Senate Bill S3527

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

                                  3527

                       2011-2012 Regular Sessions

                            I N  S E N A T E

                            February 24, 2011
                               ___________

Introduced by Sens. OPPENHEIMER, DIAZ -- read twice and ordered printed,
  and  when  printed  to  be  committed to the Committee on Children and
  Families

AN ACT to create the New York state child care facilities finance agency
  and providing for its functions, powers and duties

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

  Section 1. The New York state child care facilities finance agency act
is hereby enacted to read as follows:
                   NEW YORK STATE CHILD CARE FACILITIES
                           FINANCE AGENCY ACT
Section  1.  Short title.
         2.  Declaration of policy and statement of purposes.
         3.  Definitions.
         4.  New York state child care facilities finance agency.
         5.  Powers of the agency.
         6.  Bonds and notes of the agency.
         7.  Child  care facilities projects reserve funds and appropri-
               ations.
         8.  Bonds and notes as legal investments.
         9.  Exemption from taxation of property and income.
        10.  Exemption from taxation of notes and bonds.
        11.  Agreement with the state.
        12.  State's right to require redemption of bonds.
        13.  Remedies of noteholders and bondholders.
        14.  Monies of the agency.
        15.  Assistance  by  state  officers,  departments,  boards  and
               commissions.
        16.  Annual report.
        17.  Bond reserve insurance fund.
        18.  Act not affected if in part unconstitutional.

 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                      [ ] is old law to be omitted.
                                                           LBD06011-01-1
              

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        19.  Inconsistent provisions in other laws superseded.
  Section  1.  Short title.  This act shall be known and may be cited as
the "New York state child care facilities finance agency act".
  S 2. Declaration of policy and statement of purposes. The availability
of child care for the inhabitants of the state  are  matters  of  public
concern.  In  furtherance of this purpose, it is the policy of the state
to make available child care  services  at  a  reasonable  cost  by  the
private and public sectors in modern child care facilities accessible to
the communities to be served.
  The  legislature has heretofore found that a serious shortage of child
care services exists in many communities throughout the state; that many
child care facilities throughout the state  cannot  financially  provide
affordable  child  care  services  to  people  who  are in need of their
services, that such a shortage of affordable child care services deny to
the people of the state the benefits of child care of the highest quali-
ty and that affordable child care services are an essential need to  the
state's  population.  The  legislature has heretofore found and declared
that the accomplishment of these purposes cannot be readily achieved  by
the ordinary unaided operation of private enterprise and to this end has
constituted  and  empowered the New York state finance housing agency, a
multi-purpose corporate government agency of the state, to obtain  funds
through the issuance of its notes and bonds to finance the construction,
acquisition,  reconstruction and improvement of child care facilities in
addition to issuing its notes and  bonds  to  carry  out  other  program
responsibilities  which  touch on the need for affordable and accessible
child care services for the vast majority of the state's residents.
  In order to permit an acceleration in the implementation of affordable
and accessible child care  services  in  areas  where  the  public  need
remains  urgent,  without  jeopardizing the orderly marketing by the New
York state housing finance agency of  its  notes  and  bonds  for  other
program  purposes,  it  is  hereby  declared  that  a separate corporate
governmental agency, to be known as the "New York child care  facilities
finance  agency", should be created as a single purpose agency to act in
concert with the New York state housing finance agency and to devote its
entire energy and resources to the provision of additional funds for the
construction of child care facilities  by  any  entity  or  organization
deemed appropriate by the agency.
  In this manner, the broadest possible base of investment by the great-
est  number  of  the  general  public  may be had and the initiative and
strength of our private enterprise economy may most readily be harnessed
for the benefit of the people of the state.
  S 3. Definitions. As used in this  act,  unless  a  different  meaning
clearly appears from the context:
  1.  "Agency"  shall  mean the corporate governmental agency created by
section four of this act.
  2. "Amortized value" means,  when  used  with  respect  to  securities
purchased  at  a  premium above or a discount below par, the value as of
any given date obtained by dividing the total amount of the  premium  or
discount  at  which such securities were purchased by the number of days
remaining to maturity on such securities at the time  of  such  purchase
and by multiplying the amount so calculated by the number of days having
passed  since  the date of such purchase; and (a) in the case of securi-
ties purchased at a premium, by deducting the product thus obtained from
the purchase price, and (b) in the case of  securities  purchased  at  a
discount, by adding the product thus obtained to the purchase price.

