§ 656 — Reserve funds and appropriations

§ 656. Reserve funds and appropriations. 1. a. The corporation shall\ncreate and establish special funds (herein referred to as capital\nreserve funds) and shall pay into such a capital reserve fund (1) any\nmoneys appropriated and made available by the state or city for the\npurpose of such fund, (2) any proceeds of sale of notes or bonds, to the\nextent provided in the resolution or resolutions of the corporation\nauthorizing the issuance thereof, and (3) any other moneys which may be\nmade available to the corporation for the purpose of such fund from any\nother source or sources. All moneys held in a capital reserve fund,\nexcept as hereinafter provided, shall be used, as required, solely for\nthe payment of the principal of bonds as the same mature or the annual\nsinking fund payments, the purchase or redemption of bonds, the payment\nof interest on bonds or the payment of any redemption premium required\nto be paid when such bonds are redeemed prior to maturity; provided,\nhowever, that moneys in such fund shall not be withdrawn therefrom at\nany time in such amount as would reduce the amount of such fund to less\nthan the maximum capital reserve fund requirement, except for the\npurposes of paying interest on bonds, principal of bonds and annual\nsinking fund payments, as the same become due and for the payment of\nwhich other moneys of the corporation are not available. Any income or\ninterest earned by, or increment to, a capital reserve fund due to the\ninvestment thereof or any amount in excess of the maximum capital\nreserve fund requirement may be transferred by the corporation to other\nfunds or accounts of the corporation to the extent it does not reduce\nthe amount of such capital reserve fund below the maximum capital\nreserve fund requirement.\n b. The corporation shall not issue bonds at any time if upon issuance\nthe amount in the capital reserve fund will be less than the maximum\ncapital reserve fund requirement, unless the corporation, at the time of\nissuance of such bonds, shall deposit in such fund from the proceeds of\nthe bonds so to be issued, or otherwise, an amount which, together with\nthe amount then in such fund, will not be less than the maximum capital\nreserve fund requirement.\n c. No bonds or notes of the corporation shall be issued if upon such\nissuance the aggregate principal amount of bonds and notes of the\ncorporation then outstanding exceeds the lesser of twenty billion\ndollars or such amount as would cause the maximum capital reserve fund\nrequirement to exceed eighty-five million dollars; provided that, in\ndetermining such aggregate principal amounts there shall be deducted (i)\nall sums then available for the payment of such bonds or notes either at\nmaturity or through the operation of a sinking fund; (ii) the aggregate\nprincipal amount of outstanding bonds issued (a) to refund notes and (b)\nto refund bonds, theretofore issued and then outstanding; and (iii) the\naggregate principal amount of outstanding notes issued to renew notes\ntheretofore issued and then outstanding. The provisions of the prior\nsentence notwithstanding, the corporation shall not issue bonds if such\nissuance shall cause the maximum reserve fund requirement to exceed\nthirty million dollars unless prior to such issuance the senate and\nassembly shall have adopted a concurrent resolution passed by the votes\nof a majority of all the members elected to each such house and,\nsubsequent thereto, the governor shall evidence in writing the\ngovernor's agreement with such resolution to the chairperson of the\ncorporation, which resolution shall be in full force and effect on the\ndate of issuance of the bonds, permitting the maximum capital reserve\nfund requirement to equal or exceed the amount of the maximum capital\nreserve fund requirement which would be effective upon the issuance of\nthe bonds in question, but in no event shall the maximum capital reserve\nfund requirement exceed eighty-five million dollars.\n d. In computing the amount of a capital reserve fund for the purposes\nof this section, securities in which all or a portion of such fund shall\nbe invested shall be valued at par if purchased at par or if purchased\nat other than par, at amortized value. Amortized value, when used with\nrespect to securities purchased at a premium above or a discount below\npar, shall mean the value as of any given date obtained by dividing the\ntotal premium or discount at which such securities were purchased by the\nnumber of interest payments remaining to maturity on such securities\nafter such purchase and by multiplying the amount so calculated by the\nnumber of interest payment dates having passed since the date of such\npurchase; and (i) in the case of securities purchased at a premium by\ndeducting the product thus obtained from the purchase price, and (ii) in\nthe case of securities purchased at a discount by adding the product\nthus obtained to the purchase price.