Chapter 7 of the laws of 1975

NEW YORK STATE

PROJECT FINANCE AGENCY ACT Section 1. Short title.

2. Declaration of policy and statement of purposes.

3. Definitions.

4. New York state project finance agency.

5. Powers of the agency.

6. Bonds and notes of the agency.

7. Reserve funds and appropriations.

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. Supervision of projects.

16. Assistance by state officers, departments, boards and

commissions.

17. Annual report.

18. Maximum authorization.

19. Partial invalidity.

20. Inconsistent provisions in other laws superseded.

21. Certain special proceedings.

21-a.Actions against corporation.

22. Construction.

§ 1. Short title.

This act may be cited as the "New York state project finance

agency act."

§ 2. Declaration of policy and statement of purposes.

The legislature has heretofore created the New York state

urban development corporation to engage in the construction of

projects to fulfill essential public purposes which are

necessary for the health, safety and welfare of the people of

this state, as found by the legislature in section two of the

New York state urban development corporation act.

In order to assist in the completion of projects to which the

corporation is contractually obligated, to provide for the

orderly marketing of obligations to finance such completion, and

to provide for the orderly payment of debt service of the

corporation, it is hereby found and declared that a separate

corporate governmental agency, to be known as the "New York

state project finance agency," should be created as a single

purpose agency to provide long-term financing to the New York

state urban development corporation, by acquiring funds from

appropriations by the state and from sale of its notes and

bonds.

It is hereby declared that the aforementioned purposes are

public uses and public purposes for which public money may be

loaned and tax exemptions granted, and that the powers and

duties of the New York state project finance agency, as

hereinafter prescribed are necessary and proper for the purpose

of achieving the ends here recited.

§ 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. "Bonds" and "notes" shall mean bonds and notes,

respectively, issued by the agency pursuant to this act.

3. "Commissioner" shall mean the commissioner of housing and

community renewal of the state.

4. "Comptroller" shall mean the comptroller of the state.

5. "Corporation" shall mean the New York state urban

development corporation.

6. "Corporation first mortgage" shall mean a first mortgage on

a corporation project securing a loan by the corporation.

7. "Corporation project" shall mean a residential project as

defined in the New York state urban development corporation act.

8. "Eligible loan" shall mean a loan by the agency to the

corporation, approved by the commissioner as provided in this

act, evidenced by the issuance to the agency of notes of the

corporation (which for this purpose may be negotiable or

non-negotiable and may have any term not exceeding fifty years),

and secured by the pledge and assignment of a corporation first

mortgage and any contract or arrangement for the payment of

subsidy to the corporation on account of the corporation project

securing such mortgage, as well as by the pledge and assignment

of such other existing and future assets and revenues of the

corporation and the receipts to be derived therefrom as may be

determined by the commissioner to be required in order for the

agency to obtain borrowings to finance such eligible loan.

9. "Eligible purchase" shall mean the purchase by the agency

from the corporation of a corporation first mortgage and the

assignment to the agency of any contract or arrangement for the

payment of subsidy to the corporation on account of the

corporation project securing such mortgage.

§ 4. New York state project finance agency.

1. There is hereby created the New York state project finance

agency. The agency shall be a corporate governmental agency

constituting a public benefit corporation. Its membership shall

consist of the commissioner of taxation and finance, the

commissioner, the director of the budget, the chairman 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 have 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 thirty-nine of the

public officers law shall apply to such members. The chairman of

the New York state housing finance agency shall serve as

chairman of the agency.

2. The powers of the agency shall be vested in and exercised

by a majority of the members then in office. The commissioner of

taxation and finance, the commissioner, 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 as a

representative is absent with the same force and effect as if

the member designating him were present and voting. Such

designation shall be by written notice filed with the chairman

of the agency by each of the said members. The designation of

such persons shall continue until revoked at any time by written

notice to the chairman by the respective member making the

designation. Such designation shall not be deemed to limit the

power of the appointing member to attend and vote at any meeting

of the agency.

