Section 54.90. Issuance of bonds or notes with variable rates of interest

a.
  Whenever  in  the  judgment  of  the  finance  board  the  interest of a
  municipality would be served thereby, the municipality may  issue  bonds
  or  notes,  on  or  before  July  fifteenth,  two  thousand twelve, with
  interest rates that vary in accordance with a formula or  procedure  and
  are  subject  to  a maximum rate of interest set forth or referred to in
  the bonds or notes and may provide the holders thereof with such  rights
  to  require  the municipality or other persons to purchase such bonds or
  notes or renewals thereof from the proceeds of  the  resale  thereof  or
  otherwise from time to time prior to the final maturity of such bonds or
  notes  as  the  finance  board  may  determine  and the municipality may
  resell, at any time prior to final maturity, any  such  bonds  or  notes
  acquired  as a result of the exercise of such rights; provided, however,
  that at no time shall the total principal  amount  of  bonds  and  notes
  issued  pursuant  to  this paragraph (other than bonds and notes bearing
  interest at rates  and  for  periods  of  time  that  are  specified  at
  issuance)  exceed  ten percent of the limit prescribed by section 104.00
  of this article.
    Notwithstanding the foregoing, the holders  of  bonds  or  notes  sold
  pursuant  to  this  paragraph  shall  not  be provided with the right to
  require the municipality or other persons to  repurchase  the  bonds  or
  notes  prior  to  the final maturity thereof unless the municipality has
  entered into one or  more  letter  of  credit  agreements  or  liquidity
  facility  agreements  for  the  express  purpose  of  such  sale,  which
  agreements the municipality is hereby  authorized  to  enter  into,  and
  which  shall  require  a financially responsible party or parties to the
  agreement or agreements, as defined by section  2.00  of  this  chapter,
  other than the municipality to purchase all or any portion of such bonds
  or  notes  tendered  by  the holders thereof for repurchase prior to the
  final maturity of such bonds or notes until such time as  the  right  of
  the  holders  of such bonds or notes to require repurchase of such bonds
  or notes prior to the final maturity thereof shall cease.
    Notwithstanding the foregoing, whenever in the judgment of the finance
  board of the city of New York the interest of such city would be  served
  thereby,  the  city of New York may without further approval issue bonds
  or notes, on or before July fifteenth, two thousand ten,  with  interest
  rates  that  vary  in  accordance  with  a  formula or procedure and are
  subject to a maximum rate of interest set forth or referred  to  in  the
  bonds  or  notes and may provide the holders thereof with such rights to
  require the city or other persons to purchase such  bonds  or  notes  or
  renewals  thereof  from  the proceeds of the resale thereof or otherwise
  from time to time prior to the final maturity of such bonds or notes  as
  the finance board of the city of New York may determine and the city may
  resell,  at  any  time  prior to final maturity, any such bonds or notes
  acquired as a result of the exercise of such rights; provided,  however,
  that  at  no  time  shall  the total principal amount of bonds and notes
  issued by the city of New York pursuant to this  paragraph  (other  than
  bonds  and  notes  (1) bearing interest at rates and for periods of time
  that are specified without reference to future events or  contingencies,
  or  (2)  described in section 136.00 of this article) exceed twenty-five
  percent of the limit prescribed by section 104.00 of this article.
    b. To facilitate the marketing of any issue of bonds and notes  issued
  pursuant  to  this  section,  such municipality may, notwithstanding any
  limitation on private sale of bonds  and  notes  provided  by  law,  and
  subject  to  rules  promulgated  by the state comptroller governing such
  sales: (i) arrange for the underwriting  of  such  bonds  and  notes  at
  private   sale  through  negotiated  agreement,  compensation  for  such
  underwriting to be provided by negotiated fee or by sale of  such  bonds

