§ 1128*2 — Bonds of the authority

New York § 1128*2

• Jurisdiction: New York
• Law PBA: Public Authorities
• Title 6-C*: Dutchess County Water and Wastewater Authority
• Art. 5: Public Utility Authorities

Text

* § 1128. Bonds of the authority. 1. The authority shall have the\npower and is hereby authorized from time to time to issue bonds in such\nprincipal amounts as it may determine to be necessary to pay the cost of\nany project or for any other corporate purpose, including incidental\nexpenses in connection therewith. The authority shall have power from\ntime to time to refund any bonds by the issuance of new bonds, whether\nthe bonds to be refunded have or have not matured, and may issue bonds\npartly to refund bonds then outstanding and partly for any other\ncorporate purpose. Bonds issued by the authority may be general\nobligations secured by the faith and credit of the authority or may be\nspecial obligations payable solely out of particular revenues or other\nmoneys as may be designated in the proceedings of the authority under\nwhich the bonds shall be authorized to be issued, subject only to any\nagreements with the holders of outstanding bonds pledging any particular\nrevenues, earnings or moneys.\n 2. The authority is authorized to obtain from any insurer or financial\ninstitution any insurance, guaranty or other credit support device, to\nthe extent now or hereafter available, as to, or for the payment or\nrepayment of interest or principal, or both, or any part thereof, on any\nbonds issued by the authority and to enter into any agreement or\ncontract with respect to any such insurance, guaranty or other credit\nsupport device, except to the extent that the same would in any way\nimpair or interfere with the ability of the authority to perform and\nfulfill the terms of any agreement made with the holders of outstanding\nbonds of the authority.\n 3. (a) Bonds shall be authorized by resolution of the authority, be in\nsuch denominations, bear such date or dates and mature at such time or\ntimes as such resolution may provide, except that bonds and any renewals\nthereof shall mature within forty years from the date of their original\nissuance and notes and any renewals thereof shall mature within five\nyears from the date of their original issuance. Bonds shall be subject\nto such terms of redemption, bear interest at such rate or rates per\nannum, which may vary from time to time, as may be necessary to effect\nthe sale thereof and shall be payable at such times, be in such form,\ncarry such registration privileges, be executed in such manner, be\nsubject to tender to the authority, with or without extinction or\ncancellation, be payable in such medium of payment at such place or\nplaces, and be subject to such terms and conditions as such resolution\nmay provide. Bonds may be sold at public or private sale for such price\nor prices as the authority shall determine, provided that no bonds of\nthe authority may be sold by the authority at private sale unless such\nsale and the terms thereof have been approved in writing by the\ncomptroller, where such sale is not to be to such comptroller, or by the\nstate director of the budget, where such sale is to be to the\ncomptroller.\n (b) The state comptroller shall promulgate rules in conformance with\nthe state administrative procedure act governing the sale on a\nnegotiated basis of bonds, notes and certificates of participation by\npublic authorities and public benefit corporations made subject to such\nrules by law. No such sale by the authority on a negotiated basis shall\nbe conducted without prior approval of the state comptroller except as\nprovided in such rules, which shall set forth the circumstances under\nwhich such approval shall not be required. Such rules shall be reviewed\nat least annually and updated as may be necessary. The corporation shall\nannually deliver to the senate finance committee, the assembly ways and\nmeans committee and the director of the division of the budget a report\nlisting all such sales conducted in the previous year, including but not\nlimited to the name of the issuer, the amount of the issue, the interest\nrate and interest cost per year for each such sale.\n (c) Agreements for credit enhancement. (1) The authority is hereby\nauthorized and empowered to enter into such agreements as it deems\nreasonable and appropriate, with any department or agency of the United\nStates of America, the state, or any other financially responsible\nparty, to facilitate the issuance, sale, resale and payment of bonds,\nnotes, or other evidences of indebtedness of the authority, including,\nbut not limited to letters of credit, lines of credit, revolving credit,\nbond insurance or other credit enhancements. Such agreements may provide\nfor: (i) the advance or advances of funds on behalf of the authority to\npay bonds, notes or other evidences of indebtedness of the authority on\ntheir date or dates of maturity or redemption; and (ii) the\nreimbursement of such advance or advances by the authority.