NY State Senate Bill 2013-S5199

Senate Bill S5199

2013-2014 Legislative Session

Relates to the general debt service fund of the city of New York and a statutory lien and pledge and agreement

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Archive: Last Bill Status - In Senate Committee Local Government Committee

Introduced
- In Committee Assembly
- In Committee Senate
- On Floor Calendar Assembly
- On Floor Calendar Senate
- Passed Assembly
- Passed Senate
Delivered to Governor
Signed By Governor

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	Assembly Actions - Lowercase Senate Actions - UPPERCASE
Jan 08, 2014	referred to local government
May 14, 2013	referred to local government

2013-S5199 (ACTIVE) - Details

Current Committee:: Senate Local Government
Law Section:: Local Finance Law
Laws Affected:: Amd §85.00, add §85.85, Loc Fin L

2013-S5199 (ACTIVE) - Summary

Relates to the general debt service fund of the city of New York; relates to a statutory lien, pledge and agreement in connection with such fund; requires the city of New York to maintain a debt service fund for the purposes of paying the debt service due or becoming due in the then current fiscal year; provides that all amounts retained in the funds be used solely to pay the debt service of the city and that such funds be pledged to the holders of the notes and bonds.

2013-S5199 (ACTIVE) - Sponsor Memo

                                BILL NUMBER:S5199

TITLE OF BILL:  An act to amend the local finance law, in relation to
the general debt service fund of the city of New York and a statutory
lien and pledge and agreement in connection therewith

PURPOSE:

To authorize the City to maintain a general debt services fund
administered by the State Comptroller. This fund would be used to pay
debt service obligations.

SUMMARY OF PROVISIONS:

Section 1. Findings

Section 2. amends section 85.00 of the local finance law by making the
new section 85.85 applicable to the City of New York and only
applicable to the City of New York

Section 3. amends the local finance law by adding a new section 85.85.
This section imports certain general debt service fund provisions from
the Financial Emergency Act and makes those provisions permanent. In
addition, the changes would create a statutory lien on the fund in
favor of the City's bondholders, and would authorize a pledge and
agreement of the State to the holder of City debt relating to

preservation of the general debt service fund and the statutory lien.

JUSTIFICATION:

The City of New York carries out a large capital program in order to
maintain and improve its aging infrastructure and frequently issues
debt in the capital markets in order to finance its capital programs.
The funding mechanism for City general obligation debt service put in
place by the Financial Emergency Act included the creation of a
general debt service fund maintained by the State Comptroller. This
bill would amend the Local Finance Law to provide for a permanent
general debt service fund and create a statutory lien in favor of
bondholders on that fund; it would also authorize a pledge and
agreement of State in relation to the fund lien. These provisions
would assist the City in the marketing of the bonds, improve the
perception of the City's debt by the credit rating agencies and
investors, and lower the City's cost of borrowing.

The general debt service fund is a unique feature of the City's credit
and has long been viewed favorably by investors and rating agencies,
the changes provided for in this bill would significantly enhance its
value to the City bondholders.

LEGISLATIVE HISTORY:

None.

FISCAL IMPLICATIONS:

To be determined.


LOCAL FISCAL IMPLICATIONS:

To be determined.

EFFECTIVE DATE:

This act shall take effect immediately.

2013-S5199 (ACTIVE) - Bill Text download pdf

                            
                    S T A T E   O F   N E W   Y O R K
________________________________________________________________________

                                  5199

                       2013-2014 Regular Sessions

                            I N  S E N A T E

                              May 14, 2013
                               ___________

Introduced  by  Sen.  FELDER -- read twice and ordered printed, and when
  printed to be committed to the Committee on Local Government

AN ACT to amend the local finance law, in relation to the  general  debt
  service  fund  of the city of New York and a statutory lien and pledge
  and agreement in connection therewith

  THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND  ASSEM-
BLY, DO ENACT AS FOLLOWS:

  Section 1. Findings. The legislature has previously found and declared
that  a state of financial emergency exists within the city of New York.
The legislature further finds and declares that the assurance of  timely
payment of monthly debt service by the city is and will continue to be a
matter  of  overriding  state  concern,  and  that it is appropriate and
desirable for the legislature to implement and reinforce the  provisions
of  sections two, ten and twelve of article eight of the state constitu-
tion to strengthen such assurance and to control  the  exercise  of  the
political  and  governmental  powers of the city by granting a statutory
lien on a portion of the real estate tax payments in the city.
  S 2. Section 85.00 of the local finance law, as amended by chapter 777
of the laws of 1978, is amended to read as follows:
  S 85.00 Limitation of provisions; emergency period.  No provisions  of
this  title,  other  than  [section]  SECTIONS 85.80 AND 85.85, shall be
applicable to the city of New York.  The provisions of this title  shall
be  applicable  (a)  only  to a municipality, other than the city of New
York, with respect to which the legislature has declared that a state of
financial emergency exists, and (b) only during such emergency period as
may be specified by the legislature for any municipality, other than the
city of New York[,]; provided, however, that the provisions  of  section
85.80  of this title shall apply to any municipality, including the city
of New York, at any time, AND THE  PROVISIONS  OF  SECTION  85.85  SHALL
APPLY  ONLY  TO  THE  CITY OF NEW YORK.  As used in this title, the term
"emergency financial control board" shall mean  any  such  board  estab-

