§ 22.10 Sinking fund bonds of municipalities and school districts. a.
Any municipality or school district may issue sinking fund bonds for any
object or purpose for which serial bonds may be issued.

b. Sinking fund bonds shall mature at a date not later than the
expiration of the period of probable usefulness of the object or purpose
for which they are authorized to be issued, as computed from the date of
such bonds or, if bond anticipation notes shall have been issued in
anticipation thereof, from the date of the earliest note or notes so
issued; provided, however, that such bonds shall not mature at a date
that is later than fifty years from the date of such bonds or, if bond
anticipation notes shall have been issued in anticipation thereof, from
the date of the earliest note or notes so issued. Sinking fund bonds may
be referred to as "term bonds".

c. Sinking fund bonds shall be redeemed through annual contributions
to sinking funds established by the municipality or school district
issuing such sinking fund bonds. Each annual contribution shall be at
least equal to the amount required, if any, to enable the sinking fund
to redeem, on the date of the contribution, the same amount of
indebtedness as would have been paid and then be payable if such
indebtedness had been financed entirely by the issuance of serial bonds,
except, if an issue of sinking fund bonds is combined for sale with an
issue of serial bonds, for the same object or purpose, then the amount
of each such annual contribution shall be at least equal to the amount
required, if any, to enable the sinking fund to redeem, on the date of
each such annual contribution, (i) the amount which would be required to
be paid annually if such indebtedness had been issued entirely as serial
bonds, less (ii) the amount of indebtedness, if any, to be paid during
such year on the portion of such indebtedness actually issued as serial
bonds. There shall be established within a sinking fund established by
a municipality or school district an account for the amortization and
redemption of each issue of sinking fund bonds issued by such
municipality or school district. At the time of the issuance of sinking
fund bonds, the municipality or school district issuing such bonds shall
establish and deliver to the state comptroller a schedule setting forth
the amount required to be on deposit in the account established for the
redemption of such bonds for each year following the year of issuance of
such bonds until the year in which all the bonds of such issue are to be
redeemed. Each account shall be maintained at or above the amount
required to be on deposit pursuant to such schedule less the principal
amount of sinking fund bonds acquired pursuant to subparagraph (e) of
subdivision four of paragraph d of this section or purchased by or on
behalf of the municipality or school district and thereupon cancelled or
paid or for payment of which funds have been duly transferred to the
fiscal agent of the municipality or school district that issued the
bonds redeemable from such account. Not less than fifteen days nor more
than thirty days prior to the date on which the annual contribution
shall be made, the municipality or school district shall calculate the
amount expected to be on deposit in the sinking fund on such date and
shall certify such amount to the state comptroller. The municipality or
school district shall annually appropriate for deposit in the sinking
fund an amount equal to the difference between the amount required to be
on deposit in the sinking fund in accordance with the provisions of this
paragraph and the amount on deposit therein on the date the annual
contribution is to be made.

d. Sinking funds shall be maintained and managed by the state
comptroller pursuant to the provisions set forth below:

1. (a) Moneys deposited and retained in each account in the sinking
funds to be maintained and managed by the state comptroller shall vest
immediately in the state comptroller in trust for the benefit of the
holders of the bonds for which such account was established. Payments
and transfers from the sinking funds and the accounts therein shall not
be subject to appropriation by the legislature. The state comptroller
shall have custody of the securities and other assets in the sinking
funds; provided, however, that, subject to the rights of the owners of
the bonds, the state comptroller may contract with a bank or trust
company for the maintenance, management and custody of the sinking
funds. Such bank or trust company shall have an office and be authorized
to do business in the state and shall maintain a combined capital and
surplus of not less than seventy-five million dollars or shall be the
wholly-owned subsidiary of a corporation which maintains a combined
capital and surplus of not less than seventy-five million dollars.

(b) In performing his duties hereunder, the state comptroller shall
have no obligation to follow the directions of any bondholder or group
of bondholders nor to take any action on behalf of the bondholders,
including, without limitation, the obligation to take any action against
the municipality or the school district for nonpayment of an annual
contribution. The state comptroller shall be required to perform only
such duties as are set forth in this section and no implied covenants or
obligations shall be read into this section. The state comptroller shall
not be liable for any error of judgment made in good faith nor for any
action taken or omitted to be taken by him in good faith. The state
comptroller makes no representations as to the validity or sufficiency
of the bonds redeemable with amounts on deposit in the sinking funds,
and shall not be accountable for the use or application of the proceeds
of such bonds or of any excess in the sinking funds. The municipalities
and school districts shall deliver to the state comptroller such
certificates and documents as he shall by regulation or otherwise
request. A determination made or action taken by the state comptroller
under this section shall be final unless it is shown that such
determination or action was arbitrary and capricious or an abuse of
discretion.

