§ 2926 — Interest rate exchange or similar agreements for court facilities and combined occupancy structures and health facilities

§ 2926. Interest rate exchange or similar agreements for court\nfacilities and combined occupancy structures and health facilities. 1.\nIn connection with the issuance of bonds, notes, or other obligations,\nor in connection with such bonds, notes, or other obligations already\noutstanding, for court facilities and combined occupancy structures\npursuant to section sixteen hundred eighty-b of this chapter, and health\nfacilities pursuant to paragraph (b) of subdivision one of section eight\nof section one of chapter three hundred ninety-two of the laws of\nnineteen hundred seventy-three, the dormitory authority shall have the\npower to:\n (a) enter into interest rate exchange or similar agreements with any\nperson under such terms and conditions as the dormitory authority may\ndetermine, including provisions as to default or early termination and\nindemnification by the dormitory authority or any other party thereto\nfor loss of benefits as a result thereof; and\n (b) procure insurance, letters of credit or other credit enhancement\nwith respect to agreements described in paragraph (a) of this\nsubdivision; and\n (c) provide security for the payment or performance of its obligations\nwith respect to agreements described in paragraph (a) of this\nsubdivision from such sources and with the same effect as authorized by\napplicable law with respect to security for its bonds, notes or other\nobligations; and\n (d) modify, amend, replace, or enter into new agreements, for the\npurpose of reducing or eliminating a situation of risk or exposure under\nan existing agreement, including, but not limited to a counterparty\ndowngrade, default, or other potential economic loss.\n 2. Any interest rate exchange or similar agreement entered into\npursuant to subdivision one of this section shall be subject to the\nfollowing limitations:\n (a) any such agreement shall be in the form of a written contract with\na counterparty to provide for an exchange of payments based upon\ninterest rates, and shall be for exchanges in currency of the United\nStates of America only; and\n (b) the counterparty thereto shall have credit ratings from at least\ntwo nationally recognized statistical rating agencies that are within\nthe three highest investment grade categories, or the payment\nobligations of the counterparty shall be unconditionally guaranteed by\nan entity with such credit ratings; and\n (c) the written contract shall require that, should the rating of the\ncounterparty, if its payment obligations are not unconditionally\nguaranteed by another entity, or should the rating of the entity\nunconditionally guaranteeing the payment obligations of the\ncounterparty, if so secured, fall below the rating required by paragraph\n(b) of this subdivision, that the obligations of such counterparty shall\nbe fully and continuously collateralized by direct obligations of, or\nobligations the principal and interest on which are guaranteed by, the\nUnited States of America, with a net market value of at least one\nhundred two percent of the net market value of the contract to the\ndormitory authority, and such collateral shall be deposited with the\ndormitory authority or an agent thereof; and\n (d) the total notional amount of such interest rate exchange or\nsimilar agreements entered into by the dormitory authority shall not\nexceed an amount equal to twenty per centum of the total amount of\nbonds, notes or other obligations outstanding or to be issued on behalf\nof a participating municipality pursuant to section sixteen hundred\neighty-b of this chapter; provided, however, that such total notional\namount shall not include the notional amount of interest rate exchange\nor similar agreements entered into for the purpose of reducing or\neliminating a situation of risk or exposure under an existing agreement,\nincluding, but not limited to a counterparty downgrade, default, or\nother potential economic loss; and\n (e) the total notional amount of such interest rate exchange or\nsimilar agreements entered into by the dormitory authority shall not\nexceed an amount equal to twenty per centum of the total amount of\nbonds, notes or other obligations outstanding or to be issued on behalf\nof a participating municipality pursuant to paragraph (b) of subdivision\none of section eight of section one of chapter three hundred ninety-two\nof the laws of nineteen hundred seventy-three; provided, however, that\nsuch total notional amount shall not include the notional amount of\ninterest rate exchange or similar agreements entered into for the\npurpose of reducing or eliminating a situation of risk or exposure under\nan existing agreement, including, but not limited to a counterparty\ndowngrade, default, or other potential economic loss.\n 3. (a) Prior to authorizing the approval of any contract for interest\nrate exchange or similar agreement pursuant to subdivision one of this\nsection, the board of the dormitory authority shall adopt written\nguidelines addressing the following:\n (i) the conditions under which such contracts can be entered into;\n (ii) the methods by which such contracts are to be solicited and\nprocured;\n (iii) the form and content such contracts shall take;\n (iv) the aspects of risk exposure associated with such contracts;\n (v) standards and procedures for counterparty selection;\n (vi) the procurement of credit enhancement, liquidity facilities, or\nthe setting aside of reserves in connection with such contracts;\n (vii) collateralization or other requirements for securing the\nfinancial interest in such contracts;\n (viii) the methods to be used to reflect such contracts in the\ndormitory authority's financial statements;\n (ix) financial monitoring and periodic assessment of such contracts by\nthe dormitory authority; and\n (x) such other matters relating thereto as the board of the dormitory\nauthority shall deem necessary and proper.\n (b) The dormitory authority shall issue a report to the director of\nthe budget, the chairpersons of the senate finance committee and the\nassembly ways and means committee, and the state comptroller, on or\nbefore March first in any state fiscal year in which it enters into or\ncontinues to be a party to a contract for interest rate exchange or\nsimilar agreement. Such report shall list all such contracts entered\ninto pursuant to this section, and shall include, but not be limited to,\nthe following information for each such contract, as applicable:\n (i) a description of the contract, including a summary of the terms\nand conditions thereof and the method of procurement;\n (ii) any amounts which were required to be paid and received, and any\namounts which actually were paid and received thereunder;\n (iii) any credit enhancement, liquidity facility or reserves\nassociated therewith including an accounting of all costs and expenses\nincurred, whether or not in conjunction with the procurement of credit\nenhancement or liquidity facilities;\n (iv) a description of each counterparty;\n (v) an assessment of the counterparty risk, termination risk, and\nother risks associated therewith.\n 4. The dormitory authority shall not enter into any interest rate\nexchange or similar agreement pursuant to this section unless the lease,\nsublease, or other agreement between the participating municipality and\nthe dormitory authority:\n (a) expressly authorizes the dormitory authority to enter into such\nagreements with respect to bonds, notes or other obligations outstanding\nor to be issued in connection with court facilities and combined\noccupancy structures or health facilities for that participating\nmunicipality; and\n (b) further obligates the participating municipality to pay to the\ndormitory authority any and all amounts payable by the authority under,\nor as a result of, such interest rate exchange or similar agreement.\n