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  3.  "Bonds"  and  "notes"  shall  mean  bonds and notes, respectively,
issued by the agency pursuant to this act.
  4.  "Child care project bonds" shall mean bonds and notes, respective-
ly, issued by the agency for the purpose of  making  mortgage  loans  to
eligible borrowers.
  5.  "Commissioner"  shall  mean the New York state commissioner of the
office of children and family services.
  6. "Department" shall mean the office of children and family  services
within the New York state department of family assistance.
  7.  "Eligible  borrower"  shall  mean any entity or organization whose
project shall meet all the licensing requirements  imposed  pursuant  to
the social services law and the rules and regulations promulgated there-
under.
  8. "Mortgage loan" shall mean a loan made by the agency to an eligible
borrower  in  an amount not to exceed the total project cost and secured
by a first mortgage lien on the real property of which  the  child  care
project  consists  and  the  personal  property  attached  to or used in
connection with the construction, acquisition, reconstruction, rehabili-
tation, improvement or operation  of  the  project.  Such  loan  may  be
further  secured  by  such  a lien upon other real property owned by the
eligible borrower. Notwithstanding  the  foregoing  provisions  of  this
subdivision  or  any  other  provisions of this act to the contrary, any
personal property may be excluded from the lien of the mortgage provided
(a) the commissioner finds that such property is not essential  for  the
rendition of child care services, (b) the agency consents to such exclu-
sion.
  The  term  "mortgage  loan" shall also mean and include a loan made by
the agency to any entity or organization deemed appropriate by the agen-
cy not to exceed ninety-five per centum of the child care  project  cost
and  secured  by a first mortgage lien on the real property of which the
child care project consists and the personal  property  attached  to  or
used  in  connection with the construction, acquisition, reconstruction,
rehabilitation, improvement, or operation of  the  child  care  project.
Notwithstanding  the  foregoing  provisions  of  this subdivision or any
other provision of this section to the contrary, any  personal  property
may  be excluded from lien of the mortgage provided (a) the commissioner
finds that such property is not essential for the  child  care  project,
and (b) the agency consents to such exclusion.
  9.  "Bond  reserve  insurance  fund"  shall  mean  the fund created by
section seventeen of this act.
  S 4. New York state child care facilities finance agency. 1. There  is
hereby  created the New York state child care facilities finance agency.
The agency shall be  a  corporate  governmental  agency  constituting  a
public  benefit corporation. Its membership shall consist of the commis-
sioner of taxation and finance, the commissioner of the office of  chil-
dren  and  family services, the director of the budget, the chair of the
New York state housing finance agency and three members to be  appointed
by  the governor with the advice and consent of the senate.  The members
first appointed by the governor shall serve for terms ending  two,  four
and  six  years,  respectively, from January first next succeeding their
appointment. Their successors shall serve for terms of six  years  each.
Members  shall  continue  in  office  until  their  successors have been
appointed and qualified. In the event of  a  vacancy  occurring  in  the
office  of  any  member by death, resignation or otherwise, the governor
shall appoint a successor with the advice and consent of the  senate  to
serve  for  the balance of the unexpired term. The provisions of section

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39 of the public officers law shall apply to such members.  The  commis-
sioner  of  the  office  of  children and family services shall serve as
chair of the agency.
  2.  The  powers  of  the agency shall be vested in and exercised by no
less than four of the members then in office. The commissioner of  taxa-
tion  and finance, the commissioner of the office of children and family
services and the director of the budget each may appoint a  person  from
their  respective  department,  office  or  division  to  represent such
member, respectively, at all meetings of  the  agency  from  which  such
member  may  be absent. Any such representative so designated shall have
the power to attend and to vote at any meeting of the agency from  which
the  member so designating him or her as a representative is absent with
the same force and effect as if the member designating him or  her  were
present  and  voting.  Such designation shall be by written notice filed
with the chair of the agency by each of the  said  members.  The  desig-
nation of such persons shall continue until revoked at any time by writ-
ten notice to the chair by the respective member making the designation.
Such  designation shall not be deemed to limit the power of the appoint-
ing member to attend and vote at any meeting of the agency.
  3. The members shall serve without salary, but each  member  shall  be
entitled  to  reimbursement for his or her actual and necessary expenses
incurred in the performance of his or her official duties,  and,  except
in the case of the commissioner of taxation and finance, the commission-
er of the office of children and family services and the director of the
budget,  a  per  diem  allowance  of  one hundred dollars when rendering
services as such member, provided that the aggregate of  such  per  diem
allowance  to any one member in any one fiscal year shall not exceed the
sum of five thousand dollars.
  4. Such members, except as otherwise provided by law,  may  engage  in
private  employment,  or  in  a  profession or business. The agency, its
members, officers and employees shall be subject to  the  provisions  of
sections 73 and 74 of the public officers law.
  5.  The  chief  executive officer of the agency shall be the executive
director of the New York state housing finance agency.
  6.  Notwithstanding  any  inconsistent  provisions  of  law,  general,
special  or  local,  no officer or employee of the state or of any civil
division thereof shall be deemed to have forfeited or shall forfeit  his
or  her  office  or  employment  by  reason  of his or her acceptance of
membership on the agency created by this section; provided however, that
a member who holds such other public office or employment shall  receive
no  additional  compensation or allowance for services rendered pursuant
to this act, but shall be entitled to reimbursement for his or her actu-
al and necessary expenses incurred in the performance of such services.
  7. The governor may remove any member appointed  by  him  or  her  for
inefficiency,  neglect  of duty or misconduct in office after giving him
or her a copy of the charges against him or her and an opportunity to be
heard, in person or by counsel in his or her defense, upon not less than
ten days' notice. If any such member  shall  be  removed,  the  governor
shall file in the office of the department of state a complete statement
of  charges  made  against  such member and his or her findings thereon,
together with a complete record of the proceeding.
  8. The agency and its corporate existence shall continue until  termi-
nated  by  law, provided, however, that no such law shall take effect so
long as the  agency  shall  have  bonds,  notes  and  other  obligations
outstanding,  unless  adequate  provision  has been made for the payment

