N.Y. State Finance Law § 57: Issuance of state bonds

§ 57. Issuance of state bonds. 1. Whenever the legislature, after

authorization of a bond issue by the people at a general election, as

provided by section eleven of article seven of the state constitution,

or as provided by section three of article eighteen of the state

constitution, shall have authorized, by one or more laws, the creation

of a state debt or debts, bonds of the state, to the amount of the debt

or debts so authorized, shall be issued and sold by the state

comptroller. Any appropriation from the proceeds of the sale of bonds,

pursuant to this section, shall be deemed to be an authorization for the

creation of a state debt or debts to the extent of such appropriation.

The state comptroller may issue and sell a single series of bonds

pursuant to one or more such authorizations and for one or more duly

authorized works or purposes. As part of the proceedings for each such

issuance and sale of bonds, the state comptroller shall designate the

works or purposes for which they are issued. It shall not be necessary

for him to designate the works or purposes for which the bonds are

issued on the face of the bonds. The proceeds from the sale of bonds for

more than one work or purpose shall be separately accounted for

according to the works or purposes designated for such sale by the

comptroller and the proceeds received for each work or purpose shall be

expended only for such work or purpose. The bonds shall bear interest at

such rate or rates as in the judgment of the state comptroller may be

sufficient or necessary to effect a sale of the bonds, and such interest

shall be payable at least semi-annually, in the case of bonds with a

fixed interest rate, and at least annually, in the case of bonds with an

interest rate that varies periodically, in the city of New York unless

annual payments of principal and interest result in substantially level

or declining debt service payments over the life of an issue of bonds

pursuant to paragraph (b) of subdivision two of this section or unless

accrued interest is contributed to a sinking fund in accordance with

subdivision three of section twelve of article seven of the state

constitution, in which case interest shall be paid at such times and at

such places as shall be determined by the state comptroller prior to

issuance of the bonds.

2. Such bonds, or the portion thereof at any time issued, shall be

made payable (a) in equal annual principal installments or (b) in annual

installments of principal and interest which result in substantially

level or declining debt service payments, over the life of the bonds,

the first of which annual installments shall be payable not more than

one year from the date of issue and the last of which shall be payable

at such time as the comptroller may determine but not more than forty

years or state fiscal years after the date of issue, not more than fifty

years after the date of issue in the case of housing bonds, and not more

than twenty-five years in the case of urban renewal bonds. Where bonds

are payable pursuant to paragraph (b) of this subdivision, except for

the year or state fiscal year of initial issuance if less than a full

year of debt service is to become due in that year or state fiscal year,

either (i) the greatest aggregate amount of debt service payable in any

year or state fiscal year shall not differ from the lowest aggregate

amount of debt service payable in any other year or state fiscal year by

more than five percent or (ii) the aggregate amount of debt service in

each year or state fiscal year shall be less than the aggregate amount

of debt service in the immediately preceding year or state fiscal year.

For purposes of this subdivision, debt service shall include all

principal, redemption price, sinking fund installments or contributions,

and interest scheduled to become due. For purposes of determining

whether debt service is level or declining on bonds issued with a

variable rate of interest pursuant to paragraph b of subdivision four of

this section, the comptroller shall assume a market rate of interest as

of the date of issuance. Where the comptroller determines that interest

on any bonds shall be compounded and payable at maturity, such bonds

shall be payable only in accordance with paragraph (b) of this

subdivision unless accrued interest is contributed to a sinking fund in

accordance with subdivision three of section twelve of article seven of

the state constitution. In no case shall any bonds or portion thereof be

issued for a period longer than the probable life of the work or

purpose, or part thereof, to which the proceeds of the bonds are to be

applied, or in the alternative, the weighted average period of the

probable life of the works or purposes to which the proceeds of the

bonds are to be applied taking into consideration the respective amounts

of bonds issued for each work or purpose, as may be determined under

section sixty-one of this article and in accordance with the certificate

of the commissioner of general services, and/or the commissioner of

transportation, state architect, state commissioner of housing and urban

renewal, or other authority, as the case may be, having charge by law of

the acquisition, construction, work or improvement for which the debt

was authorized. Such certificate shall be filed in the office of the

state comptroller and shall state the group, or, where the probable

lives of two or more separable parts of the work or purposes are

different, the groups, specified in such section, for which the amount

or amounts, shall be provided by the issuance and sale of bonds.

