N.Y. NYS Financial Emergency Act for the city of NY 868/75 § 9-a: Establishment and application of a general debt service fund

* § 9-a. Establishment and application of a general debt service fund.

1. Commencing on the first day of the first full fiscal quarter

subsequent to the first sale of a federally guaranteed city obligation,

the city shall establish a general debt service fund for the purpose of

paying debt service due or becoming due in the then current fiscal year

and in subsequent fiscal years. All monies in the fund shall be held by

the comptroller, who shall administer and maintain the fund in

accordance with the provisions of this section.

2. All payments of or on account of real estate taxes or assessments,

other than the proceeds of tax anticipation notes, shall be immediately

upon receipt deposited in such fund. The comptroller shall retain,

disburse and apply monies in the fund during each month as follows:

a. During the first month of each fiscal quarter, there shall be

retained in the fund, subject to the provisions of subdivision three of

this section, all real estate tax payments deposited in the fund until

there shall have been retained from monies so deposited during such

month an amount equal to the total monthly debt service, computed as of

the date of any disbursement of money from the fund, for the second and

third months of such fiscal quarter; provided that such amount shall be

reduced by any amount already on deposit in the fund which may be used

to pay the monthly debt service for such months.

For purposes of this section, fiscal quarter shall mean the

three-month period beginning July first, October first, January first or

April first, and monthly debt service shall mean, as of any date of

computation, the amount of monies equal to the aggregate of (i) all

interest payable during such month on bonds and notes of the city, plus

(ii) the amount of principal (including payments into sinking funds)

maturing or otherwise coming due during such month on all bonds of the

city (excluding principal payments made from sinking funds required by

the terms of certain city bonds), plus (iii) the amount of principal to

be paid on notes of the city during such month from sources other than

the proceeds of bonds or renewal notes (exclusive of revenue

anticipation notes and tax anticipation notes or renewals thereof issued

less than two years prior to the date of computation).

b. During the second and third months of each fiscal quarter, there

shall be retained in the fund, subject to the provisions of subdivision

three of this section, all real estate tax payments deposited in the

fund until there shall have been retained from monies so deposited

during such month an amount equal to the total monthly debt service,

computed as of the date of any disbursement of monies from the fund, for

the first month of the next succeeding fiscal quarter; provided that

such amount shall be reduced by any amount already on deposit in the

fund which may be used to pay the monthly debt service for such month.

c. During any month of a fiscal quarter, after the retentions required

by paragraphs a and b of this subdivision have been made for such month,

the comptroller shall deposit any remaining balance of real estate taxes

received during such month, first into the TAN debt service account to

the extent required under subdivision six of this section, and second

into the board fund to be applied in accordance with procedures of the

board.

d. The city may at any time pay into the fund any monies required by

law to be used to pay monthly debt service and any other monies

available for such purpose.

3. The board may approve, subject to agreements made with the holders

or guarantors of outstanding notes or bonds issued by or for the benefit

of the city after the effective date of this act, criteria for

calculating a proportion of real estate tax receipts to be retained in

the fund in order to provide for the retention of amounts required by

the provisions of subdivision two of this section in lieu of the

retention of all initial receipts as required by such subdivision;

provided, that if the board at any time determines that retentions in

the fund pursuant to the provisions of such subdivision are or are

likely to be insufficient to provide for the payment of monthly debt

service when due, in order to ensure that the amounts on deposit in the

fund will be sufficient to pay monthly debt service when due, the board

shall require (i) that real estate tax receipts be retained in the fund

in greater amounts or at earlier dates than the provisions of such

subdivision require, or (ii) that other revenues or cash resources of

the city be paid into the fund. The board shall consider the impact of

earlier or larger retention of real estate tax receipts on the city's

seasonal borrowing requirements when determining whether it shall

require such additional retention or that other revenues or cash

resources of the city be paid into the fund. Prior to the issuance by

the city of any bonds or notes, the board shall review any criteria then

in effect which determine the proportion of real estate tax receipts to

be retained in the fund to determine whether the proposed debt service

schedule for such bonds or notes is consistent with the monies which

will be available therefor or whether such criteria should be revised.

The board shall from time to time take such action as it determines is

necessary, including disapproval of a proposed issue pursuant to

paragraph f of subdivision one of section seven, so that the monies in

the fund shall be adequate to meet debt service requirements.

4. Commencing on the first day of the second month of the first full

fiscal quarter subsequent to the first sale of a federally guaranteed

city obligation, the payment of monthly debt service shall be made,

first, from amounts retained in the fund. Amounts retained in the fund

shall be used only to pay debt service of the city.