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thereof. Upon termination of the existence of the agency, all its rights
and properties shall pass to and be vested in the state.
  9.  A  majority  of  the  members  of  the agency then in office shall
constitute a quorum for the transaction of any business or the  exercise
of  any  power or function of the agency. The agency may delegate to one
or more of its members, or  its  officers,  agents  or  employees,  such
powers and duties as it may deem proper.
  S  5.  Powers  of the agency. Except as otherwise limited by this act,
the agency shall have power:
  1. To sue and be sued;
  2. To have a seal and alter the same at pleasure;
  3. To make and execute contracts and all other  instruments  necessary
or  convenient  for  the exercise of its powers and functions under this
act;
  4. To make and alter by-laws for its organization and internal manage-
ment;
  5. To acquire, hold and dispose of personal property for its corporate
purposes;
  6. To appoint officers, agents and employees, prescribe  their  duties
and qualifications and fix their compensation;
  7.  To  borrow  money and issue negotiable notes, bonds or other obli-
gations and to provide for the rights of the holders thereof;
  8. To invest any funds held in reserve or sinking funds, or any monies
not required for immediate use or disbursement, at the discretion of the
agency, in obligations of the state or the United States  government  or
obligations  the  principal  and interest of which are guaranteed by the
state or the United States government, or in any  other  obligations  in
which  the  comptroller of the state of New York is authorized to invest
pursuant to section 98 of the state finance law;
  9. Subject to the approval of the agency, to make  mortgage  loans  to
eligible  borrowers  and to undertake commitments to make any such mort-
gage loans;
  10. Subject to the approval of the  commissioner  of  the  agency,  to
sell, at public or private sale, any mortgage or other obligation secur-
ing a mortgage loan made by the agency;
  11.  In  connection  with the making of mortgage loans and commitments
therefor to non-profit  hospital  corporations  and  non-profit  medical
corporations  constituting eligible borrowers or nursing home companies,
to make and collect from such corporations and companies such  fees  and
charges,  including  but  not  limited  to reimbursement of all costs of
financing by the agency, service charges and insurance premiums, as  the
agency shall determine to be reasonable;
  12.  In  connection  with any property on which it has made a mortgage
loan, to foreclose on any  such  property  or  commence  any  action  to
protect  or  enforce  any  right  conferred upon it by any law, mortgage
contract or other agreement, and to bid for and purchase  such  property
at  any  foreclosure or at any other sale, or acquire or take possession
of any such property; and in such event the agency may complete,  admin-
ister,  pay the principal of and interest on any obligations incurred in
connection with such property, dispose of, and otherwise deal with, such
property, in such manner as may be necessary or desirable to protect the
interests of the agency therein;
  13.  To procure insurance against any  loss  in  connection  with  its
property  and  other  assets (including mortgages and mortgage loans) in
such amounts, and from such insurers, as it deems desirable;

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  14.  To accept any gifts or grants or loans of funds  or  property  or
financial  or  other  aid in any form from the federal government or any
agency or instrumentality thereof or from the state or  from  any  other
source  and  to  comply, subject to the provisions of this act, with the
terms and conditions thereof;
  15.  To engage the services of private consultants on a contract basis
for rendering professional and technical assistance and advice;
  16.   To enter into a contract with the New York state housing finance
agency to market and service any agency bonds and notes approved by  the
agency and to contract with the New York state housing finance agency to
render  such other services as the agency may request, including but not
limited to the use of the premises, personnel and personal  property  of
the New York state housing finance agency, and to provide for reimburse-
ment  to  the  New York state housing finance agency from the agency for
any expenses necessarily incurred by the New York state housing  finance
agency  in  carrying  out  the  terms  of  any such contract.   Any such
contract shall be subject to the separate approval of  the  director  of
the budget;
  17.    Subject  to  the approval of the agency, to acquire by purchase
from the New York state housing finance agency  any  mortgage  or  other
obligation  securing  a  loan made by the New York state housing finance
agency to an eligible borrower and to sell same  at  public  or  private
sale;
  18.    To  acquire by purchase from the New York state housing finance
agency its right, title and interest in real  property,  leaseholds  and
subleaseholds  relating  to  the municipal health facilities improvement
program;
  19.  To do any and all things necessary or convenient to carry out its
purposes and exercise the powers expressly given  and  granted  in  this
act.
  S 6. Bonds and notes of the agency. 1. (a) The agency shall have power
and is hereby authorized from time to time to issue its negotiable bonds
and  notes  in  conformity  with  applicable  provisions  of the uniform
commercial code in such principal amount as, in the opinion of the agen-
cy, shall be necessary to provide sufficient  funds  for  achieving  its
corporate  purposes,  including  the  making  of  mortgage loans and the
construction, acquisition, reconstruction, rehabilitation or improvement
of child care facilities, the payment of interest on bonds and notes  of
the  agency,  establishment  of reserves to secure such bonds and notes,
and all other expenditures of the agency incident to  and  necessary  or
convenient to carry out its corporate purposes and powers;
  (b)  The  agency shall have power, from time to time, to issue renewal
notes, to issue bonds to pay notes and whenever it deem refunding  expe-
dient,  to  refund  any  bonds by the issuance of new bonds, whether the
bonds to be refunded have or have not matured, and to issue bonds partly
to refund bonds then outstanding and partly for any other  purpose.  The
refunding  bonds shall be sold and the proceeds applied to the purchase,
redemption or payment of the bonds to be refunded;
  (c) Except as may otherwise be expressly provided by the agency, every
issue if its notes or bonds shall be general obligations of  the  agency
payable out of any revenues or monies of the agency, subject only to any
agreements  with  the  holders of particular notes or bonds pledging any
particular receipts or revenues.
  2. The notes and bonds  shall  be  authorized  by  resolution  of  the
members, shall bear such date or dates, and shall mature at such time or
times, in the case of any such note, or any renewals thereof, issued for

