N.Y. NYS Financial Emergency Act for the city of NY 868/75 § 10-a: Covenants, authorizations to agree and remedies

* § 10-a. Covenants, authorizations to agree and remedies. 1. In the

event that after the date on which the provisions of this act become

operative, any notes or bonds are issued by the city prior to July 1,

2027, or any bonds are issued by a state financing agency, the state of

New York hereby authorizes the city and authorizes and requires such

state financing agency to include a pledge and agreement of the state of

New York in any agreement made by the city or such state financing

agency with holders or guarantors of such notes or bonds that the state

will not take any action which will (a) substantially impair the

authority of the board during a control period, as defined in

subdivision twelve of section two of this act as in effect on the date

such notes or bonds are issued (i) to approve, disapprove, or modify any

financial plan or financial plan modification, including the revenue

projections (or any item thereof) contained therein, subject to the

standards set forth in paragraphs a, c, d, e and f of subdivision one of

section eight of this act as in effect on the date such notes or bonds

are issued and paragraph b of such subdivision as in effect from time to

time, (ii) to disapprove a contract of the city or a covered

organization if the performance of such contract would be inconsistent

with the financial plan or to approve or disapprove proposed short-term

or long-term borrowing of the city or a covered organization or any

agreement or other arrangement referred to in subdivision four of

section seven of this act, or (iii) to establish and adopt procedures

with respect to the deposit in and disbursement from the board fund of

city revenues; (b) substantially impair the authority of the board to

review financial plans, financial plan modifications, contracts of the

city or the covered organizations and proposed short-term or long-term

borrowings of the city and the covered organizations; (c) substantially

impair the independent maintenance of a separate fund for the payment of

debt service on bonds and notes of the city; (d) alter the composition

of the board so that the majority of the voting members of the board are

not officials of the state of New York elected in a state-wide election

or appointees of the governor; (e) terminate the existence of the board

prior to the time to be determined in accordance with section thirteen

of this act as in effect on the date such notes or bonds are issued; (f)

substantially modify the requirement that the city's financial

statements be audited by a nationally recognized independent certified

public accounting firm or consortium of firms and that a report on such

audit be furnished to the board; or (g) alter the definition of a

control period set forth in subdivision twelve of section two of this

act, as in effect on the date such notes or bonds are issued, or

substantially alter the authority of the board, as set forth in said

subdivision to reimpose or terminate a control period; provided,

however, that the foregoing pledge and agreement shall be of no further

force and effect if at any time (i) there is on deposit in a separate

trust account with a bank, trust company or other fiduciary sufficient

moneys or direct obligations of the United States or obligations

guaranteed by the United States, the principal of and/or interest on

which will provide moneys to pay punctually when due at maturity or

prior to maturity by redemption, in accordance with their terms, all

principal of and interest on all outstanding notes and bonds of the city

or such state financing agency containing this pledge and agreement and

irrevocable instructions from the city or such state financing agency to

such bank, trust company or other fiduciary for such payment of such

principal and interest with such moneys shall have been given, or (ii)

such notes and bonds, together with interest thereon, have been paid in

full at maturity or have otherwise been refunded, redeemed, defeased, or

discharged; and provided further that the foregoing pledge and agreement

shall be of full force and effect upon its inclusion in any agreement

made by the city or state financing agency with holders or guarantors of

such notes or bonds.

Upon payment for such obligations issued pursuant to this act by the

original and all subsequent holders inclusion of the foregoing covenant

shall be deemed conclusive evidence of valuable consideration received

by the state and city for such covenant and of reliance upon such pledge

and agreement by any such holder. The state hereby grants any such

benefited holder the right to sue the state in a court of competent

jurisdiction and enforce this covenant and agreement and waives all

rights of defense based on sovereign immunity in such an action or suit.

2. Every such bond or note which shall contain the pledge and

agreement referred to in subdivision one above shall be callable for

redemption commencing not later than the eleventh anniversary of its

date of issuance and shall contain on its face a recital to such effect,

together with the terms and conditions under which such obligation may

be redeemed.

