Bill Text: NY S04240 | 2013-2014 | General Assembly | Introduced
NOTE: There are more recent revisions of this legislation. Read Latest Draft
Bill Title: Prohibits municipalities from forming limited liability companies to finance operations or acquisitions of assets.
Spectrum: Committee Bill
Status: (Introduced - Dead) 2014-01-08 - REFERRED TO CORPORATIONS, AUTHORITIES AND COMMISSIONS [S04240 Detail]
Download: New_York-2013-S04240-Introduced.html
Bill Title: Prohibits municipalities from forming limited liability companies to finance operations or acquisitions of assets.
Spectrum: Committee Bill
Status: (Introduced - Dead) 2014-01-08 - REFERRED TO CORPORATIONS, AUTHORITIES AND COMMISSIONS [S04240 Detail]
Download: New_York-2013-S04240-Introduced.html
S T A T E O F N E W Y O R K
________________________________________________________________________
4240
2013-2014 Regular Sessions
I N S E N A T E
March 15, 2013
___________
Introduced by COMMITTEE ON RULES -- (at request of the State Comp-
troller) -- read twice and ordered printed, and when printed to be
committed to the Committee on Corporations, Authorities and Commis-
sions
AN ACT to amend the limited liability company law and the not-for-profit
corporation law, in relation to the purposes, powers and duties of
limited liability companies, and local development corporations and
other not-for-profit corporations; and to amend the local finance law,
in relation to loans of credit and the exclusivity of such law
THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM-
BLY, DO ENACT AS FOLLOWS:
1 Section 1. Section 102 of the limited liability company law is amended
2 by adding a new subdivision (r-1) to read as follows:
3 (R-1) "MUNICIPALITY" MEANS A COUNTY, CITY, TOWN, VILLAGE, SCHOOL
4 DISTRICT, BOARD OF COOPERATIVE EDUCATIONAL SERVICES, COMMUNITY COLLEGE,
5 PUBLIC LIBRARY OR LIBRARY DISTRICT, DISTRICT CORPORATION, TOWN OR COUNTY
6 IMPROVEMENT DISTRICT, OR OTHER SPECIAL DISTRICT ESTABLISHED FOR THE
7 PURPOSE OF CARRYING ON, PERFORMING OR FINANCING ONE OR MORE IMPROVEMENTS
8 OR SERVICES FOR BENEFITED PROPERTIES OR PROPERTY OWNERS WITHIN SUCH
9 SPECIAL DISTRICT.
10 S 2. Section 201 of the limited liability company law is amended to
11 read as follows:
12 S 201. Purpose. A limited liability company may be formed under this
13 chapter for any lawful business purpose or purposes except: (A) to do in
14 this state any business for which another statute specifically requires
15 some other business entity or natural person to be formed or used for
16 such business; OR (B) TO FINANCE DIRECTLY OR INDIRECTLY OVER A PERIOD OF
17 TIME A MUNICIPALITY'S OPERATIONS OR THE ACQUISITION OR IMPROVEMENT OF AN
18 ASSET BY OR FOR THE USE OF A MUNICIPALITY.
19 S 3. The limited liability company law is amended by adding a new
20 section 202-a to read as follows:
EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
[ ] is old law to be omitted.