S. 3527                             7

achieving  its  corporate  purposes  other  than  the making of mortgage
loans, not exceeding five years, from the date of issue of such original
note, and in the case of any such note, or any renewals thereof,  issued
for  the  purpose  of  making mortgage loans, not exceeding seven years,
from the date of issue of such original note, and in  the  case  of  any
such  bond  not  exceeding  fifty  years from the date of issue, as such
resolution or resolutions may provide.  The notes and bonds  shall  bear
interest  at  such  rate  or rates, be in such denominations, be in such
form, either coupon or registered, carry such  registration  privileges,
be  executed  in  such  manner, be payable in such medium of payment, at
such place or places and be subject to such terms of redemption as  such
resolution or resolutions may provide. The notes and bonds of the agency
may  be  sold by the agency, at public or private sale, at such price or
prices as the agency shall determine. No notes or bonds  of  the  agency
may be sold by the agency at private sale, however, unless such sale and
the terms thereof have been approved in writing by  (a) the comptroller,
where  such  sale  is not to the comptroller, or (b) the director of the
budget, where such sale is to the comptroller.
  3. Any resolution or resolutions authorizing any notes or bonds or any
issue thereof may contain provisions, which  shall  be  a  part  of  the
contract with the holders thereof, as to:
  (a)  pledging all or any part of the fees and charges made or received
by the agency, and all or any part of the monies received in payment  of
mortgage loans and interest thereon, and any other monies received or to
be  received,  to  secure the payment of the child care facility project
bonds or of any issue thereof, subject to such agreement with  bondhold-
ers or noteholders as may then exist;
  (b)  pledging  all  or any part of the assets of the agency, including
mortgages and obligations securing the same, to secure  the  payment  of
the  child  care facility project bonds, subject to such agreements with
bondholders or noteholders as may then exist, provided  that  no  resol-
ution or resolutions of the agency authorizing bonds and notes shall (i)
pledge all or any portion of the rentals paid to the agency with respect
to child care facilities financed with the proceeds of child care facil-
ities  bonds  or  notes,  or  (ii)  pledge  any  other assets, monies or
accounts pledged to the agency as security for the  payment  of  rentals
with  respect  to  child  care  facilities financed with the proceeds of
child care facilities bonds or notes;
  (c) the use and disposition of the gross income from  mortgages  owned
by the agency and payment of principal of mortgages owned by the agency;
  (d)  pledging  all  or any part of the rentals paid to the agency with
respect to child care facilities financed with  the  proceeds  of  child
care  facilities  bonds or notes or any other assets, monies or accounts
pledged or assigned to the agency as security for the  payment  of  such
rentals, all subject to any agreement with noteholders or bondholders as
may  then exist and provided that no resolution or resolutions authoriz-
ing child care facilities bonds and notes shall (i) pledge  all  or  any
part  of the fees and charges made or received by the agency pursuant to
subdivision eleven of section five of this act in  connection  with  the
making  of mortgage loans or commitments therefor, or all or any part of
the monies received in payment of such mortgage loans and interest ther-
eon, or (ii) pledge all or any part of the mortgages of  the  agency  or
obligations securing the same, or (iii) provide as to the use and dispo-
sition  of  the gross income from mortgages owned by the agency or as to
the payment of principal of mortgages owned by the agency;

