N.Y. Public Authorities Law § 1128*2: Bonds of the authority

* § 1128. Bonds of the authority. 1. The authority shall have the

power and is hereby authorized from time to time to issue bonds in such

principal amounts as it may determine to be necessary to pay the cost of

any project or for any other corporate purpose, including incidental

expenses in connection therewith. The authority shall have power from

time to time to refund any bonds by the issuance of new bonds, whether

the bonds to be refunded have or have not matured, and may issue bonds

partly to refund bonds then outstanding and partly for any other

corporate purpose. Bonds issued by the authority may be general

obligations secured by the faith and credit of the authority or may be

special obligations payable solely out of particular revenues or other

moneys as may be designated in the proceedings of the authority under

which the bonds shall be authorized to be issued, subject only to any

agreements with the holders of outstanding bonds pledging any particular

revenues, earnings or moneys.

2. The authority is authorized to obtain from any insurer or financial

institution any insurance, guaranty or other credit support device, to

the extent now or hereafter available, as to, or for the payment or

repayment of interest or principal, or both, or any part thereof, on any

bonds issued by the authority and to enter into any agreement or

contract with respect to any such insurance, guaranty or other credit

support device, except to the extent that the same would in any way

impair or interfere with the ability of the authority to perform and

fulfill the terms of any agreement made with the holders of outstanding

bonds of the authority.

3. (a) Bonds shall be authorized by resolution of the authority, be in

such denominations, bear such date or dates and mature at such time or

times as such resolution may provide, except that bonds and any renewals

thereof shall mature within forty years from the date of their original

issuance and notes and any renewals thereof shall mature within five

years from the date of their original issuance. Bonds shall be subject

to such terms of redemption, bear interest at such rate or rates per

annum, which may vary from time to time, as may be necessary to effect

the sale thereof and shall be payable at such times, be in such form,

carry such registration privileges, be executed in such manner, be

subject to tender to the authority, with or without extinction or

cancellation, be payable in such medium of payment at such place or

places, and be subject to such terms and conditions as such resolution

may provide. Bonds may be sold at public or private sale for such price

or prices as the authority shall determine, provided that no bonds of

the authority may be sold by the authority at private sale unless such

sale and the terms thereof have been approved in writing by the

comptroller, where such sale is not to be to such comptroller, or by the

state director of the budget, where such sale is to be to the

comptroller.

(b) The state comptroller shall promulgate rules in conformance with

the state administrative procedure act governing the sale on a

negotiated basis of bonds, notes and certificates of participation by

public authorities and public benefit corporations made subject to such

rules by law. No such sale by the authority on a negotiated basis shall

be conducted without prior approval of the state comptroller except as

provided in such rules, which shall set forth the circumstances under

which such approval shall not be required. Such rules shall be reviewed

at least annually and updated as may be necessary. The corporation shall

annually deliver to the senate finance committee, the assembly ways and

means committee and the director of the division of the budget a report

listing all such sales conducted in the previous year, including but not

limited to the name of the issuer, the amount of the issue, the interest

rate and interest cost per year for each such sale.

(c) Agreements for credit enhancement. (1) The authority is hereby

authorized and empowered to enter into such agreements as it deems

reasonable and appropriate, with any department or agency of the United

States of America, the state, or any other financially responsible

party, to facilitate the issuance, sale, resale and payment of bonds,

notes, or other evidences of indebtedness of the authority, including,

but not limited to letters of credit, lines of credit, revolving credit,

bond insurance or other credit enhancements. Such agreements may provide

for: (i) the advance or advances of funds on behalf of the authority to

pay bonds, notes or other evidences of indebtedness of the authority on

their date or dates of maturity or redemption; and (ii) the

reimbursement of such advance or advances by the authority.

(2) Such agreements may be executed on or before the date of issuance

of the obligations to be paid pursuant thereto, provided, however, that

any reimbursement obligation of the authority shall be deemed

indebtedness of the authority; (i) only as of the date that the

corresponding advance is made pursuant to subparagraph one of this

paragraph; and (ii) only in the amount of the advance made pursuant to

such subparagraph. Such agreements may include a pledge by the authority

of its faith and credit for the payment of any indebtedness deemed to be

contracted as set forth in this paragraph, and may provide that any such

indebtedness arising from a reimbursement obligation contracted pursuant

to this section shall be paid in accordance with the terms of such

agreement. Such indebtedness shall be excluded in ascertaining the power

of the authority to contract indebtedness pursuant to this chapter. Such

agreements shall also include such terms and conditions as the authority

shall deem appropriate, including provisions for the payment of

reasonable fees by the authority in return for a commitment to advance

funds pursuant to such agreement. Such fees shall be deemed part of the

cost of the object or purpose in connection with which they are

incurred.

(3) Prior to procurement of any credit or liquidity enhancements, the

authority shall, to the extent practicable:

(i) consider the ability of the credit or liquidity enhancement

provider to make required payments as and when due under the terms of

the appropriate governing instruments;

(ii) consider the business reputation of the credit or liquidity

enhancement provider;

(iii) consider the maximum term of the credit or liquidity enhancement

relative to the maturity of the bonds, notes or other obligations being

credit or liquidity enhanced;

(iv) provide for the right of substitution for the credit or liquidity

enhancement provider in all agreements, including a provision permitting

such substitution when the rating of the credit or liquidity enhancement

provider falls below the probable credit rating of the issue without

considering the credit or liquidity enhancer; and

(v) consider the cost of the credit or liquidity enhancement relative

to the savings or other benefit likely to be achieved through the

utilization of the credit or liquidity enhancement.

