As New York lawmakers work on the state’s fifth emergency spending bill to prevent a government shutdown, other measures have quietly found their way into law.
Legislators yesterday were scheduled to vote on the measure submitted by Gov. David Paterson to keep the state operating through May 9 because there is no long-term budget in place for the fiscal year that began April 1. The Legislature does not have the power to amend the emergency spending bills, putting pressure on them to pass the measures or risk leaving the state unable to operate.
One of the emergency bills that already passed included language adding the New York City Housing Development Corp. to a group of issuers that have to pay a fee to the state every time they issue bonds. Bond sales are assessed the fee on a graduated scale that ranges between with a minimum 16.8 basis points charged to deals of $1 million or less and maxes out at 84 basis points for deals greater than $20 million.
HDC president Marc Jahr said that assessing the fee on his agency will make it more difficult to finance affordable housing projects. “It’s going to make them more expensive,” he said. “It increases our costs and it reduces the amount of subsidy we have and the number of units [of housing] we’re going to be able to do.”
The memo accompanying the legislation said the rationale for imposing the bond issuance charge on the issuer was that it was the largest issuer in the state upon which the fee was not assessed. It is expected to raise between $3 million and $14.5 million annually for the cash-strapped state, depending on who you ask.
“Due to the volume and nature of HDC bond issues, a significant level of centralized state resources are utilized to facilitate the issuance of HDC debt,” the memo said. “Imposition of the [bond issuance charge] upon HDC will permit the state to recoup costs associated with HDC bond issues.”
Jahr said the issuer could pass the charge on to individual borrowers in some cases, “but it increases the cost of the project and therefore increases the amount of subsidy we’re going to have to put on the deal.”
The HDC also sells bonds to recapitalize its internal corporate reserves it uses to make mortgages but in those cases specific borrowers are not necessarily identified before the bonds are sold, and the fee would come out of those corporate reserves.
The Budget Division and HDC differ on how much the charge will cost. The supporting memo put the number at $3 million annually but according to the HDC it would have been $14.5 million last year.
Jahr said he is sympathetic to New York’s budget woes — the state faces a $9.2 billion deficit for fiscal 2011 — but would like the fee repealed. “It’s really not just to the detriment of the city but also to the state to the extent that it reduces the amount of affordable housing it can produce in the City of New York,” he said.
Paterson has also introduced program bills, one of which passed and another which was introduced yesterday.
A program bill passed last week changes voting requirements for the state’s Local Government Assistance Corp. on debt issues. The public authorities reform law passed in 2007 expanded LGAC’s board to seven members from three, but did not change a requirement that debt issuance be approved by all members of the board.
The way the law was worded meant that a vote was required by seven board members, even if vacancies had left the board short of its full complement. The new law requires only a unanimous vote by all sitting board members. Currently the board has two vacancies.
“The bill changed the requirement to a unanimous vote of those in office to provide greater flexibility as we manage our variable-rate debt portfolio,” said Matthew Anderson, a spokesman for the Division of the Budget, in an e-mail.
In other legislation, Paterson yesterday also introduced a bill that would allow school districts to access funds set aside to pay for certain retirement benefits and use them instead to make up for decreased state aid.