3. The members shall serve without salary or other

compensation, but each member shall be entitled to reimbursement

for actual and necessary expenses incurred in the performance of

his or her official duties.

4. Such members, except as otherwise provided by law, may

engage in private employment, or in a profession or business.

The members, officers and employees of the agency shall be

deemed to be state officers or employees for the purposes of

sections seventy-three and seventy-four of the public officers

law. Notwithstanding the provisions of the preceding sentence or

of any other law, any state instrumentality (including any state

agency, trust fund or public benefit corporation other than the

agency) may purchase from, sell to, borrow from, loan to,

contract with or otherwise deal with any corporation, trust,

association, partnership or other entity in which any member of

the agency has a financial interest, direct or indirect, and the

agency may engage in any such transaction with any other state

instrumentality with which any member of the agency is

affiliated as a state officer or employee, provided that prior

to such transaction such interest or affiliation is disclosed to

such other state instrumentality and is disclosed in the minutes

of the agency, and provided further that no member having such

an affiliation (except such an affiliation with the New York

state housing finance agency) shall participate in any decision

of the agency affecting such transaction.

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 office or employment by reason of

his 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 actual and

necessary expenses incurred in the performance of such services.

7. The governor may remove any member appointed by him for

inefficiency, neglect of duty or misconduct in office after

giving him a copy of the charges against him and an opportunity

to be heard, in person or by counsel in his 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

findings thereon, together with a complete record of the

proceeding.

8. The agency and its corporate existence shall terminate on

the first date subsequent to the thirtieth day of April,

nineteen hundred seventy-seven, which is thirty days after

payment in full of all its bonds, notes or other obligations

(other than obligations for repayment of appropriations), and

may be sooner terminated by law, provided, however, that no such

law shall take effect so long as the agency shall have bonds,

notes or other obligations (other than obligations for repayment

of appropriations) outstanding, unless adequate provision has

been made for the payment thereof. Upon termination of the

existence of the agency, all its rights and properties shall

pass to and be vested in the corporation as transferee of the

agency's obligations for repayment of appropriations,

theretofore transferred by the state to the corporation pursuant

to a chapter of the laws of nineteen hundred seventy-five, and

any remaining obligations of the agency for such repayment shall

be cancelled.

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.

10. The state shall save harmless and indemnify directors,

officers and employees of the agency pursuant to section

seventeen of the public officers law against any claim, demand,

suit or judgment arising by reason of any act or omission to act

by such director, officer or employee occurring in the discharge

of his duties and within the scope of his service on behalf of

the agency. In the event of any claim, demand, suit or judgment

based on allegations that financial loss was sustained by any

person in connection with the acquisition, disposition or

holding of securities or other obligations of the agency (or

those of any other public corporation if such loss allegedly

resulted from its dealing with the agency), a director, officer

or employee of the agency shall be saved harmless and

indemnified, notwithstanding the limitations of subdivision one

of section seventeen of the public officers law, unless such

individual is found by a final judicial determination not to

have acted, in good faith, for a purpose which he reasonably

believed to be in the best interests of the agency or not to

have had reasonable cause to believe that his conduct was

lawful.

§ 5. Powers of the agency.

Except as otherwise limited by this act and subject to the

provisions of any contract with noteholders or bondholders, 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

management;

5. To acquire, hold and dispose of real or personal property

(whether tangible or intangible) 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 or non-negotiable

notes, bonds or other obligations and to provide for the rights

of the holders thereof, and as security for the payment of the

principal of and interest on any notes or bonds so issued and

any agreements made in connection therewith, to assign or pledge

any or all existing and future assets or revenues owned by or

assigned or pledged to the agency and the receipts to be derived

therefrom;

