FOR IMMEDIATE RELEASE: September 24, 2004

New 5-year Liberty Bond extension unlocks $5.7 Billion that was projected to remain unspent by original end-of-2004 deadline

New York City also gets extra year to take advantage of lower interest rates to refinance general obligation bonds

Final vote in favor: 92-3

US Senator Charles E. Schumer announced that late last night, the Senate overwhelmingly passed critical legislation to extend the period for which New York can use billions of dollars from the $20 billion 9/11 federal aid package. This move to provide a new five-year Liberty Bond extension unlocks $5.7 billion in unused bonding authority for new construction, and also gives New York City and various municipal authorities an additional year to take advantage of lower interest rates to refinance existing debt.

"I've said it before and I'll say it again, Washington is doing the right thing by New York. They are keeping their commitment to give us both the money and the flexibility we need to recover and rebuild," Schumer said. "Attaching this to the middle class tax bill which the Presdient is sure to sign means that we will be able fine-tune the $20 billion package in a way that really works for us."

The middle class tax bill that passed the Senate by a 92 to 3 vote late last night extends the authority for New York City and New York State to issue Liberty Bonds for another five years, and provides needed flexibility in the use of the bonds to ensure that they will be used by the end of this extension. In the wake of 9/11, Congress created the Liberty Bond program and gave both the City and State of New York $4 billion each in tax-exempt bonds to help finance the construction of commercial and residential construction in Lower Manhattan.

Under the original legislation, the bonds had to be issued by December 31, 2004. With approximately $5.7 billion of the $8 billion authorized unused just seven months prior to the original sunset date, Congress extended the authorization to issue Liberty Bonds for 5 years, to December 31, 2009.

The legislation also gives the City and the State one additional year to advance refund a limited amount of general obligation bonds. Much like refinancing a mortgage, advance refunding allows a state or local government to take advantage of lower interest rates and reduce payments it makes on general obligation bonds - bonds issued for governmental purposes like building schools and roads. Normally, a general obligation bond can be advance refunded only once. To help the City and State of New York in recovering from the effects of the attack, Congress permitted one additional advance refunding for a limited amount of bonds.

New York City was given $4.5 billion in advance refunding authority, but the City projects that it will not be able to use $2.3 billion in this authority by the original deadline. This legislation gives New York City entities one more year to complete this refinancing process.

The Liberty Bond Legislation was part of the conference report on the middle class tax cut legislation. It now goes to the President to sign it into law.

###