 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                      [ ] is old law to be omitted.
                                                           LBD10680-01-3

S. 5199                             2

lished  by  state law for the municipality, and the term "covered organ-
ization" shall mean any such organization as defined in the act  declar-
ing  that  a  state of financial emergency exists for such municipality.
Nothing  contained in this title shall be construed to limit or stay any
emergency financial control board from doing any act  or  commencing  or
continuing  any  action  or  special proceeding against or involving the
municipality or any covered organization.
  S 3. The local finance law is amended by adding a new section 85.85 to
read as follows:
  S 85.85 GENERAL DEBT SERVICE FUND; PLEDGE AND AGREEMENT OF THE  STATE.
A. AS USED IN THIS SECTION, THE FOLLOWING WORDS AND TERMS SHALL HAVE THE
FOLLOWING  MEANINGS UNLESS THE CONTEXT SHALL INDICATE ANOTHER OR DIFFER-
ENT MEANING OR INTENT.
  1. "COMPTROLLER" MEANS THE COMPTROLLER OF THE STATE OF NEW YORK.
  2. "CITY" MEANS THE CITY OF NEW YORK.
  3. "FISCAL QUARTER" MEANS THE THREE-MONTH PERIOD BEGINNING JULY FIRST,
OCTOBER FIRST, JANUARY FIRST, OR APRIL FIRST.
  4. "MONTHLY DEBT SERVICE" MEANS, AS OF ANY DATE  OF  COMPUTATION,  THE
AMOUNT  OF  MONIES  EQUAL  TO  THE AGGREGATE OF (I) ALL INTEREST PAYABLE
DURING THE MONTH FOR WHICH THE COMPUTATION IS MADE ON BONDS AND NOTES OF
THE CITY, PLUS (II) THE AMOUNT OF  PRINCIPAL  (INCLUDING  PAYMENTS  INTO
SINKING FUNDS) MATURING OR OTHERWISE COMING DUE DURING SUCH MONTH ON ALL
BONDS  OF THE CITY (EXCLUDING PRINCIPAL PAYMENTS MADE FROM SINKING FUNDS
REQUIRED BY THE TERMS OF CERTAIN CITY BONDS), PLUS (III) THE  AMOUNT  OF
PRINCIPAL TO BE PAID ON NOTES OF THE CITY DURING SUCH MONTH FROM SOURCES
OTHER  THAN THE PROCEEDS OF BONDS OR RENEWAL NOTES (EXCLUSIVE OF REVENUE
ANTICIPATION NOTES AND TAX ANTICIPATION NOTES OR RENEWALS THEREOF ISSUED
LESS THAN TWO YEARS PRIOR TO THE DATE OF COMPUTATION).
  5. "FUND" MEANS THE GENERAL DEBT SERVICE FUND ESTABLISHED PURSUANT  TO
PARAGRAPH B OF THIS SECTION.
  6.  "TAN  DEBT  SERVICE  ACCOUNT" MEANS THE TAX ANTICIPATION NOTE DEBT
SERVICE ACCOUNT ESTABLISHED WITHIN THE FUND PURSUANT TO PARAGRAPH  B  OF
THIS SECTION.
  7. "RAN DEBT SERVICE ACCOUNT" MEANS THE REVENUE ANTICIPATION NOTE DEBT
SERVICE  ACCOUNT  ESTABLISHED WITHIN THE FUND PURSUANT TO PARAGRAPH B OF
THIS SECTION.
  8. "AVAILABLE TAX LEVY" WITH RESPECT TO AN ISSUE OF  TAX  ANTICIPATION
NOTES  MEANS  AT  ANY  DATE OF COMPUTATION THE TOTAL AMOUNT OF CITY REAL
ESTATE TAXES OR ASSESSMENTS PROJECTED TO  BE  RECEIVED  IN  CASH  ON  OR
BEFORE  THE  FIFTH  DAY  PRECEDING  THE MATURITY DATE OF SUCH TAX ANTIC-
IPATION NOTE ISSUE, LESS AMOUNTS REQUIRED DURING THE PERIOD BETWEEN  THE
DATE OF COMPUTATION AND THE FIFTH DAY PRECEDING SUCH MATURITY DATE TO BE
PAID  INTO  THE  FUND  OR  OTHERWISE REQUIRED TO PAY INTEREST PAYABLE ON
OTHER OUTSTANDING CITY BONDS AND NOTES,  PRINCIPAL  (INCLUDING  PAYMENTS
INTO  SINKING  FUNDS) COMING DUE ON OUTSTANDING CITY BONDS AND PRINCIPAL
TO BE PAID FROM SOURCES OTHER THAN THE  PROCEEDS  OF  BONDS  OR  RENEWAL
NOTES ON OTHER OUTSTANDING CITY NOTES (EXCLUSIVE OF REVENUE ANTICIPATION
NOTES  OR  RENEWALS THEREOF ISSUED LESS THAN TWO YEARS PRIOR TO THE DATE
OF COMPUTATION) BUT NOT INCLUDING PAYMENTS FROM SINKING  FUNDS  REQUIRED
BY  THE  TERMS  OF CERTAIN CITY BONDS. FOR THE PURPOSES OF THIS SUBDIVI-
SION, SUCH AMOUNTS REQUIRED SHALL NOT INCLUDE PRINCIPAL OF  OR  INTEREST
ON  ANY  NOTES  OF THE CITY HELD BY THE MUNICIPAL ASSISTANCE CORPORATION
FOR THE CITY OF NEW  YORK  TO  THE  EXTENT  THAT  SUCH  CORPORATION  HAS
EVIDENCED ITS INTENTION NOT TO PRESENT SUCH NOTES FOR PAYMENT OF PRINCI-
PAL OR INTEREST DURING THE FISCAL YEAR IN WHICH THE COMPUTATION IS MADE,
PROVIDED  THAT  SUCH NOTES WERE HELD BY SUCH CORPORATION ON JUNE THIRTI-

