§ 4 — The sale agreement

New York § 4

• Jurisdiction: New York
• Law TSF: Tobacco Settlement Financing Corporation Act

Text

§ 4. The sale agreement. * 1. The state representative, upon the\nexecution of a sale agreement on behalf of the state may sell to the\ncorporation, and the corporation may purchase, for cash or other\nconsideration and in one or more installments, all or a portion of the\nstate's share. Any such agreement shall provide, among other matters,\nthat the purchase price payable by the corporation to the state for such\nstate's share or portion thereof shall consist of the net proceeds of\nthe bonds issued to finance such purchase price and the residual\ninterests, if any. Notwithstanding section 121 of the state finance law\nor any other law to the contrary, the residual interests shall be\ndeposited into the Medicaid management information system (MMIS)\nstatewide escrow fund within thirty days upon the availability of such\nresidual interests to fund a portion of the cumulative non-federal share\nof expenses related to the state takeover of the local share of Medicaid\ngrowth pursuant to part F of chapter 56 of the laws of 2012. Such\ndeposit shall be in an amount equal to (a) the amount of residual\ninterests scheduled for deposit into the MMIS statewide escrow fund in\nthe applicable year's enacted budget financial plan as updated or (b)\nthe total amount of residual interests available if the total amount of\nsuch residual interests is less than the total amount of residual\ninterests scheduled for deposit into the MMIS statewide escrow fund in\nthe applicable year's enacted budget financial plan as updated. At the\ndiscretion of the state representative, any residual interests which\nexceed the amount scheduled for deposit into the MMIS statewide escrow\nfund in the applicable year's enacted budget financial plan as updated\nmay either be deposited into the (i) MMIS statewide escrow fund to fund\na portion, as determined by the state representative, of the cumulative\nnon-Federal share of expenses related to the state takeover of the local\nshare of Medicaid growth, pursuant to part F of chapter 56 of the laws\nof 2012, or (ii) the state general fund; provided, however that any\nresidual interest derived from other assets shall be applied as directed\nby statute. Notwithstanding any other law to the contrary, the amount\nused from such deposit to fund a portion of the cumulative non-Federal\nshare of expenses related to the State takeover of the local share of\nMedicaid growth shall be paid without appropriation. Any such sale shall\nbe pursuant to one or more sale agreements which may contain such terms\nand conditions deemed necessary by the state representative to carry out\nand effectuate the purposes of this section, including covenants binding\nthe state in favor of the corporation and its assignees, including the\nowners of its bonds such as covenants with respect to the enforcement at\nthe expense of the state of the payment provisions of the master\nsettlement agreement, the diligent enforcement at the expense of the\nstate of the qualifying statute, the application and use of the proceeds\nof the sale of the state's share to preserve the tax-exemption on the\nbonds, the interest on which is intended to be exempt from federal\nincome tax, issued to finance the purchase thereof and otherwise as\nprovided in this act. Notwithstanding the foregoing, neither the state\nrepresentative nor the corporation shall be authorized to make any\ncovenant, pledge, promise or agreement purporting to bind the state with\nrespect to pledged tobacco revenues, except as otherwise specifically\nauthorized by this act.\n * NB Effective until March 31, 2027\n * 1. The state representative, upon the execution of a sale agreement\non behalf of the state may sell to the corporation, and the corporation\nmay purchase, for cash or other consideration and in one or more\ninstallments, all or a portion of the state's share. Any such agreement\nshall provide, among other matters, that the purchase price payable by\nthe corporation to the state for such state's share or portion thereof\nshall consist of the net proceeds of the bonds issued to finance such\npurchase price and the residual interests, if any. The residual\ninterests shall be deposited into the tobacco settlement fund pursuant\nto section 92-x of the state finance law, unless otherwise directed by\nstatute; provided, however that any residual interest derived from other\nassets shall be applied as directed by statute. Any such sale shall be\npursuant to one or more sale agreements which may contain such terms and\nconditions deemed necessary by the state representative to carry out and\neffectuate the purposes of this section, including covenants binding the\nstate in favor of the corporation and its assignees, including the\nowners of its bonds such as covenants with respect to the enforcement at\nthe expense of the state of the payment provisions of the master\nsettlement agreement, the diligent enforcement at the expense of the\nstate of the qualifying statute, the application and use of the proceeds\nof the sale of the state's share to preserve the tax-exemption on the\nbonds, the interest on which is intended to be exempt from federal\nincome tax, issued to finance the purchase thereof and otherwise as\nprovided in this act. Notwithstanding the foregoing, neither the state\nrepresentative nor the corporation shall be authorized to make any\ncovenant, pledge, promise or agreement purporting to bind the state with\nrespect to pledged tobacco revenues, except as otherwise specifically\nauthorized by this act.