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  (e) the setting aside of reserves or sinking funds and the  regulation
and disposition thereof;
  (f)  limitations on the purpose to which the proceeds of sale of notes
or bonds may be applied and pledging such proceeds to secure the payment
of the notes or bonds or of any issue thereof;
  (g) limitations on the issuance of  additional  notes  or  bonds;  the
terms  upon  which  additional notes or bonds may be issued and secured;
the refunding of outstanding or other notes or bonds;
  (h) the procedure, if any, by which the terms  of  any  contract  with
noteholders  or  bondholders  may be amended or abrogated, the amount of
notes or bonds the holders of which must consent thereto, and the manner
in which such consent may be given;
  (i) limitations on the amount of monies to be expended by  the  agency
for operating, administrative or other expenses of the agency;
  (j) vesting in a trustee or trustees such property, rights, powers and
duties  in  trust  as the agency may determine, which may include any or
all of the rights, powers and duties of the  trustee  appointed  by  the
bondholders  pursuant  to this act, and limiting or abrogating the right
of the bondholders to appoint a trustee under this act or  limiting  the
right, powers and duties of such trustee;
  (k)  any  other  matters, of like or different character, which in any
way affect the security or protection of the notes or bonds.
  4. It is the intention hereof that any pledge made by the agency shall
be valid and binding from the time when the pledge  is  made;  that  the
monies  or  property  so  pledged  and thereafter received by the agency
shall immediately be subject to the lien  of  such  pledge  without  any
physical  delivery thereof or further act; and that the lien of any such
pledge shall be valid and binding as against all parties  having  claims
of any kind in tort, contract or otherwise against the agency, irrespec-
tive of whether such parties have notice thereof. Neither the resolution
nor any other instrument by which a pledge is created need be recorded.
  5.  Neither  the  members  of  the agency nor any person executing the
notes or bonds shall be liable personally on the notes or  bonds  or  be
subject  to  any  personal  liability or accountability by reason of the
issuance thereof.
  6. The agency, subject to such agreements with  noteholders  or  bond-
holders  as  may then exist, shall have power out of any funds available
therefor to purchase notes or bonds of the agency, which shall thereupon
be cancelled, at a price not exceeding (a) if the  notes  or  bonds  are
then  redeemable,  the  redemption  price  then  applicable plus accrued
interest to the next interest payment date thereon, or (b) if the  notes
or bonds are not then redeemable, the redemption price applicable on the
first  date  after  such  purchase  upon which the notes or bonds become
subject to redemption plus accrued interest to such date.
  7. The state shall not be liable on notes or bonds of the  agency  and
such  notes  and  bonds shall not be a debt of the state, and such notes
and bonds shall contain on the face thereof a statement to such effect.
  S 7. Child care facilities projects reserve funds and  appropriations.
1.  (a)  For  the  purposes  of the issuance by the agency of child care
facility project bonds, the term "child care  facility  capital  reserve
fund  requirement" shall mean, as of any particular date of computation,
an amount of money equal to the greatest of the respective amounts,  for
the then current or any succeeding calendar year, of annual debt service
payments of the agency, such annual debt service payments for any calen-
dar  year  being  an  amount  of money equal to the aggregate of (i) all
interest payable during such calendar year on all  child  care  facility

S. 3527                             9

project  bonds  of  the agency then outstanding on said date of computa-
tion, plus (ii) the principal amount of all child care facility  project
bonds  of  the agency then outstanding on said date of computation which
mature  during  such calendar year, plus (iii) the amount of all sinking
fund payments payable during such calendar  year  with  respect  to  all
child care facility project bonds of the agency outstanding on said date
of  computation;  and  the  term  "sinking  fund payment" shall mean the
amount of money specified in the resolution authorizing  term  bonds  as
payable into a sinking fund for the amortization of such term bonds. The
agency  shall  create  and  establish  a special fund to be known as the
child care facility capital reserve fund and may pay into  such  reserve
fund (1) any monies appropriated and made available by the state for the
purposes  of  such fund, (2) any proceeds of sale of child care facility
project notes or bonds, to the extent provided in the resolution of  the
agency  authorizing the issuance thereof, and (3) any other monies which
may be made available to the agency for the purposes of such  fund  from
any other source or sources. The monies held in or credited to the child
care  facility  capital  reserve  fund  established  under this section,
except as hereinafter provided, shall be used solely for the payment  of
the principal of child care facility project bonds of the agency secured
by  such  reserve  fund,  as the same mature, sinking fund payments, the
purchase of such child care facility project bonds of  the  agency,  the
payment  of  interest  on such child care facility projects bonds of the
agency, or the payment of any redemption premium  required  to  be  paid
when  such bonds are redeemed prior to maturity; provided, however, that
monies 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  child
care  facility  capital reserve fund requirement, except for the purpose
of paying principal and interest on  the  child  care  facility  project
bonds  of  the agency secured by such reserve fund maturing and becoming
due and any sinking fund payments and for the  payment  of  which  other
monies  of  the  agency are not available. Any income or interest earned
by, or increment to, the child care facility capital reserve fund due to
the investment thereof may be transferred to any other fund  or  account
of  the  agency to the extent it does not reduce the amount of the child
care facility capital reserve fund below the child care facility   capi-
tal reserve fund requirement.
  (b)  The  agency shall not issue child care facility project bonds and
notes in an aggregate principal amount exceeding  two  billion  dollars,
excluding  child  care  facility  project  bonds and child care facility
notes issued to refund outstanding child care facility project bonds and
notes.  The agency shall not issue child care facility project bonds  at
any time secured by the child care facility capital reserve fund if upon
issuance,  the  amount  in  the child care facility capital reserve fund
will be less than the child care facility capital reserve fund  require-
ment,  unless  the  agency, at the time of issuance of such bonds, shall
deposit in such reserve fund from the proceeds of the  bonds  so  to  be
issued,  or  otherwise, an amount which together with the amount then in
such reserve fund, will be not less than the child care facility capital
reserve fund requirement.
  (c) To assure the continued operation and solvency of the  agency  for
the  carrying  out of the public purposes of this act, provision is made
in paragraph (a) of this subdivision for the accumulation in  the  child
care  facility capital reserve fund of an amount equal to the child care
facility capital reserve fund requirement. In order  further  to  assure
the  maintenance  of the child care facility capital reserve fund, there