5. Upon the issuance of any tax anticipation notes following the

effective date of this act, the comptroller shall establish and, so long

as any tax anticipation notes shall be outstanding, shall maintain a tax

anticipation note debt service account within the fund for the purpose

of paying the principal of tax anticipation notes.

6. The city shall determine the date on which the principal due or to

become due on an outstanding issue of tax anticipation notes shall equal

ninety percent of the available tax levy with respect to such issue, and

upon reasonable notice thereof the comptroller shall commence on such

date to pay into the TAN debt service account from collections of such

taxes and assessments, after retaining amounts required to be deposited

in the fund, amounts sufficient to pay when due, the principal of such

issue of tax anticipation notes. The payments of the principal of tax

anticipation notes shall be made, first, from amounts retained in the

TAN debt service account.

7. Upon the issuance of any revenue anticipation notes following the

effective date of this act, the comptroller shall establish and, so long

as any revenue anticipation notes shall be outstanding, shall maintain a

revenue anticipation note debt service account within the fund for the

purpose of paying the principal of revenue anticipation notes. Each

specific type of revenue in anticipation of which such notes are issued

and available for such purpose shall be deposited in such account

immediately upon receipt by the city. Where such revenue consists of

state aid or other revenue to be paid to the city by the comptroller, on

the date such revenue is payable to the city, the comptroller shall

deposit such revenue directly into such account in lieu of payment to

the city. All revenues deposited in the RAN debt service account shall

be paid immediately into the board fund except as otherwise provided in

subdivision eight of this section.

8. The city shall determine the date on which the principal due or to

become due on an outstanding issue of revenue anticipation notes shall

equal ninety percent of the total amount of revenue against which such

notes were issued remaining to be paid to the city on or before the

fifth day prior to the maturity date of such notes and upon reasonable

notice thereof the comptroller shall commence on such date to retain in

the RAN debt service account from amounts deposited or to be deposited

therein of each specific type of revenue in anticipation of which

revenue such anticipation notes were issued, an amount sufficient to

pay, when due, the principal of such revenue anticipation notes. Monies

retained in such account shall vest immediately in the comptroller in

trust for the benefit of the holders of the revenue anticipation notes

in anticipation of which such notes were issued. No person having any

claim of any kind in tort, contract or otherwise against such city shall

have any right to or claim against any monies of the state appropriated

by the state and in anticipation of which such notes have been issued,

other than a claim for payment by the holders of such notes, and such

monies shall not be subject to any order, judgment, lien, execution,

attachment, setoff or counter-claim by any such person; provided,

however, that nothing contained in this paragraph shall be construed to

limit, impair, impede or otherwise adversely affect in any manner the

rights or remedies of the purchasers and holders and owners of any bonds

or notes of the state or any agency, instrumentality, public benefit

corporation or political subdivision thereof, including the city of New

York, under which such purchasers and holders and owners have any right

of payment of such bonds or notes by recourse to state aid or local

assistance monies held by the state or for the payment of which bonds or

notes state aid or local assistance monies are a designated source. The

payment of the principal of revenue anticipation notes shall be made

first from amounts retained in the RAN debt service account.

9. Whenever the amount contained in the TAN debt service account or

the RAN debt service account exceeds the amount required to be retained

in such account such excess monies, including earnings on investments of

monies in the fund, shall be withdrawn from such account and paid into

the board fund.

10. Subject to agreements made with holders or guarantors of

outstanding notes or bonds issued by or for the benefit of the city

after the effective date of this act, the comptroller shall invest the

monies retained in the fund in accordance with law.

11. The limitations imposed upon the city by this section shall be in

addition to any limitations imposed upon the city under the local

finance law. In the event any provisions of the local finance law shall

be inconsistent with the provisions of this section, the provisions of

this section shall prevail. The requirements of this section shall not

apply to any note of the city held by the municipal assistance

corporation for the city of New York to the extent that such corporation

has evidenced its intention not to present such notes for payment during

the fiscal year in which the determination is made provided that such

notes were held by such corporation on June thirtieth, nineteen hundred

seventy-eight or were issued in exchange for or in refunding or renewal

of notes held by such corporation on such date.

12. Notwithstanding any other provision of this section, the city may,

at any time, subject to approval by the comptroller, designate a trust

company or bank having its principal place of business in the state of

New York and having the powers of a trust company in the state of New

York to hold all or any part of the monies in the fund and to administer

and maintain the monies so held in accordance with the applicable

provisions of this section and any agreements made pursuant thereto.

* Terminates July 1, 2035 or ... see § 13