STATE OF NEW YORK ________________________________________________________________________ 5354 2023-2024 Regular Sessions IN SENATE March 2, 2023 ___________ Introduced by Sen. RYAN -- read twice and ordered printed, and when printed to be committed to the Committee on Commerce, Economic Devel- opment and Small Business AN ACT to amend the economic development law, the public authorities law and the New York state urban development corporation act, in relation to financial assistance to small businesses for the purpose of pollution prevention, control and compliance The People of the State of New York, represented in Senate and Assem- bly, do enact as follows: 1 Section 1. Paragraphs l and m of subdivision 2 of section 137 of the 2 economic development law, paragraph l as amended and paragraph m as 3 added by chapter 594 of the laws of 1994, are amended and a new para- 4 graph n is added to read as follows: 5 l. providing information to small business stationary sources on 6 state-sponsored programs offering financial and technical assistance, 7 and in locating sources of funding for compliance with the requirements 8 of article nineteen of the environmental conservation law and the Act; 9 [and] 10 m. establishing procedures for assuring the confidentiality of infor- 11 mation received from small business stationary sources[.]; and 12 n. marketing the small business environmental fund established pursu- 13 ant to section twelve hundred eighty-five-v of the public authorities 14 law to small business stationary sources, assisting the New York state 15 urban development corporation in the projection of demand for financial 16 assistance pursuant to section sixteen-m of the New York state urban 17 development corporation act. 18 § 2. The public authorities law is amended by adding a new section 19 1285-v to read as follows: 20 § 1285-v. Small business environmental fund. 1. The corporation shall 21 undertake and provide assistance in support of a program to assist small 22 businesses in leveraging capital from financial institutions to achieve EXPLANATION--Matter in italics (underscored) is new; matter in brackets [ ] is old law to be omitted. LBD00411-02-3
S. 5354 2 1 pollution prevention and/or compliance with federal or state environ- 2 mental laws. 3 2. There is hereby established in the custody of the corporation a 4 special fund to be known as the small business environmental fund. 5 Moneys in such fund shall be segregated from all other funds of or in 6 the custody of the corporation subject to any rights of holders of 7 corporation bonds or notes issued for the purposes of this section. 8 Moneys in such fund shall only be used in accordance with the provisions 9 of this section. The moneys in such fund shall be applied to or paid out 10 for authorized purposes of such fund on the direction of the chairman of 11 the corporation in accordance with subdivision four of this section, or 12 such other person as the corporation shall authorize to make such direc- 13 tion. 14 3. Such fund shall consist of all of the following: (a) moneys appro- 15 priated by the state legislature for the purpose of such fund or other- 16 wise transferred by the state for deposit therein by the comptroller as 17 required by law; (b) payments of the loan origination fee authorized 18 pursuant to subdivision six of this section; (c) investment earnings on 19 amounts in such fund; (d) the proceeds of bonds or notes issued by the 20 corporation for purposes of leveraging capital on behalf of small busi- 21 nesses seeking to achieve pollution prevention and/or comply with feder- 22 al or state environmental laws; and (e) any other payments received from 23 the federal government or other sources for the purposes of the fund. 24 4. (a) Moneys in such fund shall be applied by the corporation as a 25 loan loss reserve fund, to provide credit enhancement to encourage 26 financial institutions to make pollution prevention or compliance loans 27 including such loans as may be necessary to purchase, lease, install or 28 acquire pollution control equipment to small businesses. 29 (b) The corporation is hereby authorized to provide assistance in the 30 form of a loan loss reserve fund for loans by financial institutions to 31 small businesses that otherwise find it difficult to obtain bank financ- 32 ing for pollution prevention or compliance activities control. The 33 corporation may use moneys in the fund to guarantee up to ninety percent 34 of the outstanding principal of each loan to be made by a financial 35 institution to a small business for pollution prevention or compliance 36 activities, provided, however, that no loan by a financial institution 37 pursuant to this section shall exceed five hundred thousand dollars. 