S. 5199                             3

ETH, NINETEEN HUNDRED SEVENTY-EIGHT OR WERE ISSUED IN EXCHANGE FOR OR IN
REFUNDING OR RENEWAL OF NOTES HELD BY SUCH CORPORATION ON SUCH DATE.
  B. THE CITY SHALL MAINTAIN A GENERAL DEBT SERVICE FUND FOR THE PURPOSE
OF  PAYING  DEBT  SERVICE DUE OR BECOMING DUE IN THE THEN CURRENT FISCAL
YEAR AND IN SUBSEQUENT FISCAL YEARS. ALL MONIES IN  THE  FUND  SHALL  BE
HELD  BY  THE COMPTROLLER, WHO SHALL ADMINISTER AND MAINTAIN THE FUND IN
ACCORDANCE WITH THE PROVISIONS OF THIS SECTION.
  1. ALL PAYMENTS OF OR ON ACCOUNT OF REAL ESTATE TAXES OR  ASSESSMENTS,
OTHER  THAN THE PROCEEDS OF TAX ANTICIPATION NOTES, SHALL BE IMMEDIATELY
UPON RECEIPT DEPOSITED IN  SUCH  FUND.  THE  COMPTROLLER  SHALL  RETAIN,
DISBURSE AND APPLY MONIES IN THE FUND DURING EACH MONTH AS FOLLOWS:
  (A)  DURING  THE  FIRST  MONTH  OF EACH FISCAL QUARTER, THERE SHALL BE
RETAINED IN THE FUND ALL REAL ESTATE TAX PAYMENTS DEPOSITED IN THE  FUND
UNTIL  THERE  SHALL  HAVE  BEEN RETAINED FROM MONIES SO DEPOSITED DURING
SUCH MONTH AN AMOUNT EQUAL TO THE TOTAL MONTHLY DEBT  SERVICE,  COMPUTED
AS  OF  THE  DATE  OF  ANY  DISBURSEMENT OF MONEY FROM THE FUND, FOR THE
SECOND AND THIRD MONTHS OF  SUCH  FISCAL  QUARTER;  PROVIDED  THAT  SUCH
AMOUNT  SHALL  BE  REDUCED  BY ANY AMOUNT ALREADY ON DEPOSIT IN THE FUND
WHICH MAY BE USED TO PAY THE MONTHLY DEBT SERVICE FOR SUCH MONTHS.
  (B) DURING THE SECOND AND THIRD MONTHS OF EACH FISCAL  QUARTER,  THERE
SHALL  BE RETAINED IN THE FUND ALL REAL ESTATE TAX PAYMENTS DEPOSITED IN
THE FUND UNTIL THERE SHALL HAVE BEEN RETAINED FROM MONIES  SO  DEPOSITED
DURING  SUCH  MONTH  AN  AMOUNT EQUAL TO THE TOTAL MONTHLY DEBT SERVICE,
COMPUTED AS OF THE DATE OF ANY DISBURSEMENT OF MONIES FROM THE FUND, FOR
THE FIRST MONTH OF THE NEXT SUCCEEDING  FISCAL  QUARTER;  PROVIDED  THAT
SUCH  AMOUNT  SHALL  BE  REDUCED BY ANY AMOUNT ALREADY ON DEPOSIT IN THE
FUND WHICH MAY BE USED TO PAY THE MONTHLY DEBT SERVICE FOR SUCH MONTH.