(c) In connection with any claim, demand, suit, or judgment against
the state comptroller in connection with the exercise or performance of
any of his powers or duties under this section, the state comptroller
shall be entitled to representation by private counsel of his choice in
any civil judicial proceeding whenever the attorney general determines
based upon his investigation and review of the facts and circumstances
of the case that representation by the attorney general would be
inappropriate. The attorney general shall notify the state comptroller
in writing of such determination. The provisions of this subparagraph
shall be in addition to and shall not supplant the indemnification or
other benefits conferred upon the state comptroller by section seventeen
of the public officers law or otherwise, or any further indemnification
or other benefits that may be hereafter conferred by any such law. The
provisions of this subparagraph shall inure only to the state
comptroller, shall not enlarge or diminish the rights of any other
party, and shall not impair, limit or modify the rights and obligations
of any insurer under any policy of insurance.

2. As soon as practicable after a municipality or school district on
whose behalf the state comptroller is maintaining and managing a sinking
fund notifies the state comptroller of its intention to redeem sinking
fund bonds redeemable from an account in such sinking fund prior to or
at maturity, the state comptroller shall transfer the requested funds in
accordance with the instructions of such municipality or school
district.

3. Subject to the provisions of subdivision six of this paragraph, the
state comptroller shall, as soon as practicable following the request of
the municipality or school district, (i) transfer to such municipality
or school district any amounts in any account in the sinking fund held
on its behalf determined by the municipality or school district and
certified by it to the state comptroller to be over and above the amount
required to be maintained in such account pursuant to paragraph c of
this section or (ii) transfer or credit the excess in one account to
another account within a sinking fund established by such municipality
or school district. Such request shall not be made more than once in
any twelve month period.

4. (a) Moneys in any sinking fund shall be invested in any of the
following:

(i) Direct obligations of the United States of America or obligations
the principal of and interest on which are unconditionally guaranteed by
the United States of America.

(ii) Certificates of deposit issued by commercial banks or trust
companies maintaining their principal place of business in this state
which maintain, or the corporations of which they are wholly-owned
subsidiaries maintain, a combined capital and surplus of not less than
seventy-five million dollars; provided that any such investment in
certificates of deposit shall be secured by direct obligations of the
United States of America or the state or by obligations the principal of
and interest on which are unconditionally guaranteed by the United
States of America or the state in a principal amount with a fair market
value at least equal at all times to the principal amount at maturity of
such certificates of deposit, and provided further that such collateral
securities shall be physically delivered by the bank or trust company
issuing the certificate of deposit to the state comptroller or to a bank
or trust company designated pursuant to section sixty-five of the state
finance law as his agent (which designated bank or trust company shall
not be an issuer of certificates of deposit for the purposes of this
section) unless such collateral securities are issued in book-entry
form, in which case the state comptroller shall take such other action
as may be necessary to obtain title to or a perfected security interest
in such collateral securities.

(iii) With the consent of the municipality or school district on whose
behalf a sinking fund is held, securities of or guaranteed by the state
of New York or obligations of political subdivisions and public benefit
corporations thereof, other than obligations of such municipality or
school district.

(iv) Deposit accounts (other than certificates of deposit) at the
banks or trust companies described in subdivision one of this paragraph;
provided that the amounts on deposit in such accounts are secured at all
times by direct obligations of the United States of America or the state
or by obligations the principal of and interest on which are
unconditionally guaranteed by the United States of America or the state
in an amount with a fair market value at least equal at all times to the
amount of such deposits; and provided further that such collateral
securities shall be physically delivered for retention to the state
comptroller or a bank or trust company designated pursuant to section
sixty-five of the state finance law as his agent (which designated bank
or trust company shall not be the bank or trust company at which such
account is located) unless such collateral securities are issued in
book-entry form, in which case the state comptroller shall take such
other action as may be necessary to obtain title to or a perfected
security interest in such collateral securities.

