§ 10-A — Covenants, authorizations to agree and remedies

New York § 10-A

• Jurisdiction: New York
• Law FEA: NYS Financial Emergency Act for the city of NY 868/75

Text

* § 10-a. Covenants, authorizations to agree and remedies. 1. In the\nevent that after the date on which the provisions of this act become\noperative, any notes or bonds are issued by the city prior to July 1,\n2026, or any bonds are issued by a state financing agency, the state of\nNew York hereby authorizes the city and authorizes and requires such\nstate financing agency to include a pledge and agreement of the state of\nNew York in any agreement made by the city or such state financing\nagency with holders or guarantors of such notes or bonds that the state\nwill not take any action which will (a) substantially impair the\nauthority of the board during a control period, as defined in\nsubdivision twelve of section two of this act as in effect on the date\nsuch notes or bonds are issued (i) to approve, disapprove, or modify any\nfinancial plan or financial plan modification, including the revenue\nprojections (or any item thereof) contained therein, subject to the\nstandards set forth in paragraphs a, c, d, e and f of subdivision one of\nsection eight of this act as in effect on the date such notes or bonds\nare issued and paragraph b of such subdivision as in effect from time to\ntime, (ii) to disapprove a contract of the city or a covered\norganization if the performance of such contract would be inconsistent\nwith the financial plan or to approve or disapprove proposed short-term\nor long-term borrowing of the city or a covered organization or any\nagreement or other arrangement referred to in subdivision four of\nsection seven of this act, or (iii) to establish and adopt procedures\nwith respect to the deposit in and disbursement from the board fund of\ncity revenues; (b) substantially impair the authority of the board to\nreview financial plans, financial plan modifications, contracts of the\ncity or the covered organizations and proposed short-term or long-term\nborrowings of the city and the covered organizations; (c) substantially\nimpair the independent maintenance of a separate fund for the payment of\ndebt service on bonds and notes of the city; (d) alter the composition\nof the board so that the majority of the voting members of the board are\nnot officials of the state of New York elected in a state-wide election\nor appointees of the governor; (e) terminate the existence of the board\nprior to the time to be determined in accordance with section thirteen\nof this act as in effect on the date such notes or bonds are issued; (f)\nsubstantially modify the requirement that the city's financial\nstatements be audited by a nationally recognized independent certified\npublic accounting firm or consortium of firms and that a report on such\naudit be furnished to the board; or (g) alter the definition of a\ncontrol period set forth in subdivision twelve of section two of this\nact, as in effect on the date such notes or bonds are issued, or\nsubstantially alter the authority of the board, as set forth in said\nsubdivision to reimpose or terminate a control period; provided,\nhowever, that the foregoing pledge and agreement shall be of no further\nforce and effect if at any time (i) there is on deposit in a separate\ntrust account with a bank, trust company or other fiduciary sufficient\nmoneys or direct obligations of the United States or obligations\nguaranteed by the United States, the principal of and/or interest on\nwhich will provide moneys to pay punctually when due at maturity or\nprior to maturity by redemption, in accordance with their terms, all\nprincipal of and interest on all outstanding notes and bonds of the city\nor such state financing agency containing this pledge and agreement and\nirrevocable instructions from the city or such state financing agency to\nsuch bank, trust company or other fiduciary for such payment of such\nprincipal and interest with such moneys shall have been given, or (ii)\nsuch notes and bonds, together with interest thereon, have been paid in\nfull at maturity or have otherwise been refunded, redeemed, defeased, or\ndischarged; and provided further that the foregoing pledge and agreement\nshall be of full force and effect upon its inclusion in any agreement\nmade by the city or state financing agency with holders or guarantors of\nsuch notes or bonds.\n Upon payment for such obligations issued pursuant to this act by the\noriginal and all subsequent holders inclusion of the foregoing covenant\nshall be deemed conclusive evidence of valuable consideration received\nby the state and city for such covenant and of reliance upon such pledge\nand agreement by any such holder. The state hereby grants any such\nbenefited holder the right to sue the state in a court of competent\njurisdiction and enforce this covenant and agreement and waives all\nrights of defense based on sovereign immunity in such an action or suit.\n 2. Every such bond or note which shall contain the pledge and\nagreement referred to in subdivision one above shall be callable for\nredemption commencing not later than the eleventh anniversary of its\ndate of issuance and shall contain on its face a recital to such effect,\ntogether with the terms and conditions under which such obligation may\nbe redeemed.