Section 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.