  (C) DURING ANY  MONTH  OF  A  FISCAL  QUARTER,  AFTER  THE  RETENTIONS
REQUIRED BY SUBPARAGRAPHS (A) AND (B) OF THIS SUBDIVISION HAVE BEEN MADE
FOR  SUCH  MONTH, THE COMPTROLLER SHALL DEPOSIT ANY REMAINING BALANCE OF
REAL ESTATE TAXES RECEIVED DURING SUCH MONTH, FIRST INTO  THE  TAN  DEBT
SERVICE  ACCOUNT  TO  THE EXTENT REQUIRED UNDER SUBDIVISION FOUR OF THIS
PARAGRAPH, AND SECOND INTO THE GENERAL FUND OF THE CITY OR OTHERWISE  IN
ACCORDANCE WITH LAW.
  (D)  THE CITY MAY AT ANY TIME PAY INTO THE FUND ANY MONIES REQUIRED BY
LAW TO BE USED TO PAY MONTHLY DEBT SERVICE AND ANY OTHER  MONIES  AVAIL-
ABLE FOR SUCH PURPOSE.
  2.  THE  PAYMENT  OF  MONTHLY  DEBT SERVICE SHALL BE MADE, FIRST, FROM
AMOUNTS RETAINED IN THE FUND. AMOUNTS RETAINED IN THE FUND (EXCLUSIVE OF
THE TAN DEBT SERVICE ACCOUNT AND THE RAN DEBT SERVICE ACCOUNT) SHALL  BE
USED ONLY TO PAY MONTHLY DEBT SERVICE OF THE CITY AND, PENDING THIS USE,
SHALL  BE  PLEDGED  TO AND HELD IN TRUST FOR (AND A LIEN THEREON, AND ON
THE RIGHT TO RECEIVE THE REAL ESTATE TAX PAYMENTS AS LONG  AS  BONDS  OR
NOTES ARE OUTSTANDING, IS HEREBY GRANTED IN FAVOR OF) THE HOLDERS OF THE
BONDS AND NOTES OF THE CITY. NOTWITHSTANDING THE UNIFORM COMMERCIAL CODE
OR  ANY OTHER LAW TO THE CONTRARY, THE PLEDGE, TRUST AND LIEN CREATED BY
THIS SUBDIVISION SHALL BE  VALID,  BINDING,  PERFECTED  AND  ENFORCEABLE
WITHOUT ANY SECURITY AGREEMENT, NOR ANY PHYSICAL DELIVERY OF THE COLLAT-
ERAL OR FURTHER ACT, AND THE LIEN SHALL BE VALID, BINDING, PERFECTED AND
ENFORCEABLE  AGAINST  ANY PURCHASERS OF THE FUND OR THE RIGHT TO RECEIVE
SUCH PAYMENTS AND ALL  PARTIES  HAVING  CLAIMS  OF  ANY  KIND  IN  TORT,
CONTRACT  OR  OTHERWISE AGAINST THE CITY, IRRESPECTIVE OF WHETHER OR NOT
SUCH PURCHASERS OR PARTIES HAVE NOTICE THEREOF. THE LIEN OF THIS  SUBDI-
VISION  ON  AMOUNTS IN THE FUND AND THE RIGHT TO RECEIVE REAL ESTATE TAX
PAYMENTS ARISES SOLELY BY FORCE OF THIS STATUTE AND IS NOT TO BE CREATED
OR PROVIDED FOR, NOR MAY IT BE LIMITED, BY ANY AGREEMENT.  NO  AGREEMENT