\n 3. The finance board of the city is hereby authorized to enter into\nagreements and to make covenants with any purchaser, holder or guarantor\nof obligations issued by the city or by a state financing agency to\nprotect and safeguard the security and rights of a purchaser, holder or\nguarantor or to protect and safeguard the source of payment of such\nobligations or as deemed appropriate by the finance board which\nagreements or covenants may contain provisions providing for (a) (i) the\ncompliance by the city with any of the provisions of this act or of the\nNew York City Loan Guaranty Act of nineteen hundred seventy-eight,\nPublic Law 95-339, or, (ii) in any agreements with the guarantor of such\nobligations but only in such agreements unless otherwise authorized by\nlaw, the compliance with any of the terms and conditions required by the\nsecretary of the treasury pursuant to such act, (b) restrictions on the\nissuance by the city of its obligations, limitations on the inclusion of\nexpense items in its capital budgets and financial records, reporting\nand disclosure requirements in addition to any such restrictions,\nlimitations or requirements contained in this act, (c) compliance by the\ncity with its financial plan as modified from time to time, (d)\nconditions that would give rise to an event of default on such\nobligations, and (e) remedies available to a purchaser, holder or\nguarantor of such obligations, other than acceleration or the required\nelimination or reduction of specific municipal expenditures, including\nthe circumstances, if any, under which a trustee or trustees or a fiscal\nagent may be appointed or may act as a representative of holders of\nobligations issued by the city in connection with an issue or issues of\nobligations of the city and the rights, powers and duties which may be\nvested in such trustee, trustees or fiscal agent as such representative.\nThe state of New York hereby pledges and agrees that it will take no\naction that would impair the power of the city to comply with or to\nperform any covenant or agreement made pursuant to this subdivision, or\nany right or remedy of a purchaser, holder or guarantor to enforce such\ncovenant or agreement; and the city or a state financing agency is\nhereby authorized to include such pledge and agreement in any agreement\nmade pursuant to this subdivision. Nothing contained in this subdivision\nshall preclude the state from authorizing the city to exercise, or the\ncity from exercising, any power provided by law to seek application of\nlaws then in effect under the bankruptcy provisions of the United States\nconstitution or shall preclude the state from validly exercising its\npolice powers.\n 4. Notwithstanding any other provision of law, the trustees of any\nretirement, pension or annuity fund or system of the state of New York\nor of the city of New York are hereby authorized to enter into\ncommitments to purchase and to purchase notes, bonds or other\nobligations of the city of New York or of a state financing agency, the\npayment in whole or in part, of interest, principal, or both, is\nguaranteed by the secretary of the Treasury of the United States of\nAmerica pursuant to the New York City Loan Guarantee Act of 1978, Public\nLaw 95-339, as presently in effect or hereafter amended or to purchase\nother bonds or notes of such city or of a state financing agency prior\nto June thirtieth, nineteen hundred eighty-two, or in the case of the\ntrustees of any retirement, pension or annuity fund or system of the\ncity of New York, to enter into commitments to purchase such other bonds\nor notes of such city or of a state financing agency prior to June\nthirtieth, nineteen hundred eighty-two. Such commitments to purchase\nshall be binding upon and enforceable against successor trustees of such\nretirement, pension or annuity funds or systems of the state of New York\nor city of New York.\n 5. The secretary of the treasury shall have the right to initiate a\nproceeding in the supreme court of the state of New York in and for the\ncounty of New York or the court of claims of the state of New York to\nobtain a court order or other relief in connection with any agreements\nor other transactions entered into by the secretary relative to his\nguarantee of the principal, interest, or both of city indebtedness.\n 6. Notwithstanding any other provision of law to the contrary, the\ngovernor shall have the authority in connection with any agreement by\nthe federal government or any agency or instrumentality thereof to\nguarantee the payment of the principal of or interest on bonds or notes\nissued by the city of New York or by a state financing agency, to enter\ninto one or more agreements containing terms and conditions required by\nthe secretary of the treasury pursuant to the New York City Loan\nGuarantee Act of 1978, Public Law 95-339, approved by the comptroller\nand approved as to form by the attorney general, with the federal\ngovernment or any agency or instrumentality thereof with respect to such\nguarantee or any matters related thereto and to comply with such terms\nand conditions.\n 7. Nothing in this section contained shall preclude the state from\nauthorizing the board or the city to exercise, or the board or city from\nexercising, any power provided by law to seek application of laws then\nin effect under the bankruptcy provisions of the United States\nconstitution or to preclude the state from a further exercise of its\npowers under article eight, section twelve, of the state constitution.\n * Terminates July 1, 2035 or § 13\n