8. To accept appropriations made to it by the state and to

apply the proceeds of such appropriations, together with the

proceeds of borrowings by the agency and any other funds

available to it, for the purposes set forth in this act, and

from time to time to enter into a repayment agreement with the

state in respect of such appropriations on such terms and

conditions as the director of the budget determines are

appropriate for the repayment of any and all outstanding sums

then owed in such respect by the agency and each such agreement

shall supersede all prior such agreements, provided that such

repayment agreements shall require payments thereunder in any

fiscal year of the agency only to the extent that the agency's

revenues and receipts from operations (excluding borrowings,

proceeds of sales of assets and appropriations) during its

preceding fiscal year shall exceed the aggregate amount payable

by the agency during such preceding year for expenses (including

reasonable reserves for contingencies) and debt service (without

regard to any refunding of debt) plus the amount of any eligible

purchases and eligible loans made during either such year out of

any balance of such revenues and receipts from operations;

9. To invest any funds held in reserve or sinking funds, or

any funds not required for immediate use or disbursement, at the

discretion of the agency, in obligations of the state or federal

government, obligations the principal and interest of which are

guaranteed by the state or federal government, or obligations of

agencies of the federal government, or special time deposits in,

or certificates of deposit issued by, a bank or trust company

authorized to do business in this state and secured by a pledge

of obligations of the United States of America or obligations of

the state or obligations the principal and interest of which are

guaranteed by the state or federal government or obligations of

agencies of the federal government, provided that any such

investment is one which may from time to time be legally

purchased by savings banks of the state as investments of funds

belonging to them or in their control;

10. To make eligible purchases at such purchase price as the

commissioner shall approve (including a purchase price at a

premium over the par value of the corporation first mortgage to

be purchased) which shall be determined on the basis that such

purchase price is to be amortized over the remaining term of the

corporation first mortgage at the corporation's estimated

average cost of borrowing (as determined by the commissioner in

accordance with any accepted method) utilizing the annual

payments of principal and interest called for by such mortgage,

and otherwise on such terms and conditions, not inconsistent

with this act, as are satisfactory to the agency; provided that

no eligible purchase shall be made by the agency unless, except

as otherwise permitted by contract with bondholders or

noteholders, the commissioner finds that

(a) the mortgage purchased is (or in the case of a purchase

not involving the use of funds acquired through the issuance of

bonds or notes of the agency, can reasonably be anticipated to

become) a valid first mortgage lien on a corporation project

free and clear of all other liens and encumbrances which would

materially affect the value or usefulness of the property

secured thereby (or that arrangements satisfactory to the

commissioner for the discharge of such liens and encumbrances

have been made) and that such first mortgage has been executed

and recorded in accordance with the requirements of existing

laws; and

(b) the estimated net revenues of such corporation project,

after provision has been made to cover all probable costs of

operation and maintenance, of fixed charges and operating

reserves and depreciation reserves, if any, including any

subsidy payments attributable to such corporation project, shall

be sufficient to pay the estimated principal of and interest on

all bonds or notes of the agency issued or to be issued which

are allocated or re-allocated by the commissioner to the

financing of the purchase of such mortgage (after giving effect

to such estimated net revenues related to mortgages purchased or

acquired as security for eligible loans made with state

appropriations or other available funds which are concurrently

allocated or re-allocated to such financing) and any fees and

charges of the agency applicable to such eligible purchase.

Subject to the provisions of any contract of the agency or the

corporation with their respective noteholders or bondholders,

(i) the corporation shall have authority to make an additional

mortgage loan, pursuant to the private housing finance law and

the New York state urban development corporation act, for any

corporation project the corporation first mortgage on which has

been purchased by the agency, such loan to be made on an

additional mortgage junior and subordinate only to the mortgage

that was purchased by the agency but otherwise equivalent to a

corporation first mortgage, (ii) the agency shall have authority

to make an eligible purchase, pursuant to this act, of such

additional mortgage notwithstanding that it is not a corporation

first mortgage, at any time at or after the making of the first

advance on such additional mortgage by the corporation, with the

purchase price (including any applicable premium) to be payable

at such times and in such amounts as shall be agreed by the

agency and the corporation, and (iii) upon such a purchase by

the agency such additional mortgage may be consolidated with the

corporation first mortgage previously purchased by the agency;

