§ 3038 — Conditions on extension of benefits to the city

* § 3038. Conditions on extension of benefits to the city. The\ncorporation shall, at the time of any exchange of the corporation's\nbonds and notes for short-term obligations of the city pursuant to\nsubdivision two of section three thousand thirty-five of this chapter or\nany payment of funds of the corporation to the city or of any purchase\nfrom the city of its obligations pursuant to section three thousand\nthirty-seven of this chapter, require the city to agree to observe and\nperform the conditions set forth below in this section, with such\nlimitations as to the implementation of such conditions as the\ncorporation may, subject to any contract with bondholders or\nnoteholders, then approve; provided, however, that no such specific\nlimitations shall be so substantial as to effectively constitute a\nwaiver of any such conditions. Any such conditions may thereafter, in\nthe discretion of the corporation, subject to any contract with\nbondholders or noteholders, be further limited. Such conditions shall\ncease to apply when all notes and bonds have been repaid or when the\ncorporation has accumulated in its capital reserve funds or otherwise an\namount equal to the principal of all outstanding notes and bonds and\ninterest accrued thereon. The city shall have the right at any time to\npay the corporation an amount which, when added to the capital reserve\nfunds, shall equal the principal of all outstanding notes and bonds and\ninterest accrued thereon and redemption premium if any. If the city\nmakes such payment at a time when the corporation has outstanding notes\nor bonds that are not then callable, the city shall agree to pay the\ncorporation on demand an amount equal to the amount, if any, by which\nthe amount of interest on such notes or bonds shall exceed the\ncorporation's income from the investment of its funds. Subject to the\nforegoing, the conditions that the corporation shall require the city to\nobserve and perform shall be as follows:\n 1. The city shall deliver a certificate, executed by the mayor and the\ncity comptroller in form prescribed by the corporation, (a) representing\nthat the city is in compliance with the conditions described below in\nthis section as the corporation may specify, (b) undertaking to comply\nwith any of such specified conditions as the corporation may then\nrequire and (c) stating that all local legislative and executive action\nthen required to permit such compliance by the city has been taken. The\ncorporation may require the delivery with such certificate of an opinion\nof the city's corporation counsel that all such legislative and\nexecutive action has been taken.\n 2. (a) The city shall, within ninety days after the first such\nagreement, initiate steps to adopt as the city's method of accounting\nfor purposes of reporting to the corporation with respect to the city's\nfinancial condition and compliance with the conditions of this section,\nthe accounting principles set forth in the state comptroller's uniform\nsystem of accounts for municipalities, as the same may be modified by\nthe state comptroller, in consultation with the city comptroller, for\napplication to the city. The city shall complete the transition to such\naccounting method as promptly as reasonably practicable thereafter and,\nin any event, so that the audited financial statements for the fiscal\nyear ending June thirtieth, nineteen hundred seventy-eight shall be\nprepared in accordance with such accounting methods, except as provided\nbelow in this subdivision. It is recognized that the adoption of such\naccounting principles may result in substantial adjustments from the\naccounting principles now followed by the city. The corporation and the\ncity shall consult, over the course of the introduction and adoption of\nsuch accounting system and the accounting methods referred to in section\neight of the New York state financial emergency act for the city of New\nYork, and until the expiration of the fiscal year ending June thirtieth,\nnineteen hundred seventy-eight, the corporation and the city may\nformulate a mutually acceptable method of phasing such adjustments into\nthe accounting system described in this paragraph over such reasonable\nperiod, not exceeding ten years, as the corporation may determine to be\nappropriate and the financial statements and other information to be\nfurnished to the corporation may, notwithstanding any other provision of\nthis section three thousand thirty-eight be prepared in accordance with\nsuch determination.\n (b) For the fiscal year ending June thirtieth, nineteen hundred\nseventy-nine, and for each fiscal year thereafter, the city's expense\nbudget shall be prepared in accordance with the provisions of section\neight of the New York state financial emergency act for the city of New\nYork.