Weighted average period of probable life shall be determined by

computing the sum of the products derived from multiplying the dollar

value of the portion of the debt contracted for each work or purpose (or

class of works or purposes) by the probable life of such work or purpose

(or class of works or purposes) and dividing the resulting sum by the

dollar value of the entire debt after taking into consideration any

original issue discount. Any costs of issuance financed with bond

proceeds shall be prorated among the various works or purposes. Such

bonds, or the portion thereof at any time sold, shall be of such

denominations, subject to the foregoing provisions, as the state

comptroller may determine. Notwithstanding the foregoing provisions of

this subdivision, the comptroller may issue all or a portion of such

bonds as serial debt, term debt or a combination thereof, maturing as

required by this subdivision, provided that the comptroller shall have

provided for the retirement each year or state fiscal year, or otherwise

have provided for the payment of, through sinking fund installment

payments or otherwise, a portion of such term bonds in an amount meeting

the requirements of paragraph (a) or (b) of this subdivision or shall

have established a sinking fund and provided for contributions thereto

as provided in subdivision eight of this section and section twelve of

article seven of the state constitution.

3. The bonds shall be sold in such lot or lots, from time to time, as

may be required for the work or purpose for which the creation of a

state debt or debts shall have been authorized and appropriations shall

have been made by law, but not in excess of the aggregate amount

authorized for such purpose. For the purpose of determining the total

amount of debt sold for a particular work or purpose, only the amount of

money actually received by the state shall be considered when bonds are

sold at a discount.

4. a. Such bonds shall be sold at par, at par plus a premium, or at a

discount to the bidder offering the lowest interest cost to the state,

taking into consideration any premium or discount and, in the case of

refunding bonds, the bona fide initial public offering price, not less

than two business days after the publication of a notice of sale at

least once in a definitive trade publication of the municipal bond

industry published on each business day in the state of New York which

is generally available in electronic or physical form to participants in

the municipal bond industry, which notice shall state the terms of the

sale. The comptroller may not change the terms of the sale unless notice

of such change is sent via a definitive trade wire service of the

municipal bond industry which, in general, makes available information

regarding activity and sales of municipal bonds and is generally

available to participants in the municipal bond industry, at least one

hour prior to the time of the sale as set forth in the original notice

of sale. In so changing the terms or conditions of a sale the

comptroller may send notice by such wire service that the sale will be

delayed by up to thirty days, provided that wire notice of the new sale

date will be given at least one business day prior to the new time when

bids will be accepted. In such event, no new notice of sale shall be

required to be published. Notwithstanding the provisions of section

three hundred five of the state technology law or any other law, if the

notice of sale contains a provision that bids will only be accepted

electronically in the manner provided in such notice of sale, the

comptroller shall not be required to accept non-electronic bids in any

form. Advertisements shall contain a provision to the effect that the

state comptroller, in his or her discretion, may reject any or all bids

made in pursuance of such advertisements, and in the event of such

rejection, the state comptroller is authorized to negotiate a private

sale or readvertise for bids in the form and manner above described as

many times as, in his or her judgment, may be necessary to effect a

satisfactory sale. Notwithstanding the foregoing provisions of this

paragraph, whenever in the judgment of the comptroller the interests of

the state will be served thereby, he or she may sell state bonds at

private sale at par, at par plus a premium, or at a discount. The

comptroller shall promulgate regulations governing the terms and

conditions of any such private sales, which regulations shall include a

provision that he or she give notice to the governor, the temporary

president of the senate, and the speaker of the assembly, of his or her

intention to conduct a private sale of obligations pursuant to this

section not less than two business days prior to such sale or the

execution of any binding agreement to effect such sale.

b. Notwithstanding paragraph a of this subdivision, whenever in the

judgment of the comptroller the interests of the state will be served

thereby, such bonds may be sold at public or private sale in accordance

with the procedures set forth in paragraph a of this subdivision, with

interest rates that vary in accordance with a formula or procedure set

forth or referred to in the bonds and may provide the holders thereof

with such rights to require the state or other persons to purchase or

redeem such bonds or renewals thereof from the proceeds of the resale

thereof or otherwise from time to time prior to the final maturity of

such bonds as the comptroller may determine and the state may resell, at

any time prior to final maturity, any such bonds acquired as a result of

the exercise of such rights. The holders of bonds sold pursuant to this

paragraph may be provided with the right to require the state to

repurchase or redeem the bonds prior to the final maturity thereof if

the state has entered into one or more letter of credit agreements or

other liquidity facility agreements entered into for the express

purposes of such sale and which shall require a financially responsible

party or parties to the agreement or agreements, which may be the state,

to purchase or redeem all or any portion of such bonds tendered by the

holders thereof for repurchase or redemption prior to the final maturity

of such bonds. Such requirement to purchase or redeem bonds shall

continue until such time as the right of the holders of such bonds to

require repurchase or redemption of such bonds prior to the final

maturity thereof shall cease. A financially responsible party or

parties, for purposes of this paragraph, shall mean a person or persons

determined by the comptroller to have sufficient net worth and liquidity

to purchase and pay for on a timely basis all of the bonds which may be

tendered for repurchase or redemption by the holders thereof.