11. To make eligible loans on such terms and conditions, not

inconsistent with this act, as are satisfactory to the agency;

provided that no eligible loan shall be made by the agency

unless, except as otherwise permitted by contract with

bondholders or noteholders, the commissioner finds that

(a) the mortgage securing the eligible loan is (or in the case

of a loan not involving the use of funds acquired through the

issuance of bonds or notes of the agency, can reasonably be

anticipated to become) a valid first mortgage lien on a

corporation project free and clear of all other liens and

encumbrances which would materially affect the value or

usefulness of the property secured thereby (or that arrangements

satisfactory to the commissioner for the discharge of such liens

and encumbrances have been made) and that such first mortgage

has been executed and recorded in accordance with the

requirements of existing laws; and

(b) the estimated net revenues of such corporation project,

after provision has been made to cover all probable costs of

operation and maintenance, of fixed charges and operating

reserves and depreciation reserves, if any, including any

subsidy payments attributable to such corporation project, shall

be sufficient to pay the estimated principal of and interest on

all bonds or notes of the agency issued or to be issued which

are allocated or re-allocated by the commissioner to the

financing of such eligible loan (after giving effect to such

estimated net revenues related to mortgages purchased or

acquired as security for eligible loans made with state

appropriations or other available funds which are concurrently

allocated or re-allocated to such financing) and any fees and

charges of the agency applicable to such eligible loan;

12. To use and apply all monies received by the agency on

account of the corporation first mortgages purchased by the

agency or on account of the corporation first mortgages and

other assets or revenues assigned or pledged to it as security

for eligible loans:

(a) In the case of such corporation first mortgages and other

assets or revenues assigned or pledged by the agency as security

for outstanding bonds of the agency, to meet payments of

principal and interest on such outstanding bonds and any fees

and charges of the agency related to the respective corporation

first mortgages, and any excess shall be applied in accordance

with paragraph (d) of this subdivision;

(b) In the case of such corporation first mortgages and other

assets or revenues assigned or pledged by the agency as security

for outstanding notes of the agency, to meet payments of

principal and interest on such outstanding notes (including the

redemption of any note payment certificates delivered pursuant

to subdivision three of section seven of this act) and any fees

and charges of the agency related to the respective corporation

first mortgages, and any excess shall be applied in accordance

with paragraph (d) of this subdivision;

(c) In the case of any such corporation first mortgages and

other assets or revenues assigned or pledged by the agency as

security for its guaranty of obligations of the corporation,

pursuant to subdivision twenty-one of this section, to be

applied in accordance with the provisions of such guaranty, and

any excess shall be applied in accordance with paragraph (d) of

this subdivision; and

(d) In the case of any such corporation first mortgages and

other assets or revenues not assigned or pledged by the agency

as security, and in the case of excess amounts to be applied in

accordance with this paragraph as provided above, first, to meet

payments of principal and interest on any outstanding bonds or

notes of the agency (including the redemption of any note

payment certificates delivered pursuant to subdivision three of

section seven of this act) and the fees and charges of the

agency, irrespective of the corporation project or projects from

which such monies are derived, and, second, any balance shall be

applied as follows: (i) in the case of any such monies received

on account of such corporation first mortgages and other assets

or revenues that had been assigned or pledged to the agency as

security for eligible loans, to pay over such balance to the

corporation in accordance with the terms and conditions of such

eligible loans; and (ii) in the case of any such monies received

on account of such corporation first mortgages that had been

purchased by the agency, to make further eligible purchases or

eligible loans to the extent deemed appropriate by the

commissioner, to pay any remaining balance to the corporation in

reduction of the agency's obligations for repayment of

appropriations theretofore transferred by the state to the

corporation pursuant to a chapter of the laws of nineteen

hundred seventy-five, and, in the event of payment in full by

the agency of such obligations, to apply any remaining balance

as the members of the agency, in their discretion, with the

approval of the commissioner, shall determine to be in the best

interests of the agency and the corporation and their respective

bondholders and noteholders.

