§ 1285-M — Drinking water revolving fund

§ 1285-m. Drinking water revolving fund. 1. (a) The corporation shall\nundertake and provide assistance in support of the program to make\nfinancial assistance available to recipients to encourage and support\nthe planning, development and construction of water supply facilities in\naccordance with the provisions of this section and title four of article\neleven of the public health law.\n (b) There is hereby established in the custody of the corporation a\nspecial fund to be known as the drinking water revolving fund. Except as\notherwise provided by this paragraph, moneys in the drinking water\nrevolving fund shall be segregated from all other funds of or in the\ncustody of the corporation subject to any rights of holders of\ncorporation bonds or notes issued for the purposes of this section.\nMoneys in the drinking water revolving fund shall only be used in\naccordance with the provisions of this section and title four of article\neleven of the public health law; provided that, in addition, to the\nextent permitted by federal or state law, moneys in the drinking water\nrevolving fund may be transferred to and used for the purposes\nauthorized for the water pollution control revolving fund, and moneys in\nthe water pollution control revolving fund may be transferred to and\nused for the purposes authorized for the drinking water revolving fund.\nThe moneys in the drinking water revolving fund shall be applied to or\npaid out for authorized purposes of such fund in accordance with\nsubdivision four of this section and title four of article eleven of the\npublic health law. To the extent approved by the commissioner of health\nand the commissioner of environmental conservation and notwithstanding\nthe provisions of paragraph (a) of this subdivision, moneys in the\ndrinking water revolving fund and in the water pollution control\nrevolving fund may be held together; provided that all such moneys are\nsegregated from all other funds of or in the custody of the corporation\nsubject to any rights of holders of corporation bonds or notes issued\nfor the purposes of this section; provided further, that the corporation\nshall establish and maintain or cause there to be established and\nmaintained a system of tracking the application of such moneys to the\npurposes of this section. The corporation may establish within the\ndrinking water revolving fund additional accounts or subaccounts and\nspecify any conditions applicable to the transfer of moneys between such\naccounts or subaccounts. With respect to each eligible project, the\ncorporation shall establish and maintain a record of the allocation\nprovided for the benefit of such project in accordance with the terms of\nthe applicable financing agreement.\n 2. As used in this section, the terms "allocation", "construction",\n"eligible project", "fund" and "financing agreement" shall have the\nmeanings set forth in section eleven hundred sixty of the public health\nlaw.\n 3. Such fund shall consist of all of the following:\n (a) the proceeds of bonds or notes issued by the state pursuant to the\nClean Water/Clean Air Bond Act of 1996; provided that up to two hundred\nsixty-five million dollars ($265,000,000) of such proceeds shall be\navailable to finance state assistance payments in the manner set forth\nin paragraphs (a), (d), (e), (f) and (g) of subdivision four of this\nsection, and up to ninety million dollars ($90,000,000) shall be\navailable to finance state assistance payments in the manner set forth\nin paragraphs (d), (f) and (h) of subdivision four of this section;\n (b) federal capitalization grants and awards or other federal\nassistance provided pursuant to the federal safe drinking water act for\npurposes of deposit in the fund and appropriated by the state for\ndeposit therein;\n (c) moneys appropriated by the state legislature for the purpose of\nsuch fund or otherwise transferred by the state for deposit therein by\nthe comptroller as required by law;\n (d) payments of principal and interest made by recipients pursuant to\nloan or other financing agreements entered into pursuant to subdivisions\neight and nine of this section; provided, however, if financial\nassistance made pursuant to financing agreements were financed by the\nissuance of bonds or notes of the corporation, deposit of such payments\ninto the fund shall be subject to the rights of the holders of such\nbonds or notes to receive such moneys;\n (e) investment earnings on amounts in such fund; and\n (f) the proceeds of bonds or notes issued by the corporation for\npurposes of providing financial assistance to recipients.\n 4. Moneys in the drinking water revolving fund shall be applied by the\ncorporation in accordance with this section and title four of article\neleven of the public health law to provide financial assistance to\nrecipients for construction of eligible projects and, upon consultation\nwith the director of the division of the budget, for such other purposes\npermitted by the federal safe drinking water act, as amended, and to\nprovide for the administrative and management costs of the program,\nprovided however, that proceeds of bonds issued pursuant to the Clean\nWater/Clean Air Bond Act of 1996, other than proceeds of bonds used to\nfinance the state match for federal capitalization grants for the\ndrinking water revolving fund, shall not be used for administrative and\nmanagement costs; and provided further, that proceeds of bonds issued\npursuant to the Clean Water/Clean Air Bond Act of 1996, other than\nproceeds of bonds issued to finance the state match for federal\ncapitalization grants for the drinking water revolving fund, shall not\nbe used to finance costs with respect to the Croton filtration project.