\n 3. The city shall take such action as may be necessary to enable the\nstate comptroller, or at his election an independent certified public\naccounting firm retained by the city but satisfactory to the state\ncomptroller, to perform an annual audit and to furnish to the\ncorporation an annual report, for the fiscal year ending June thirtieth,\nnineteen hundred seventy-eight upon the financial statements of the\ncity. For each subsequent fiscal year the city shall take such action as\nmay be necessary to enable a nationally recognized independent certified\npublic accounting firm selected and retained by the city at its cost in\naccordance with the provisions of section seven-a of the New York state\nfinancial emergency act for the city of New York to perform an annual\naudit and to furnish to the corporation an annual report upon the\nfinancial statements of the city. Each such report shall be prepared in\naccordance with the accounting method prescribed under subdivision two\nof this section. The city shall make available for inspection and\ncopying all books, records, work papers and other data and material as\nrequired by the state comptroller or the independent certified public\naccounting firm conducting such audit and the city shall make its\nofficers and employees available to and shall cooperate with such\nauditors so as to permit such annual audit to be completed and the\nreport issued to the city and to the corporation within one hundred\ntwenty days after the close of the fiscal year. Such report shall be\nmade available to the public promptly thereafter.\n 4. Beginning with the fiscal year ending June thirtieth, nineteen\nhundred seventy-seven and for each fiscal year thereafter, the city\nshall deliver a proposed expense budget to the corporation. Delivery to\nthe corporation shall be made concurrently with the initial submission\nof the proposed expense budget to the board of estimate and the city\ncouncil, but in any event not later than fifty days prior to the\nbeginning of such fiscal year or such other date as the corporation may\napprove upon the request of the city. Beginning with the fiscal year\nending June thirtieth, nineteen hundred seventy-eight, and for each\nfiscal year thereafter, the proposed expense budget submitted to the\ncorporation shall be prepared in accordance with the accounting methods\nreferred to in subdivision two of this section. Such budget shall be\nidentical to the proposed expense budget submitted to the board of\nestimate and city council. The proposed expense budget delivered to the\ncorporation shall be accompanied by (i) a statement setting forth in\ndetail the assumptions of income and expense used in its preparation,\n(ii) for the fiscal year ending June thirtieth, nineteen hundred\nseventy-eight, a reconciliation of the differences, if any, between such\nproposed expense budget and the proposed expense budget based on the\napplicable accounting methods set forth in subdivision two a of this\nsection but without adjustments or modifications permitted by this\ntitle, and for each subsequent fiscal year a reconciliation between such\nproposed expense budget and the proposed budget based on the principles\ndescribed in section eight of the New York state financial emergency act\nfor the city of New York, and (iii) a certificate of the mayor stating\nthat such assumptions are reasonable and that operation within the\nbudget is feasible and explaining the reasons for any differences\ntherein from the proposed expense budget described in clause (ii) above.\nSubject to and in accordance with the provisions of section eight of the\nNew York state financial emergency act for the city of the New York, as\nthe same may be amended from time to time, the city shall in every\nfiscal year adopt and maintain an expense budget in which the total of\nall income items equals or exceeds the total of all expenditure items.\nFor the fiscal year ending June thirtieth, nineteen hundred\nseventy-eight and each subsequent fiscal year the total of all income\nitems shall also equal or exceed the total of all expenditure items in\neach expense budget as adopted by the city, after the adjustments, if\nany, required to conform to the accounting methods referred to in\nsubdivision two of this section (except as may be modified by the\napplication of subdivision five of this section) and the city shall also\nmaintain a budget balanced in accordance with such accounting\nprinciples. Prior to July first, nineteen hundred eighty-two and\nnotwithstanding any other provision of this section to the contrary, any\nexpense item in the expense budget for any fiscal year, which item\nrelates to contributions by the city or other public employer to any\nretirement system or pension fund, shall include only the amounts which,\nunder the provisions of law, rules or regulations expressly prescribing\nthe method of determining employer contributions to such retirement\nsystem or pension fund and the time of payment thereof, are due and\npayable in such fiscal year, and no such expense item shall include\namounts for any such contribution which, under such laws, rules or\nregulations, do not become due and payable in such fiscal year.