5:10-14.1. Debt service reserve fund; limitation on issuance of bonds; accumulation of moneys; nonliability of state or its political subdivisions

a. The authority may create and establish a reserve fund in connection with the issuance of bonds to finance the initial project to be known as the debt service reserve fund and may pay into such reserve fund (1) any moneys appropriated and made available by the State for the purposes of such fund, (2) any proceeds of sale of such bonds to the extent provided in the resolution of the authority authorizing the issuance thereof, and (3) any other moneys which may be made available to the authority for the purposes of such fund from any other source or sources. The moneys held in or credited to the debt service reserve fund established under this section, except as hereinafter provided, shall be used solely for the payment of the principal of such bonds of the authority secured by such reserve fund, as the same mature or become due, the purchase or retirement of such bonds, the payment of interest on such bonds or the payment of any redemption premium required to be paid when such bonds are redeemed prior to maturity; provided, however, that moneys in such fund shall not be withdrawn therefrom at any time in such amount as would reduce the amount of such fund to less than the maximum debt service reserve (as hereinafter defined) with respect to such bonds then outstanding and secured by such reserve fund, except for the purpose of paying the principal of, interest on, the premium, if any, on, and the retirement of, such bonds secured by such reserve fund maturing or becoming due and for the payment of which other moneys of the authority are not available. Maximum debt service reserve as used in this section shall mean, as of any date of calculation and with respect to such bonds secured by the debt service reserve fund, the largest amount of money required by the terms of any contracts of the authority with the holders of such bonds to be provided in any succeeding calendar year for the payment of interest on and serial maturities of such bonds then outstanding and payments required by the terms of any such contracts to be made to sinking funds established for the payment or redemption of such bonds, calculated on the assumption that such bonds will cease to be outstanding after the date of such calculation only by reason of the payment of such bonds at their respective maturities and the making of required payments to sinking funds and the application thereof in accordance with the terms of such contracts to the retirement of such bonds. Any income or interest earned by, or increment to, the debt service reserve fund due to the investment thereof may be transferred to any other fund or account of the authority to the extent it does not reduce the amount of such debt service reserve fund below the maximum debt service reserve with respect to such bonds of the authority then outstanding and secured by such reserve fund.

b. The authority shall not issue bonds at any time if the maximum debt service reserve with respect to such bonds outstanding and then to be issued and secured by the debt service reserve fund will exceed the amount of such reserve fund at the time of issuance, unless the authority, at the time of issuance of such bonds, shall deposit in such reserve fund from the proceeds of such 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 maximum debt service reserve with respect to such bonds then to be issued and on all other bonds of the authority then outstanding and secured by such reserve fund.

c. To assure the continued operation and solvency of the authority for the carrying out of the public purposes of the act, provision is made hereinabove in this section for the accumulation in the debt service reserve fund of an amount equal to the maximum debt service reserve with respect to all bonds of the authority then outstanding and secured by such reserve fund. In order further to assure the maintenance of such debt service reserve fund, there shall be annually appropriated and paid to the authority for deposit in the debt service reserve fund such sum, if any, as shall be certified by the chairman of the authority to the Governor as necessary to restore such reserve fund to an amount equal to the maximum debt service reserve with respect to such bonds of the authority then outstanding and secured by such reserve fund. The chairman of the authority shall annually, on or before March 1, make and deliver to the Governor his certificate stating the sum, if any, required to restore the debt service reserve fund of the authority to the amount aforesaid, and the sum or sums so certified, if any, shall be appropriated and paid to the authority for deposit in such debt service reserve fund of the authority prior to the end of the first calendar month of the next succeeding State fiscal year. Any payments to be made by the State to the authority as aforesaid for deposit in such debt service reserve fund are subject to and dependent upon appropriations being made from time to time by the State Legislature for such purpose.

d. In computing the debt service reserve fund for the purposes of this section, securities in which all or a portion of such debt service reserve fund shall be invested shall be valued at par, or if purchased at less than par, at their cost to the authority.

e. Nothing herein contained shall be deemed to cause the bonds or notes of the authority to be in any way a debt or a liability of the State or any political subdivision thereof other than the authority, and the bonds and notes of the authority, whether or not payable from the debt service reserve fund created and established pursuant to this section, shall not create or constitute any indebtedness, liability or obligation of the State or any such political subdivision or be or constitute a pledge of the faith and credit of the State or of any such political subdivision.

f. For purposes of this section, initial project shall mean the initial development of the meadowlands complex as determined by the authority, and shall consist of (1) a football stadium to seat approximately 76,500 persons, (2) a racetrack and related facilities for both thoroughbred and harness horse racing, (3) roadways, parking and other support facilities therefor, and environmental facilities in connection therewith, together with all land and rights in land, structures and improvements, and other facilities and appurtenances related thereto.

L.1973, c. 286, s. 1, eff. Dec. 4, 1973.