(a) Chapter 413 of the Laws of 1991 added a new section 54.90 to the Local Finance Law. This statute authorizes counties, cities, towns and villages (hereinafter “municipalities”) to issue, until June 30, 1994, bonds or notes that bear variable rates of interest in accordance with the requirements of that section. Among other things, section 54.90 requires, in certain instances, that the issuer enter into one or more letter of credit or liquidity facility agreements. It also permits the issuer to enter into an agreement for the remarketing or repurchasing of its bonds or notes. Section 54.90 of the Local Finance Law also permits the issuer of variable rate obligations, subject to rules promulgated by the State Comptroller, to:

(b) Chapter 413 also amended paragraph e of section 57.00 of the Local Finance Law to provide that, for the three-year period commencing July 1, 1991, a municipality, school district or district corporation may sell its bonds at public sale at a price of less than the par value of the issue of bonds provided that:

(c) Chapter 413 also added a new paragraph f to section 57.00. This new paragraph provides that, to facilitate the marketing of any bonds issued pursuant to paragraph e of section 57.00, the municipality, school district or district corporation may, subject to rules promulgated by the State Comptroller:

(d) Section 57.10 of the Local Finance Law, also enacted by Chapter 413 of the Laws of 1991, requires the State Comptroller to promulgate rules governing the negotiated sale of bonds or notes authorized by sections 54.90 and 57.00 and provides that no municipality, school district or district corporation shall sell bonds or notes on a negotiated basis without prior approval of the State Comptroller except as provided in such rules. These rules are expressly required to set forth the circumstances under which the State Comptroller's prior approval will not be required.

(e) The State Comptroller believes that competitive sale of municipal bonds and notes in a stable market with a normal yield curve generally produces the lowest interest cost to issuers and provides an equal opportunity for potential purchasers to obtain an award of obligations. For these reasons, the State Comptroller has consistently favored the competitive sale of obligations unless an issuer would have difficulty utilizing competitive sale because of one or more of the following factors:

(f) The complexity of variable rate debt transactions may warrant the use of negotiated sales. The State Comptroller believes that the authorization and issuance of all debt obligations is, in the first instance, the responsibility of the municipal issuer and its local officials. Therefore, these regulations permit a municipality to make its own determination whether to sell variable rate obligations at negotiated sale. To help ensure that the negotiated sale of variable rate debt is in the best interests of the issuer and that the procurement of the professional services necessary to conduct the sale is accomplished in an open and competitive manner, any municipality choosing to sell its variable rate obligations at negotiated sale shall be required to comply with, and make the determinations required by, the policies and procedures contained in section 37.5 of this Part.

(g) The State Comptroller does not believe that there is anything inherent in the sale of bonds at a discount that requires the use of negotiated sales. As noted, however, the State Comptroller does recognize that unstable or volatile market conditions, conditions of fiscal stress or negative credit factors being experienced by an issuer, the large dollar amount of the proposed issue, or the complexity of an issue may render the sale of bonds at competitive sale impractical or impossible. Therefore, if a municipality, school district or district corporation believes that one or more of these factors will make it difficult to sell a proposed issue at competitive public sale, it may seek approval of the State Comptroller to sell such bonds on a negotiated basis pursuant to sections 57.00(f) and 57.10 of the Local Finance Law. Where such a negotiated sale of bonds has been approved by the State Comptroller, the municipality, school district or district corporation shall be required to sell those bonds in accordance with the policies and procedures contained in section 37.5 of this Part.