§ 7 — Reserve funds and appropriations

§ 7. Reserve funds and appropriations.\n 1. (a) For the purposes of the issuance by the agency of bonds, the\nterm "capital reserve fund requirement" shall mean, as of any particular\ndate of computation, with respect to each capital reserve fund of the\nagency an amount of money equal to the greatest of the respective\namounts, for the then current or any succeeding calendar year, of annual\ndebt service payments of the agency on the bonds secured by such capital\nreserve fund, such annual debt service payments for any calendar year\nbeing an amount of money equal to the aggregate of the following with\nrespect to all such bonds of the agency outstanding on said date of\ncomputation; (i) all interest payable during such calendar year, plus\n(ii) the principal amount which matures (net of any sinking fund\npayments payable in prior years) during such calendar year, plus (iii)\nthe amount of all sinking fund payments payable during such calendar\nyear; and the term "sinking fund payment" shall mean the amount of money\nspecified in the resolution authorizing term bonds as payable into a\nsinking fund for the amortization of such term bonds. The agency may\ncreate and establish one or more special funds to be known as capital\nreserve funds and may pay into each such reserve fund (1) any monies\nappropriated and made available by the state for the purposes of such\nfund, (2) any proceeds of sale of notes or bonds, to the extent provided\nin the resolution of the agency authorizing the issuance thereof, and\n(3) any other monies which may be made available to the agency for the\npurposes of such fund from any other source or sources. The monies held\nin or credited to any capital reserve fund established under this\nsubdivision, except as hereinafter provided, shall be used solely for\nthe payment of the principal of bonds of the agency secured by such\nreserve fund, as the same mature, sinking fund payments with respect to\nsuch bonds of the agency, the purchase of such bonds of the agency, the\npayment of interest on such bonds of the agency, or the payment of any\nredemption premium required to be paid when such bonds are redeemed\nprior to maturity; provided, however, that monies in any such fund shall\nnot be withdrawn therefrom at any time in such amount as would reduce\nthe amount of such fund to less than the capital reserve fund\nrequirement, except for the purpose of paying principal and interest on\nthe bonds of the agency secured by such reserve fund maturing and\nbecoming due or any sinking fund payments with respect to such bonds and\nfor the payment of which other monies of the agency are not available.\nAny income or interest earned by, or increment to, any capital reserve\nfund due to the investment thereof may be transferred to any other fund\nor account of the agency to the extent it does not reduce the amount of\nsuch capital reserve fund below the capital reserve fund requirement.\n (b) The agency shall not issue bonds at any time if upon issuance, the\namount in the capital reserve fund securing such bonds will be less than\nthe capital reserve fund requirement unless the agency, at the time of\nissuance of such bonds shall deposit in such reserve fund from the\nproceeds of the bonds so to be issued, or otherwise, an amount which\ntogether with the amount then in such reserve fund, will be not less\nthan the capital reserve fund requirement.\n (c) To assure the continued operation and solvency of the agency for\nthe carrying out of the public purposes of this act, provision is made\nin paragraph (a) of this subdivision for the accumulation in each\ncapital reserve fund of an amount equal to the capital reserve fund\nrequirement. In order further to assure the maintenance of each such\ncapital reserve fund, there shall be annually apportioned and paid to\nthe agency for deposit in each capital reserve fund such sum, if any, as\nshall be certified by the chairman of the agency to the governor and\ndirector of the budget as necessary to restore such reserve fund to an\namount equal to the capital reserve fund requirement. The chairman of\nthe agency shall annually, on or before December first, make and deliver\nto the governor and director of the budget his certificate stating the\nsum or sums, if any, required to restore each such capital reserve fund\nto the amount aforesaid and the sums so certified, if any, shall be\napportioned and paid to the agency during the then current state fiscal\nyear.\n (d) In computing any capital reserve fund for the purposes of this\nsection, securities in which all or a portion of such reserve fund shall\nbe invested shall be valued at par if purchased at par, or if purchased\nat other than par, at amortized value. As used herein "amortized value"\nshall mean, when used with respect to securities purchased at a premium\nabove or a discount below par, the value as of any given date obtained\nby dividing the total amount of the premium or discount at which such\nsecurities were purchased by the number of days remaining to maturity on\nsuch securities at the time of such purchase and by multiplying the\namount so calculated by the number of days having passed since the date\nof such purchase; and (a) in the case of securities purchased at a\npremium, by deducting the product thus obtained from the purchase price,\nand (b) in the case of securities purchased at a discount, by adding the\nproduct thus obtained to the purchase price.