§ 656. Reserve funds and appropriations. 1. a. The corporation shall create and establish special funds (herein referred to as capital reserve funds) and shall pay into such a capital reserve fund (1) any moneys appropriated and made available by the state or city for the purpose of such fund, (2) any proceeds of sale of notes or bonds, to the extent provided in the resolution or resolutions of the corporation authorizing the issuance thereof, and (3) any other moneys which may be made available to the corporation for the purpose of such fund from any other source or sources. All moneys held in a capital reserve fund, except as hereinafter provided, shall be used, as required, solely for the payment of the principal of bonds as the same mature or the annual sinking fund payments, the purchase or redemption of bonds, the payment of interest on 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to be paid when such bonds are redeemed prior to maturity; provided, however, that moneys in such fund shall not be withdrawn therefrom at any time in such amount as would reduce the amount of such fund to less than the maximum capital reserve fund requirement, except for the purposes of paying interest on bonds, principal of bonds and annual sinking fund payments, as the same become due and for the payment of which other moneys of the corporation are not available. Any income or interest earned by, or increment to, a capital reserve fund due to the investment thereof or any amount in excess of the maximum capital reserve fund requirement may be transferred by the corporation to other funds or accounts of the corporation to the extent it does not reduce the amount of such capital reserve fund below the maximum capital reserve fund requirement.

b. The corporation shall not issue bonds at any time if upon issuance the amount in the capital reserve fund will be less than the maximum capital reserve fund requirement, unless the corporation, at the time of issuance of such bonds, shall deposit in such fund from the proceeds of the bonds so to be issued, or otherwise, an amount which, together with the amount then in such fund, will not be less than the maximum capital reserve fund requirement.

c. No bonds or notes of the corporation shall be issued if upon such issuance the aggregate principal amount of bonds and notes of the corporation then outstanding exceeds the lesser of fourteen billion five hundred million dollars or such amount as would cause the maximum capital reserve fund requirement to exceed eighty-five million dollars; provided that, in determining such aggregate principal amounts there shall be deducted (i) all sums then available for the payment of such bonds or notes either at maturity or through the operation of a sinking fund; (ii) the aggregate principal amount of outstanding bonds issued (a) to refund notes and (b) to refund bonds, theretofore issued and then outstanding; and (iii) the aggregate principal amount of outstanding notes issued to renew notes theretofore issued and then outstanding. The provisions of the prior sentence notwithstanding, the corporation shall not issue bonds if such issuance shall cause the maximum reserve fund requirement to exceed thirty million dollars unless prior to such issuance the senate and assembly shall have adopted a concurrent resolution passed by the votes of a majority of all the members elected to each such house and, subsequent thereto, the governor shall evidence in writing the governor's agreement with such resolution to the chairperson of the corporation, which resolution shall be in full force and effect on the date of issuance of the bonds, permitting the maximum capital reserve fund requirement to equal or exceed the amount of the maximum capital reserve fund requirement which would be effective upon the issuance of the bonds in question, but in no event shall the maximum capital reserve fund requirement exceed eighty-five million dollars.

d. In computing the amount of a capital reserve fund for the purposes of this section, securities in which all or a portion of such fund shall be invested shall be valued at par if purchased at par or if purchased at other than par, at amortized value. Amortized value, when used with respect to securities purchased at a premium above or a discount below par, shall mean the value as of any given date obtained by dividing the total premium or discount at which such securities were purchased by the number of interest payments remaining to maturity on such securities after such purchase and by multiplying the amount so calculated by the number of interest payment dates having passed since the date of such purchase; and (i) in the case of securities purchased at a premium by deducting the product thus obtained from the purchase price, and (ii) in the case of securities purchased at a discount by adding the product thus obtained to the purchase price.

e. To assure the continued operation and solvency of the corporation for the carrying out of its corporate purposes, provision is made in paragraph a of this subdivision for the accumulation in each capital reserve fund of an amount equal to the maximum capital reserve fund requirement. In order further to assure such maintenance of each capital reserve fund, there shall be paid by the city to the corporation for deposit in each capital reserve fund on or before the first day of April, in each year, such amount, if any, needed for the purpose of restoring each such capital reserve fund to the maximum capital reserve fund requirement for such fund, as shall be certified by the chairperson of the corporation to the mayor and the director of management and budget on or before the first day of December next preceding; provided that any such amount shall have been first appropriated by or on behalf of the city for such purpose or shall have been otherwise made available from the proceeds of notes or bonds of the city authorized and issued pursuant to the local finance law for such purpose, which is hereby determined to be a specific object or purpose having a period of probable usefulness of five years. In the event of the failure or inability of the city to pay over to the corporation, in full, on or before such first day of April the amount so certified the chairperson of the corporation shall forthwith certify to the comptroller of the state of New York the amount remaining unpaid and thereupon the state comptroller shall pay to the corporation, out of the first moneys available for the next succeeding payments of (i) state aid apportioned to the city of New York as per capita aid for the support of local government pursuant to section fifty-four of the state finance law or (ii) such other aid or assistance payable by the state to the city and not otherwise allocated as shall supersede or supplement such state per capita aid, including federal moneys apportioned to the city by the state, such amount remaining unpaid, after giving written notice to the director of management and budget of each amount to be paid out of such state aid, until the amount in each such capital reserve fund is restored to the maximum capital reserve fund requirement thereof; provided, however, that prior to the issuance of any notes or bonds of the corporation pursuant to this article the city shall have enacted a local law authorizing payments from such sources into such a fund so long as any notes or bonds of the corporation shall be outstanding and unpaid, and provided further that moneys, if any, payable to the city university construction fund pursuant to the provisions of the city university construction fund act shall be paid, in full, to such fund, prior to any payments therefrom to the corporation. Any amount so paid over to the corporation shall be deducted from the corresponding apportionment of such per capita state aid otherwise payable to the city of New York, and shall not obligate the state to make nor entitle the city to receive any additional apportionment or payment of per capita state aid. All amounts paid over to the corporation as provided in this paragraph, including amounts paid by the state comptroller out of payments of such state aid, shall constitute and be accounted for as non-interest bearing loans by the city to the corporation and, subject, subordinate and junior to the rights of the holders of any notes or bonds of the corporation theretofore or thereafter issued, shall be repaid to the city from (i) moneys in such capital reserve fund in excess of the maximum capital reserve fund requirement thereof or (ii) any moneys of the corporation not required for any other of its corporate purposes.

f. In the event the chairperson of the corporation shall certify to the mayor and director of management and budget or to the state comptroller any amount necessary to restore a capital reserve fund to the maximum capital reserve fund requirement thereof pursuant to subdivision e of this section, the chairperson shall simultaneously deliver to such persons a statement of the cause or causes of such capital reserve fund deficiency and the measures to be taken by the corporation or the department of housing preservation and development to insure repayment of any loans made by the city to the corporation, including amounts paid by the state comptroller out of payments of state aid, for the purpose of restoring such capital reserve fund to the maximum capital reserve fund requirement thereof and to prevent the recurrence of any such deficiency.

2. Notwithstanding the provisions of subdivision one hereof, the corporation may issue bonds for any of its corporate purposes, without making any deposit in a capital reserve fund and the provisions of subdivision one of section six hundred fifty-six of this article shall not apply to such bonds and the principal of and interest on such bonds shall not be payable from or secured by any capital reserve fund.

3. The corporation shall create and establish such other fund or funds as may be necessary or desirable for its corporate purposes.