N.Y. Rapid Transit Law § 41: Contract for maintenance and operation

§ 41. Contract for maintenance and operation. a. If in the opinion of

the board of estimate and the mayor, a contract for the equipment,

maintenance and operation as provided for in the preceding section shall

be inexpedient, impracticable or prejudical to the public interest, the

board of transportation, with the approval of the board of estimate and

the mayor, may equip such road in whole or in part, or purchase power

for operation thereof, for and at the public expense, by contract

therefor subject to the provisions of section seventeen of this chapter,

and enter into a contract with any person, who or which in the opinion

of such board of transportation shall be best qualified to fulfill and

carry out such contract for the maintenance and operation of such road

for a term of not to exceed ten years to be specified in such contract.

The provisions of the foregoing sections in respect of contracts for the

equipment, maintenance and operation of such road shall apply to such

contract for maintenance and operation so far as such provisions are

pertinent and applicable thereto except that the renewal or renewals of

such contract provided for therein shall not exceed ten years in the

aggregate.

b. Every grant or contract made under the provisions of this chapter,

as part of which the city shall have a right to terminate any right or

franchise or any contract for maintenance and operation of any railroad,

shall provide that if at any time in ascertaining the amount to be paid

by the city as a condition of such termination or at the expiration of

the full term, it shall be necessary that a valuation of any plant,

property, equipment, construction or any investment in any thereof,

shall be determined, such valuation shall in default of agreement be

determined by arbitration or by the court. Every such grant or contract

shall also make provision to assure supervision by the board of

transportation of all operations of such grantee or contractor in and

about such enterprise and for keeping and for access to and examination,

use and production of any and all books, records and memoranda of such

operations, not only of the grantee or contractor but of any contractor,

sub-contractor, banker or person furnishing money, material or supplies

directly or indirectly to such enterprise, to the extent that such

books, records and memoranda have to do therewith, and for ascertaining

the cost to the grantee or contractor and the value of any equipment,

property or construction furnished or done pursuant to such grant or

contract, including permanent additions to construction from time to

time and for a method of determining the amount of such cost forthwith

upon the furnishing or completion of the same by arbitration or by the

court in default of an agreement upon the amount thereof. The grant or

contract may provide that if the amounts to be paid to the grantee or

contractor upon any such termination shall not have been finally

determined or paid prior to or at the time when the termination is under

such notice given to take effect the title to and right of possession of

the property, and the right of possession of such railroad may

nevertheless pass to the city or to a new contractor, and that the city

or such new contractor having given proper and sufficient sureties shall

pay to the contractor the amount so determined, with interest from the

time aforesaid.

c. Every grant or contract made under the provisions of this chapter

by the terms of which the city in lieu of rental shall be entitled to a

portion of income or increase derived from the enterprise shall make

provision for definition and determination from time to time of the

items to be included in operating expenses, taxes, payments to reserve

and amortization funds and for the percentages or amounts to be set

aside therefor and for interest upon construction cost. The board of

transportation shall prescribe in the grant or contract a period for

amortization by the grantee or contractor of the actual cost of plant

and property other than equipment, or actual cost to the contractor of

the construction of such road and the period so prescribed shall end

with the term of the grant. Any and all sums of money received by the

city from or under any grant or contract made under the provisions of

the rapid transit act or this chapter, over and above such sum as is

required by law to be paid into a sinking fund to meet the payment of

interest or principal on city bonds issued for construction and

equipment of any railroad pursuant to any such contract, and except any

sum of money that may be contributed toward the construction of any road

by the contractor having the contract for the equipment and operation of

such road, shall be kept separate and apart from any and all other

moneys of such city and paid into a fund to be known as the rapid

transit fund, and shall be applied under the direction of the board of

estimate with the approval of the mayor only to or toward the

construction of railroads, or the purchase of plant and property or

equipment of railroads, pursuant to the provisions of this chapter, or

to deficiencies in the operation or rental of railroads owned by the

city, or in the operation of railroads owned and operated by the city

pursuant to this chapter.

d. Unless otherwise provided by law the board of transportation, with

the approval of the board of estimate and the mayor, shall have and

exercise the powers, rights and privileges reserved or given to the city

to terminate any right, privilege, franchise, authority or contract

granted or entered into, or which may be exercised under the provisions

of this chapter, and may do and perform any and all things requisite and

necessary to any such termination.