If an exclusion is allowed

by the state comptroller, such certificate shall constitute the

authorization for the exclusion of such amount of such indebtedness in

ascertaining the power of such municipality to contract indebtedness. In

the case of a district corporation, the state comptroller shall issue a

written certificate setting forth his determination as to the extent to

which any such indebtedness shall be excluded in ascertaining the

indebtedness of a city or village within which, or of a town within the

unincorporated area of which, such district corporation is situated in

whole or in part. If an exclusion is allowed by the state comptroller,

such certificate shall constitute the authorization for the exclusion of

such amount of such indebtedness in ascertaining the power of such city,

village or town to contract indebtedness. If the state comptroller

disallows the application, the certificate shall set forth the reasons

for such disallowance. The determination of the state comptroller shall

be conclusive. The certificate of the state comptroller shall not be

issued until ten days after the filing of such proof of publication in

the office of the state comptroller and shall be issued within

forty-five days after such filing. The certificate of the state

comptroller granting an exclusion shall be effective until the first day

of the fourth month following the close of the fiscal year in which the

application is made, except that where the application is made in

connection with a public improvement or part thereof, or service, which

has not been in operation for one year the certificate shall be

effective until the first day of the fourth month following the close of

the first year of operation. The certificate of the state comptroller

shall be executed under his hand and seal in duplicate. One of such

certificates shall be filed in the department of audit and control and

the other in the office of the chief fiscal officer of such municipality

or in the office of the finance board of the district corporation. Both

of such certificates shall be public records.

k. The provisions of this section shall not affect or impair any

existing exclusions of indebtedness, or the power to exclude

indebtedness granted by any other provision of this chapter or the

constitution.