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Bureau of Debt Management

Simplified Procedures for Local Governments Seeking the Comptroller's Approval of Certain Matters Relating to Refunding Local Debt Pursuant to Sections 90.00 and 90.10 of the Local Finance Law

Pursuant to Sections 90.00(c)(2) and 90.10(g) of the Local Finance Law, advance refunding bonds (with limited specified exceptions relating to New York City) and certain current refunding bonds may not be issued until a certificate approved by the State Comptroller is filed with the issuer's finance board setting forth the present value of the total debt service savings to the issuer resulting from the issuance of the refunding bonds. In addition, refunding bonds may only be sold at private (interpreted to include negotiated) sale if the terms and conditions of the sale are approved by the Comptroller.  Local Finance Law, § 90.10, par. f, subd. 2.  We ask that local governments seeking approval of present value savings and/or terms and conditions comply with the following procedures.

I. COVER LETTER.  An application for approval of a present value savings certificate should include a cover letter that lists the documents submitted and sets forth the closing (delivery) date of the refunding bonds.

II. DOCUMENTS.  In addition to the cover letter the application should include an original and three copies of each of the following documents (except for item f, which should be filed in accordance with the instructions on the form):

  1. The Refunding Financial Plan, which should include at a minimum:
    1. A complete sources and uses table including any municipal resources other than bond proceeds to be used for expenses or costs of issuance, to reduce the size of the refunding or for any other purpose related to the refunding;
    2. A complete schedule (including due dates) of principal and interest due on the bonds being refunded and a schedule of principal and interest due on any unrefunded bond maturities that are required to be taken into consideration in calculating compliance with the fifty per cent rule or a level debt service schedule;
    3. A complete schedule (including due dates) of  principal and interest due on the refunding bonds;
    4. A calculation of the Effective Interest Cost as defined in section 90.10(b)(2)(a);
    5. A calculation of the present value of the total payments of principal and interest to become due on the refunding bonds (including a calculation of present value by maturity and interest payment date) which are not to be paid from income received as a result of investing the proceeds of the refunding bonds;
    6. The amount of accrued interest to be received by the issuer that will not be used to pay principal of or interest on the bonds being refunded or to pay costs of issuance of the refunding bonds;
    7. A calculation of the present value of the total payments of principal and interest to become due on the bonds to be refunded (including a calculation of present value by maturity and interest payment date); and
    8. The present value savings calculated in accordance with section 90.10(b)(2)(a).
  2. If the bonds are to be sold at private or negotiated sale, a letter signed by the chief financial officer of the issuer setting forth the terms and conditions of the sale, which shall include at a minimum:
    1. The par amount of the issue, purchase price of the issue, net interest rate and coupon rates by maturity;
    2. The underwriters' compensation;
    3. Clearance fees, if any;
    4. An itemization of all other costs of issuance, including, but not limited to, bond counsel fees, financial advisor fees, insurance premium, if any, and  verification fees; and    
    5. The following statement at the end of the letter:
    The terms and conditions of the [name of issue] of the[issuer], as set forth in the above letter, and  in Exhibit[s __ and __] attached hereto, are hereby approved.

    State Comptroller

    By:_______________________________
    Dated:____________________________
  3. A Certificate Pursuant to Section 90.10(g) of the Local Finance Law, signed by the chief fiscal officer, which should contain, at a minimum, the following:
    1. A description of the bonds being refunded including (for each issue being refunded) the original principal amount, dated date, issue date, principal amount  outstanding, principal amount being refunded, and, if all maturities are not  being refunded in full, the maturities and / or portions of maturities that are being refunded;    
    2. A description of the refunding bonds, including principal amount, dated date, issue date and maturities, and a description of the authorizing resolution which shall include a statement that it was duly adopted by the governing board and the date adopted;
    3. The effective interest rate on the refunding bonds as calculated in accordance with section 90.10(b)(2)(a);
    4. The present value of the total payments of principal of and interest to become due on the refunding bonds other than principal and interest to be paid from income earned as a result of the investment of the proceeds from the sale of the refunding bonds;    
    5. All costs and expenses of the refunding not paid from bond proceeds;    
    6. Accrued interest to be received by the issuer and not to be used to pay principal  or interest on the bonds to be refunded or costs of issuance of the refunding  bonds;    
    7. Any other cash contribution of the issuer to the refunding;
    8. The present value of the of the principal and interest payments to become due at their stated maturities or payment dates on the principal amount of bonds to be refunded which are outstanding as of the date of issue of the refunding bonds; and    
    9. The present value of the total debt service savings to the issuer resulting from the  issuance of the refunding bonds computed in accordance with the provisions of section 90.10(b)(2)(a).
  4. A letter from Bond Counsel to the issuer, addressed to the Comptroller, stating that the refunding bonds will not be issued until Bond Counsel has rendered its validity opinion and that the Comptroller may rely on that opinion when issued with the same force and effect as if it had been addressed to the Comptroller.   A copy of the opinion and a concurrent reliance letter shall be sent to the Comptroller immediately after the closing.
  5. A complete copy of the final official statement for the refunding issue and cover pages (which shall include maturity schedules), if available, of the final official statements for each issue of bonds any portion of which is being refunded by the refunding issue.    
  6. In addition, if the bonds are to be sold at private or negotiated sale, the issuer's financial advisor or the underwriter of the issue shall submit the form attached to these guidelines as Attachment 1 in accordance with the instructions on the form together with a copy of the cover of the preliminary official statement. 

III.  TIME FOR SUBMISSION OF APPLICATION.  Section 90.10(g) prohibits the Comptroller from approving the certificate less than 10 days after its receipt.  Issuers who desire approval in advance of the closing date should insure that the application is filed more than 10 days in advance.