N.Y. General Municipal Law § 11: Temporary investments

§ 11. Temporary investments. 1. For purposes of this section, the

terms "local government", "bank" and "trust company" shall have the same

meanings as in section ten of this article.

2. a. The governing board of any local government or, if the governing

board so delegates, the chief fiscal officer or other officer having

custody of the moneys may temporarily invest moneys not required for

immediate expenditure, except moneys the investment of which is

otherwise provided for by law, either: (1) in special time deposit

accounts in, or certificates of deposit issued by, a bank or trust

company located and authorized to do business in this state; or (2) in

accordance with all of the following conditions:

(i) the moneys are invested through a bank or trust company located

and authorized to do business in this state;

(ii) the bank or trust company arranges for the deposit of the moneys

in certificates of deposit in one or more banking institutions, as

defined in section nine-r of the banking law, for the account of the

local government;

(iii) the full amount of principal and accrued interest of each such

certificate of deposit must be insured by the federal deposit insurance

corporation;

(iv) the bank or trust company acts as custodian for the local

government with respect to such certificates of deposit issued for the

local government's account; and

(v) at the same time that the local government's moneys are deposited

and the certificates of deposit are issued for the account of the local

government, the bank or trust company receives an amount of deposits

from customers of other financial institutions equal to or greater than

the amount of the moneys invested by the local government through the

bank or trust company.

b. For any investment made pursuant to paragraph a of this

subdivision, such time deposit account or certificate of deposit shall

be payable within such time as the proceeds shall be needed to meet

expenditures for which such moneys were obtained and provided further

that such time deposit account or certificate of deposit be secured in

the same manner as is provided for securing deposits of public funds by

subdivision three of section ten of this article.

* 3. a. Investments pursuant to this section may also be made in the

following:

(1) obligations of the United States of America or in obligations

guaranteed by agencies of the United States of America where the payment

of principal and interest are guaranteed by the United States of America

or in obligations of the state of New York, or with the approval of the

state comptroller in obligations issued pursuant to section 24.00 or

25.00 of the local finance law by any municipality, school district or

district corporation other than the municipality, school district or

district corporation investing such moneys pursuant to this paragraph.

In addition, moneys in any reserve fund established pursuant to section

six-c, six-d, six-e, six-f, six-g, six-h, six-j, six-k, six-l, six-m or

six-n of this article may be invested in obligations of the

municipality, school district, fire district or district corporation

which has established the reserve fund, or in the case of a capital

reserve fund established for a town or county improvement district,

obligations of the town or county issued for the purposes of such

district.

(2) notwithstanding any other provision of general, special or local

law, any city having a population of one million or more and any county

may also make investments in the following:

(i) general obligation bonds and notes of any state other than this

state, provided that such bonds and notes receive the highest rating of

at least one independent rating agency designated by the state

comptroller;