13. To sell, at public or private sale, any obligations,

property or rights representing, embodying or securing an

eligible loan made by the agency or acquired in an eligible

purchase;

14. In connection with the making of eligible purchases,

eligible loans and commitments therefor, to make and collect

such fees and charges, including but not limited to

reimbursements of all costs of financing by the agency, service

charges and insurance premiums, as the agency shall determine to

be reasonable;

15. To consent to the modification, with respect to rate of

interest, time of payment of any installment of principal or

interest, security, or any other term, of any eligible loan,

eligible loan commitment, eligible purchase, eligible purchase

commitment, contract or agreement of any kind to which the

agency is a party;

16. To exercise exclusively all rights of the mortgagee under

any corporation first mortgage purchased by the agency or

assigned to secure any eligible loan, to foreclose on any

property subject to such mortgage 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, administer, 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;

17. 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;

18. To accept any gifts or grants or loans of funds or

property or financial or other aid in any form, including but

not limited to mortgage insurance, 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;

19. To engage the services of private consultants on a

contract basis for rendering professional and technical

assistance and advice;

20. 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 reimbursement 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;

21. To guarantee obligations of the corporation and to assign

or pledge as security for any such guaranty any or all of the

obligations, property or rights representing, embodying or

securing an eligible loan made by the agency or acquired in an

eligible purchase;

22. 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.

§ 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 or non-negotiable

bonds and notes in such principal amount as, in the opinion of

the agency, shall be necessary to provide sufficient funds for

achieving its corporate purposes, including the making of

eligible purchases and eligible loans, 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

deems refunding expedient, 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 of 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 or other property.

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, not exceeding ten 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 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 payments to

be received in respect of corporation first mortgages purchased

by the agency or in respect of eligible loans, and any amounts

realized on account of the corporation first mortgages and other

assets or revenues pledged or assigned as security for such

eligible loans, and other monies received or to be received, to

secure the payment of bonds or notes or of any issue thereof,

subject to such agreements with bondholders or noteholders as

may then exist;

(b) pledging all or any part of the assets or revenues of the

agency, including mortgages and other obligations, owned by or

pledged or assigned to the agency, to secure the payment of the

bonds or notes, subject to such agreements with bondholders or

noteholders as may then exist;

(c) the use and disposition of payments received on account of

mortgages and other obligations owned by or pledged or assigned

to the agency;

(d) the setting aside of reserves or sinking funds and the

regulation and disposition thereof;

(e) 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;

(f) 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;

(g) 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;

(h) limitations on the amount of monies to be expended by the

agency for operating, administrative or other expenses of the

agency;

(i) vesting in a trustee or trustees or an agent or agents,

for bondholders or noteholders, such property, rights, powers

and duties in trust or as security as the agency may determine,

which may, but not by way of limitation, include any or all of

the rights, powers and duties of the trustee which may be

appointed by bondholders or noteholders pursuant to section

thirteen of this act, and limiting or abrogating the

applicability of section thirteen of this act to the affected

bonds or notes, the holders thereof or any trustee or agent for

such holders;

(j) any other matters, of like or different character, which

in any way affect the security or protection of the notes and

bonds.

4. It is the intention hereof that any pledge or assignment

for security made by the agency shall be valid and binding from

the time when the same is made; that the monies or property so

pledged or assigned and then held or thereafter received by the

agency shall immediately be subject to the lien or security

interest of such pledge or assignment without any physical

delivery thereof or further act; and that the lien or security

interest of any such pledge or assignment shall be valid and

binding as against all parties having claims of any kind in

tort, contract or otherwise against the agency, irrespective of

whether such parties have notice thereof. Neither the resolution

nor any other instrument by which any such pledge or assignment

is created need be recorded, and no filing with respect to such

pledge or assignment need be made under the uniform commercial

code.

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 and

bondholders 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.

§ 7. Reserve funds and appropriations.