\n 2. The agency may create and establish one or more special funds\n(herein each referred to as a general reserve fund) and shall pay into\neach such fund, to the extent required by agreements with holders of\nbonds or notes secured by such fund, all fees and charges collected by\nthe agency pursuant to subdivision fourteen of section five of this act\nand any monies which the agency shall transfer from the related capital\nreserve fund pursuant to the provisions of paragraph (a) of subdivision\none of this section. Such monies and any other monies paid into a\ngeneral reserve fund may, in the discretion of the agency, but subject\nto agreement with bondholders or noteholders, be used by the agency (a)\nfor the repayment of advances from the state in accordance with the\nprovisions of repayment agreements between the agency and the director\nof the budget, (b) to reimburse the division of housing and community\nrenewal the reasonable costs of the services performed by the\ncommissioner and the division pursuant to the provisions of this act,\n(c) to pay all costs, expenses and charges of financing, including fees\nand expenses of trustees and paying agents, (d) for transfers to the\nrelated capital reserve fund, (e) for the payment of principal and\ninterest on bonds or notes issued by the agency and secured by such\ngeneral reserve fund when the same shall become due whether at maturity\nor on call for redemption and for the payment of any redemption premium\nrequired to be paid where such bonds or notes are redeemed prior to\ntheir stated maturities and any sinking fund payments, and to purchase\nsuch bonds or notes issued by the agency, or (f) for such other\ncorporate purposes of the agency as the agency in its discretion shall\ndetermine and provide.\n 3. (a) This subdivision shall be applicable if the agency shall issue\nnotes (herein called "secured notes") secured by the pledge and\nassignment of assets or revenues of the agency, with provision under\ncertain circumstances for amortization of the principal amount of such\nnotes over a period of years. Upon the issuance of any secured notes,\nand if necessary upon the actual commencement of amortization of\nprincipal, the agency shall determine the amount which, notwithstanding\nthe actual terms of such notes for payment of interest and principal or\nfor the application thereto of receipts from the pledged assets or\nrevenues, would then be required to be provided as hypothetical monthly\nlevel debt service payments in order to pay the stated interest on and\nto amortize the maximum principal amount of the secured notes over the\nlongest period of years then allowed for full amortization of principal\nunder the terms of the secured notes. The aggregate for all secured\nnotes of the portion of such hypothetical level debt service payments\nthat would be payable in any twelve consecutive months during such\nperiod of amortization thereof, but in no event an amount greater than\ntwenty per cent of the maximum principal amount of the secured notes, as\nof any particular date of computation, is herein called the "note\nservice requirement" of the agency.\n (b) The agency shall create and establish a special fund to be known\nas the "note service reserve fund," and upon the issuance of any secured\nnotes shall create and deposit therein note payment certificates (herein\ncalled "note payment certificates") in an aggregate principal amount\nequal to the note service requirement as then computed. Any note payment\ncertificates that are in excess of the note service requirement upon a\nrecomputation of such requirement shall be withdrawn from such fund and\ncancelled. Note payment certificates shall be obligations of the agency,\nissuable and re-issuable in any denominations, deliverable as further\nevidence of and security for unpaid amounts of interest or principal on\nsecured notes which are not paid when due because the agency has\ninsufficient funds available to make such payments in cash, bearing\ninterest to the same extent as the unpaid amounts of interest or\nprincipal on the secured notes in connection with which they are\ndelivered continue to accrue interest, and redeemable by the agency upon\npayment in cash of the principal amount of the redeemed note payment\ncertificates plus any interest accrued thereon from date of delivery to\ndate of redemption. Any note payment certificates so redeemed, or an\nequal principal amount of certificates created in replacement thereof,\nshall be redeposited in the note service reserve fund, to the extent\nnecessary to cause the principal amount deposited in such reserve fund\nto equal the note service requirement, as then computed, and any excess\nnote payment certificates redeemed shall be cancelled. The note service\nreserve fund may be maintained with any trustee or agent for the holders\nof secured notes and the note payment certificates may be deposited with\nsuch trustee or agent to be held in trust prior to delivery thereof as\nfurther security for the payment of principal of or interest on the\nsecured notes when due. Such trustee or agent shall have no obligation\nto realize upon any pledged assets or revenues either prior to\ndelivering note payment certificates upon the failure of the agency to\npay interest or principal when due or thereafter and prior to redemption\nof such certificates. However, any realization upon any pledged assets\nor revenues and any other payments made on account of the secured notes\nshall be applied to the payments of principal of or interest on the\nsecured notes (including redemption of delivered note payment\ncertificates) in the order in which such payments originally became due.\nThe proceeds of each redemption of note payment certificates shall be\napplied as payment of an equivalent amount of overdue principal of or\ninterest on the secured notes.\n (c) In order to assure the availability of funds to maintain the note\nservice reserve fund at an amount equal to the note service requirement\nof the agency, there shall be annually apportioned and paid to the\nagency, for application exclusively to the redemption of delivered note\npayment certificates, such sum, if any, as shall be certified by the\nchairman of the agency to the governor and director of the budget as\nestimated to be necessary to redeem by the end of the then current state\nfiscal year all note payment certificates theretofore delivered and not\nredeemed by payment in full of the principal amount thereof and any\ninterest accrued thereon. The chairman of the agency shall annually, on\nor before December first, make and deliver to the governor and director\nof the budget his certificate stating the sum, if any, estimated to be\nrequired to redeem all such note payment certificates as aforesaid by\nthe end of the then current state fiscal year, and the sum so certified,\nif any, shall be apportioned and paid to the agency during the then\ncurrent state fiscal year. Upon its receipt of such payment from the\nstate, the agency shall immediately apply such payment, to the extent\nthereof, to the redemption of outstanding note payment certificates.\n