(b) For purposes of making any investment of amounts pursuant to this
section, the state comptroller may consolidate moneys in any sinking
fund or account in a sinking fund with moneys in any other sinking fund
or account in the same or any other sinking fund and may transfer an
interest in an investment from one sinking fund or account to another
without liquidating the investment, but only if all such investments are
authorized or consented to for such sinking funds, and all such
investments shall be credited on a pro-rata basis to the appropriate
sinking funds and accounts. The allocable amount of income or interest
earned and gains realized in excess of losses suffered due to the
investment of amounts on deposit in any account in a sinking fund shall
be deposited upon receipt in such account. All investments made pursuant
to this section shall mature or be redeemable at the option of the
holder thereof on such dates and in such amounts as may be necessary to
pay principal of any sinking fund bonds when due, whether at maturity or
by redemption prior to maturity.

(c) Each municipality and school district shall provide the state
comptroller with information and opinions of counsel necessary to insure
that the municipality or school district complies with any restrictions
imposed by applicable federal law on the yield payable on investments in
a sinking fund. In order to comply with such yield restrictions, the
state comptroller shall, at the direction of the municipality or school
district, invest the amounts on deposit in any account of a sinking fund
of such municipality or school district in obligations described in
clause (iii) of subparagraph (a) of subdivision four of this paragraph,
the interest on which is exempt from federal income taxes. The state
comptroller is authorized to promulgate rules and regulations as he
deems appropriate to implement the provisions of this paragraph.

(d) The state comptroller may engage the services of such consultants
and counsel as he may deem necessary to assist in performing the
functions required to be performed by him under this section.

(e) The state comptroller shall, at the instruction of any
municipality or school district on whose behalf the state comptroller is
maintaining and managing a sinking fund, use his best efforts to apply
funds in any account within such sinking fund to purchase bonds
redeemable from such account.

5. The principal amount of sinking fund bonds required to be redeemed
on any date by payment from a sinking fund shall be reduced by the
principal amount of any such sinking fund bond which has been purchased
or redeemed and cancelled and not theretofore applied as a credit
against such requirement.

6. The state comptroller shall be reimbursed annually by March
fifteenth of each year for the fees and expenses of custodians of
securities in a sinking fund, fees and expenses of custodians of
collateral securities for investments in a sinking fund, fees of banks
and trust companies designated pursuant to subdivision one of this
paragraph, fees and expenses of counsel other than the attorney general,
fees and expenses of consultants, direct personnel costs of the
department of audit and control and other similar costs and related
expenses of maintaining and managing the sinking funds during the year
ending the preceding December thirty-first by the municipalities or
school districts issuing the bonds redeemable therefrom. Notwithstanding
the foregoing, the fees and expenses of consultants retained by the
comptroller shall be reimbursed by any such municipality or school
district only with its express consent. In the event that the state
comptroller shall not have been reimbursed as provided above, then the
state comptroller shall deduct the amount of the required reimbursement
from any excess on deposit in a sinking fund; provided, however, that in
no event shall the state comptroller use assets of the sinking funds
other than the excess therein for such reimbursement. The state
comptroller may establish such accounts in the state special revenue
fund as are necessary to provide for the receipt and disposition of such
payments as may be received from municipalities and school districts
pursuant to this subdivision; provided that payments and transfers from
such accounts shall be made pursuant to an appropriation provided by
law.

7. (a) The state comptroller shall adopt such regulations as he deems
appropriate to implement the provisions of this section, which may
include, but shall not be limited to, regulations establishing:

(A) The rights and responsibilities of the state comptroller in
maintaining and managing the sinking funds hereunder, which rights and
responsibilities may include, among others, that:

(i) the state comptroller undertakes to perform such duties and only
such duties as are specifically set forth in the statute, the
regulations or any agreement with the municipality or school district
and no implied covenants or obligations shall be read into the statute,
the regulations or into any agreement with the municipality or school
district against the state comptroller;

(ii) the state comptroller may conclusively rely, as to the truth of
the statements and the correctness of the opinions expressed therein,
upon certificates or opinions furnished to the state comptroller and
conforming to the requirements of the statute, the regulations and any
agreement with the municipality or school district; but in the case of
any such certificates or opinions which are specifically required to be
furnished to the state comptroller pursuant to paragraph c of this
section, the state comptroller shall be under a duty to examine the
contents of the same to determine whether or not they conform to the
requirements of the statute, the regulations and any agreement with the
municipality or school district;

(iii) the state comptroller shall not be liable for any error of
judgment made in good faith by him;

(iv) the state comptroller shall not be liable with respect to any
action taken or omitted to be taken by him in good faith in accordance
with the direction of the municipality or school district;