(ii) obligations of any corporation organized under the laws of any

state in the United States maturing within two hundred seventy days,

provided that such obligations receive the highest rating of two

independent rating services designated by the state comptroller and that

the issuer of such obligations has maintained such ratings on similar

obligations during the preceding six months, provided, however, that the

issuer of such obligations need not have received such rating during the

prior six month period if such issuer has received the highest rating of

two independent rating services designated by the state comptroller and

is the successor or wholly owned subsidiary of an issuer that has

maintained such ratings on similar obligations during the preceding six

month period or if the issuer is the product of a merger of two or more

issuers, one of which has maintained such ratings on similar obligations

during the preceding six month period, provided, however, that no more

than two hundred fifty million dollars may be invested in such

obligations of any one corporation; or

(iii) bankers' acceptances maturing within two hundred seventy days

which are eligible for purchase in the open market by federal reserve

banks and which have been accepted by a bank or trust company which is

organized under the laws of the United States or of any state thereof

and which is a member of the federal reserve system and whose short-term

obligations meet the criteria outlined in clause (ii) of this

subparagraph. Provided, however, that no more than two hundred fifty

million dollars may be invested in such bankers' acceptances of any one

bank or trust company; or

(iv) obligations of, or instruments issued by or fully guaranteed as

to principal and interest by, any agency or instrumentality of the

United States acting pursuant to a grant of authority from the congress

of the United States, including but not limited to, any federal home

loan bank or banks, the Tennessee valley authority, the federal national

mortgage association, the federal home loan mortgage corporation and the

United States postal service, provided, however, that no more than two

hundred fifty million dollars may be invested in such obligations of any

one agency.

(v) no-load money market mutual funds registered under the Securities

Act of 1933, as amended, and operated in accordance with Rule 2a-7 of

the Investment Company Act of 1940, as amended, provided that such funds

are limited to investments in obligations issued or guaranteed by the

United States of America or in obligations of agencies or

instrumentalities of the United States of America where the payment of

principal and interest are guaranteed by the United States of America

(including contracts for the sale and repurchase of any such

obligations), and are rated in the highest rating category by at least

one nationally recognized statistical rating organization, provided,

however, that no more than two hundred fifty million dollars may be

invested in such funds.

b. All investments made pursuant to this subdivision shall be subject

to the following conditions:

(1) Such obligations shall be payable or redeemable at the option of

the owner within such times as the proceeds will be needed to meet

expenditures for purposes for which the moneys were provided and, in the

case of obligations purchased with the proceeds of bonds or notes, shall

be payable or redeemable in any event, at the option of the owner,

within two years of the date of purchase. Obligations that are purchased

pursuant to a repurchase agreement shall be deemed to be payable or

redeemable for purposes of this paragraph on the date on which the

purchased obligations are scheduled to be repurchased by the seller

thereof. Any obligation that provides for the adjustment of its interest

rate on set dates shall be deemed to be payable or redeemable for

purposes of this paragraph on the date on which the principal amount can

be recovered through demand by the holder thereof.

(2) Such obligations, unless registered or inscribed in the name of

the local government, shall be purchased through, delivered to and held

in the custody of a bank or trust company or, with respect to the city

of New York and counties, a reputable dealer in such obligations as

shall be designated by the state comptroller, in this state. Such

obligations shall be purchased, sold or presented for redemption or

payment by such bank or trust company or dealer in obligations only in

accordance with prior written authorization from the officer authorized

to make the investment. All such transactions shall be confirmed in

writing to the local government by the bank or trust company. All

obligations held in the custody of a bank or trust company pursuant to

this paragraph shall be held by such bank or trust company pursuant to a

written custodial agreement as set forth in paragraph a of subdivision

three of section ten of this article.

* NB Effective until July 1, 2029

* 3. Investments pursuant to this section may also be made in

obligations of the United States of America or in obligations guaranteed

by agencies of the United States of America where the payment of

principal and interest are guaranteed by the United States of America or

in obligations of the state of New York,. In addition, moneys in any

reserve fund established pursuant to section six-c, six-d, six-e, six-f,

six-g, six-h, six-j, six-k, six-l, six-m or six-n of this article may be

invested in obligations of the municipality, school district, fire

district or district corporation which has established the reserve fund,

or in the case of a capital reserve fund established for a town or

county improvement district, obligations of the town or county issued

for the purposes of such district.

All investments made pursuant to this subdivision shall be subject to

the following conditions:

a. Such obligations shall be payable or redeemable at the option of

the owner within such times as the proceeds will be needed to meet

expenditures for purposes for which the moneys were provided and, in the

case of obligations purchased with the proceeds of bonds or notes, shall

be payable or redeemable in any event, at the option of the owner,

within two years of the date of purchase. Obligations that are purchased

pursuant to a repurchase agreement shall be deemed to be payable or

redeemable for purposes of this paragraph on the date on which the

purchased obligations are scheduled to be repurchased by the seller

thereof. Any obligation that provides for the adjustment of its interest

rate on set dates shall be deemed to be payable or redeemable for

purposes of this paragraph on the date on which the principal amount can

be recovered through demand by the holder thereof.