1. (a) For the purposes of the issuance by the agency of

bonds, the term "capital reserve fund requirement" shall mean,

as of any particular date of computation, with respect to each

capital reserve fund of the agency 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 on the bonds secured by such capital reserve fund,

such annual debt service payments for any calendar year being an

amount of money equal to the aggregate of the following with

respect to all such bonds of the agency outstanding on said date

of computation; (i) all interest payable during such calendar

year, plus (ii) the principal amount which matures (net of any

sinking fund payments payable in prior years) during such

calendar year, plus (iii) the amount of all sinking fund

payments payable during such calendar year; 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

may create and establish one or more special funds to be known

as capital reserve funds and may pay into each 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 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 any capital reserve fund established under this

subdivision, except as hereinafter provided, shall be used

solely for the payment of the principal of bonds of the agency

secured by such reserve fund, as the same mature, sinking fund

payments with respect to such bonds of the agency, the purchase

of such bonds of the agency, the payment of interest on such

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 any 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 capital reserve

fund requirement, except for the purpose of paying principal and

interest on the bonds of the agency secured by such reserve fund

maturing and becoming due or any sinking fund payments with

respect to such bonds and for the payment of which other monies

of the agency are not available. Any income or interest earned

by, or increment to, any 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 such capital reserve fund below the capital reserve

fund requirement.

(b) The agency shall not issue bonds at any time if upon

issuance, the amount in the capital reserve fund securing such

bonds will be less than the capital reserve fund requirement

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

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 each capital reserve fund of an amount equal to

the capital reserve fund requirement. In order further to

assure the maintenance of each such capital reserve fund, there

shall be annually apportioned and paid to the agency for deposit

in each 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 capital reserve fund requirement. The

chairman of the agency shall annually, on or before December

first, make and deliver to the governor and director of the

budget his certificate stating the sum or sums, if any, required

to restore each such 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.

(d) In computing any 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. As used herein "amortized value" shall mean,

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 securities 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.

2. The agency may create and establish one or more special

funds (herein each referred to as a general reserve fund) and

shall pay into each such fund, to the extent required by

agreements with holders of bonds or notes secured by such fund,

all fees and charges collected by the agency pursuant to

subdivision fourteen of section five of this act and any monies

which the agency shall transfer from the related 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 general reserve fund may, in the discretion of the agency, but

subject to agreement with bondholders or 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

division of housing and community renewal the reasonable costs

of the services performed by the commissioner and the division

pursuant to the provisions of 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 related

capital reserve fund, (e) for the payment of principal and

interest on bonds or notes issued by the agency and secured by

such general reserve fund 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 bonds or notes

are redeemed prior to their stated maturities and any sinking

fund payments, and to purchase such 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.

3. (a) This subdivision shall be applicable if the agency

shall issue notes (herein called "secured notes") secured by the

pledge and assignment of assets or revenues of the agency, with

provision under certain circumstances for amortization of the

principal amount of such notes over a period of years. Upon the

issuance of any secured notes, and if necessary upon the actual

commencement of amortization of principal, the agency shall

determine the amount which, notwithstanding the actual terms of

such notes for payment of interest and principal or for the

application thereto of receipts from the pledged assets or

revenues, would then be required to be provided as hypothetical

monthly level debt service payments in order to pay the stated

interest on and to amortize the maximum principal amount of the

secured notes over the longest period of years then allowed for

full amortization of principal under the terms of the secured

notes. The aggregate for all secured notes of the portion of

such hypothetical level debt service payments that would be

payable in any twelve consecutive months during such period of

amortization thereof, but in no event an amount greater than

twenty per cent of the maximum principal amount of the secured

notes, as of any particular date of computation, is herein

called the "note service requirement" of the agency.

(b) The agency shall create and establish a special fund to be

known as the "note service reserve fund," and upon the issuance

of any secured notes shall create and deposit therein note

payment certificates (herein called "note payment certificates")