38 5. (a) The corporation shall enter into agreements with financial 39 institutions governing participation in the fund which shall include, 40 but not be limited to, the terms of the payment of claims pursuant to 41 subdivision seven of this section. Such agreements shall set forth any 42 loan application fee to be charged by the financial institution to the 43 applicant and the loan origination fee to be paid to the corporation for 44 loans pursuant to this section. In entering into agreements with finan- 45 cial institutions, the corporation shall give priority to the execution 46 of agreements which provide for the participation of a consortium of 47 financial institutions serving an entire economic development region as 48 defined in section two hundred thirty of the economic development law. 49 (b) The corporation shall also establish procedures and other require- 50 ments for small business participation. Such procedures shall include a 51 simplified application form for small businesses seeking assistance. 52 Such application shall require a demonstration by the applicant that 53 difficulty in obtaining conventional bank financing for pollution 54 prevention or compliance activities in the purchase, lease, installation 55 or acquisition of pollution control equipment impedes the ability of the 56 applicant to achieve pollution prevention or comply with federal or
S. 5354 3 1 state environmental laws. Such application shall also include such 2 specific information as the corporation may require, with regard to the 3 pollution prevention or compliance activities proposed, and the esti- 4 mated cost of financing such activities. 5 (c) Within twenty-eight days of receipt of an application pursuant to 6 this section, the corporation shall either approve or reject such appli- 7 cation. The corporation shall approve an application pursuant to para- 8 graph (b) of this subdivision based upon a determination that: 9 (1) the proposed pollution prevention or compliance activities will 10 assist the small business in achieving pollution prevention and/or full 11 compliance with federal or state environmental laws; 12 (2) a loan is required to finance the pollution prevention or compli- 13 ance activities or to finance the purchase, lease, installment or acqui- 14 sition of pollution control equipment; 15 (3) approval is not sought for an outstanding loan previously made by 16 a financial institution to the small business; and 17 (4) no concurrent loan has been made to the small business pursuant to 18 this section. 19 (d) In the approval of applications, the corporation shall give pref- 20 erence to those small businesses which are: 21 (1) seeking to comply with new requirements imposed pursuant to the 22 federal Clean Air Act (42 U.S.C. 7401 et seq. as amended by P.L. 101- 23 549), the New York state clean air compliance act, as established pursu- 24 ant to chapter six hundred eight of the laws of nineteen hundred nine- 25 ty-three, the provisions of article seventeen of the environmental 26 conservation law, relating to water pollution control, and the 27 provisions of title nine of article twenty-seven of the environmental 28 conservation law, relating to industrial hazardous waste management, or 29 any rules and regulations promulgated thereunder; and are 30 (2) seeking to comply with new requirements imposed pursuant to feder- 31 al or state environmental laws; and are 32 (3) in highly distressed areas or minority-owned business enterprises 33 or women-owned business enterprises. 34 (e) Upon approval or denial of an application, the corporation shall 35 notify the applicant of such action by regular mail. The corporation may 36 also notify any financial institution of the approval or denial of an 37 application. 38 6. (a) Decisions to execute a loan pursuant to this section shall be 39 made solely by the financial institution and may provide for such inter- 40 est rate, fees and other terms and conditions as the financial institu- 41 tion and borrower may agree, provided, however, that: 42 (1) unless approved by the corporation, the term of the loan shall not 43 exceed seven years or the estimated useful life of any financed changes 44 in pollution prevention or control methods or equipment, whichever is 45 less; and 46 (2) if the amount of the loan is determined by a commitment agreement 47 that establishes a line of credit, the amount of the actual loan is the 48 maximum amount available to the borrower under the agreement. 49 (b) A small business, in receipt of a loan pursuant to this section, 50 shall pay an origination fee to the corporation upon distribution of 51 loan proceeds. Moneys from such a fee shall be deposited in the fund; 52 provided, however, that the corporation, in consultation with the direc- 53 tor of the division of the budget, may use a portion of such moneys for 54 the administration of the fund. Nothing contained in this section shall 55 prohibit the financing of the origination fee in the terms of the loan.