\n * NB Effective March 31, 2027\n 2. Any sale of all or part of the state's share to the corporation\nshall be treated as a true sale and absolute transfer of the property so\ntransferred and not as a pledge or other security interest for any\nborrowing. The characterization of such a sale as an absolute transfer\nby the participants shall not be negated or adversely affected by the\nfact that only a portion of the state's share is transferred, nor by the\nacquisition or retention by the state of a residual interest, nor by any\ncharacterization of the corporation or its obligations for purposes of\naccounting, taxation or securities regulation, nor by the pledge of any\nother funds or assets of the corporation to secure bonds, nor by any\nother factor whatsoever.\n 3. On and after the effective date of each sale of any portion\n(including all) of the state's share, the state shall have no right,\ntitle or interest in or to the portion of the state's share sold, and\nthe portion of the state's share so sold shall be the property of the\ncorporation and not of the state, and shall be owned, received, held and\ndisbursed by the corporation and not the state treasury. Notwithstanding\nsection 92-x of the state finance law, on the effective date of any such\nsale with respect to tobacco settlement payments, the state through the\nattorney general shall notify the independent auditor and the escrow\nagent under the master settlement agreement that such portion of the\nstate's share has been sold to the corporation and irrevocably instruct\nsuch independent auditor and escrow agent that, subsequent to such date,\nsuch portion of the state's share is to be paid directly to the\nindenture trustee for the benefit of the owners of the bonds of the\ncorporation which are secured by a pledge of such amounts, until such\nbonds are no longer outstanding pursuant to the resolution or related\nindenture under which such bonds are issued.\n 4. The net proceeds of the bonds and any earnings thereon shall never\nbe pledged to, nor made available for, payment of the bonds or any\ninterest or redemption price thereon or any other debt or obligation of\nthe corporation. The net proceeds of the bonds shall be deposited in the\ngeneral fund as directed by the state representative as specified in, or\notherwise provided for by, the sale agreement, and shall be used by the\nstate (either directly or by reimbursement of the general fund) for any\nof the following purposes: (i) for health care purposes in accordance\nwith section 2807-v of the public health law, including but not limited\nto the treatment of smoking-related illnesses and for smoking cessation\nefforts, (ii) for any of its capital purposes or for any of its capital\nprograms, (iii) for payment of debt service on any of its outstanding\nbonds or on any state supported bonds, notes or other obligations or in\nrespect of debt service on any outstanding bonds, notes or other\nobligations of local governments, school districts or public benefit\ncorporations for which state aid is applicable or required to be paid or\nfor which there is a contract subject to state appropriation provided\nthat such bonds, notes or other obligations funded capital projects or\nprograms, (iv) for other grants to local governments, school districts\nor public benefit corporations, or (v) to provide a revenue resource for\npersonal service expenses of the state and general state charges. With\nrespect to any bonds of the corporation, the interest on which is\nintended to be exempt from federal income tax, the corporation and the\nstate representative may provide restrictions on the use of net proceeds\nof the bonds and other amounts in the sale agreement or otherwise in a\ntax regulatory agreement only as necessary to assure such exempt status.\n 5. The director of the budget shall notify in writing the chairs of\nthe senate finance committee and the assembly ways and means committee\nof any plans to sell all or a portion of the state's share of tobacco\nsettlement payments prior to entering any sale agreement with the\ncorporation. At the time this notification is given, the chief executive\nofficer of the corporation and the director of the budget shall provide\na report to the chairs of the senate finance committee and the assembly\nways and means committee on a planned bond sale of the corporation and\nsuch report shall include, but not be limited to: (A) the maximum amount\nof bonds expected to be sold by the corporation in connection with a\nsale agreement; (B) the expected maximum interest rate and maturity date\nof such bonds; (C) the expected amount of the bonds that will be fixed\nand/or variable interest rate; (D) the estimated costs of issuance; (E)\nthe estimated level or levels of reserve fund or funds, if any; (F) the\nestimated cost of bond insurance, if any; (G) the anticipated use or\nuses of the proceeds; and (H) the maximum expected net proceeds that\nwill be paid to the state as a result of the issuance of such bonds. Any\nsuch expectations and estimates in the report shall not be deemed a\nsubstantive limitation on the authority of the corporation contained in\nthis act.\n