3. The finance board of the city is hereby authorized to enter into

agreements and to make covenants with any purchaser, holder or guarantor

of obligations issued by the city or by a state financing agency to

protect and safeguard the security and rights of a purchaser, holder or

guarantor or to protect and safeguard the source of payment of such

obligations or as deemed appropriate by the finance board which

agreements or covenants may contain provisions providing for (a) (i) the

compliance by the city with any of the provisions of this act or of the

New York City Loan Guaranty Act of nineteen hundred seventy-eight,

Public Law 95-339, or, (ii) in any agreements with the guarantor of such

obligations but only in such agreements unless otherwise authorized by

law, the compliance with any of the terms and conditions required by the

secretary of the treasury pursuant to such act, (b) restrictions on the

issuance by the city of its obligations, limitations on the inclusion of

expense items in its capital budgets and financial records, reporting

and disclosure requirements in addition to any such restrictions,

limitations or requirements contained in this act, (c) compliance by the

city with its financial plan as modified from time to time, (d)

conditions that would give rise to an event of default on such

obligations, and (e) remedies available to a purchaser, holder or

guarantor of such obligations, other than acceleration or the required

elimination or reduction of specific municipal expenditures, including

the circumstances, if any, under which a trustee or trustees or a fiscal

agent may be appointed or may act as a representative of holders of

obligations issued by the city in connection with an issue or issues of

obligations of the city and the rights, powers and duties which may be

vested in such trustee, trustees or fiscal agent as such representative.

The state of New York hereby pledges and agrees that it will take no

action that would impair the power of the city to comply with or to

perform any covenant or agreement made pursuant to this subdivision, or

any right or remedy of a purchaser, holder or guarantor to enforce such

covenant or agreement; and the city or a state financing agency is

hereby authorized to include such pledge and agreement in any agreement

made pursuant to this subdivision. Nothing contained in this subdivision

shall preclude the state from authorizing the city to exercise, or the

city from exercising, any power provided by law to seek application of

laws then in effect under the bankruptcy provisions of the United States

constitution or shall preclude the state from validly exercising its

police powers.

4. Notwithstanding any other provision of law, the trustees of any

retirement, pension or annuity fund or system of the state of New York

or of the city of New York are hereby authorized to enter into

commitments to purchase and to purchase notes, bonds or other

obligations of the city of New York or of a state financing agency, the

payment in whole or in part, of interest, principal, or both, is

guaranteed by the secretary of the Treasury of the United States of

America pursuant to the New York City Loan Guarantee Act of 1978, Public

Law 95-339, as presently in effect or hereafter amended or to purchase

other bonds or notes of such city or of a state financing agency prior

to June thirtieth, nineteen hundred eighty-two, or in the case of the

trustees of any retirement, pension or annuity fund or system of the

city of New York, to enter into commitments to purchase such other bonds

or notes of such city or of a state financing agency prior to June

thirtieth, nineteen hundred eighty-two. Such commitments to purchase

shall be binding upon and enforceable against successor trustees of such

retirement, pension or annuity funds or systems of the state of New York

or city of New York.

5. The secretary of the treasury shall have the right to initiate a

proceeding in the supreme court of the state of New York in and for the

county of New York or the court of claims of the state of New York to

obtain a court order or other relief in connection with any agreements

or other transactions entered into by the secretary relative to his

guarantee of the principal, interest, or both of city indebtedness.

6. Notwithstanding any other provision of law to the contrary, the

governor shall have the authority in connection with any agreement by

the federal government or any agency or instrumentality thereof to

guarantee the payment of the principal of or interest on bonds or notes

issued by the city of New York or by a state financing agency, to enter

into one or more agreements containing terms and conditions required by

the secretary of the treasury pursuant to the New York City Loan

Guarantee Act of 1978, Public Law 95-339, approved by the comptroller

and approved as to form by the attorney general, with the federal

government or any agency or instrumentality thereof with respect to such

guarantee or any matters related thereto and to comply with such terms

and conditions.

7. Nothing in this section contained shall preclude the state from

authorizing the board or the city to exercise, or the board or city from

exercising, any power provided by law to seek application of laws then

in effect under the bankruptcy provisions of the United States

constitution or to preclude the state from a further exercise of its

powers under article eight, section twelve, of the state constitution.

* Terminates July 1, 2035 or § 13