\n (2) Such agreements may be executed on or before the date of issuance\nof the obligations to be paid pursuant thereto, provided, however, that\nany reimbursement obligation of the authority shall be deemed\nindebtedness of the authority; (i) only as of the date that the\ncorresponding advance is made pursuant to subparagraph one of this\nparagraph; and (ii) only in the amount of the advance made pursuant to\nsuch subparagraph. Such agreements may include a pledge by the authority\nof its faith and credit for the payment of any indebtedness deemed to be\ncontracted as set forth in this paragraph, and may provide that any such\nindebtedness arising from a reimbursement obligation contracted pursuant\nto this section shall be paid in accordance with the terms of such\nagreement. Such indebtedness shall be excluded in ascertaining the power\nof the authority to contract indebtedness pursuant to this chapter. Such\nagreements shall also include such terms and conditions as the authority\nshall deem appropriate, including provisions for the payment of\nreasonable fees by the authority in return for a commitment to advance\nfunds pursuant to such agreement. Such fees shall be deemed part of the\ncost of the object or purpose in connection with which they are\nincurred.\n (3) Prior to procurement of any credit or liquidity enhancements, the\nauthority shall, to the extent practicable:\n (i) consider the ability of the credit or liquidity enhancement\nprovider to make required payments as and when due under the terms of\nthe appropriate governing instruments;\n (ii) consider the business reputation of the credit or liquidity\nenhancement provider;\n (iii) consider the maximum term of the credit or liquidity enhancement\nrelative to the maturity of the bonds, notes or other obligations being\ncredit or liquidity enhanced;\n (iv) provide for the right of substitution for the credit or liquidity\nenhancement provider in all agreements, including a provision permitting\nsuch substitution when the rating of the credit or liquidity enhancement\nprovider falls below the probable credit rating of the issue without\nconsidering the credit or liquidity enhancer; and\n (v) consider the cost of the credit or liquidity enhancement relative\nto the savings or other benefit likely to be achieved through the\nutilization of the credit or liquidity enhancement.\n (4) Where the credit or liquidity enhancement procured is an\nirrevocable letter of credit or an acquisition arrangement with a\nliquidity enhancer, such instrument shall be:\n (i) issued or confirmed by a bank holding company or its direct\nsubsidiaries, a federally chartered bank or its subsidiaries, or a state\nchartered bank or its subsidiaries, licensed or authorized to do\nbusiness in this state; and\n (ii) issued or confirmed by an agency or branch of a foreign banking\ninstitution licensed to do business in this state with total worldwide\nassets in excess of five billion dollars.\n (5) Any such issuing banking organization referred to in subparagraph\nfour of this paragraph shall meet the regulatory guidelines for capital\nadequacy as promulgated by the appropriate federal banking agency as\ndefined in the Federal Deposit Insurance Act, 12 U.S.C. 1813(q).\n (6) Where the credit or liquidity enhancement procured is provided by\nan insurance company, such insurer shall be licensed to write financial\nguarantee insurance in this state.\n (7) The failure of the authority to comply with subparagraphs three\nthrough six of this paragraph shall not invalidate or impair any credit\nor liquidity enhancement contract or instrument.\n 4. Any resolution or resolutions authorizing bonds or any issue of\nbonds may contain provisions which may be a part of the contract with\nthe holders of the bonds thereby authorized as to:\n (a) pledging all or any part of the revenues of the authority,\ntogether with any other moneys or property of the authority, to secure\nthe payment of the bonds, subject to such agreements with bondholders as\nmay then exist;\n (b) the setting aside of reserves and the creation of sinking funds\nand the regulation and disposition thereof;\n (c) limitations on the purpose to which the proceeds from the sale of\nbonds may be applied;\n (d) the rates, rents, fees and other charges to be fixed and collected\nby the authority and the amount to be raised in each year thereby, and\nthe use and disposition of revenues;\n (e) limitations on the right of the authority to restrict and regulate\nthe use of any project or part hereof in connection with which bonds are\nissued;\n (f) limitations on the issuance of additional bonds, the terms upon\nwhich additional bonds may be issued and secured and the refunding of\noutstanding or other bonds;\n (g) the