by Robert Crump

The Dormitory Authority of the State of New York (DASNY) is scheduled to issue a large bond of $3.2 billion in State Personal Income Tax Revenue Bonds. The negotiated sale is planned for December 17th with Morgan Stanley, Jefferies, and Ramirez & Co., Inc. as lead co-managers. The Bonds are comprised of three series, each with slightly different tax status and redemption schedules. Let’s dig into some of the details.

About the Bonds

The Bonds are special obligations of DASNY secured by tax revenues deposited into the The Revenue Bond Tax Fund. Sources of financing payments include statutory allocation of 50 percent of the receipts from the New York State Personal Income Tax and 50 percent of the receipts from the New York State Employer Compensation Expense Program. Payments made from amounts set aside in the Revenue Bond Tax Fund are subject to annual appropriation by the State Legislature. It’s important to note that these Bonds are not pledges of revenue from facilities or properties of any other DASNY assets outside the Bonds’ special obligation. Each series of the Bonds have different optional, mandatory, and/or extraordinary call provisions that are dependent on the date and certain conditions detailed in the Official Statement.

Proceeds from the Bonds are expected to be used for general corporate purposes of DASNY. Additionally, a portion of the proceeds will be used to refund various series of State-supported debt issued by DASNY in 2010 and 2013. Simultaneously with the issuance and delivery of the Series 2019 Bonds, a portion of the proceeds of the Series 2019 Bonds will be deposited in separate escrows to pay the redemption price of and interest due on the applicable Refunded Bonds to their respective redemption dates.

In the opinion of counsel, interest on the Series 2019D Bonds is excluded from gross income for Federal income tax purposes and the alternative minimum tax. Interest on the Series 2019D Bonds is also exempt from personal income taxes imposed by the State of New York or any political subdivision thereof (including The City of New York). The same tax status applies to Series 2019E Bonds, except that no opinion is expressed on the exempt status of any Series 2019E Bond held by a person who is a “substantial user” of the facilities financed with the proceeds of the Series 2019E Bond. Interest on the Series 2019F Bonds is Federally taxable, but is exempt from local and state taxes imposed by the State.

Dormitory Authority of the State of New York

DASNY is a public benefit corporation originally created in 1944 to finance and build dormitories at State teachers’ colleges to provide housing for the large influx of students returning to college on the G.I. Bill following World War II. Over the years, the State Legislature has expanded DASNY’s scope of responsibilities to include finance, design, construction or rehabilitation of facilities for use by a variety of public and private not-for-profit entities. In this role, the DASNY is authorized to issue bonds to finance its operations and support capital projects around the State with partners who provide a wide range of benefits to the citizens of New York. DASNY provides financing services to its clients in three major areas: public facilities; not-for- profit healthcare; and independent higher education and other not-for-profit institutions. A list of active construction projects can be seen here.

DASNY also offers a variety of construction services to certain educational, governmental and not-for-profit institutions in the areas of project planning, monitoring project construction, purchasing of furnishings and equipment for projects, interior design of projects and designing and managing projects to rehabilitate older facilities. In connection with the powers described above, DASNY has the general power to acquire real and personal property, give mortgages, make contracts, operate certain facilities, contract with the holders of its bonds, borrow money and adopt a program of self-insurance. DASNY has a staff of approximately 536 employees located in three main offices and at approximately 47 field sites across the State.

These details and more on purposes, security, risks and other matters pertaining to these Bonds can be found in the preliminary official statement, provided by MuniOS. After registering, if needed, visitors can link directly to the official statement by searching for ‘Dormitory Authority of the State of New York’. See the table below for a financial snapshot of New York’s personal income tax program.

NY Personal Income Tax for FY 2019

Provided above is a quick snapshot of financial characteristics of the New York Personal Income Tax, courtesy of Merritt Research Services, LLC. (Merritt believes the data to be reliable but does not make any representations as to its accuracy or completeness). In addition to the Merritt information related to the featured bond, more information can be found on our municipal bond calendar, city, state, and county pages.

These facts and numbers are for informational purposes, and should not be considered an official disclosure for potential investors. Investors should consult the official statement. None of the information provided should be construed as a recommendation by MuniNet Guide, MuniNet LLC, Merritt Research Services LLC, or any of their employees. Information and analysis is for informational purposes only.

Potential investors should rely only on the official documents and figures provided in the official statement (prospectus). Although the numbers presented in this summary are primarily derived from public documents, including issuer audits, issuer reports and other public sources such as federal reporting agencies , they are not intended to replace official information presented in connection with the bond sale. Medians may differ from official sales documents due to methodology or survey base variances.