\n 5. The city shall, over a period of six fiscal years, beginning with\nits fiscal year ending June thirtieth, nineteen hundred seventy-seven,\neliminate from its capital budget those expenses that are properly\nincludable only in its expense budget, as determined in accordance with\nthe accounting principles set forth in the state comptroller's uniform\nsystem of accounts for municipalities, as the same may be modified by\nthe state comptroller, in consultation with the city comptroller, for\napplication to the city. The determination of which items are properly\nincludable only in the city's expense budget shall be made in accordance\nwith the aforesaid accounting principles regardless of any act of the\nlegislature prior or subsequent to the effective date of this title\notherwise classifying such items. To implement the foregoing:\n (a) The mayor and the city comptroller shall, not later than October\nthirty-first, nineteen hundred seventy-five, certify to the corporation,\na list, to the best of their information, of the expense items in the\ncity's capital budget for the fiscal year ending June thirtieth,\nnineteen hundred seventy-six, and the amount of each such item;\n (b) The comptroller (or the independent certified public accounting\nfirm then retained pursuant to subdivision three of this section) shall\nprepare a determination of and shall report upon the expense items and\nthe amount thereof in the city's capital budget for the fiscal year\nending June thirtieth, nineteen hundred seventy-six and for each\nsubsequent fiscal year, in accordance with the aforesaid accounting\nprinciples. Such report shall also include a statement as to the city's\ncompliance with the conditions of this subdivision for the fiscal year\nreported upon and in the budget for the succeeding fiscal year;\n (c) Unless the corporation shall approve the inclusion of a greater\namount with respect to any such fiscal year, the aggregate amount of all\nsuch expense items included in the capital budget, including judgments\nand claims related to other than capital projects, for the fiscal year\nending June thirtieth, nineteen hundred seventy-seven and for the\nfollowing fiscal year shall be reduced at the cumulative rate of ten\npercent per year from the aggregate amount for the nineteen hundred\nseventy-six fiscal year set forth in the report provided for under\nparagraph (b) of this subdivision (or set forth in the certification\nunder paragraph (a) of this subdivision if such report has not then been\nprepared). For the fiscal year ending June thirtieth, nineteen hundred\nseventy-nine the maximum aggregate amount of all such expense items\nincluded in the capital budget shall be four hundred fifty million\ndollars and for each of the following two fiscal years the aggregate\namount of all such expense items included in the capital budget shall be\nsubstantially reduced from the aggregate amount for the nineteen hundred\nseventy-nine fiscal year. For the fiscal year ending June thirtieth,\nnineteen hundred eighty-two and thereafter, no such expense items shall\nbe included in the city's capital budget;\n (d) For the fiscal year ending June thirtieth, nineteen hundred\nseventy-seven and continuing thereafter, the city shall not include any\nnew or additional item in its capital budget which, in accordance with\nthe aforesaid accounting principles, is properly includable only in its\nexpense budget; and\n (e) To implement this subdivision, and in order to provide full\ndisclosure of all expense items properly includable only in the expense\nbudget, the city shall include in its expense budget for each fiscal\nyear by appropriation all expense items which are included in its\ncapital budget for such fiscal year pursuant to paragraph (c) of this\nsubdivision including judgments and claims related to other than capital\nprojects, such items shall be stated separately and distinctly and the\ncity may include in such expense budget as items of income, in addition\nto all other items of income properly includable in such expense budget\npursuant to this section, all amounts to be applied to the payment of\nsuch expense items, which amounts may be derived from any source\navailable to the city during such fiscal year, provided that such income\nshall be listed separately and distinctly.\n 6. If after the adoption of the expense budget for any fiscal year,\nany increase therein, or an increase in total expenditures shall be\nproposed, the mayor shall cause such proposal to be submitted to the\ncorporation concurrently with its submission to the board of estimate\nand the city council, together with a statement of the source of current\nincome or other identifiable and currently available funds required for\nthe payment of such additional amounts.\n 7. Commencing at such time as the corporation may specify, but not\nlater than December 1, 1975 the city budget director shall deliver to\nthe corporation, not less than thirty days before each fiscal quarter\n(except, within thirty days after the commencement of the first fiscal\nquarter), an expenditure plan to implement the city expense budget for\nsuch fiscal quarter and within amounts based on current income or other\nidentifiable and currently available funds. The city budget director\nshall deliver to the corporation within thirty days after the end of\neach such fiscal quarter covered by an expenditure plan, an operations\nreport reflecting results of city operations for such fiscal quarter and\nwhether the city has operated within the related expenditure plan. Each\nexpenditure plan and operations report shall be in such form as the\ncorporation may specify and shall be certified by the city budget\ndirector and shall detail and report upon action taken by the city to\nmaintain a balanced expense budget.