\nAs used in this section "financial assistance to recipients" means any\none or more of the following:\n (a) making loans to recipients for construction of eligible projects\non such terms as the corporation may determine, subject to any\napplicable provisions of federal or state law;\n (b) buying or refinancing debt obligations of recipients at market or\nbelow market rates, subject to any applicable provisions of federal or\nstate law;\n (c) guarantying, or purchasing insurance or other credit enhancement\nfor municipal obligations where such action would improve credit market\naccess for or reduce interest rates on such municipal obligations;\n (d) providing a source of revenue or security for payment of principal\nand interest on bonds or notes issued by the corporation if the proceeds\nof the sale of such bonds or notes will be deposited in the fund;\n (e) providing interest rate subsidy allocations to subsidize loans to\nrecipients made from the proceeds of the corporation's bonds or notes;\n (f) paying, pursuant to subdivision seven of this section, the costs\nof the corporation and the department of health of administering and\nmanaging the program described in this section and title four of article\neleven of the public health law and paying the costs of the corporation\nand the department of health of providing technical assistance with\nrespect to such program; provided, however, that proceeds of bonds\nissued pursuant to the Clean Water/Clean Air Bond Act of 1996, other\nthan proceeds of bonds used to finance the state match for federal\ncapitalization grants for the drinking water revolving fund, shall not\nbe used for such costs;\n (g) paying up to seventy-five percent of the principal on loans made\nto recipients under financing agreements if the corporation determines\nthat the recipient would be unable to carry out the eligible project\nfinanced with such loan without creating a financial hardship on system\nusers and without the subsidy afforded by such payment of principal,\nprovided that (i) the amounts applied to such purpose shall be paid from\ninterest earned on funds deposited in the fund and from interest\nreceived on other loans made from the fund, (ii) the amounts so applied\nshall not exceed, in the aggregate, the interest earnings received by\nthe fund on fifty percent of the amounts deposited to the fund, and\n(iii) in accordance with regulations to be promulgated by the\ncorporation, preference shall be given to small and rural communities in\nproviding such principal subsidies; or\n (h) making state assistance payments for the state share of the cost\nof an eligible project from up to ninety million dollars ($90,000,000)\nof the proceeds of state bonds and notes issued pursuant to the Clean\nWater/Clean Air Bond Act of 1996; provided that, in accordance with\nregulations to be promulgated by the corporation, preference shall be\ngiven to recipients which would be unable to carry out such eligible\nprojects in the absence of such state assistance payments without\ncreating a financial hardship on system users.\n Subject to any applicable provisions of federal or state law, any\nfinancial assistance at an interest rate of zero percent provided to\nrecipients that meet the financial hardship criteria regulations\nestablished pursuant to title four of article eleven of the public\nhealth law, may have a final maturity up to forty years following\nscheduled completion of the eligible project.\n 5. The corporation may make payments to the state in accordance with\nsubdivision seven of this section to reimburse the state for\nexpenditures made pursuant to appropriation to pay the cost of the\ncorporation and the department of health for administering and managing\nthe drinking water revolving fund program, including provision of\ntechnical assistance. Such reimbursement may be made from:\n (a) available investment earnings on all amounts in the drinking water\nrevolving fund excluding all amounts in the fund which are the subject\nof allocations or other financial assistance to a recipient;\n (b) payments received from a recipient for such purpose; and\n (c) the proceeds of federal capitalization grants, awards or\nassistance available for administration and management of such program.\n Notwithstanding the foregoing, if the sources of revenues described in\nparagraphs (a), (b) and (c) of this subdivision are at any time\ninsufficient to make a reimbursement to the state pursuant to this\nsubdivision when due, the corporation may make such reimbursement from\nany other available amounts in the drinking water revolving fund,\nexcluding all amounts that are the subject of allocations, provided,\nthat the amounts paid from fund sources other than those described in\nparagraphs (a), (b) and (c) of this subdivision shall be reimbursed upon\na determination by the director of the budget that future revenues\nobtained from sources described in paragraphs (a), (b) and (c) of this\nsubdivision are in excess of the amounts reasonably needed to make\nfuture reimbursements pursuant to this subdivision.\n * 6. Moneys in the drinking water revolving fund may be invested as\nprovided in subdivision four of section twelve hundred eighty-four of\nthis title and may be further invested:\n (a) in investment agreements continuously secured by obligations with\nany insurance company or reinsurance company or corporate affiliate\nthereof rated by a nationally recognized rating agency in one of its two\nhighest categories, any bank, trust company or broker or dealer, as\ndefined by the securities exchange act of 1934, which is a dealer in\ngovernment bonds, which reports to, trades with and is recognized as a\nprimary dealer by a federal reserve bank and is a member of the\nsecurities investors protection corporation, if such investment\nagreement provides that:\n (i) such obligations securing such investment agreements are\nobligations as set forth in section ten of the general municipal law;\n (ii) such obligations are to be delivered to a trustee for the benefit\nof the corporation or, with respect to moneys pledged under an indenture\nof trust or trust agreement relating to bonds or notes of the\ncorporation, to the trustee under such indenture or trust agreement, or\nare supported by a safe keeping receipt issued by a depository\nsatisfactory to the corporation as applicable, provided that such\ninvestment agreements must provide that the value of the underlying\nobligations shall be maintained at a current market value, calculated no\nless frequently than monthly, of not less than the amount deposited\nthereunder;\n (iii) a prior perfected security interest in the obligations which are\nsecuring such agreement has been granted to the corporation, such\ntrustee or such depository as applicable; and\n (iv) such obligations are free and clear of adverse third party\nclaims; or\n (b) in obligations as set forth in section ten of the general\nmunicipal law that are rated by a nationally recognized rating agency in\none of its two highest rating categories.