S. 3527                            10

shall be annually apportioned and paid to the agency for deposit in  the
child  care  facility capital reserve fund such sum, if any, as shall be
certified by the chairman of the agency to the governor and director  of
the  budget as necessary to restore such reserve fund to an amount equal
to the child care facility capital reserve fund requirement.  The  chair
of  the  agency  shall  annually,  on or before December first, make and
deliver to the governor and director of the budget his  or  her  certif-
icate  stating  the  sums,  if  any,  required to restore the child care
facility capital reserve fund to the amount aforesaid and  the  sums  so
certified,  if  any,  shall be apportioned and paid to the agency during
the then current state  fiscal  year.  The  principal  amount  of  bonds
secured  by  the child care facility capital reserve fund to which state
funds are apportionable pursuant to this paragraph 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 effec-
tive date of this act as determined by the New York state public author-
ities control board created pursuant to section 50 of the public author-
ities law whose affirmative determination shall be conclusive as to  all
matters  of  law  and  fact  solely  for the purposes of the limitations
contained in this paragraph, but in no event shall the total  amount  of
bonds  so  secured  by  such  a capital reserve fund or funds exceed two
hundred forty million 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.
  (d)  In computing the child care facility capital reserve fund for the
purposes of this section, securities in which all or a portion  of  such
reserve  fund  shall  be invested shall be valued at par if purchased at
par, or if purchased at other than par, at amortized value.
  2. The agency shall create and establish one  or  more  special  funds
(herein  referred to as child care facility reserve funds) and shall, to
the extent provided in the applicable  bond  resolution  of  the  agency
authorizing  the issuance of child care facility project bonds, pay into
any such fund the fees and charges collected by the agency  pursuant  to
subdivision  eleven of section five of this act and any monies which the
agency shall transfer from the child care facility capital reserve  fund
pursuant  to  the provisions of paragraph (a) of subdivision one of this
section. Such monies and any other monies paid into a child care facili-
ty general reserve fund may,  in  the  discretion  of  the  agency,  but
subject  to  agreements with bondholders and noteholders, be used by the
agency (a) for the repayment of advances from the  state  in  accordance
with  the  provisions of repayment agreements between the agency and the
director of the budget, (b) to reimburse the department  the  reasonable
costs  of  the services performed by the commissioner and the department
pursuant to this act, (c) to pay all  costs,  expenses  and  charges  of
financing,  including  fees  and expenses of trustees and paying agents,
(d) for transfers to the child care facility capital reserve  fund,  (e)
for the payment of principal and interest on child care facility project
bonds  and project notes issued by the agency when the same shall become
due whether at maturity or on call for redemption and for the payment of
any redemption premium required to be paid where such child care facili-
ty project bonds and notes are redeemed prior to their stated maturities
and any sinking fund payments,  and  to  purchase  child  care  facility

