Governor Cuomo recently signed a bill amending the Local Finance Law to provide municipalities (including fire districts) and school districts with additional flexibility to borrow money in order to manage Superstorm Sandy relief expenses.  This client memorandum discusses the new law, which became effective on November 13, 2013.

Prior to this amendment, Local Finance Law Section 26.10 provided school districts and municipalities with alternative methods of financing flood relief expenses.  The amendment allows these entities to use the alternative financing methods set forth in Section 26.10 to also help manage and pay the expenses caused by Superstorm Sandy.  The amendment also expands Section 26.10 to include fire districts. 

As a result of the amendment, a municipality, school district or fire district is now permitted to issue serial bonds on or before December 31, 2013 to provide for the payment of all or part of the “extraordinary expenses of storm relief.”  Any serial bonds issued pursuant to this amendment must have a maximum maturity of over two years, but the date of final maturity may not extend beyond December 31, 2018.  The term “extraordinary expenses of storm relief” is defined as expenses incurred by a municipality, school district or fire district before January 1, 2014 as a result of Superstorm Sandy.  These extraordinary expenses may include any interest payments on revenue anticipation notes issued while awaiting receipt of monies from a State or Federal government disaster relief act.  Extraordinary expenses, however, do not include the salaries and wages of regular employees, except for overtime work and work performed on Sundays and holidays.    

In addition to serial bonds, the amendment authorizes a municipality or school district (but not a fire district) to issue budget notes to provide for the payment of all or part of the extraordinary expenses of storm relief.  The budget notes generally must mature no later than the close of the fiscal year following the year of issue.  If the notes are issued after the annual budget for the next fiscal year is adopted, then they may mature by the close of the second fiscal year following the year of issue. 

Please contact us if you have any questions about this new law.

THIS MEMORANDUM IS MEANT TO ASSIST IN GENERAL UNDERSTANDING OF THE CURRENT LAW.  IT IS NOT TO BE REGARDED AS LEGAL ADVICE.  THOSE WITH PARTICULAR QUESTIONS SHOULD SEEK THE ADVICE OF COUNSEL.

© Lamb & Barnosky, LLP 2013