in an aggregate principal amount equal to the note service

requirement as then computed. Any note payment certificates that

are in excess of the note service requirement upon a

recomputation of such requirement shall be withdrawn from such

fund and cancelled. Note payment certificates shall be

obligations of the agency, issuable and re-issuable in any

denominations, deliverable as further evidence of and security

for unpaid amounts of interest or principal on secured notes

which are not paid when due because the agency has insufficient

funds available to make such payments in cash, bearing interest

to the same extent as the unpaid amounts of interest or

principal on the secured notes in connection with which they are

delivered continue to accrue interest, and redeemable by the

agency upon payment in cash of the principal amount of the

redeemed note payment certificates plus any interest accrued

thereon from date of delivery to date of redemption. Any note

payment certificates so redeemed, or an equal principal amount

of certificates created in replacement thereof, shall be

redeposited in the note service reserve fund, to the extent

necessary to cause the principal amount deposited in such

reserve fund to equal the note service requirement, as then

computed, and any excess note payment certificates redeemed

shall be cancelled. The note service reserve fund may be

maintained with any trustee or agent for the holders of secured

notes and the note payment certificates may be deposited with

such trustee or agent to be held in trust prior to delivery

thereof as further security for the payment of principal of or

interest on the secured notes when due. Such trustee or agent

shall have no obligation to realize upon any pledged assets or

revenues either prior to delivering note payment certificates

upon the failure of the agency to pay interest or principal when

due or thereafter and prior to redemption of such certificates.

However, any realization upon any pledged assets or revenues and

any other payments made on account of the secured notes shall be

applied to the payments of principal of or interest on the

secured notes (including redemption of delivered note payment

certificates) in the order in which such payments originally

became due. The proceeds of each redemption of note payment

certificates shall be applied as payment of an equivalent amount

of overdue principal of or interest on the secured notes.

(c) In order to assure the availability of funds to maintain

the note service reserve fund at an amount equal to the note

service requirement of the agency, there shall be annually

apportioned and paid to the agency, for application exclusively

to the redemption of delivered note payment certificates, such

sum, if any, as shall be certified by the chairman of the agency

to the governor and director of the budget as estimated to be

necessary to redeem by the end of the then current state fiscal

year all note payment certificates theretofore delivered and not

redeemed by payment in full of the principal amount thereof and

any interest accrued thereon. The chairman of the agency shall

annually, on or before December first, make and deliver to the

governor and director of the budget his certificate stating the

sum, if any, estimated to be required to redeem all such note

payment certificates as aforesaid by the end of the then current

state fiscal year, and the sum so certified, if any, shall be

apportioned and paid to the agency during the then current state

fiscal year. Upon its receipt of such payment from the state,

the agency shall immediately apply such payment, to the extent

thereof, to the redemption of outstanding note payment

certificates.

§ 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 savings associations, including savings and loan

associations, building and loan associations, investment

companies and other persons carrying on a banking business, all

administrators, guardians, executors, 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, including

capital, in their control or belonging to them.

§ 9. Exemption from taxation of property and income.

The property of the agency and its income and operations shall

be exempt from taxation.

§ 10. Exemption from taxation of notes and bonds.

It is hereby determined 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 governmental 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

consideration 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.

§ 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 holders, 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.

§ 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 interest

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 at least twice in each of at least one

newspaper publishing and circulating in the county of Albany and

at least one newspaper publishing and circulating in the city of

New York, the first publication to be at least thirty days

before the date of redemption.

§ 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 agreements 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 instruments filed in the

office of the clerk of the county of Albany and proved 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 twenty-five per centum in principal amount of such notes or

bonds then outstanding shall, in his or its own name:

(a) by suit, action or proceeding in accordance with the civil

practice law and rules, enforce all rights of the noteholders or

bondholders, including the right to require the agency to

collect fees and charges and interest and amortization payments

on mortgages purchased and eligible 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 loans 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 functions specifically set forth herein or

incident to the general representation 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 purchased by the

agency or securing an eligible loan made by the agency, the

trustee shall first give thirty days' notice in writing to the

governor, to the agency, to the commissioner and to the attorney

general of the state.

§ 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 taxation and finance on requisition of the

chairman of the agency or of such other officer or employee as

the agency shall 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.

2. Subject to agreements with noteholders and bondholders and

the approval of the comptroller, the agency shall prescribe a

system of accounts.

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.

3. The comptroller, or his legally authorized representative,

is hereby authorized and empowerd 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, chairman of the

senate finance committee, chairman of the assembly ways and

means committee and the comptroller, within thirty days of the

receipt thereof by the agency, 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 examination made by the

comptroller.