LBD04649-01-3
S. 4240 2
1 S 202-A. LIMITATION ON POWERS. NOTWITHSTANDING THE PROVISIONS OF
2 SECTION TWO HUNDRED TWO OF THIS ARTICLE, A LIMITED LIABILITY COMPANY
3 SHALL NOT PARTICIPATE IN ANY TRANSACTION OR SERIES OF RELATED TRANS-
4 ACTIONS INVOLVING THE PAYMENT OF MONEY OVER A PERIOD OF TIME BY OR ON
5 BEHALF OF A MUNICIPALITY LOCATED IN THIS STATE AND HAVING AS A PURPOSE
6 THE DIRECT OR INDIRECT FINANCING OF THE MUNICIPALITY'S OPERATIONS OR THE
7 ACQUISITION OR IMPROVEMENT OF AN ASSET BY OR FOR THE USE OF THE MUNICI-
8 PALITY. PROVIDED, HOWEVER, THAT NOTHING IN THIS SECTION SHALL PROHIBIT A
9 LIMITED LIABILITY COMPANY FROM ENTERING INTO A TRUE LEASE WITH A MUNICI-
10 PALITY, ENTERING INTO AN INSTALLMENT PURCHASE CONTRACT PURSUANT TO
11 SECTION ONE HUNDRED NINE-B OF THE GENERAL MUNICIPAL LAW OR PURCHASING
12 BONDS OR NOTES ISSUED PURSUANT TO THE LOCAL FINANCE LAW.
13 S 4. Subdivision 1 of paragraph a of section 101.00 of the local
14 finance law, as amended by chapter 200 of the laws of 1960, is amended
15 to read as follows:
16 1. Give or loan its credit to or in aid of any individual, or public
17 or private corporation or association, or private undertaking, INCLUD-
18 ING, BUT NOT LIMITED TO, GUARANTEEING OR ASSUMING THE INDEBTEDNESS OR
19 OBLIGATIONS OF ANY NOT-FOR-PROFIT CORPORATION OR LIMITED LIABILITY
20 COMPANY FORMED BY, ON BEHALF OF, FOR THE BENEFIT OF, OR UNDER THE
21 CONTROL OF THE MUNICIPALITY, SCHOOL DISTRICT OR DISTRICT CORPORATION, or
22 S 5. Section 176.00 of the local finance law, as amended by chapter
23 837 of the laws of 1945, is amended to read as follows:
24 S 176.00 Local finance law to be the exclusive law. A. Except as
25 otherwise provided in this article, all statutes, local laws, ordi-
26 nances, rules and regulations, insofar as they relate to the matters
27 herein contained, are hereby superseded, it being the legislative intent
28 that this chapter shall constitute the exclusive law on such matters.
29 B. UNLESS EXPRESSLY AND SPECIFICALLY OTHERWISE PROVIDED IN ANY OTHER
30 GENERAL LAW OR IN A SPECIAL LAW, THE PROVISIONS OF THIS CHAPTER SHALL BE
31 THE EXCLUSIVE LAW GOVERNING THE MANNER IN WHICH MUNICIPALITIES, SCHOOL
32 DISTRICTS AND DISTRICT CORPORATIONS FINANCE OVER A PERIOD OF TIME THEIR
33 OPERATIONS AND THE ACQUISITION OR IMPROVEMENT OF AN ASSET BY OR FOR THE
34 USE OF A MUNICIPALITY, SCHOOL DISTRICT OR DISTRICT CORPORATION.
35 S 6. Paragraph (a) of section 102 of the not-for-profit corporation
36 law is amended by adding a new subparagraph 19 to read as follows:
37 (19) "MUNICIPALITY" MEANS A COUNTY, CITY, TOWN, VILLAGE, SCHOOL
38 DISTRICT, BOARD OF COOPERATIVE EDUCATIONAL SERVICES, COMMUNITY COLLEGE,
39 PUBLIC LIBRARY OR LIBRARY DISTRICT, DISTRICT CORPORATION, TOWN OR COUNTY
40 IMPROVEMENT DISTRICT, OR OTHER SPECIAL DISTRICT ESTABLISHED FOR THE
41 PURPOSE OF CARRYING ON, PERFORMING OR FINANCING ONE OR MORE IMPROVEMENTS
42 OR SERVICES FOR BENEFITED PROPERTIES OR PROPERTY OWNERS WITHIN SUCH
43 SPECIAL DISTRICT.
44 S 7. Section 204 of the not-for-profit corporation law is amended to
45 read as follows:
