N.Y. General Municipal Law § 6-l: Mandatory reserve fund for municipal corporations, fire districts and school districts

§ 6-l. Mandatory reserve fund for municipal corporations, fire

districts and school districts. 1. As used in this section, the term

"governing board," in so far as it is used in reference to a municipal

corporation, shall mean the "legislative body" thereof, as that term is

defined in section two of the municipal home rule law, as amended from

time to time; in so far as it is used in reference to a fire district,

shall mean the board of fire commissioners thereof; in so far as it is

used in reference to a school district, shall mean the board of trustees

thereof.

2. Notwithstanding any other provision of this chapter, upon the cash

sale by a municipal corporation, fire district or school district of a

capital improvement, as defined in section six-c of this chapter, for

the cost of which obligations were issued pursuant to the local finance

law, and when all or part of such indebtedness is outstanding at the

time of such sale, a mandatory reserve fund shall be established for the

purpose of retiring such obligations, or, as an additional alternative,

paying principal of, or redemption premiums in connection with such

obligations or other obligations of at least equal weighted average

life; provided however, that, if the proceeds of the sale are used or

set aside to be used (i) to pay or provide for the construction,

reconstruction, acquisition or installation of capital improvements or

equipment, as defined in section six-c of this chapter, or (ii) for the

payment of principal of, or redemption premiums in connection with, any

outstanding obligations issued by the municipal corporation, fire

district or school district to finance such capital improvements or

equipment, in an amount not less than the lesser of such proceeds or the

principal amount of the indebtedness outstanding on the capital

improvement sold, then such fund need not be established; provided,

however, that if such amount to be so used, together with any other

amounts so used pursuant to this sentence in the same fiscal year of

such municipal corporation, fire district or school district, would

exceed one percent of the limit prescribed by section 104.00 of the

local finance law, then such fund shall nevertheless be established; and

provided further, that a municipal corporation, fire district or school

district shall within thirty days after the use of such proceeds

pursuant to clause (i) herein, file a report with the state comptroller

identifying: (a) the asset sold, (b) the amount of net proceeds from

such sale, (c) the amount to be paid or provided pursuant to such clause

(i), and (d) the capital improvements or equipment to be so paid for or

provided. When a municipal corporation, fire district or school district

has outstanding indebtedness incurred to finance the cost of such a

capital improvement, federal and state aid received on account of such

improvement, to the extent that it is not applied directly to the

payment of a part of the cost of such improvement or to retire

indebtedness issued in anticipation of such aid, shall likewise be

deposited in a reserve fund for the purpose of retiring either such

obligations or, as an additional alternative, other obligations of at

least equal weighted average life. The entire proceeds of the sale or

such state or federal aid received, as the case may be, shall be

deposited to the credit of such fund, provided however, that if the

aggregate amount thereof shall exceed the principal of such indebtedness

due or to become due, or if, when all such outstanding obligations have

been retired, any moneys remain unexpended in the reserve fund, such

excess moneys may be used for any lawful municipal or district purpose,

as the case may be. The provisions of this section shall not apply in a

case where a provision of any other law requires that the proceeds of

the sale of a capital improvement shall be deposited in a reserve fund

established for the purpose of retiring outstanding obligations.

2-a. The provisions of this section shall apply to capital

improvements of town and county improvement districts. For the purpose

of implementing the provisions of this section in regard to such

districts, the term "governing board" shall mean the governing board of

the town or county, as the case may be, in which such district is

located, and the term "chief fiscal officer" shall mean the chief fiscal

officer of such town or county.

3. Appropriations from such fund shall be made only for the payment or

payments of all or part of the said outstanding indebtedness. However,

any balance remaining in said fund upon the payment of all outstanding

principal and interest may be expended for any lawful purpose of the

municipal corporation, fire district or school district.

4. The chief fiscal officer shall keep a separate account for each of

such funds established. Such account shall show:

a. The date of creation of the fund and the amount credited thereto.

b. The interest earned by such fund.

c. The capital gains or losses resulting from the sale of investments

of the fund.

d. The interest or capital gains which have accrued to the fund.

e. The amount and date of each withdrawal from the fund.

f. The assets of the fund, indicating the cash balance therein and a

schedule of the amounts invested. The chief fiscal officer at the

termination of each fiscal year shall render a detailed report of the

operation and condition of each of such funds to the governing board.

5. The members of the governing board are hereby declared trustees of

such funds and shall be subject to all the duties and responsibilities

imposed by law on trustees, and such duties and responsibilities may be

enforced by the municipal corporation, fire district or school district,

as the case may be, or by any board, commission, agency, office or

taxpayer thereof. An expenditure from such mandatory reserve fund may be

made only by appropriation pursuant to a resolution of the governing

board.

6. The moneys in each such fund shall be deposited and secured in the

manner provided by section ten of this article. The governing board or

the chief fiscal officer of such municipal corporation, fire district or

school district, if the governing board shall delegate such duty to him,

may invest the moneys in each such fund in the manner provided in

section eleven of this article. Any interest earned or capital gains

realized on the moneys so deposited or invested shall accrue to and

become a part of each such fund. The separate identity of each such fund

shall be maintained whether its assets consist of cash, investments, or

both.

7. The members of the governing board shall be guilty of a misdemeanor

if they:

a. Authorize a withdrawal from any such mandatory reserve fund for any

purpose other than as provided in this section.

b. Expend any money withdrawn from any such mandatory reserve fund for

a purpose other than as provided in this section.