S. 5354 4 1 7. (a) Upon the default of a loan made pursuant to this section, a 2 financial institution may file contemporaneously with a notice of 3 default to the small business, a claim with the corporation to recover 4 the outstanding principal plus accrued interest and one-half of the 5 documented out-of-pocket expenses incurred in pursuing loan collection 6 efforts, including preservation of collateral. The amount of principal 7 and accrued interest included in the claim may not exceed the principal 8 amount agreed upon at the time of closing, plus accrued interest attrib- 9 utable to such agreed upon amounts, consistent with the requirements of 10 this section. 11 (b) For loans made pursuant to this section, the financial institution 12 shall determine a loan to be in default in a manner consistent with 13 methods employed by the financial institution for similar loans not made 14 pursuant to this section. 15 (c) The corporation is authorized and directed to adopt rules and 16 regulations governing the payment of claims from the fund. Such rules 17 and regulations shall provide that upon receipt of a claim filed by a 18 financial institution, the corporation shall, within ten business days, 19 pay from the fund the amount of the claim as submitted, unless informa- 20 tion provided by the financial institution is found by the corporation 21 to be incomplete or was known by the financial institution to be false 22 at the closing of the loan. The terms of the payment of claims from the 23 fund shall be included in the agreement entered into by the corporation 24 and the financial institution pursuant to subdivision five of this 25 section. 26 (d) Upon payment of a claim, the corporation shall report the claim to 27 the office of the attorney general, who then shall exercise the rights 28 of subrogation. The financial institution thereafter shall assign to the 29 attorney general any right, title, or interest to any collateral, secu- 30 rity, or other right of recovery in connection with the loan. Any money 31 received by the attorney general as a result of enforcement actions 32 taken with respect to any collateral, security or other rights of recov- 33 ery shall be promptly deposited by the attorney general through the 34 corporation in the fund, less any out-of-pocket expenses incurred by the 35 attorney general in taking such enforcement actions. 36 8. Pursuant to rules and regulations of the corporation, the corpo- 37 ration may terminate the participation of a financial institution in the 38 fund upon a determination that such institution is not in substantial 39 compliance with the requirements of this section or the provisions of an 40 agreement executed pursuant to subdivision five of this section. The 41 corporation shall provide notice to a financial institution at least 42 ninety days in advance of such termination. 43 9. The corporation shall monitor the activities of participating 44 financial institutions and small businesses and may require such period- 45 ic reports or other information as deemed necessary from such insti- 46 tutions and businesses on the status of loans made pursuant to this 47 section. On or before the first day of March following the effective 48 date of this section, and on such date annually thereafter, the corpo- 49 ration shall submit to the governor, the temporary president of the 50 senate and the speaker of the assembly a report on the fund. Such report 51 shall include, but not be limited to: 52 (a) the total number and amount of loans and the average amount of 53 loans leveraged by the fund from financial institutions in each economic 54 development region of the state as defined in section two hundred thirty 55 of the economic development law;
S. 5354 5 1 (b) the total number and amount of loans and the average amount of 2 loans leveraged by the fund from financial institutions pursuant to 3 paragraph (d) of subdivision five of this section in each such region; 4 and 5 (c) the total number and amount of claims submitted by financial 6 institutions for recovery of moneys through the fund, the total number 7 and amount of claims paid from the fund and a summary of the circum- 8 stances associated with claims on the fund. 9 10. (a) On or before the first day of September following the effec- 10 tive date of this section, and on such date every two years thereafter, 11 the corporation shall submit to the director of the budget, the chair of 12 the senate finance committee and the chair of the assembly ways and 13 means committee an evaluation of the effectiveness of the fund in real- 14 izing pollution prevention by small businesses and securing the compli- 15 ance of such businesses with federal and state environmental laws. Such 16 evaluation shall be prepared by an entity independent of the corporation 17 selected through a request for proposal process and shall include recom- 18 mendations for improvements to the implementation of the fund to enhance 19 small business pollution prevention, control and compliance. 20 (b) On or before the first day of September following the effective 21 date of this section, and on such date every two years thereafter, the 22 corporation shall submit to the director of the budget, the chair of the 23 senate finance committee and the chair of the assembly ways and means 24 committee an evaluation of the effectiveness of the fund in securing the 25 compliance of small businesses with the requirements of the federal 26 Clean Air Act (42 U.S.C. §7401 et seq. as amended by P.L. 101-549), the 27 New York state clean air compliance act, as established pursuant to 28 chapter six hundred eight of the laws of nineteen hundred ninety-three, 29 the provisions of article seventeen of the environmental conservation 30 law relating to water pollution control, and the provisions of title 31 nine of article twenty-seven of the environmental conservation law, 32 relating to industrial hazardous waste management, or any rules and 33 regulations promulgated thereunder. Such evaluation shall be prepared 34 by an entity independent of the corporation selected through a request 35 for proposal process and shall include recommendations for improvements 36 to the implementation of the fund to enhance small business pollution 37 prevention, control and compliance. 