(4) Where the credit or liquidity enhancement procured is an

irrevocable letter of credit or an acquisition arrangement with a

liquidity enhancer, such instrument shall be:

(i) issued or confirmed by a bank holding company or its direct

subsidiaries, a federally chartered bank or its subsidiaries, or a state

chartered bank or its subsidiaries, licensed or authorized to do

business in this state; and

(ii) issued or confirmed by an agency or branch of a foreign banking

institution licensed to do business in this state with total worldwide

assets in excess of five billion dollars.

(5) Any such issuing banking organization referred to in subparagraph

four of this paragraph shall meet the regulatory guidelines for capital

adequacy as promulgated by the appropriate federal banking agency as

defined in the Federal Deposit Insurance Act, 12 U.S.C. 1813(q).

(6) Where the credit or liquidity enhancement procured is provided by

an insurance company, such insurer shall be licensed to write financial

guarantee insurance in this state.

(7) The failure of the authority to comply with subparagraphs three

through six of this paragraph shall not invalidate or impair any credit

or liquidity enhancement contract or instrument.

4. Any resolution or resolutions authorizing bonds or any issue of

bonds may contain provisions which may be a part of the contract with

the holders of the bonds thereby authorized as to:

(a) pledging all or any part of the revenues of the authority,

together with any other moneys or property of the authority, to secure

the payment of the bonds, subject to such agreements with bondholders as

may then exist;

(b) the setting aside of reserves and the creation of sinking funds

and the regulation and disposition thereof;

(c) limitations on the purpose to which the proceeds from the sale of

bonds may be applied;

(d) the rates, rents, fees and other charges to be fixed and collected

by the authority and the amount to be raised in each year thereby, and

the use and disposition of revenues;

(e) limitations on the right of the authority to restrict and regulate

the use of any project or part hereof in connection with which bonds are

issued;

(f) limitations on the issuance of additional bonds, the terms upon

which additional bonds may be issued and secured and the refunding of

outstanding or other bonds;

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

bondholders may be amended or abrogated, including the portion of

bondholders which must consent thereto, and the manner in which such

consent may be given;

(h) the creation of special funds into which any revenues or moneys

may be deposited;

(i) the terms and provisions of any trust, deed, mortgage or indenture

securing the bonds under which the bonds may be issued;

(j) vesting in a trustee or trustees such properties, rights, powers

and duties in trust as the authority may determine which may include any

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

bondholders pursuant to section one thousand one hundred twenty-nine of

this title and limiting or abrogating the rights of the bondholders to

appoint a trustee under such section or limiting the rights, duties and

powers of such trustee;

(k) defining the acts or omissions to act which may constitute a

default in the obligations and duties of the authority to the

bondholders and providing for the rights and remedies of the bondholders

in the event of such default, including as a matter of right the

appointment of a receiver, provided, however, that such rights and

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

and other provisions of this title;

(l) limitations on the power of the authority to sell or otherwise

dispose of any project or any part thereof;

(m) limitations on the amount of revenues and other moneys to be

expended for operating, administrative or other expenses of the

authority;

(n) the payment of the proceeds of bonds, revenues and other moneys to

a trustee or other depository, and for the method of disbursement

thereof with such safeguards and restrictions as the authority may

determine; and

(o) any other matters of like or different character which may in any

way affect the security or protection of the bonds or the rights and

remedies of bondholders.

5. In addition to the powers herein conferred upon the authority to

secure its bonds, the authority shall have power in connection with the

issuance of bonds to enter into such agreements as the authority may

deem necessary, convenient or desirable concerning the use or

disposition of its revenues or other moneys or property, including the

mortgaging of any of its properties and the entrusting, pledging or

creation of any other security interest in any such revenues, moneys or

properties and the doing of any act (including refraining from doing any

act) which the authority would have to do in the absence of such

agreements. The authority shall have power to enter into amendments of

any such agreements within the powers granted to the authority by this

title and to perform such agreements. The provisions of any such

agreements may be made a part of the contract with the holders of bonds

of the authority.

6. Any provision of the uniform commercial code to the contrary

notwithstanding, any pledge of or other security interest in revenues,

moneys, accounts, contract rights, general intangibles or other personal

property made or created by the authority shall be valid, binding and

perfected from the time such pledge is made or other security interest

attaches without any physical delivery of the collateral or further act,

and the lien of any such pledge, or other security interest shall be

valid, binding and perfected against all parties having claims of any

kind in tort, contract or otherwise against the authority irrespective

of whether or not such parties have notice thereof. No instrument by

which such a pledge or security interest is created nor any financing

statement need be recorded or filed.

7. Whether or not the bonds are of such form and character as to be

negotiable instruments under the terms of the uniform commercial code,

the 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 bonds for registration.

8. Neither the members of the authority nor any person executing bonds

shall be liable personally thereon or be subject to any personal

liability or accountability by reason of the issuance thereof.

9. The authority, subject to such agreements with bondholders as then

may exist, shall have power out of any moneys available therefor to

purchase bonds of the authority, which shall thereupon be cancelled at a

price not exceeding; (i) if the bonds are then redeemable, the

redemption price then applicable plus accrued interest to the next

interest payment date, or (ii) if the bonds are not then immediately

redeemable then the redemption price applicable on the first date after

such purchase upon which the bonds become subject to redemption, plus

accrued interest to the next interest payment date.

* NB There are 2 § 1128's