The Dormitory Authority of the State of New York approved $2.31 billion of personal income tax bonds at a special board meeting in Albany yesterday.
DASNY had expected to vote on the offering at its monthly board meeting last week but it was pulled because the law allowing the deal had expired.
The Legislature on Monday extended the law for another year as lawmakers also passed another emergency spending bill to keep the state from shutting down as it entered its seventh week without a budget.
The deal will be divided into two pieces with $800 million of Build America Bonds pricing competitively. The bonds will have maturities up to 30 years in a structure that has yet to be determined. The remainder will be a mix of tax-exempts, BABs and federally taxable bonds sold through negotiation. An underwriter has not been named.
The first piece had originally been scheduled to price by the end of the month and the remainder next month, but the sale date is uncertain.
“We’re still making a determination about the timing,” said Division of Budget spokeswoman Jessica Bassett. “This is meant to give us the opportunity to enter the market when we determine the appropriate time.”
Sidley, Austin LLP and Harris Beach PLLC are bond counsel. Public Financial Management Inc. is financial adviser.
PIT bonds are the state’s primary debt-issuance vehicle. It sells them through five public authorities: DASNY, the Empire State Development Corp., the New York State Environmental Facilities Corp., the New York State Housing Finance Agency and the New York State Thruway Authority.
Since the credit was introduced in 2002, each issuer has been restricted to selling the appropriation-backed bonds for certain purposes related to each authority’s mission. That changed last year when the enacted budget allowed DASNY and the ESDC to sell personal income tax bonds for any purpose eligible for such financing for one year. The budget bill also allowed DASNY to sell PIT bonds for mental health services facilities, which were previously were sold as a separate credit.
The bond proceeds will be used to finance capital projects for the State University of New York and City University of New York, education funding, economic development grants, and to refund mental health bonds.
DASNY yesterday also approved the issuance of up to $133.49 million of qualified school construction bonds backed by personal income taxes to fund Expanding our Children’s Education and Learning, a state program that provides capital funds to school districts. Last year the state sold $58.6 million of QSCBs to fund EXCEL grants.
New York has sold $17.88 billion of new-money PIT bonds since 2002, according to Thomson Reuters. The state usually sells its PIT bonds through negotiation but has set a goal of selling 25% of all its bonds competitively.
Gov. David Paterson’s fiscal 2011 budget proposal called for the state to sell $5.9 billion of debt to finance capital projects. Lawmakers have deadlocked over Paterson’s $135.28 billion budget proposal, seeking to restore cuts to education and local aid.
The expiration of the law was not the first time in recent history that Albany’s inaction had caused expected bond hiccups. A short-lived leadership coup in the state Senate last year left New York City unable to sell bonds through negotiation for two weeks after a routine extender bill expired.