N.Y. Private Housing Finance Law § 655: Notes and bonds of the corporation

§ 655. Notes and bonds of the corporation. 1. (a) Subject to the

provisions of section six hundred fifty-six of this article, the

corporation shall have power and is hereby authorized to issue from time

to time its negotiable notes and bonds in conformity with applicable

provisions of the uniform commercial code in such principal amount as

the corporation shall determine to be necessary to provide sufficient

funds for achieving its corporate purposes, including the making of

mortgage loans, the payment of interest on notes and bonds of the

corporation, the establishment of reserves to secure such notes and

bonds, and the payment of all operating expenses of the corporation

incident to or necessary or convenient to carry out its corporate

purposes and powers.

(b) The corporation shall have the power, from time to time, to issue

(i) notes to renew notes and (ii) bonds to pay notes, including the

interest thereon and, whenever it deems refunding expedient, to refund

any bonds by the issuance of new bonds, whether the bonds to be refunded

have or have not matured, and to issue bonds partly to refund bonds then

outstanding and partly for any of its corporate purposes. The refunding

bonds may be exchanged for the bonds to be refunded or sold and the

proceeds applied to the purchase, redemption or payment of such bonds.

(c) Except as may otherwise be expressly provided by the corporation,

every issue of its notes and bonds shall be general obligations of the

corporation payable out of any revenues of the corporation, subject only

to any agreements with the holders of particular notes or bonds pledging

any particular revenues.

2. The notes and bonds shall be authorized by resolution or

resolutions of the corporation, shall bear such date or dates and shall

mature at such time or times as such resolution or resolutions may

provide, except that no note or any renewal thereof shall mature more

than five years, and in the case of any note or any renewal thereof

issued for the purposes of making mortgage loans shall mature more than

nine years, after the date of issue of the original note and no bond

shall mature more than fifty years from the date of its issue. The

bonds may be issued as serial bonds payable in annual installments or as

term bonds or as a combination thereof. The notes and bonds shall bear

interest at such rate or rates, be in such denominations, be in such

form, either coupon or registered, carry such registration privileges,

be executed in such manner, be payable in such medium of payment, at

such place or places, and be subject to such terms of redemption as such

resolution or resolutions may provide. The notes and bonds may be sold

by the corporation at public or private sale, at such price or prices as

the corporation shall determine; provided, however, that the corporation

shall consult with the comptroller as to the timing of any sale; and

provided further that no notes or bonds of the corporation may be sold

at a private sale unless such sale and the terms thereof have been

approved in writing by (a) the comptroller, where such sale is not to

the comptroller, or (b) the director of the budget, where such sale is

to the comptroller.

3. Any resolution or resolutions authorizing any notes or bonds or any

issue thereof may contain provisions, which shall be a part of the

contract or contracts with the holders thereof, as to:

(a) pledging all or any part of the revenues to secure the payment of

the notes or bonds or of any issue thereof, subject to such agreements

with noteholders or bondholders as may then exist;

(b) pledging all or any part of the assets of the corporation,

including mortgages and obligations securing the same, to secure the

payment of the notes or bonds or of any issue of notes or bonds, subject

to such agreements with noteholders or bondholders as may then exist;

(c) the use and disposition of the gross income from mortgages owned

by the corporation and payment of principal of mortgages owned by the

corporation;

(d) the setting aside of reserves or sinking funds and the regulation

and disposition thereof;

(e) limitations on the purpose to which the proceeds of sale of notes

or bonds may be applied and pledging such proceeds to secure the payment

of the notes or bonds or of any issue thereof;

(f) limitations on the issuance of additional notes or bonds; the

terms upon which additional notes or bonds may be issued and secured;

and the refunding of outstanding or other notes or bonds;

(g) the procedure, if any, by which the terms of any contract with

noteholders or bondholders may be amended or abrogated, the amount of

notes or bonds the holders of which must consent thereto, and the manner

in which such consent may be given;

(h) limitations on the amount of moneys to be expended by the

corporation for operating expenses of the corporation;

(i) vesting in a trustee or trustees such property, rights, powers and

duties in trust as the corporation may determine, which may include any

or all of the rights, powers and duties of the trustee appointed by the

bondholders pursuant to this article, and limiting or abrogating the

right of the bondholders to appoint a trustee under this article or

limiting the rights, powers and duties of such trustee;

(j) the acts or omissions to act which shall constitute a default in

the obligations and duties of the corporation to the holders of the

notes or bonds and providing for the rights and remedies of the holders

of the notes or bonds in the event of such default, including the right

to appointment of a receiver; providing, however, that such rights and

remedies shall not be inconsistent with the general laws of the state

and the other provisions of this article;

(k) any other matters, of like or different character, which in any

way affect the security or protection of the holders of the notes or

bonds.

3-a. Any resolution or resolutions authorizing any notes or bonds or

any issue thereof shall contain provisions, which shall be a part of the

contract or contracts with the holders thereof, ensuring that no

mortgage loan shall be made by the corporation from the proceeds of such

notes or bonds or issue thereof unless the estimated revenues from the

mortgaged property, including any subsidies, shall be sufficient in

amount to secure repayment of the loan and the interest thereon and to

pay all other necessary expenses of the mortgagor relating to such

property.

4. Any pledge made by the corporation shall be valid and binding from

the time when the pledge is made; the revenues or property so pledged

and thereafter received by the corporation shall immediately be subject

to the lien of such pledge without any physical delivery thereof or

further act, and the lien of any such pledge shall be valid and binding

as against all parties having claims of any kind in tort, contract or

otherwise against the corporation, irrespective of whether such parties

have notice thereof. Neither the resolution nor any other instrument by

which a pledge is created need be recorded.

5. Neither the members of the corporation nor any other person

executing such notes or bonds shall be subject to any personal liability

or accountability by reason of the issuance thereof.

6. The corporation, subject to such agreements with noteholders or

bondholders as may then exist, shall have power out of any funds

available therefor, to purchase notes or bonds of the corporation, which

shall thereupon be cancelled, at a price not exceeding

(a) if the notes or bonds are then redeemable, the redemption price

then applicable plus accrued interest to the next interest payment date

thereon, or

(b) if the notes or bonds are not then redeemable, the redemption

price applicable on the first date after such purchase upon which the

notes or bonds become subject to redemption plus accrued interest to

such date.

7. In the discretion of the corporation, the bonds may be secured by a

trust indenture by and between the corporation and a corporate trustee,

which may be any trust company or bank having the powers of a trust

company in the state. Such trust indenture may contain such provisions

for protecting and enforcing the rights and remedies of the bondholders

as may be reasonable and proper and not in violation of law, including

covenants setting forth the duties of the corporation in relation to the

exercise of its corporate powers and the custody, safeguarding and

application of all moneys. The corporation may provide by such trust

indenture for the payment of the proceeds of the bonds and the revenues

to the trustee under such trust indenture or other depository, and for

the method of disbursement thereof, with such safeguards and

restrictions as it may determine. All expenses incurred in carrying out

such trust indenture may be treated as a part of the operating expenses

of the corporation. If the bonds shall be secured by a trust indenture,

the bondholders shall have no authority to appoint a separate trustee to

represent them.

8. Whether or not the notes and bonds are of such form and character

as to be negotiable instruments under the terms of the uniform

commercial code, the notes and bonds are hereby made negotiable

instruments within the meaning of and for all the purposes of the

uniform commercial code, subject only to the provisions of the notes and

bonds for registration.