S. 5199                             4

OR  OTHER  INSTRUMENT BY WHICH SUCH LIEN IS CREATED OR PROVIDED FOR NEED
BE EXECUTED NOR SHALL ANY FINANCING STATEMENT BE RECORDED OR FILED.
  3.  UPON  THE  ISSUANCE OF ANY TAX ANTICIPATION NOTES, THE COMPTROLLER
SHALL ESTABLISH AND, SO LONG AS ANY  TAX  ANTICIPATION  NOTES  SHALL  BE
OUTSTANDING,  SHALL  MAINTAIN A TAN DEBT SERVICE ACCOUNT WITHIN THE FUND
FOR THE PURPOSE OF PAYING THE PRINCIPAL OF TAX ANTICIPATION NOTES.
  4. THE CITY SHALL DETERMINE THE DATE ON WHICH THE PRINCIPAL DUE OR  TO
BECOME DUE ON AN OUTSTANDING ISSUE OF TAX ANTICIPATION NOTES SHALL EQUAL
NINETY PERCENT OF THE AVAILABLE TAX LEVY WITH RESPECT TO SUCH ISSUE, AND
UPON  REASONABLE  NOTICE  THEREOF THE COMPTROLLER SHALL COMMENCE ON SUCH
DATE TO PAY INTO THE TAN DEBT SERVICE ACCOUNT FROM COLLECTIONS  OF  SUCH
TAXES  AND ASSESSMENTS, AFTER RETAINING AMOUNTS REQUIRED TO BE DEPOSITED
IN THE FUND, AMOUNTS SUFFICIENT TO PAY WHEN DUE THE  PRINCIPAL  OF  SUCH
ISSUE  OF  TAX  ANTICIPATION NOTES. THE PAYMENTS OF THE PRINCIPAL OF TAX
ANTICIPATION NOTES SHALL BE MADE, FIRST, FROM AMOUNTS  RETAINED  IN  THE
TAN DEBT SERVICE ACCOUNT.
  5.  UPON  THE  ISSUANCE  OF  ANY REVENUE ANTICIPATION NOTES, THE COMP-
TROLLER SHALL ESTABLISH AND, SO LONG AS ANY REVENUE  ANTICIPATION  NOTES
SHALL  BE  OUTSTANDING, SHALL MAINTAIN A RAN DEBT SERVICE ACCOUNT WITHIN
THE FUND FOR THE PURPOSE OF PAYING THE PRINCIPAL OF REVENUE ANTICIPATION
NOTES. EACH SPECIFIC TYPE OF REVENUE IN ANTICIPATION OF WHICH SUCH NOTES
ARE ISSUED AND AVAILABLE FOR SUCH PURPOSE SHALL  BE  DEPOSITED  IN  SUCH
ACCOUNT  IMMEDIATELY  UPON  RECEIPT  BY  THE  CITY.  WHERE  SUCH REVENUE
CONSISTS OF STATE AID OR OTHER REVENUE TO BE PAID TO  THE  CITY  BY  THE
COMPTROLLER,  ON THE DATE SUCH REVENUE IS PAYABLE TO THE CITY, THE COMP-
TROLLER SHALL DEPOSIT SUCH REVENUE DIRECTLY INTO SUCH ACCOUNT IN LIEU OF
PAYMENT TO THE CITY.
  6. THE CITY SHALL DETERMINE THE DATE ON WHICH THE PRINCIPAL DUE OR  TO
