N.Y. Private Housing Finance Law § 656: Reserve funds and appropriations

§ 656. Reserve funds and appropriations. 1. a. The corporation shall

create and establish special funds (herein referred to as capital

reserve funds) and shall pay into such a capital reserve fund (1) any

moneys appropriated and made available by the state or city for the

purpose of such fund, (2) any proceeds of sale of notes or bonds, to the

extent provided in the resolution or resolutions of the corporation

authorizing the issuance thereof, and (3) any other moneys which may be

made available to the corporation for the purpose of such fund from any

other source or sources. All moneys held in a capital reserve fund,

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

the payment of the principal of bonds as the same mature or the annual

sinking fund payments, the purchase or redemption of bonds, the payment

of interest on bonds or the payment of any redemption premium required

to be paid when such bonds are redeemed prior to maturity; provided,

however, that moneys in such fund shall not be withdrawn therefrom at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 maximum capital reserve fund requirement, except for the

purposes of paying interest on bonds, principal of bonds and annual

sinking fund payments, as the same become due and for the payment of

which other moneys of the corporation are not available. Any income or

interest earned by, or increment to, a capital reserve fund due to the

investment thereof or any amount in excess of the maximum capital

reserve fund requirement may be transferred by the corporation to other

funds or accounts of the corporation to the extent it does not reduce

the amount of such capital reserve fund below the maximum capital

reserve fund requirement.

b. The corporation shall not issue bonds at any time if upon issuance

the amount in the capital reserve fund will be less than the maximum

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

issuance of such bonds, shall deposit in such fund from the proceeds of

the bonds so to be issued, or otherwise, an amount which, together with

the amount then in such fund, will not be less than the maximum capital

reserve fund requirement.

c. No bonds or notes of the corporation shall be issued if upon such

issuance the aggregate principal amount of bonds and notes of the

corporation then outstanding exceeds the lesser of twenty-two billion

dollars or such amount as would cause the maximum capital reserve fund

requirement to exceed eighty-five million dollars; provided that, in

determining such aggregate principal amounts there shall be deducted:

(i) all sums then available for the payment of such bonds or notes

either at maturity or through the operation of a sinking fund; (ii) the

aggregate principal amount of outstanding bonds issued: (a) to refund

notes; and (b) to refund bonds, theretofore issued and then outstanding;

and (iii) the aggregate principal amount of outstanding notes issued to

renew notes theretofore issued and then outstanding. The provisions of

the prior sentence notwithstanding, the corporation shall not issue

bonds if such issuance shall cause the maximum reserve fund requirement

to exceed thirty million dollars unless prior to such issuance the

senate and assembly shall have adopted a concurrent resolution passed by

the votes of a majority of all the members elected to each such house

and, subsequent thereto, the governor shall evidence in writing the

governor's agreement with such resolution to the chairperson of the

corporation, which resolution shall be in full force and effect on the

date of issuance of the bonds, permitting the maximum capital reserve

fund requirement to equal or exceed the amount of the maximum capital

reserve fund requirement which would be effective upon the issuance of

the bonds in question, but in no event shall the maximum capital reserve

fund requirement exceed eighty-five million dollars.

d. In computing the amount of a capital reserve fund for the purposes

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

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

at other than par, at amortized value. Amortized value, when used with

respect to securities purchased at a premium above or a discount below

par, shall mean the value as of any given date obtained by dividing the

total premium or discount at which such securities were purchased by the

number of interest payments remaining to maturity on such securities

after such purchase and by multiplying the amount so calculated by the

number of interest payment dates having passed since the date of such

purchase; and (i) in the case of securities purchased at a premium by

deducting the product thus obtained from the purchase price, and (ii) in

the case of securities purchased at a discount by adding the product

thus obtained to the purchase price.

e. To assure the continued operation and solvency of the corporation

for the carrying out of its corporate purposes, provision is made in

paragraph a of this subdivision for the accumulation in each capital

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

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

reserve fund, there shall be paid by the city to the corporation for

deposit in each capital reserve fund on or before the first day of

April, in each year, such amount, if any, needed for the purpose of

restoring each such capital reserve fund to the maximum capital reserve

fund requirement for such fund, as shall be certified by the chairperson

of the corporation to the mayor and the director of management and

budget on or before the first day of December next preceding; provided

that any such amount shall have been first appropriated by or on behalf

of the city for such purpose or shall have been otherwise made available

from the proceeds of notes or bonds of the city authorized and issued

pursuant to the local finance law for such purpose, which is hereby

determined to be a specific object or purpose having a period of

probable usefulness of five years. In the event of the failure or

inability of the city to pay over to the corporation, in full, on or

before such first day of April the amount so certified the chairperson

of the corporation shall forthwith certify to the comptroller of the

state of New York the amount remaining unpaid and thereupon the state

comptroller shall pay to the corporation, out of the first moneys

available for the next succeeding payments of (i) state aid apportioned

to the city of New York as per capita aid for the support of local

government pursuant to section fifty-four of the state finance law or

(ii) such other aid or assistance payable by the state to the city and

not otherwise allocated as shall supersede or supplement such state per

capita aid, including federal moneys apportioned to the city by the

state, such amount remaining unpaid, after giving written notice to the

director of management and budget of each amount to be paid out of such

state aid, until the amount in each such capital reserve fund is

restored to the maximum capital reserve fund requirement thereof;

provided, however, that prior to the issuance of any notes or bonds of

the corporation pursuant to this article the city shall have enacted a

local law authorizing payments from such sources into such a fund so

long as any notes or bonds of the corporation shall be outstanding and

unpaid, and provided further that moneys, if any, payable to the city

university construction fund pursuant to the provisions of the city

university construction fund act shall be paid, in full, to such fund,

prior to any payments therefrom to the corporation. Any amount so paid

over to the corporation shall be deducted from the corresponding

apportionment of such per capita state aid otherwise payable to the city

of New York, and shall not obligate the state to make nor entitle the

city to receive any additional apportionment or payment of per capita

state aid. All amounts paid over to the corporation as provided in this

paragraph, including amounts paid by the state comptroller out of

payments of such state aid, shall constitute and be accounted for as

non-interest bearing loans by the city to the corporation and, subject,

subordinate and junior to the rights of the holders of any notes or

bonds of the corporation theretofore or thereafter issued, shall be

repaid to the city from (i) moneys in such capital reserve fund in

excess of the maximum capital reserve fund requirement thereof or (ii)

any moneys of the corporation not required for any other of its

corporate purposes.

f. In the event the chairperson of the corporation shall certify to

the mayor and director of management and budget or to the state

comptroller any amount necessary to restore a capital reserve fund to

the maximum capital reserve fund requirement thereof pursuant to

subdivision e of this section, the chairperson shall simultaneously

deliver to such persons a statement of the cause or causes of such

capital reserve fund deficiency and the measures to be taken by the

corporation or the department of housing preservation and development to

insure repayment of any loans made by the city to the corporation,

including amounts paid by the state comptroller out of payments of state

aid, for the purpose of restoring such capital reserve fund to the

maximum capital reserve fund requirement thereof and to prevent the

recurrence of any such deficiency.

2. Notwithstanding the provisions of subdivision one hereof, the

corporation may issue bonds for any of its corporate purposes, without

making any deposit in a capital reserve fund and the provisions of

subdivision one of section six hundred fifty-six of this article shall

not apply to such bonds and the principal of and interest on such bonds

shall not be payable from or secured by any capital reserve fund.

3. The corporation shall create and establish such other fund or funds

as may be necessary or desirable for its corporate purposes.