The Onondaga Tobacco Asset Securitization Corporation (OTASC) is a local development corporation organized pursuant to Section 1411 of the Not-For-Profit Corporation Law of the State of New York. It was created for the special purpose of the sale of tobacco assets by Onondaga County and was established on July 3, 2001. OTASC is legally separate from the County of Onondaga, New York (the County); however it is a blended component unit of the County and accordingly is included in the County’s financial statements.
On July 3, 2001, pursuant to a Purchase and Sale Agreement with the County, the County sold to OTASC all of its future rights, title and interest in the Tobacco Settlement Revenues. These revenues were from a master settlement agreement (MSA) that resolved cigarette smoking-related litigation between the settling states and the tobacco companies; a portion of the payments made to the states of NY and CA are allocated to the Counties.
The purchase price of the County’s future rights, title and interest in the Tobacco Settlement Revenues was financed by the issuance of serial bonds to investors which
will be paid back with the money that OTASC expects to receive annually from tobacco companies from the agreed upon MSA. OTASC again sold bonds in November 2005, further pledging its payments from the tobacco companies through 2060 to make principal and interest payments on the bonds.
OTASC was formed and its activities are strictly limited to:
- Acquiring the tobacco assets from the County
- Issuing bonds, the net proceeds of which are paid to the County for the tobacco assets; and
- Collecting receipts from the tobacco settlement payments and servicing its debt in connection with the issuance of those bonds; and
- Remaining in existence for the term of the bonds and providing annual reports to the bondholders
OTASC is managed by a Board of Directors, two members of which serve ex-officio: the Deputy County Executive of the County and the County Attorney; two members appointed by the Legislator (one being the Chairperson, Ways & Means committee); and one member who is an Independent Director.
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