BECOME  DUE  ON AN OUTSTANDING ISSUE OF REVENUE ANTICIPATION NOTES SHALL
EQUAL NINETY PERCENT OF THE TOTAL AMOUNT OF REVENUE AGAINST  WHICH  SUCH
NOTES  WERE  ISSUED  REMAINING  TO  BE PAID TO THE CITY ON OR BEFORE THE
FIFTH DAY PRIOR TO THE MATURITY DATE OF SUCH NOTES AND  UPON  REASONABLE
NOTICE  THEREOF THE COMPTROLLER SHALL COMMENCE ON SUCH DATE TO RETAIN IN
THE RAN DEBT SERVICE ACCOUNT FROM AMOUNTS DEPOSITED OR TO  BE  DEPOSITED
THEREIN OF EACH SPECIFIC TYPE OF REVENUE IN ANTICIPATION OF WHICH REVEN-
UE  SUCH  ANTICIPATION  NOTES  WERE ISSUED, AN AMOUNT SUFFICIENT TO PAY,
WHEN DUE, THE PRINCIPAL  OF  SUCH  REVENUE  ANTICIPATION  NOTES.  MONIES
RETAINED  IN  SUCH  ACCOUNT SHALL VEST IMMEDIATELY IN THE COMPTROLLER IN
TRUST FOR THE BENEFIT OF THE HOLDERS OF THE REVENUE  ANTICIPATION  NOTES
IN  ANTICIPATION  OF  WHICH SUCH NOTES WERE ISSUED. NO PERSON HAVING ANY
CLAIM OF ANY KIND IN TORT, CONTRACT OR OTHERWISE AGAINST SUCH CITY SHALL
HAVE ANY RIGHT TO OR CLAIM AGAINST ANY MONIES OF THE STATE  APPROPRIATED
BY  THE  STATE AND IN ANTICIPATION OF WHICH SUCH NOTES HAVE BEEN ISSUED,
OTHER THAN A CLAIM FOR PAYMENT BY THE HOLDERS OF SUCH  NOTES,  AND  SUCH
MONIES  SHALL  NOT  BE  SUBJECT TO ANY ORDER, JUDGMENT, LIEN, EXECUTION,
ATTACHMENT, SETOFF OR COUNTER-CLAIM BY ANY SUCH PERSON; PROVIDED, HOWEV-
ER, THAT NOTHING CONTAINED IN  THIS  PARAGRAPH  SHALL  BE  CONSTRUED  TO
LIMIT,  IMPAIR,  IMPEDE  OR OTHERWISE ADVERSELY AFFECT IN ANY MANNER THE
RIGHTS OR REMEDIES OF THE PURCHASERS AND HOLDERS AND OWNERS OF ANY BONDS
OR NOTES OF THE STATE OR ANY  AGENCY,  INSTRUMENTALITY,  PUBLIC  BENEFIT
CORPORATION  OR POLITICAL SUBDIVISION THEREOF, INCLUDING THE CITY, UNDER
WHICH SUCH PURCHASERS AND HOLDERS AND OWNERS HAVE ANY RIGHT  OF  PAYMENT
OF  SUCH  BONDS  OR  NOTES  BY RECOURSE TO STATE AID OR LOCAL ASSISTANCE
MONIES HELD BY THE STATE OR FOR THE PAYMENT  OF  WHICH  BONDS  OR  NOTES
STATE  AID  OR  LOCAL  ASSISTANCE  MONIES  ARE  A DESIGNATED SOURCE. THE