46 S 204. Limitation on activities.
47 Notwithstanding any other provision of this chapter or any other
48 general law, a corporation of any type or kind to which this chapter
49 applies shall: (A) conduct no activities for pecuniary profit or finan-
50 cial gain, whether or not in furtherance of its corporate purposes,
51 except to the extent that such activity supports its other lawful activ-
52 ities then being conducted; AND (B) NOT PARTICIPATE IN ANY TRANSACTION
53 OR SERIES OF RELATED TRANSACTIONS INVOLVING THE PAYMENT OF MONEY OVER A
54 PERIOD OF TIME BY OR ON BEHALF OF A MUNICIPALITY AND HAVING AS A PURPOSE
55 THE DIRECT OR INDIRECT FINANCING OF THE MUNICIPALITY'S OPERATIONS, OR
56 THE ACQUISITION OR IMPROVEMENT OF AN ASSET BY OR FOR THE USE OF THE
S. 4240 3
1 MUNICIPALITY, PROVIDED, HOWEVER, THAT NOTHING IN THIS SECTION SHALL
2 PROHIBIT SUCH A CORPORATION FROM ENTERING INTO A TRUE LEASE WITH A MUNI-
3 CIPALITY OR PURCHASING BONDS OR NOTES ISSUED PURSUANT TO THE LOCAL
4 FINANCE LAW.
5 S 8. Paragraphs (a), (c), (d) and (i) of section 1411 of the not-for-
6 profit corporation law, paragraph (a) as amended by chapter 847 of the
7 laws of 1970, are amended and a new paragraph (d-1) is added to read as
8 follows:
9 (a) Purposes.
10 This section shall provide an additional and alternate method of
11 incorporation or reincorporation of not-for-profit corporations for any
12 of the purposes set forth in this paragraph [and shall not be deemed to
13 alter, impair or diminish the purposes, rights, powers or privileges of
14 any corporation heretofore or hereafter incorporated under this section
15 or under the stock or business corporation laws]. Corporations may be
16 incorporated or reincorporated under this section as not-for-profit
17 local development corporations operated for the exclusively charitable
18 or public purposes of relieving and reducing unemployment, promoting and
19 providing for additional and maximum employment, bettering and maintain-
20 ing job opportunities, instructing or training individuals to improve or
21 develop their capabilities for such jobs, carrying on scientific
22 research for the purpose of aiding a community or geographical area by
23 attracting new industry to the community or area or by encouraging the
24 development of, or retention of, an industry in the community or area,
25 and lessening the burdens of government and acting in the public inter-
26 est, and any one or more counties, cities, towns or villages of the
27 state, or any combination thereof, or the New York job development
28 authority in exercising its power under the public authorities law to
29 encourage the organization of local development corporations, may cause
30 such corporations to be incorporated by public officers or private indi-
31 viduals or reincorporated upon compliance with the requirements of this
32 section, and it is hereby found, determined and declared that in carry-
33 ing out said purposes and in exercising the powers conferred by para-
34 graph (b) such corporations will be performing an essential governmental
35 function.
36 (c) Powers.
