N.Y. NYS Project Finance Agency Act7/75 § 7: Reserve funds and appropriations

§ 7. Reserve funds and appropriations.

1. (a) For the purposes of the issuance by the agency of bonds, the

term "capital reserve fund requirement" shall mean, as of any particular

date of computation, with respect to each capital reserve fund of the

agency an amount of money equal to the greatest of the respective

amounts, for the then current or any succeeding calendar year, of annual

debt service payments of the agency on the bonds secured by such capital

reserve fund, such annual debt service payments for any calendar year

being an amount of money equal to the aggregate of the following with

respect to all such bonds of the agency outstanding on said date of

computation; (i) all interest payable during such calendar year, plus

(ii) the principal amount which matures (net of any sinking fund

payments payable in prior years) during such calendar year, plus (iii)

the amount of all sinking fund payments payable during such calendar

year; and the term "sinking fund payment" shall mean the amount of money

specified in the resolution authorizing term bonds as payable into a

sinking fund for the amortization of such term bonds. The agency may

create and establish one or more special funds to be known as capital

reserve funds and may pay into each such reserve fund (1) any monies

appropriated and made available by the state for the purposes of such

fund, (2) any proceeds of sale of notes or bonds, to the extent provided

in the resolution of the agency authorizing the issuance thereof, and

(3) any other monies which may be made available to the agency for the

purposes of such fund from any other source or sources. The monies held

in or credited to any capital reserve fund established under this

subdivision, except as hereinafter provided, shall be used solely for

the payment of the principal of bonds of the agency secured by such

reserve fund, as the same mature, sinking fund payments with respect to

such bonds of the agency, the purchase of such bonds of the agency, the

payment of interest on such bonds of the agency, or the payment of any

redemption premium required to be paid when such bonds are redeemed

prior to maturity; provided, however, that monies in any such fund shall

not be withdrawn therefrom at any time in such amount as would reduce

the amount of such fund to less than the capital reserve fund

requirement, except for the purpose of paying principal and interest on

the bonds of the agency secured by such reserve fund maturing and

becoming due or any sinking fund payments with respect to such bonds and

for the payment of which other monies of the agency are not available.

Any income or interest earned by, or increment to, any capital reserve

fund due to the investment thereof may be transferred to any other fund

or account of the agency to the extent it does not reduce the amount of

such capital reserve fund below the capital reserve fund requirement.

(b) The agency shall not issue bonds at any time if upon issuance, the

amount in the capital reserve fund securing such bonds will be less than

the capital reserve fund requirement unless the agency, at the time of

issuance of such bonds shall deposit in such reserve fund from the

proceeds of the bonds so to be issued, or otherwise, an amount which

together with the amount then in such reserve fund, will be not less

than the capital reserve fund requirement.

(c) To assure the continued operation and solvency of the agency for

the carrying out of the public purposes of this act, provision is made

in paragraph (a) of this subdivision for the accumulation in each

capital reserve fund of an amount equal to the capital reserve fund

requirement. In order further to assure the maintenance of each such

capital reserve fund, there shall be annually apportioned and paid to

the agency for deposit in each capital reserve fund such sum, if any, as

shall be certified by the chairman of the agency to the governor and

director of the budget as necessary to restore such reserve fund to an

amount equal to the capital reserve fund requirement. The chairman of

the agency shall annually, on or before December first, make and deliver

to the governor and director of the budget his certificate stating the

sum or sums, if any, required to restore each such capital reserve fund

to the amount aforesaid and the sums so certified, if any, shall be

apportioned and paid to the agency during the then current state fiscal

year.

(d) In computing any capital reserve fund for the purposes of this

section, securities in which all or a portion of such reserve fund shall

be invested shall be valued at par if purchased at par, or if purchased

at other than par, at amortized value. As used herein "amortized value"

shall mean, when used with respect to securities purchased at a premium

above or a discount below par, the value as of any given date obtained

by dividing the total amount of the premium or discount at which such

securities were purchased by the number of days remaining to maturity on

such securities at the time of such purchase and by multiplying the

amount so calculated by the number of days having passed since the date

of such purchase; and (a) in the case of securities purchased at a

premium, by deducting the product thus obtained from the purchase price,

and (b) in the case of securities purchased at a discount, by adding the

product thus obtained to the purchase price.