procedure, if any, by which the terms of any contract with\nbondholders may be amended or abrogated, including the portion of\nbondholders which must consent thereto, and the manner in which such\nconsent may be given;\n (h) the creation of special funds into which any revenues or moneys\nmay be deposited;\n (i) the terms and provisions of any trust, deed, mortgage or indenture\nsecuring the bonds under which the bonds may be issued;\n (j) vesting in a trustee or trustees such properties, rights, powers\nand duties in trust as the authority may determine which may include any\nor all of the rights, powers and duties of the trustee appointed by the\nbondholders pursuant to section one thousand one hundred twenty-nine of\nthis title and limiting or abrogating the rights of the bondholders to\nappoint a trustee under such section or limiting the rights, duties and\npowers of such trustee;\n (k) defining the acts or omissions to act which may constitute a\ndefault in the obligations and duties of the authority to the\nbondholders and providing for the rights and remedies of the bondholders\nin the event of such default, including as a matter of right the\nappointment of a receiver, provided, however, that such rights and\nremedies shall not be inconsistent with the general laws of the state\nand other provisions of this title;\n (l) limitations on the power of the authority to sell or otherwise\ndispose of any project or any part thereof;\n (m) limitations on the amount of revenues and other moneys to be\nexpended for operating, administrative or other expenses of the\nauthority;\n (n) the payment of the proceeds of bonds, revenues and other moneys to\na trustee or other depository, and for the method of disbursement\nthereof with such safeguards and restrictions as the authority may\ndetermine; and\n (o) any other matters of like or different character which may in any\nway affect the security or protection of the bonds or the rights and\nremedies of bondholders.\n 5. In addition to the powers herein conferred upon the authority to\nsecure its bonds, the authority shall have power in connection with the\nissuance of bonds to enter into such agreements as the authority may\ndeem necessary, convenient or desirable concerning the use or\ndisposition of its revenues or other moneys or property, including the\nmortgaging of any of its properties and the entrusting, pledging or\ncreation of any other security interest in any such revenues, moneys or\nproperties and the doing of any act (including refraining from doing any\nact) which the authority would have to do in the absence of such\nagreements. The authority shall have power to enter into amendments of\nany such agreements within the powers granted to the authority by this\ntitle and to perform such agreements. The provisions of any such\nagreements may be made a part of the contract with the holders of bonds\nof the authority.\n 6. Any provision of the uniform commercial code to the contrary\nnotwithstanding, any pledge of or other security interest in revenues,\nmoneys, accounts, contract rights, general intangibles or other personal\nproperty made or created by the authority shall be valid, binding and\nperfected from the time such pledge is made or other security interest\nattaches without any physical delivery of the collateral or further act,\nand the lien of any such pledge, or other security interest shall be\nvalid, binding and perfected against all parties having claims of any\nkind in tort, contract or otherwise against the authority irrespective\nof whether or not such parties have notice thereof. No instrument by\nwhich such a pledge or security interest is created nor any financing\nstatement need be recorded or filed.\n 7. Whether or not the bonds are of such form and character as to be\nnegotiable instruments under the terms of the uniform commercial code,\nthe bonds are hereby made negotiable instruments within the meaning of\nand for all the purposes of the uniform commercial code, subject only to\nthe provisions of the bonds for registration.\n 8. Neither the members of the authority nor any person executing bonds\nshall be liable personally thereon or be subject to any personal\nliability or accountability by reason of the issuance thereof.\n 9. The authority, subject to such agreements with bondholders as then\nmay exist, shall have power out of any moneys available therefor to\npurchase bonds of the authority, which shall thereupon be cancelled at a\nprice not exceeding; (i) if the bonds are then redeemable, the\nredemption price then applicable plus accrued interest to the next\ninterest payment date, or (ii) if the bonds are not then immediately\nredeemable then the redemption price applicable on the first date after\nsuch purchase upon which the bonds become subject to redemption, plus\naccrued interest to the next interest payment date.\n * NB There are 2 § 1128's\n