N.Y. Public Authorities Law § 1291: Reserve funds and appropriations

§ 1291. Reserve funds and appropriations. 1. The corporation may

create and establish one or more reserve funds to be known as debt

service reserve funds and may pay into such debt service reserve funds

(a) any monies appropriated and made available by the state for the

purposes of such funds, (b) any proceeds of sale of notes or bonds, to

the extent provided in the resolution of the corporation authorizing the

issuance thereof, and (c) any other monies which may be made available

to the corporation for the purpose of such funds from any other source

or sources. The monies held in or credited to any debt service reserve

fund established under this section, except as hereinafter provided,

shall be used solely for the payment of the principal of bonds of the

corporation secured by such debt service reserve fund as the same mature

or as payments required by the terms of any contracts therefor as

sinking fund payments become due, the purchase of such bonds of the

corporation, the payment of interest on such bonds of the corporation or

the payment of any redemption premium required to be paid when such

bonds are redeemed prior to maturity; provided however, that the

corporation shall have power to provide 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shall not be withdrawn therefrom at any time in such amount as would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 maximum amount of any

sinking fund payments becoming due and principal and interest maturing

and becoming due in any succeeding calendar year on the bonds of the

corporation then outstanding and secured by such debt service reserve

fund, except for the purpose of paying any sinking fund payments

becoming due and principal of and interest on such bonds of the

corporation secured by such debt service reserve fund maturing and

becoming due and for the payment of which other monies of the

corporation are not available. Any income or interest earned by, or

increment to, any such debt service reserve fund due to the investment

thereof may be transferred by the corporation to any other fund or

account of the corporation and the corporation shall have power to

provide that any such transfer shall not reduce the amount of such debt

service reserve fund below the maximum amount of any sinking fund

payments becoming due and principal and interest maturing and becoming

due in any succeeding calendar year on all bonds of the corporation then

outstanding and secured by such debt service reserve fund.

2. The corporation shall not issue bonds at any time if the maximum

amount of any sinking fund payments becoming due and principal and

interest maturing and becoming due in any succeeding calendar year on

the bonds outstanding and then to be issued and secured by a debt

service reserve fund will exceed the amount of such debt service reserve

fund at the time of issuance, unless the corporation, at the time of the

issuance of such bonds, shall deposit in such debt service reserve fund

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

which, together with the amount then in such debt service reserve fund,

will be not less than the maximum amount of any sinking fund payments

becoming due and principal and interest maturing and becoming due in any

succeeding calendar year on the bonds then to be issued and on all other

bonds of the corporation then outstanding and secured by such debt

service reserve fund.

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

for the carrying out of the public purposes of this title, provision is

made in subdivision one of this section for the accumulation in each

debt service reserve fund of an amount equal to the maximum amount of

any sinking fund payments becoming due and principal and interest

maturing and becoming due in any succeeding calendar year as determined

by the corporation on all bonds of the corporation then outstanding and

secured by such debt service reserve fund. In order further to assure

the maintenance of such debt service reserve funds in the respective

amounts provided therefor by the corporation in the issuance of its

bonds secured thereby, there shall be annually apportioned and paid to

the corporation for deposit in each such debt service reserve fund such

amount, if any, as shall be certified by the chief executive officer of

the corporation to the governor and director of the budget as necessary

to restore such debt service reserve fund to an amount equal to the

maximum amount provided therefor by the corporation as aforesaid. The

chief executive officer of the corporation shall annually, on or before

December first, make and deliver to the governor and director of the

budget his certificate stating the amount, if any, required to restore

each debt service reserve fund to the amount aforesaid and the amount or

amounts so certified, if any, shall be apportioned and paid to the

corporation during the then current state fiscal year. The principal

amount of bonds secured by a debt service reserve fund or funds to which

state funds are apportionable pursuant to this subdivision shall be

limited to the total amount of bonds and notes outstanding on the

effective date of this act, plus the total amount of bonds and notes

contracted after the effective date of this act to finance projects in

progress on the effective date of this act as determined by the New York

state public authorities control board created pursuant to section fifty

of this chapter whose affirmative determination shall be conclusive as

to all matters of law and fact solely for the purposes of the

limitations contained in this subdivision, but in no event shall the

total amount of bonds so secured by such a debt service reserve fund or

funds exceed forty million five hundred thirteen thousand dollars,

excluding bonds issued to refund such outstanding bonds until the date

of redemption of such outstanding bonds. As outstanding bonds so secured

are paid, the amount so secured shall be reduced accordingly but the

redemption of such outstanding bonds from the proceeds of refunding

bonds shall not reduce the amount so secured.

4. For the purposes of this section, "maximum amount of any sinking

fund payments becoming due and principal and interest maturing and

becoming due in any succeeding year" means, as of the date of

computation, the largest amount of money required in any succeeding year

for the payment of interest on and maturing principal of outstanding

bonds and payments required by the terms of any contracts to be made to

any sinking fund established for the payment or redemption of such

bonds, provided that the principal amount of any bonds required to be

made to any such sinking fund during any year shall, for the purposes of

this definition, be considered as maturing in the year during which such

payment is required and not in the year in which the stated maturity of

such bonds occurs. In computing the amount of any debt service 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, or if

purchased at less than par, at their cost to the corporation.