5. The proceeds of bonds sold pursuant to this section shall be paid

into the treasury, and each portion thereof provided for a given work or

purpose shall be accounted for separately in one or more capital

projects funds in accordance with generally accepted accounting

principles and made available only for such work or purpose, and only to

the extent of appropriations.

6. Except with respect to bonds issued in the manner provided in

paragraph (c) of subdivision seven of this section, all bonds of the

state of New York which the comptroller of the state of New York is

authorized to issue and sell, shall be executed in the name of the state

of New York by the manual or facsimile signature of the state

comptroller and his seal (or a facsimile thereof) shall be thereunto

affixed, imprinted, engraved or otherwise reproduced. In case the state

comptroller who shall have signed and sealed any of the bonds shall

cease to hold the office of state comptroller before the bonds so signed

and sealed shall have been actually countersigned and delivered by the

fiscal agent or trustee, such bonds may, nevertheless, be countersigned

and delivered as herein provided, and may be issued as if the state

comptroller who signed and sealed such bonds had not ceased to hold such

office. Any bond of a series may be signed and sealed on behalf of the

state of New York by such person as at the actual time of the execution

of such bond shall hold the office of comptroller of the state of New

York, although at the date of the bonds of such series such person may

not have held such office. The coupons to be attached to the coupon

bonds of each series shall be signed by the facsimile signature of the

state comptroller of the state of New York or by any person who shall

have held the office of state comptroller of the state of New York on or

after the date of the bonds of such series, notwithstanding that such

person may not have been such state comptroller at the date of any such

bond or may have ceased to be such state comptroller at the date when

any such bond shall be actually countersigned and delivered. The bonds

of each series shall be countersigned with the manual signature of an

authorized employee of the fiscal agent or trustee of the state of New

York. No bond and no coupon thereunto appertaining shall be valid or

obligatory for any purpose until such manual countersignature of an

authorized employee of the fiscal agent or trustee of the state of New

York shall have been duly affixed to such bond.

7. (a) The state comptroller is authorized to issue bonds in fully

registered form, executed as provided in subdivision six of this

section, in such denominations as shall be determined by the state

comptroller and exchangeable for fully registered bonds in denominations

as shall be determined by the state comptroller.

(b) The state comptroller is authorized to issue bonds as a single

registered bond, executed as provided in subdivision six of this

section, in an amount equal to the principal amount of the series of

bonds being issued, or more than one registered bond in amounts equal to

the principal amount of the series of bonds maturing in a single year,

and to deposit the bond or bonds with a securities depository organized

under the banking law of the state of New York and qualifying as a

clearing agency registered under the United States Securities Exchange

Act of 1934, as amended. Book entries representing beneficial ownership

of the bonds shall be in denominations determined by the state

comptroller.

(c) The state comptroller is authorized to issue bonds as

uncertificated securities within the meaning of article eight of the

uniform commercial code with beneficial ownership in denominations

determined by the state comptroller and exchangeable in book entries in

denominations as shall be determined by the state comptroller.

8. Any sinking funds created pursuant to this section shall be

maintained and managed by the state comptroller or an agent or trustee

designated by the state comptroller and shall be funded in accordance

with the requirements of section twelve of article seven of the state

constitution. Money in such sinking funds shall be held as cash or shall

be invested in direct obligations of the federal government, or

obligations the interest on which is exempt from federal income taxation

and which are fully secured by direct obligations of the federal

government, having such maturities and interest payment dates as

required to make all payments to be made from the sinking fund as they

come due. Amounts in such sinking funds shall be used solely for the

purpose of retiring the bonds secured thereby except that amounts in

excess of the required balance on any contribution date and amounts

remaining in such funds after all of the bonds secured thereby have been

retired shall be deposited in the general fund. No appropriation shall

be required for disbursement of money, or income earned thereon, from

any sinking fund for the purpose of paying principal of and interest on

the bonds for which such fund was created, except that interest shall be

paid from any such fund only if, and to the extent that, it is not

payable annually and contributions on account of such interest were made

to the fund.