2. The agency may create and establish one or more special funds

(herein each referred to as a general reserve fund) and shall pay into

each such fund, to the extent required by agreements with holders of

bonds or notes secured by such fund, all fees and charges collected by

the agency pursuant to subdivision fourteen of section five of this act

and any monies which the agency shall transfer from the related capital

reserve fund pursuant to the provisions of paragraph (a) of subdivision

one of this section. Such monies and any other monies paid into a

general reserve fund may, in the discretion of the agency, but subject

to agreement with bondholders or noteholders, be used by the agency (a)

for the repayment of advances from the state in accordance with the

provisions of repayment agreements between the agency and the director

of the budget, (b) to reimburse the division of housing and community

renewal the reasonable costs of the services performed by the

commissioner and the division pursuant to the provisions of this act,

(c) to pay all costs, expenses and charges of financing, including fees

and expenses of trustees and paying agents, (d) for transfers to the

related capital reserve fund, (e) for the payment of principal and

interest on bonds or notes issued by the agency and secured by such

general reserve fund when the same shall become due whether at maturity

or on call for redemption and for the payment of any redemption premium

required to be paid where such bonds or notes are redeemed prior to

their stated maturities and any sinking fund payments, and to purchase

such bonds or notes issued by the agency, or (f) for such other

corporate purposes of the agency as the agency in its discretion shall

determine and provide.

3. (a) This subdivision shall be applicable if the agency shall issue

notes (herein called "secured notes") secured by the pledge and

assignment of assets or revenues of the agency, with provision under

certain circumstances for amortization of the principal amount of such

notes over a period of years. Upon the issuance of any secured notes,

and if necessary upon the actual commencement of amortization of

principal, the agency shall determine the amount which, notwithstanding

the actual terms of such notes for payment of interest and principal or

for the application thereto of receipts from the pledged assets or

revenues, would then be required to be provided as hypothetical monthly

level debt service payments in order to pay the stated interest on and

to amortize the maximum principal amount of the secured notes over the

longest period of years then allowed for full amortization of principal

under the terms of the secured notes. The aggregate for all secured

notes of the portion of such hypothetical level debt service payments

that would be payable in any twelve consecutive months during such

period of amortization thereof, but in no event an amount greater than

twenty per cent of the maximum principal amount of the secured notes, as

of any particular date of computation, is herein called the "note

service requirement" of the agency.

(b) The agency shall create and establish a special fund to be known

as the "note service reserve fund," and upon the issuance of any secured

notes shall create and deposit therein note payment certificates (herein

called "note payment certificates") in an aggregate principal amount

equal to the note service requirement as then computed. Any note payment

certificates that are in excess of the note service requirement upon a

recomputation of such requirement shall be withdrawn from such fund and

cancelled. Note payment certificates shall be obligations of the agency,

issuable and re-issuable in any denominations, deliverable as further

evidence of and security for unpaid amounts of interest or principal on

secured notes which are not paid when due because the agency has

insufficient funds available to make such payments in cash, bearing

interest to the same extent as the unpaid amounts of interest or

principal on the secured notes in connection with which they are

delivered continue to accrue interest, and redeemable by the agency upon

payment in cash of the principal amount of the redeemed note payment

certificates plus any interest accrued thereon from date of delivery to

date of redemption. Any note payment certificates so redeemed, or an

equal principal amount of certificates created in replacement thereof,

shall be redeposited in the note service reserve fund, to the extent

necessary to cause the principal amount deposited in such reserve fund

to equal the note service requirement, as then computed, and any excess

note payment certificates redeemed shall be cancelled. The note service

reserve fund may be maintained with any trustee or agent for the holders

of secured notes and the note payment certificates may be deposited with

such trustee or agent to be held in trust prior to delivery thereof as

further security for the payment of principal of or interest on the

secured notes when due. Such trustee or agent shall have no obligation

to realize upon any pledged assets or revenues either prior to

delivering note payment certificates upon the failure of the agency to

pay interest or principal when due or thereafter and prior to redemption

of such certificates. However, any realization upon any pledged assets

or revenues and any other payments made on account of the secured notes

shall be applied to the payments of principal of or interest on the

secured notes (including redemption of delivered note payment

certificates) in the order in which such payments originally became due.

The proceeds of each redemption of note payment certificates shall be

applied as payment of an equivalent amount of overdue principal of or

interest on the secured notes.

(c) In order to assure the availability of funds to maintain the note

service reserve fund at an amount equal to the note service requirement

of the agency, there shall be annually apportioned and paid to the

agency, for application exclusively to the redemption of delivered note

payment certificates, such sum, if any, as shall be certified by the

chairman of the agency to the governor and director of the budget as

estimated to be necessary to redeem by the end of the then current state

fiscal year all note payment certificates theretofore delivered and not

redeemed by payment in full of the principal amount thereof and any

interest accrued thereon. The chairman of the agency shall annually, on

or before December first, make and deliver to the governor and director

of the budget his certificate stating the sum, if any, estimated to be

required to redeem all such note payment certificates as aforesaid by

the end of the then current state fiscal year, and the sum so certified,

if any, shall be apportioned and paid to the agency during the then

current state fiscal year. Upon its receipt of such payment from the

state, the agency shall immediately apply such payment, to the extent

thereof, to the redemption of outstanding note payment certificates.