38 11. The corporation shall market the fund program to small businesses 39 in cooperation with financial institutions, statewide trade associations 40 representing financial institutions and small businesses, local and 41 regional economic development agencies, and the small business station- 42 ary source ombudsman program, established pursuant to section one 43 hundred thirty-seven of the economic development law. The corporation 44 shall develop a program to promote awareness of the program in all 45 geographic regions of the state, to ensure maximum participation by 46 small businesses and financial institutions and the fiscal integrity of 47 the fund. Agreements entered into by the corporation pursuant to subdi- 48 vision five of this section shall require a plan by each financial 49 institution for marketing the fund in highly distressed areas, empire 50 zones and to minority-owned business enterprises and women-owned busi- 51 ness enterprises, with appropriate lending objectives identified by each 52 financial institution for such areas and businesses. 53 12. The corporation is authorized and directed to adopt rules and 54 regulations for the establishment and administration of the fund, in 55 accordance with the state administrative procedure act. No funds shall
S. 5354 6 1 be disbursed from this program until such rules and regulations have 2 been promulgated by the corporation. 3 13. For the purposes of this section, the following words or terms 4 shall mean: 5 (a) "financial institution" shall mean a banking organization, as 6 defined pursuant to section two of the banking law, a New York small 7 business investment company and a New York specialized small business 8 investment company, as defined pursuant to section two hundred twenty- 9 eight-a of the banking law, a local development corporation, as defined 10 in subdivision eight of section eighteen hundred one of this chapter, 11 and the New York business development corporation established pursuant 12 to section two hundred ten of the banking law. 13 (b) "fund" shall mean the small business environmental fund estab- 14 lished pursuant to this section. 15 (c) "highly distressed area" shall mean an area meeting the criteria 16 as set forth under subdivision (a) of section nine hundred fifty-eight 17 of the general municipal law. 18 (d) "minority-owned business enterprise" shall have the same meaning 19 as defined in subdivision seven of section three hundred ten of the 20 executive law. 21 (e) "pollution control equipment" shall mean any equipment approved by 22 the corporation as necessary for compliance with new requirements of the 23 federal Clean Air Act (42 U.S.C. § 7401 et seq. as amended by P.L. 101- 24 549), the New York state clean air compliance act, as established pursu- 25 ant to chapter six hundred eight of the laws of nineteen hundred nine- 26 ty-three, the provisions of article seventeen of the environmental 27 conservation law relating to water pollution control, and the provisions 28 of title nine of article twenty-seven of the environmental conservation 29 law, relating to industrial hazardous waste management, or any rules and 30 regulations promulgated thereunder. 31 (f) "pollutant" shall mean any substance, contaminant, waste or emis- 32 sion which contributes to pollution as defined in article one of the 33 environmental conservation law. 34 (g) "pollution prevention" shall mean changes in production methods or 35 raw materials that reduce, avoid, or eliminate the use of toxic or 36 hazardous substances or the generation of such substances or pollutants 37 per unit of product, so as to reduce risks to the health of workers, 38 consumers, or the environment, without shifting risks between workers, 39 consumers, or environmental media. Pollution prevention includes the 40 redesign, modification, upgrade or replacement of production processes, 41 equipment or technology; reformulation or redesign of products; substi- 42 tution of inputs or raw materials; improvements in housekeeping, mainte- 43 nance, training, or inventory control; and extended use or reuse of 44 materials through methods integral to the production process, such as 45 in-process, closed-loop recycling. It does not include incineration, 46 transfer from one medium of release or discharge to another media, off- 47 site or out-of-production recycling, end-of-pipe treatment or pollution 48 control. 49 (h) "toxic or hazardous substance" shall mean any substance listed as 50 a substance hazardous to public health, safety or the environment in 51 regulations promulgated pursuant to article thirty-seven of the environ- 52 mental conservation law. 53 (i) "small business" shall have the same meaning as defined in section 54 one hundred thirty-one of the economic development law. 55 (j) "women-owned business enterprise" shall have the same meaning as 56 subdivision fifteen of section three hundred ten of the executive law.
S. 5354 7 1 § 3. Subdivision 1 of section 16-m of section 1 of chapter 174 of the 2 laws of 1968, constituting the New York state urban development corpo- 3 ration act, is amended by adding a new paragraph (p) to read as follows: 4 (p) Assistance to capitalize the small business environmental fund, 5 established pursuant to section twelve hundred eighty-five-v of the 6 public authorities law. 7 § 4. This act shall take effect on the one hundred eightieth day after 8 it shall have become a law; provided, however, that the amendments to 9 section 16-m of section 1 of chapter 174 of the laws of 1968, constitut- 10 ing the New York state urban development corporation act, made by 11 section three of this act, shall not affect the expiration of such 12 section and shall be deemed to expire therewith. Effective immediately, 13 the addition, amendment and/or repeal of any rule or regulation neces- 14 sary for the implementation of this act on its effective date are 15 authorized to be made and completed on or before such effective date.