b. Such obligations, unless registered or inscribed in the name of the

local government, shall be purchased through, delivered to and held in

the custody of a bank or trust company or, with respect to the city of

New York and counties, a reputable dealer in such obligations as shall

be designated by the state comptroller, in this state. Such obligations

shall be purchased, sold or presented for redemption or payment by such

bank or trust company or dealer in obligations only in accordance with

prior written authorization from the officer authorized to make the

investment. All such transactions shall be confirmed in writing to the

local government by the bank or trust company. All obligations held in

the custody of a bank or trust company pursuant to this paragraph shall

be held by such bank or trust company pursuant to a written custodial

agreement as set forth in paragraph a of subdivision three of section

ten of this article.

* NB Effective July 1, 2029

4. Notwithstanding any other provision of law, the governing board of

a local government may authorize the aforementioned officers to turn

over the physical custody and safekeeping of the evidences of the

investments made pursuant to this section to (a) any bank or trust

company incorporated in this state, or (b) any national bank located in

this state, or (c) any private banker duly authorized by the

superintendent of financial services of this state to engage in business

here. All such private bankers shall, as private bankers, maintain a

permanent capital of not less than one million dollars in this state.

The said officers may direct such bank, trust company or private banker

to register and hold any such evidences of investments in its custody,

in the name of its nominee. Such officers may deposit or authorize such

bank, trust company or private banker, to deposit, or arrange for the

deposit of any such evidences of investments with a federal reserve bank

or other book-entry transfer system operated by a federally regulated

entity to be credited to an account as to which the ownership of, and

other interests in, such evidences of investments may be transferred by

entries on the books of such federal reserve bank or other book-entry

transfer system operated by a federally regulated entity without

physical delivery of any such evidences of investments. The records of

any such bank, trust company or private banker shall show, at all times,

the ownership of such evidences of investments, and they shall, when

held in the possession of such bank, trust company or private banker be,

at all times, kept separate from the assets of such bank, trust company

or private banker. All evidences of investments delivered to a bank,

trust company, or private banker pursuant to this subdivision shall be

held by such bank, trust company or private banker pursuant to a written

custodial agreement as set forth in paragraph a of subdivision three of

section ten of this article. When any such evidences of investments are

so registered in the name of a nominee, such bank, trust company or

private banker shall be absolutely liable for any loss occasioned by the

acts of such nominee with respect to such evidences of investments.

5. A county clerk may invest any money collected on behalf of the

state until such time as the money is required to be remitted to the

state. The county clerk shall invest the state money only in those

investments authorized by this section and payable within such time as

the proceeds shall be required to be remitted to the state. Any interest

that accrues on moneys invested pursuant to this subdivision shall be

payable in equal shares to the state and to the county provided,

however, that any fees or service charges associated with the investment

shall be paid from such interest.

6. Except as may otherwise be provided in a contract with bond or note

holders, any moneys of a political subdivision authorized to be invested

pursuant to this section may be commingled for investment purposes;

provided, however, that any investment of commingled moneys shall be

payable or redeemable at the option of the owner within such time as the

proceeds shall be needed to meet expenditures for which such moneys were

obtained or as otherwise specifically provided in this section. The

separate identity of the sources of such funds shall at all times be

maintained and income received on moneys commingled for the purpose of

investment shall be credited on a pro rata basis to the fund or account

from which the moneys were invested.

7. The chief fiscal officer of each local government shall maintain or

cause to be maintained a proper record of all books, notes, securities

or other evidences of indebtedness held by or for such subdivision for

the purpose of investment. Such record shall at least identify the

security, the fund for which held, the place where kept and entries

shall be made therein showing date of sale or other disposition and the

amount realized therefrom.