S. 3527                            11

project  bonds  or  notes  issued  by  the agency, or (f) for such other
corporate purposes of the agency as the agency in its  discretion  shall
determine and provide.
  S  8. Bonds and notes as legal investments. The bonds and notes of the
agency are hereby made securities  in  which  all  public  officers  and
bodies  of this state and all municipalities and municipal subdivisions,
all insurance companies and associations, and other persons carrying  on
an  insurance  business,  all  banks,  bankers, trust companies, savings
banks and saving associations, including savings and loan  associations,
building  and  loan associations, investment companies and other persons
carrying on a banking business, all  administrators,  guardians,  execu-
tors,  trustees  and other fiduciaries, and all other persons whatsoever
who are now or may  hereafter be authorized to invest in bonds or  other
obligations of the state, may properly and legally invest funds, includ-
ing capital, in their control and belonging to them.
  S  9.  Exemption from taxation of property and income. The property of
the agency and its income and operations shall be exempt from taxation.
  S 10. Exemption from taxation of notes and bonds. It is hereby  deter-
mined that the creation of the agency is in all respects for the benefit
of  the  people  of  the  state and for the improvement of their health,
safety, welfare, comfort and security, and that said purposes are public
purposes and that the agency will be  performing  an  essential  govern-
mental  function in the exercise of the powers conferred upon it by this
act. The state covenants with the purchasers and all subsequent  holders
and  transferees  of  notes and bonds issued by the agency, in consider-
ation of the acceptance of and payment for the notes and bonds, that the
notes and bonds of the agency, issued  pursuant  to  this  act  and  the
income  therefrom  and  all  its fees, charges, gifts, grants, revenues,
receipts, and other monies received or to be received, pledged to pay or
secure the payment of such notes or bonds shall at  all  times  be  free
from taxation, except for estate and gift taxes and taxes on transfers.
  S  11.  Agreement  with the state. The state does hereby pledge to and
agree with the holders of any notes or bonds issued under this act, that
the state will not limit or alter the rights hereby vested in the agency
to fulfill the terms of any agreements made with the holders thereof, or
in any way impair the rights and remedies of  such  holders  until  such
notes or bonds, together with the interest thereon, with interest on any
unpaid   installments  of  interest,  and  all  costs  and  expenses  in
connection with any action or proceeding by or on behalf of  such  hold-
ers,  are  fully met and discharged. The agency is authorized to include
this pledge and agreement of the state in any agreement with the holders
of such notes or bonds.
  S 12. State's right to require redemption  of  bonds.  Notwithstanding
and  in addition to any provisions for the redemption of bonds which may
be contained in any contract with the holders of the  bonds,  the  state
may,  upon  furnishing  sufficient funds therefor, require the agency to
redeem, prior to maturity, as a  whole, any issue of bonds on any inter-
est payment date not less than twenty years after the date of the  bonds
of  such  issue  at  one hundred five per centum of their face value and
accrued interest or at such lower redemption price as may be provided in
the bonds in case of the redemption thereof as a whole on the redemption
date.  Notice of such redemption shall be  published  in  at  least  two
newspapers  publishing  and  circulating  respectively  in the cities of
Albany and New York at least twice, the first publication to be at least
thirty days before the date of redemption.

S. 3527                            12

  S 13. Remedies of noteholders and bondholders. 1. In  the  event  that
the  agency  shall default in the payment of principal of or interest on
any issue of notes or bonds after the same shall become due, whether  at
maturity  or  upon  call for redemption, and such default shall continue
for  a period of thirty days, or in the event that the agency shall fail
or refuse to comply with the provisions of this act, or shall default in
any agreement made with the holders of any issue of notes or bonds,  the
holders  of  twenty-five per centum in aggregate principal amount of the
notes or bonds of such issue then outstanding, by instrument or  instru-
ments  filed  in  the  office  of  the clerk of the county of Albany and
approved or acknowledged in the same manner as a deed  to  be  recorded,
may  appoint  a  trustee to represent the holders of such notes or bonds
for the purposes herein provided.
  2. Such trustee may, and upon written request of the holders of  twen-
ty-five  per  centum  in  principal  amount  of such notes or bonds then
outstanding shall, in his, her or its own name:
  (a) by suit, action or proceeding in accordance with the  civil  prac-
tice  law  and rules, enforce all rights of the noteholders or bondhold-
ers, including the right to require  the  agency  to  collect  fees  and
charges  and interest and amortization payment on mortgage loans made by
it adequate to carry out any agreement as to, or pledge  of,  such  fees
and  charges  and  interest and amortization payments on such mortgages,
and other properties and to require the agency to carry  out  any  other
agreements  with  the  holders of such notes or bonds and to perform its
duties under this act;
  (b) bring suit upon such notes or bonds;
  (c) by action or suit, require the agency to account as if it were the
trustee of an express trust for the holders of such notes or bonds;
  (d) by action or suit, enjoin any acts or things which may be unlawful
or in violation of the rights of the holders of such notes or bonds;
  (e) declare all such notes or  bonds  due  and  payable,  and  if  all
defaults  shall  be  made good, then, with the consent of the holders of
twenty-five per centum of the principal amount of such  notes  or  bonds
then outstanding, to annul such declaration and its consequences.
  3.  Such  trustee  shall in addition to the foregoing have and possess
all of the powers necessary or appropriate for the exercise of any func-
tions specifically set forth herein or incident to the general represen-
tation of bondholders or noteholders in the enforcement  and  protection
of their rights.
  4.  The  supreme  court shall have jurisdiction of any suit, action or
proceeding by the trustee on behalf of such noteholders or  bondholders.
The  venue  of  any such suit, action or proceeding shall be laid in the
county of Albany.
  5. Before declaring due and payable the principal of  notes  or  bonds
issued  in  connection with any mortgage or other obligations securing a
mortgage loan made by the agency, the trustee shall  first  give  thirty
days'  notice  in  writing  to the governor, to the agency, to the state
commissioner of health and to the attorney general of the state.
  S 14. Monies of the agency. 1. All monies of  the  agency,  except  as
otherwise  authorized  or  provided  in  this  act, shall be paid to the
commissioner of taxation and finance as agent of the agency,  who  shall
not  commingle  such  monies with any other monies. Such monies shall be
deposited in a separate bank account or accounts.  The  monies  in  such
accounts shall be paid out on checks signed by the commissioner of taxa-
tion  and  finance  on requisition of the chair of the agency or of such
other officer or employee or officers or employees as the  agency  shall