\n * NB Effective until September 30, 2026\n * 6. Moneys in the drinking water revolving fund may be invested as\nprovided in subdivision four of section twelve hundred eighty-four of\nthis title and may be further invested:\n (a) in investment agreements continuously secured by obligations with\nany insurance company or reinsurance company or corporate affiliate\nthereof rated by a nationally recognized rating agency in one of its two\nhighest categories, any bank, trust company or broker or dealer, as\ndefined by the securities exchange act of 1934, which is a dealer in\ngovernment bonds, which reports to, trades with and is recognized as a\nprimary dealer by a federal reserve bank and is a member of the\nsecurities investors protection corporation, if such investment\nagreement provides that:\n (i) such obligations securing such investment agreements are\nobligations as set forth in section ten of the general municipal law;\n (ii) such obligations are to be delivered to a trustee for the benefit\nof the corporation or, with respect to moneys pledged under an indenture\nof trust or trust agreement relating to bonds or notes of the\ncorporation, to the trustee under such indenture or trust agreement, or\nare supported by a safe keeping receipt issued by a depository\nsatisfactory to the corporation as applicable, provided that such\ninvestment agreements must provide that the value of the underlying\nobligations shall be maintained at a current market value, calculated no\nless frequently than monthly, of not less than the amount deposited\nthereunder;\n (iii) a prior perfected security interest in the obligations which are\nsecuring such agreement has been granted to the corporation, such\ntrustee or such depository as applicable; and\n (iv) such obligations are free and clear of adverse third party\nclaims; or\n (b) in obligations the interest on which is excludable from gross\nincome under section one hundred three of the internal revenue code,\nprovided that such obligations are rated by a nationally recognized\nrating agency in one of its two highest rating categories.\n * NB Effective September 30, 2026\n 7. The corporation may transfer to the state on such schedule as the\ncorporation and the department of health shall agree amounts from the\nfund to reimburse the state in accordance with the provisions of\nsubdivision five of this section.\n 8. In addition to the powers of the corporation granted elsewhere in\nthis chapter, the corporation shall have the power to enter into loan\nand other financing agreements authorized by title four of article\neleven of the public health law. Notwithstanding the powers granted to\nthe corporation elsewhere in this title, the corporation's power to\nfinance eligible projects from the fund is limited to eligible projects\nfor which financing agreements have been executed pursuant to title four\nof article eleven of the public health law.\n 9. In addition to the powers granted to the corporation elsewhere in\nthis chapter, the corporation may make loans or other financial\nassistance to recipients for purposes of financing eligible projects for\nwhich the fund may be used, subject to the limitations of subdivision\neight of this section, may accept the obligations of any recipient as\nsecurity for the repayment of a loan to such recipient, and may assign\nand pledge such recipient obligations and financing agreements for the\nbenefit of the holders of obligations of the corporation. Loan proceeds\nor other financial assistance may be disbursed to a recipient only in\nconnection with facilities that have been certified by the commissioner\nof health as constituting an eligible project and in accordance with\nother restrictions as may be imposed in connection with such loan or\nobligations of the corporation from the proceeds of which such loan is\nmade.\n 10. The corporation is authorized to arrange, in consultation with the\ndepartment of health, for any audits required by law for the purpose of\nissuing its bonds or notes to provide financial assistance to\nrecipients, and provide for the implementation of any independently\nconducted reviews or audits arranged pursuant to subdivision two of\nsection eleven hundred sixty-six of the public health law.\n 11. In the event a municipality participating in the drinking water\nrevolving fund program shall fail to make any payment due the\ncorporation pursuant to any financing agreement or other obligation of\nthe municipality sold to the corporation or issued as security for the\nundertaking of the municipality thereunder, the corporation shall\ncertify to the comptroller, and notify the chairman of the senate\nfinance committee, the chairman of the assembly ways and means\ncommittee, the director of the division of the budget and the governing\nbody of the municipality that such municipality has failed to make such\npayment. Such certificate shall be in such form as may be determined by\nthe corporation provided such certificate shall specify the exact amount\nof debt service and surcharge, if applicable, required to satisfy such\nmunicipality's unpaid obligation. The comptroller, upon receipt of such\ncertificate from the corporation, is authorized to and shall, to the\nextent not otherwise prohibited by law and subject to any other\nprovision of law providing for withholding of payments to the\nmunicipality which takes precedence over this subdivision, withhold from\nsuch municipality the next succeeding payments of state aid or local\nassistance otherwise payable to it to the extent necessary to meet the\ncertified amount of debt service and surcharge, if applicable, due the\ncorporation and shall immediately pay over to the corporation as a debt\nservice payment on behalf of such municipality the amount so withheld.\n