37 In furtherance of its purposes set forth in paragraph (a) but not for
38 any other purposes, a local development corporation incorporated or
39 reincorporated under this section shall have the following powers: to
40 construct, acquire, rehabilitate and improve for use by others indus-
41 trial or manufacturing plants in the territory in which its operations
42 are principally to be conducted, to assist financially in such
43 construction, acquisition, rehabilitation and improvement, to maintain
44 such plants for others in such territory, to disseminate information and
45 furnish advice, technical assistance and liaison with federal, state and
46 local authorities with respect thereto, to acquire by purchase, lease,
47 gift, bequest, devise or otherwise real or personal property or inter-
48 ests therein, to borrow money and to issue negotiable bonds, notes and
49 other obligations therefor, and notwithstanding section 510 (Disposition
50 of all or substantially all assets) without leave of the court, to sell,
51 lease, mortgage or otherwise dispose of or encumber any such plants or
52 any of its real or personal property or any interest therein upon such
53 terms as it may determine and, in connection with loans from the New
54 York job development authority, to enter into covenants and agreements
55 and to comply with all the terms, conditions and provisions thereof, and
56 otherwise to carry out its corporate purposes and to foster and encour-
S. 4240 4
1 age the location or expansion of industrial or manufacturing plants in
2 the territory in which the operations of such corporation are principal-
3 ly to be conducted, provided, however, that no such corporation shall:
4 (1) attempt to influence legislation by propaganda or otherwise, or
5 participate or intervene, directly or indirectly, in any political
6 campaign on behalf of or in opposition to any candidate for public
7 office; (2) PARTICIPATE IN ANY TRANSACTION OR SERIES OF RELATED TRANS-
8 ACTIONS INVOLVING THE PAYMENT OF MONEY OVER A PERIOD OF TIME BY OR ON
9 BEHALF OF A MUNICIPALITY AND HAVING AS A PURPOSE THE DIRECT OR INDIRECT
10 FINANCING OF THE MUNICIPALITY'S OPERATIONS, OR THE ACQUISITION OR
11 IMPROVEMENT OF AN ASSET BY OR FOR THE USE OF THE MUNICIPALITY, PROVIDED,
12 HOWEVER, THAT NOTHING IN THIS SECTION SHALL PROHIBIT A LOCAL DEVELOPMENT
13 CORPORATION FROM ENTERING INTO A TRUE LEASE WITH A MUNICIPALITY OR
14 PURCHASING BONDS OR NOTES ISSUED PURSUANT TO THE LOCAL FINANCE LAW; AND
15 (3) IN THE CASE OF A LOCAL DEVELOPMENT CORPORATION, THE INCORPORATION OF
16 WHICH WAS CAUSED BY A COUNTY, CITY, TOWN OR VILLAGE, PROVIDE COMPEN-
17 SATION TO A PERSON WHO SERVES AS A DIRECTOR, OFFICER OR EMPLOYEE OF SUCH
18 CORPORATION WHEN THE PERSON SERVES OR HAS SERVED WITHIN THE PREVIOUS TWO
19 YEARS AS AN OFFICER OR EMPLOYEE OF SUCH COUNTY, CITY, TOWN OR VILLAGE.
20 (d) Purchase or lease of real property owned by a county, city, town
21 or village.
22 (1) The local legislative body of a county, city, town or village
23 [or, if there is a board of estimate in a city, then the board of esti-
24 mate,] may by resolution determine that specifically described real
25 property owned by the county, city, town or village is not required for
26 use by such county, city, town or village and authorize the county,
27 city, town or village to sell or lease such real property to a local
28 development corporation incorporated or reincorporated under this arti-
29 cle; provided, however, that: (I) title to such land be not declared
30 inalienable as a forest preserve or a parkland; AND (II) THAT NO SUCH
31 SALE OR LEASE SHALL HAVE AS A PURPOSE THE DIRECT OR INDIRECT FINANCING
32 OVER A PERIOD OF TIME OF THE OPERATIONS OF THE COUNTY, CITY, TOWN OR
33 VILLAGE, OR THE ACQUISITION OR IMPROVEMENT OF AN ASSET BY OR FOR THE USE
34 OF THE COUNTY, CITY, TOWN OR VILLAGE.
35 (2) Notwithstanding the provisions of any general, special or local
36 law, charter or ordinance to the contrary, such sale or lease may be
37 made without appraisal, public notice, (except as provided in subpara-
38 graph (4)) or public bidding for [such price or rental] FAIR AND
39 ADEQUATE CONSIDERATION and upon such OTHER terms as may be agreed upon
40 between the county, city, town or village and said local development
41 corporation; provided, however, that in case of a lease the term may not
42 exceed ninety-nine years and provided, further, that in cities having a
43 population of one million or more, no such sale or lease shall be made
44 without the approval of a majority of the members of the borough
45 [improvement] board of the borough in which such real property is
46 located.