\n 8. The city shall comply in all material respects with the expenditure\nlimitations in its budgets as adopted or modified in accordance with\nsubdivisions four and six of this section, and with section eight of the\nNew York state financial emergency act for the city of New York as the\nsame may from time to time be amended.\n 9. a. The city shall not, at any time issue any short-term obligations\nwhich would cause the aggregate principal amount of its outstanding\nshort-term obligations plus the aggregate principal amount of all notes\nand bonds issued by the corporation (less any notes or bonds of the\ncorporation which have been refunded, renewed, redeemed, paid or\ncancelled and less any notes and bonds deemed to have been paid pursuant\nto the provisions of any contract with noteholders or bondholders and\nless any notes other than notes issued in anticipation of the issuance\nof bonds of the corporation, or bonds of the corporation issued for a\npurpose set forth in subparagraph (b) of section three thousand\nthirty-seven or in subparagraph eighteen of section three thousand ten\nof this article, and less any notes other than notes issued in\nanticipation of the issuance of bonds of the corporation, or bonds of\nthe corporation issued for the purpose of making deposits into any of\nits capital reserve funds, and less any short-term obligations of the\ncity then held by the corporation) to exceed (i) six billion six hundred\nmillion (hereinafter called the base debt limit) plus (ii) an additional\namount, not exceeding ten percent of the base debt limit; provided,\nhowever, that during the fiscal years ending June 30, 1976 and 1977 such\nadditional amount may not exceed thirty per cent of the base debt limit,\nduring the fiscal year ending June 30, 1978 the additional amount may\nnot exceed twenty-five per cent of the base debt limit, during the\nfiscal year ending June 30, 1979, the additional amount may not exceed\ntwenty per cent of the base debt limit, and during the fiscal year\nending June 30, 1980 the additional amount may not exceed fifteen per\ncent of the base debt limit.\n b. In addition to the foregoing limitation the city shall not, at any\ndate, issue any short-term obligations which would cause the aggregate\nprincipal amount of its outstanding short-term obligations (excluding\nbond anticipation notes) plus the aggregate principal amount of all\nnotes and bonds issued by the corporation (less (i) any notes or bonds\nwhich have been refunded or renewed and any notes or bonds in an amount\nequal to the aggregate principal amount of bond anticipation notes of\nthe city acquired by the corporation, whether or not then held by the\ncorporation (except bond anticipation notes of the city acquired by the\ncorporation in consideration of the surrender by the corporation to the\ncity of bond anticipation notes of the city), and any notes or bonds\nissued for a purpose set forth in subparagraph (b), (c) or (d) of\nsection three thousand thirty-seven, in subdivision two-a of section\nthree thousand thirty-three, or subparagraph eighteen of section three\nthousand ten of this article, and less any notes or bonds of the\ncorporation issued for the purpose of making deposits into any of its\ncapital reserve funds, (ii) any short-term obligations of the city then\nheld by the corporation other than bond anticipation notes and (iii) any\nshort-term obligations of the city issued and payable within the same\nfiscal year) to exceed four billion five hundred million dollars plus,\nin the discretion of the board of directors, an additional amount not\nexceeding five hundred million dollars plus, in the discretion of the\nboard of directors, until June thirtieth, nineteen hundred seventy-six,\na further additional amount not exceeding two hundred million dollars.\n c. Notwithstanding any other provision of this act, the corporation\nshall not have the authority to modify or waive the limitations on the\naggregate amount of outstanding short-term obligations of the city\npermitted to be outstanding in excess of the limits specified in\nparagraphs (a) and (b) of this subdivision.\n d. Not less than twenty days prior to the issuance of any short-term\nobligations by the city, other than such obligations to be issued to the\ncorporation, on or after July first, nineteen hundred seventy-five, the\ncity comptroller shall deliver to the corporation a notice of intent to\nissue such obligations, specifying the amount and proposed terms thereof\nand the authority under which such obligations are proposed to be\nissued, together with a certificate of the city budget director\nspecifying the purpose and the proposed source of funds for the\nredemption thereof. The city comptroller and the city budget director\nshall provide such additional information and shall be available for\nconsultation as the corporation may request. If, within ten days after\nthe receipt of such a notice from the city, the corporation determines\nafter consultation with the city comptroller and the city budget\ndirector, that the issuance of such obligations would violate the\nlimitation of this subdivision, the corporation shall deliver to the\ncity comptroller a certified copy of such determination within such\n10-day period and the city comptroller shall not thereafter issue such\nobligations.\n * NB The corporation shall continue for a term ending the later of\nJuly 1, 2008 or one year after its liabilities have been fully paid and\ndischarged per § 3033 sub 1.\n