Extends the effectiveness of certain provisions relating to refunding bonds

◆ The sponsor's argument

Why Christopher Ryan says this is needed

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.

This is the sponsor's own case for the bill, quoted from their memorandum. It is not Agora's description of what the bill does.