(v) the state comptroller may rely, and shall be protected in acting
or refraining from acting in reliance, upon any resolution, certificate,
statement, instrument, opinion, report, notice, request, direction,
consent, order, bond, debenture or other paper or document believed by
him to be genuine and to have been signed or presented by the proper
party or parties;

(vi) any request or direction of the municipality or school district
shall be sufficiently evidenced by a certificate signed by an authorized
official of the municipality or school district and any resolution of
the governing body of the municipality or school district may be
sufficiently evidenced by a copy of such resolution certified by the
appropriate official of the municipality or school district;

(vii) whenever the state comptroller shall deem it desirable that a
matter be proved or established prior to taking, suffering or omitting
any action, the state comptroller (unless other evidence be specifically
prescribed) may, in the absence of bad faith on his part, rely upon a
certificate signed by an authorized official of the municipality or
school district;

(viii) the state comptroller may consult with counsel, including the
attorney general, and the written advice of such counsel shall be full
and complete authorization and protection in respect of any action
taken, suffered or omitted by it in good faith and in reliance thereon;

(ix) the state comptroller shall not be bound to make any
investigation into the facts or matters stated in any resolution,
certificate, statement, instrument, opinion, report, notice, request,
direction, consent, order, bond or other paper or document, but the
state comptroller, in his discretion, may make such further inquiry or
investigation into such facts or matters as he may see fit, and, if the
state comptroller shall determine to make such further inquiry or
investigation, he shall be entitled to examine the books, records and
premises of the municipality or school district, personally or by agent
or attorney;

(B) Procedures for determining the value of investments in the sinking
funds and of the collateral securities securing such investments;

(C) Procedures for determining and allocating administrative expenses
related to maintaining and managing the sinking funds and the payment
thereof;

(D) Procedures for determining the amount of excesses in a sinking
fund and when withdrawals of excesses in a sinking fund may occur, for
transferring moneys from a sinking fund to redeem sinking fund bonds and
for directing the purchase of sinking fund bonds, including the
frequency with which such actions may be taken;

(E) The form and substance of reports, certificates and other material
to be delivered by the municipality or the school district to the state
comptroller;

(F) Standards for the qualification of consultants to the state
comptroller;

(G) Procedures for securing amounts on deposit in the sinking funds;

(H) Procedures for distributing the amount on deposit in a sinking
fund if such amount is insufficient to pay any bonds when due; and

(I) Procedures for the disposition of a sinking fund upon defeasance
of the sinking fund bonds, if defeasance other than by payment or
purchase by sinking fund moneys is legally permissible.

(b) Each municipality and school district is authorized to enter into
agreements with the state comptroller and the state comptroller is
authorized to enter into agreements with one or more municipality or
school district setting forth, with respect to the sinking funds and
each account therein, the dates on which annual contributions to such
accounts shall be made, the dates on which withdrawals from such
accounts may be made, the dates on which excesses in such accounts shall
be calculated, any limitations on the price to be paid for the purchase
of bonds pursuant to subparagraph (e) of subdivision four of this
paragraph and such other matters as the state comptroller and the
municipality or school district shall deem appropriate. Such agreements
shall be subject to approval only by the chief fiscal officer and the
finance board of the municipality or school district.

8. Nothing in this section shall be construed to prevent or apply to
the issuance of sinking fund bonds by the city of New York pursuant to
the authorization contained in section 22.00 of this chapter; provided,
however, that in the event the city of New York issues sinking fund
bonds pursuant to the authorization contained in this section, all of
the provisions of this section shall apply.

9. Failure to comply with any provision of this section shall not
affect the validity of any sinking fund bonds.

10. The comptroller shall annually prepare a report with respect to
the maintenance and management of sinking funds authorized by this
section. Such report, with respect to each municipality and school
district issuing sinking fund bonds pursuant to this section, shall
include, but not be limited to, a summary statement of the cash and
bonds invested in sinking funds, earnings thereon and disbursements
therefrom, and fees charged including information pertaining to the
allocation of the costs of the department of audit and control of
managing and maintaining such funds. Such report may also include any
other matter which the comptroller deems advisable. Such report shall be
delivered not later than May thirtieth to the governor, the temporary
president of the senate, the speaker of the assembly, the chairman of
the senate finance committee, the chairman of the assembly ways and
means committee and the chief fiscal officer of each such municipality
and school district.