\n e. To assure the continued operation and solvency of the corporation\nfor the carrying out of its corporate purposes, provision is made in\nparagraph a of this subdivision for the accumulation in each capital\nreserve fund of an amount equal to the maximum capital reserve fund\nrequirement. In order further to assure such maintenance of each capital\nreserve fund, there shall be paid by the city to the corporation for\ndeposit in each capital reserve fund on or before the first day of\nApril, in each year, such amount, if any, needed for the purpose of\nrestoring each such capital reserve fund to the maximum capital reserve\nfund requirement for such fund, as shall be certified by the chairperson\nof the corporation to the mayor and the director of management and\nbudget on or before the first day of December next preceding; provided\nthat any such amount shall have been first appropriated by or on behalf\nof the city for such purpose or shall have been otherwise made available\nfrom the proceeds of notes or bonds of the city authorized and issued\npursuant to the local finance law for such purpose, which is hereby\ndetermined to be a specific object or purpose having a period of\nprobable usefulness of five years. In the event of the failure or\ninability of the city to pay over to the corporation, in full, on or\nbefore such first day of April the amount so certified the chairperson\nof the corporation shall forthwith certify to the comptroller of the\nstate of New York the amount remaining unpaid and thereupon the state\ncomptroller shall pay to the corporation, out of the first moneys\navailable for the next succeeding payments of (i) state aid apportioned\nto the city of New York as per capita aid for the support of local\ngovernment pursuant to section fifty-four of the state finance law or\n(ii) such other aid or assistance payable by the state to the city and\nnot otherwise allocated as shall supersede or supplement such state per\ncapita aid, including federal moneys apportioned to the city by the\nstate, such amount remaining unpaid, after giving written notice to the\ndirector of management and budget of each amount to be paid out of such\nstate aid, until the amount in each such capital reserve fund is\nrestored to the maximum capital reserve fund requirement thereof;\nprovided, however, that prior to the issuance of any notes or bonds of\nthe corporation pursuant to this article the city shall have enacted a\nlocal law authorizing payments from such sources into such a fund so\nlong as any notes or bonds of the corporation shall be outstanding and\nunpaid, and provided further that moneys, if any, payable to the city\nuniversity construction fund pursuant to the provisions of the city\nuniversity construction fund act shall be paid, in full, to such fund,\nprior to any payments therefrom to the corporation. Any amount so paid\nover to the corporation shall be deducted from the corresponding\napportionment of such per capita state aid otherwise payable to the city\nof New York, and shall not obligate the state to make nor entitle the\ncity to receive any additional apportionment or payment of per capita\nstate aid. All amounts paid over to the corporation as provided in this\nparagraph, including amounts paid by the state comptroller out of\npayments of such state aid, shall constitute and be accounted for as\nnon-interest bearing loans by the city to the corporation and, subject,\nsubordinate and junior to the rights of the holders of any notes or\nbonds of the corporation theretofore or thereafter issued, shall be\nrepaid to the city from (i) moneys in such capital reserve fund in\nexcess of the maximum capital reserve fund requirement thereof or (ii)\nany moneys of the corporation not required for any other of its\ncorporate purposes.\n f. In the event the chairperson of the corporation shall certify to\nthe mayor and director of management and budget or to the state\ncomptroller any amount necessary to restore a capital reserve fund to\nthe maximum capital reserve fund requirement thereof pursuant to\nsubdivision e of this section, the chairperson shall simultaneously\ndeliver to such persons a statement of the cause or causes of such\ncapital reserve fund deficiency and the measures to be taken by the\ncorporation or the department of housing preservation and development to\ninsure repayment of any loans made by the city to the corporation,\nincluding amounts paid by the state comptroller out of payments of state\naid, for the purpose of restoring such capital reserve fund to the\nmaximum capital reserve fund requirement thereof and to prevent the\nrecurrence of any such deficiency.\n 2. Notwithstanding the provisions of subdivision one hereof, the\ncorporation may issue bonds for any of its corporate purposes, without\nmaking any deposit in a capital reserve fund and the provisions of\nsubdivision one of section six hundred fifty-six of this article shall\nnot apply to such bonds and the principal of and interest on such bonds\nshall not be payable from or secured by any capital reserve fund.\n 3. The corporation shall create and establish such other fund or funds\nas may be necessary or desirable for its corporate purposes.\n