47 (3) Before any sale or lease to a local development corporation
48 incorporated or reincorporated under this article shall be authorized, a
49 public hearing shall be held by the local legislative body[, or by the
50 board of estimate, as the case may be,] to consider the proposed sale or
51 lease.
52 (4) Notice of such hearing shall be published at least ten days
53 before the date set for the hearing in such publication and in such
54 manner as may be designated by the local legislative body[, or the board
55 of estimate as the case may be]. SUCH NOTICE SHALL INCLUDE A DESCRIPTION
56 OF THE REAL PROPERTY PROPOSED TO BE SOLD OR LEASED, AND A STATEMENT OF
S. 4240 5
1 (I) THE ESTIMATED FAIR MARKET VALUE OF THE REAL PROPERTY PROPOSED TO BE
2 SOLD OR LEASED, (II) THE CONSIDERATION TO BE RECEIVED BY THE COUNTY,
3 CITY, TOWN OR VILLAGE ON ACCOUNT OF SUCH SALE OR LEASE, AND (III) A
4 STATEMENT OF THE INTENDED USE OR DISPOSITION OF SUCH REAL PROPERTY BY
5 THE LOCAL DEVELOPMENT CORPORATION.
6 (5) A local development corporation, incorporated or reincorporated
7 under this section, which purchases or leases real property from a coun-
8 ty, city, town or village, shall not, without the written approval of
9 the county, city, town or village, use such real property for any
10 purpose except the purposes set forth in the certificate of incorpo-
11 ration or reincorporation of said local development corporation. In the
12 event such real property is used in violation of the restrictions of
13 this paragraph, the attorney-general may bring an action or special
14 proceeding to enjoin the unauthorized use.
15 (D-1) CONTRACTS WITH MUNICIPALITIES.
16 ANY CONTRACT OR OTHER AGREEMENT BETWEEN A LOCAL DEVELOPMENT CORPO-
17 RATION AND A MUNICIPALITY SHALL: (I) PROVIDE FOR THE MUNICIPALITY TO
18 RECEIVE FAIR AND ADEQUATE CONSIDERATION, (II) BE SUBJECT TO THE REQUIRE-
19 MENTS OF ARTICLE FIVE-A OF THE GENERAL MUNICIPAL LAW, (III) EXCEPT FOR A
20 REAL PROPERTY LEASE AGREEMENT, HAVE A TERM NOT TO EXCEED FIVE YEARS,
21 SUBJECT TO ONE OR MORE RENEWALS FOR A TERM NOT TO EXCEED FIVE YEARS UPON
22 THE MUTUAL CONSENT OF THE PARTIES, AND (IV) BE MADE FOR A PROPER MUNICI-
23 PAL PURPOSE, WHICH SHALL NOT INCLUDE THE DIRECT OR INDIRECT FINANCING
24 OVER A PERIOD OF TIME OF THE MUNICIPALITY'S OPERATIONS OR THE ACQUISI-
25 TION OR IMPROVEMENT OF AN ASSET BY OR FOR THE USE OF THE MUNICIPALITY.
26 (i) Effect of section.
27 Corporations incorporated or reincorporated under this section shall
28 be organized and operated exclusively for the purposes set forth in
29 paragraph (a), shall have, in addition to the powers otherwise conferred
30 by law, the powers conferred by paragraph (c) and shall be subject to
31 all the restrictions and limitations imposed by [paragraph] PARAGRAPHS
32 (C), (D), (D-1), (e) and [paragraph] (g). In so far as the provisions
33 of this section are inconsistent with the provisions of any other law,
34 general or special, the provisions of this section shall be controlling
35 as to corporations incorporated or reincorporated hereunder.
36 S 9. This act shall take effect immediately and shall apply to any
37 transaction occurring on or after such effective date.