§ 15. Supervision of projects.

Notwithstanding any provision of law to the contrary, and upon

the issuance by the commissioner of a certificate of assumption

of supervision, any corporation project a mortgage on which has

been purchased by the agency or assigned as security for an

eligible loan shall be subject to the supervision and control of

the commissioner and the New York state division of housing and

community renewal, which shall have the same powers and

responsibilities with respect to such project as they would have

if such project were aided by a loan from the state or the New

York state housing finance agency under article two of the

private housing finance law and which shall assume the

additional powers and responsibilities with respect to such

project theretofore conferred on the corporation by law or

contract. The corporation and the commissioner shall take such

actions and execute such documents as may be necessary to

implement this section.

§ 16. Assistance by state officers, departments, boards and

commissions.

1. The department of audit and control, department of law,

division of housing and community renewal and all other state

officers, departments, boards, divisions and commissions may

render such services to the agency within their respective

functions as may be requested by the agency.

2. The commissioner and the division of housing and community

renewal are hereby designated to act for and in behalf of the

agency in servicing the corporation first mortgages purchased by

the agency or securing eligible loans of the agency, and shall

perform such additional functions and services in connection

with the making, servicing and collection of such eligible loans

as shall be requested by the agency. The agency shall pay to

the division of housing and community renewal from any monies of

the agency available for such purpose, such amounts as are

necessary to reimburse the division of housing and community

renewal for the reasonable cost of the services performed by the

commissioner and the division of housing and community renewal

pursuant to this section.

§ 17. Annual report.

The agency shall submit to the governor, the chairman of the

senate finance committee, the chairman 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 the agency,

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 eligible purchases, eligible 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.

§ 18. Maximum authorization.

The agency shall not issue bonds and notes in an aggregate

principal amount exceeding three hundred five million dollars,

excluding bonds and notes issued to refund or otherwise repay

outstanding bonds and notes of the agency or of the corporation.

§ 19. Partial invalidity.

If any provision of this act, or the application thereof to

any person or circumstance, shall be adjudged by any court of

competent jurisdiction to be invalid or unenforceable, such

judgment shall not affect, impair or invalidate the remainder of

this act or the application of such provision to any other

person or circumstance, but shall be confined in its operation

to the provision, person and circumstance directly involved in

the controversy in which such judgment shall have been rendered.

§ 20. 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.

§ 21. Certain special proceedings.

In the event that the agency or the corporation shall have

occasion at any time to seek declaratory relief in the courts

with respect to any matters relating to transactions

contemplated by this act, any request for such relief shall be

brought as a special proceeding and conducted in accordance with

article four of the civil practice law and rules. Any such

special proceeding shall be preferred over all other civil

causes except election causes in all courts of the state of New

York and shall be heard and determined in preference to all

other civil business pending therein except election causes,

irrespective of position on the calendar. In any such special

proceeding, the court hearing the matter shall have authority in

its discretion to award, as against the agency or the

corporation, the reasonable counsel fees and expenses of a party

or intervenor opposing such declaratory relief, based on the

court's determination as to the contribution made to the sound

and orderly resolution of the proceeding by the participation of

such party or intervenor therein, and the court hearing the

matter may in its discretion appoint counsel to represent a

class of persons having interests in opposition to such

declaratory relief being sought and may award reasonable counsel

fees and expenses as aforesaid on account of such

representation.

§ 21-a. Actions against corporation. Except in an action for

wrongful death, in any case founded upon tort a notice of claim

shall be required as a condition precedent to the commencement

of an action or special proceeding against the agency and the

provisions of section fifty-e of the general municipal law shall

govern the giving of such notice. No such action shall be

commenced more than one year and ninety days after the cause of

action therefor shall have accrued. An action for wrongful death

shall be commenced in accordance with the notice of claim and

time limitation provisions of title eleven of article nine of

the public authorities law.

§ 22. Construction.

This act, being necessary for the welfare of the state and its

inhabitants, shall be liberally construed so as to effectuate

its purposes.