S. 3527                            13

authorize  to  make such requisition. All deposits of such monies shall,
if required by the commissioner of taxation and finance or  the  agency,
be  secured  by  obligations  of  the United States or of the state of a
market  value  equal  at  all times to the amount of the deposit and all
banks and trust companies are authorized to give such security for  such
deposits.
  Notwithstanding  the provisions of this section, the agency shall have
power, subject to the approval  of  the  commissioner  of  taxation  and
finance,  to  contract with the holders of any of its notes or bonds, as
to the custody, collection, securing,  investment  and  payment  of  any
monies  of  the agency, of any monies held in trust or otherwise for the
payment of notes or bonds, and to carry out such contract.  Monies  held
in trust or otherwise for the payment of notes or bonds or in any way to
secure  notes or bonds and deposits of such monies may be secured in the
same manner as monies of the agency, and all banks and  trust  companies
are authorized to give such security for such deposits.
  2.  Subject  to  agreements  with  noteholders and bondholders and the
approval of the comptroller, the agency  shall  prescribe  a  system  of
accounts.
  3.  The  comptroller, or his or her legally authorized representative,
is hereby authorized and empowered from time  to  time  to  examine  the
books  and accounts of the agency including its receipts, disbursements,
contracts, reserve funds, sinking  funds,  investments,  and  any  other
matters relating to its financial standing. Such an examination shall be
conducted  by  the  comptroller  at  least once in every five years; the
comptroller is authorized, however, to accept from the agency,  in  lieu
of  such  an  examination,  an  external  examination  of  its books and
accounts made at the request of the agency.
  4. The agency shall submit  to  the  governor,  chair  of  the  senate
finance  committee,  chair  of the assembly ways and means committee and
the comptroller, within thirty days of the receipt thereof by the  agen-
cy,  a copy of the report of every external examination of the books and
accounts of the agency other than copies of the reports of such examina-
tions made by the comptroller.
  S 15. Assistance by state officers, departments,  boards  and  commis-
sions. 1. The department of audit and control, department of law, office
of  children  and family services, and all other state officers, depart-
ments, boards, divisions and commissions may render such services to the
agency within their respective functions as  may  be  requested  by  the
agency.
  2. The state commissioner of health and the state department of health
are  hereby designated to act for and in behalf of the agency in servic-
ing the mortgage loans of the agency, and shall perform  such  functions
and  services in connection with the making, servicing and collection of
such loans as shall be requested by the agency. The agency shall pay  to
such  department  from  any  monies  of  the  agency  available for such
purpose, such amounts as are necessary to reimburse such department  for
the  reasonable  cost of the services performed by such commissioner and
department pursuant to this section.
  S 16. Annual report. The agency shall  submit  to  the  governor,  the
chair  of  the  senate finance committee, the chair of the assembly ways
and means committee, the comptroller and  the  director  of  the  budget
within  one  hundred  eighty  days  after  the end of its fiscal year, a
complete and detailed report  setting  forth:  (1)  its  operations  and
accomplishments;  (2)  its  receipts and expenditures during such fiscal
year in accordance with the categories or classifications established by

S. 3527                            14

the agency for its operating and capital outlay  purposes,  including  a
listing  of  all private consultants engaged by the agency on a contract
basis and a statement of the total amount  paid  to  each  such  private
consultant;  (3)  its  assets  and  liabilities at the end of its fiscal
year, including a schedule of its mortgage loans and commitments and the
status of reserve, special or other funds; and (4)  a  schedule  of  its
bonds and notes outstanding at the end of its fiscal year, together with
a  statement  of  the  amounts  redeemed and incurred during such fiscal
year.
  S 17. Bond reserve insurance fund. The agency shall create and  estab-
lish  a special fund, to be known as the bond reserve insurance fund and
shall pay into such fund all monies appropriated and made  available  by
the  state  for the purposes of such fund and any other monies which may
be made available to the agency for the purposes of such fund  from  any
other  source  or sources. All monies held in the bond reserve insurance
fund shall be used by the agency to  meet  the  agency's  obligation  to
repay  principal  and  interest  on  its outstanding bonds solely to the
extent that all other revenues of the agency available for such  purpose
are not sufficient to meet such obligations of the agency. Any income or
interest  earned by, or increment to the bond reserve insurance fund may
be used for authorized purposes including, but not limited to, the addi-
tion of such income or interest earned, or increment to the monies  held
in  such  fund  for  the  purposes  herein provided, or the repayment of
appropriation expenditures made to the credit of such fund.
  S 18. Act not affected if in part unconstitutional.  If  any  section,
subdivision,  paragraph, sentence, clause or provision of this act shall
be unconstitutional or be ineffective in whole or in part, to the extent
that it is not unconstitutional or ineffective, it shall  be  valid  and
effective and no other section, subdivision, paragraph, sentence, clause
or provision shall on account thereof be deemed invalid or ineffective.
  S 19. Inconsistent provisions in other laws superseded. Insofar as the
provisions of this act are inconsistent with the provisions of any other
law,  general,  special  or  local,  the provisions of this act shall be
controlling.
  S 2. This act shall take effect immediately.