S. 5199                             5

PAYMENT OF THE PRINCIPAL OF REVENUE ANTICIPATION  NOTES  SHALL  BE  MADE
FIRST FROM AMOUNTS RETAINED IN THE RAN DEBT SERVICE ACCOUNT.
  7.  WHENEVER  THE  AMOUNT CONTAINED IN THE TAN DEBT SERVICE ACCOUNT OR
THE RAN DEBT SERVICE ACCOUNT EXCEEDS THE AMOUNT REQUIRED TO BE  RETAINED
IN  SUCH  ACCOUNT, SUCH EXCESS MONIES, INCLUDING EARNINGS ON INVESTMENTS
OF MONIES IN THE FUND, SHALL BE WITHDRAWN FROM  SUCH  ACCOUNT  AND  PAID
INTO THE GENERAL FUND OF THE CITY OR OTHERWISE IN ACCORDANCE WITH LAW.
  8.  SUBJECT TO AGREEMENTS MADE WITH HOLDERS OR GUARANTORS OF OUTSTAND-
ING NOTES OR BONDS ISSUED BY OR FOR THE BENEFIT OF THE CITY,  THE  COMP-
TROLLER  SHALL INVEST THE MONIES RETAINED IN THE FUND IN ACCORDANCE WITH
LAW.
  9. NOTWITHSTANDING ANY OTHER PROVISION OF THIS PARAGRAPH, THE CITY MAY
AT ANY TIME, SUBJECT TO APPROVAL BY THE COMPTROLLER, DESIGNATE  A  TRUST
COMPANY  OR  BANK HAVING ITS PRINCIPAL PLACE OF BUSINESS IN THE STATE OF
NEW YORK AND HAVING THE POWERS OF A TRUST COMPANY IN THE  STATE  OF  NEW
YORK  TO HOLD (IN TRUST AND SUBJECT TO A LIEN TO THE EXTENT SPECIFIED IN
SUBDIVISION TWO OF THIS PARAGRAPH) ALL OR ANY PART OF THE MONIES IN  THE
FUND  AND  TO  ADMINISTER  AND MAINTAIN THE MONIES SO HELD IN ACCORDANCE
WITH THE APPLICABLE PROVISIONS OF THIS SECTION AND ANY  AGREEMENTS  MADE
PURSUANT THERETO.
  C. 1. IN THE EVENT THAT ANY NOTES OR BONDS ARE ISSUED BY THE CITY, AND
IN  ADDITION  TO  ANY  OTHER  PLEDGE OR AGREEMENT AUTHORIZED BY LAW, THE
STATE OF NEW YORK HEREBY AUTHORIZES THE CITY TO  INCLUDE  A  PLEDGE  AND
AGREEMENT  OF  THE  STATE  OF NEW YORK IN ANY AGREEMENT MADE BY THE CITY
WITH HOLDERS OR GUARANTORS OF SUCH NOTES OR BONDS OF THE CITY  THAT  THE
STATE WILL NOT TAKE ANY ACTION WHICH WILL SUBSTANTIALLY IMPAIR THE INDE-
PENDENT  MAINTENANCE  OF A SEPARATE FUND FOR THE PAYMENT OF DEBT SERVICE
ON BONDS AND NOTES OF THE CITY, OR THE STATUTORY LIEN CREATED BY  SUBDI-
VISION  TWO  OF PARAGRAPH B OF THIS SECTION; PROVIDED, HOWEVER, THAT THE
FOREGOING PLEDGE AND AGREEMENT SHALL BE OF NO FURTHER FORCE  AND  EFFECT
IF  AT ANY TIME (I) THERE IS ON DEPOSIT IN A SEPARATE TRUST ACCOUNT WITH
A BANK, TRUST COMPANY OR OTHER FIDUCIARY  SUFFICIENT  MONEYS  OR  DIRECT
OBLIGATIONS OF THE UNITED STATES OR OBLIGATIONS GUARANTEED BY THE UNITED
STATES, THE PRINCIPAL OF AND/OR INTEREST ON WHICH WILL PROVIDE MONEYS TO
PAY  PUNCTUALLY WHEN DUE AT MATURITY OR PRIOR TO MATURITY BY REDEMPTION,
IN ACCORDANCE WITH THEIR TERMS, ALL PRINCIPAL OF  AND  INTEREST  ON  ALL
OUTSTANDING  NOTES  AND  BONDS  OF  THE  CITY CONTAINING THIS PLEDGE AND
AGREEMENT AND IRREVOCABLE INSTRUCTIONS FROM THE CITY TO SUCH BANK, TRUST
COMPANY OR OTHER FIDUCIARY FOR SUCH PAYMENT OF SUCH PRINCIPAL AND INTER-
EST WITH SUCH MONEYS SHALL HAVE BEEN  GIVEN,  OR  (II)  SUCH  NOTES  AND
BONDS, TOGETHER WITH INTEREST THEREON, HAVE BEEN PAID IN FULL AT MATURI-
TY  OR  HAVE OTHERWISE BEEN REFUNDED, REDEEMED, DEFEASED, OR DISCHARGED;
AND PROVIDED FURTHER THAT THE FOREGOING PLEDGE AND AGREEMENT SHALL BE OF
FULL FORCE AND EFFECT UPON ITS INCLUSION IN ANY AGREEMENT  MADE  BY  THE
CITY WITH HOLDERS OR GUARANTORS OF SUCH NOTES OR BONDS.
  2.  UPON  PAYMENT FOR SUCH OBLIGATIONS ISSUED PURSUANT TO THIS SECTION
BY THE ORIGINAL AND ALL SUBSEQUENT HOLDERS, INCLUSION OF  THE  FOREGOING
COVENANT  SHALL  BE DEEMED CONCLUSIVE EVIDENCE OF VALUABLE CONSIDERATION
RECEIVED BY THE STATE AND CITY FOR SUCH COVENANT AND  OF  RELIANCE  UPON
SUCH  PLEDGE  AND  AGREEMENT BY ANY SUCH HOLDER. THE STATE HEREBY GRANTS
ANY SUCH BENEFITED HOLDER THE RIGHT TO SUE  THE  STATE  IN  A  COURT  OF
COMPETENT  JURISDICTION  AND  ENFORCE  THIS  COVENANT  AND AGREEMENT AND
WAIVES ALL RIGHTS OF DEFENSE BASED ON  SOVEREIGN  IMMUNITY  IN  SUCH  AN
ACTION OR SUIT.
  3.  THE  FINANCE  BOARD OF THE CITY IS HEREBY AUTHORIZED TO ENTER INTO
AGREEMENTS AND TO MAKE COVENANTS WITH ANY PURCHASER, HOLDER OR GUARANTOR

S. 5199                             6

OF OBLIGATIONS ISSUED BY THE CITY TO PROTECT AND SAFEGUARD THE  SECURITY
AND  RIGHTS  OF A PURCHASER, HOLDER OR GUARANTOR OR TO PROTECT AND SAFE-
GUARD THE SOURCE OF PAYMENT OF SUCH OBLIGATIONS OR AS DEEMED APPROPRIATE
BY  SUCH  FINANCE  BOARD,  WHICH  AGREEMENTS  OR  COVENANTS  MAY CONTAIN
PROVISIONS PROVIDING FOR (A) RESTRICTIONS ON THE ISSUANCE BY THE CITY OF
ITS OBLIGATIONS, LIMITATIONS ON THE INCLUSION OF EXPENSE  ITEMS  IN  ITS
CAPITAL BUDGETS AND FINANCIAL RECORDS, REPORTING AND DISCLOSURE REQUIRE-
MENTS  NOT  INCONSISTENT  WITH  ANY  SUCH  RESTRICTIONS,  LIMITATIONS OR
REQUIREMENTS OF LAW, (B) CONDITIONS THAT WOULD GIVE RISE TO AN EVENT  OF
DEFAULT  ON SUCH OBLIGATIONS, AND (C) REMEDIES AVAILABLE TO A PURCHASER,
HOLDER OR GUARANTOR OF SUCH OBLIGATIONS, OTHER THAN ACCELERATION OR  THE
REQUIRED  ELIMINATION  OR  REDUCTION OF SPECIFIC MUNICIPAL EXPENDITURES,
INCLUDING THE CIRCUMSTANCES, IF ANY, UNDER WHICH A TRUSTEE  OR  TRUSTEES
OR  A  FISCAL  AGENT  MAY BE APPOINTED OR MAY ACT AS A REPRESENTATIVE OF
HOLDERS OF OBLIGATIONS ISSUED BY THE CITY IN CONNECTION WITH AN ISSUE OR
ISSUES OF OBLIGATIONS OF THE CITY AND  THE  RIGHTS,  POWERS  AND  DUTIES
WHICH  MAY  BE  VESTED IN SUCH TRUSTEE, TRUSTEES OR FISCAL AGENT AS SUCH
REPRESENTATIVE. THE STATE OF NEW YORK HEREBY PLEDGES AND AGREES THAT  IT
WILL  TAKE  NO  ACTION THAT WOULD IMPAIR THE POWER OF THE CITY TO COMPLY
WITH OR TO PERFORM ANY COVENANT  OR  AGREEMENT  MADE  PURSUANT  TO  THIS
SUBDIVISION,  OR ANY RIGHT OR REMEDY OF A PURCHASER, HOLDER OR GUARANTOR
TO ENFORCE SUCH COVENANT OR AGREEMENT; AND THE CITY IS HEREBY AUTHORIZED
TO INCLUDE SUCH PLEDGE AND AGREEMENT IN ANY AGREEMENT MADE  PURSUANT  TO
THIS SUBDIVISION.
  4.  NOTHING  CONTAINED IN THIS PARAGRAPH SHALL PRECLUDE THE STATE FROM
AUTHORIZING THE CITY TO EXERCISE, OR THE CITY FROM EXERCISING, ANY POWER
PROVIDED BY LAW TO SEEK APPLICATION OF LAWS THEN  IN  EFFECT  UNDER  THE
BANKRUPTCY  PROVISIONS  OF  THE  UNITED  STATES  CONSTITUTION  OR  SHALL
PRECLUDE THE STATE FROM VALIDLY EXERCISING ITS POLICE POWERS OR  FROM  A
FURTHER  EXERCISE  OF ITS POWERS UNDER ARTICLE EIGHT, SECTION TWELVE, OF
THE STATE CONSTITUTION.
  D. THE GENERAL DEBT SERVICE FUND ESTABLISHED UNDER THE NEW YORK  STATE
FINANCIAL EMERGENCY ACT FOR THE CITY OF NEW YORK SHALL BE THE FUND MAIN-
TAINED  AND  CONTINUED  PURSUANT  TO THIS SECTION, AND THE PROVISIONS OF
THIS SECTION, INCLUDING BUT NOT LIMITED TO THE STATUTORY LIEN CREATED BY
SUBDIVISION TWO OF PARAGRAPH B OF THIS SECTION, SHALL BE FULLY  APPLICA-
BLE THERETO IN ADDITION TO THE PROVISIONS OF SUCH ACT, AND NOTWITHSTAND-
ING  THE TERMINATION OF SUCH ACT. THE PLEDGE AND AGREEMENT AUTHORIZED BY
PARAGRAPH C OF THIS SECTION SHALL BE IN ADDITION TO ANY PLEDGE OR AGREE-
MENT AUTHORIZED BY SUCH ACT.
  S 4. Severability clause. If any clause, sentence, paragraph,  section
or  part  of this act shall be adjudged by any court of competent juris-
diction to be invalid, such judgment shall not affect, impair or invali-
date the remainder thereof, but shall be confined in  its  operation  to
the  clause,  sentence,  paragraph,  section  or  part  thereof directly
involved in the controversy in  which  such  judgment  shall  have  been
rendered. It is hereby declared to be the intent of the legislature that
this act would have been enacted even if such invalid provisions had not
been included herein.
  S 5. This act shall take effect immediately.

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