  and notes to an underwriter at a price of less than the sum of par value
  of,  and  accrued interest on, such obligations; or (ii) arrange for the
  private sale of such  bonds  and  notes  through  negotiated  agreement,
  compensation  for  such  sale  to  be  provided  by  negotiated  fee, if
  required. The cost of such underwriting or private  placement  shall  be
  deemed  a  preliminary  cost  for  the purposes of section 11.00 of this
  chapter.
    c. The finance board of such municipality  is  hereby  authorized  and
  empowered,  in conformance with paragraphs c through g of section 168.00
  of this chapter, to enter into such agreements as  it  deems  reasonable
  and  appropriate to facilitate the issuance, sale, resale and repurchase
  of such bonds and notes, including but not limited  to  agreements  with
  financially  responsible third parties for the remarketing or repurchase
  of such  bonds  and  notes  in  accordance  with  terms  and  conditions
  determined  by  such  finance  board,  provided,  however,  that no such
  agreement shall cause or have the effect of causing any annual principal
  installment of an issue of serial bonds to be more than fifty per centum
  in excess of the smallest prior installment unless the finance board has
  determined to provide for substantially level or declining  annual  debt
  service payments in accordance with paragraph d of section 21.00 of this
  chapter,  in which case no such agreement shall cause or have the effect
  of causing any annual principal installment of an issue to vary from the
  amounts determined by the finance board to be required  to  comply  with
  such  paragraph  at  the  time  of  issuance  of the bonds or notes. The
  finance board  may,  by  resolution,  delegate  its  power  to  contract
  pursuant  to  this  section  to  the chief fiscal officer, as defined in
  section 2.00 of this chapter, of such public body  in  which  event  the
  chief  fiscal officer shall exercise such power until the finance board,
  by resolution, shall elect to reassume the same. For  purposes  of  this
  section,  the finance board of the city of New York shall mean the mayor
  and the city comptroller.
    d. 1. On or before July fifteenth, two  thousand  ten  the  mayor  and
  comptroller of the city of New York may:
    (i)  enter  into interest rate exchange or similar agreements with any
  person under such terms and conditions as the mayor and comptroller  may
  determine,  including  provisions as to default or early termination and
  indemnification by the city or any  other  party  thereto  for  loss  of
  benefits as a result thereof;
    (ii)  procure insurance, letters of credit or other credit enhancement
  with respect to such agreements;
    (iii)  provide  security  for  the  payment  or  performance  of   its
  obligations  with  respect  to  agreements described in item (i) of this
  subdivision from such sources and with the same effect as is  authorized
  by applicable law with respect to security for its bonds, notes or other
  obligations,  provided,  however,  that  any  payment  or performance of
  obligations with respect to agreements described in  item  (i)  of  this
  subdivision  in  connection  with  debt obligations which carry the full
  faith and credit of the city shall be subject to appropriation; and
    (iv) modify, amend, or replace such agreements.
    2. For the purposes of this paragraph:
    (i) "Interest rate exchange or similar agreement" shall mean a written
  contract entered into in connection with the issuance of city  debt,  or
  in   connection   with  such  city  debt  already  outstanding,  with  a
  counterparty to provide for an exchange of  payments  based  upon  fixed
  and/or  variable  interest rates, and shall be for exchanges in currency
  of the United States of America only.
    (ii) "Excluded agreements" shall mean the  total  notional  amount  of
  interest  rate  exchange  or  similar  agreements  entered  into for the

  purpose of reducing or eliminating a situation of risk or exposure under
  an existing interest rate exchange or similar agreement, including,  but
  not  limited  to  a  counterparty downgrade, default, or other actual or
  potential economic loss.
    (iii)  Interest rate exchange; limitations. Any interest rate exchange
  or similar agreements entered into pursuant to item (i)  of  subdivision
  one of this paragraph shall be subject to the following limitations:
    (A)  the  counterparty thereto shall have credit ratings from at least
  one nationally recognized statistical rating agency that is  within  the
  two  highest  investment grade categories and ratings which are obtained
  from any other nationally recognized statistical rating  agencies  shall
  also  be  within  the  three highest investment grade categories, or the
  payment  obligations  of  the  counterparty  shall  be   unconditionally
  guaranteed by an entity with such credit ratings;
    (B)  the written contract shall require that should the rating: (I) of
  the counterparty, if its payment  obligations  are  not  unconditionally
  guaranteed  by  another  entity,  or  (II) of the entity unconditionally
  guaranteeing its payment obligations, if  so  secured,  fall  below  the
  rating required by clause (A) of this item, that the obligations of such
  counterparty  shall  be  fully and continuously collateralized by direct
  obligations of, or obligations the principal and interest on  which  are
  guaranteed  by, the United States of America, or any agency thereof with
  a net market value of at least one hundred two percent of the net market
  value of the contract to the authorized issuer and such collateral shall
  be deposited with the authorized issuer or an agent thereof;
    (C) the total notional amount of all interest rate exchange or similar
  agreements shall not exceed an amount equal to  twenty-five  percent  of
  the  limit  prescribed  by  section  104.00  of  this chapter; provided,
  however, that such total notional amount shall not include any  excluded
  agreements;
    (D)  no  interest  rate  exchange  or  similar  agreement shall have a
  maturity exceeding the maturity of related city debt; and
    (E) each interest rate exchange or similar agreement shall be  subject
  to  an  independent finding that its terms and conditions reflect a fair
  market value of  such  agreement  as  of  the  date  of  its  execution,
  regardless  of  whether such agreement was solicited on a competitive or
  negotiated basis.
    3. (i) Prior to authorizing the approval of any contract for  interest
  rate  exchange  or similar agreement pursuant to subdivision one of this
  paragraph, the finance board of the city shall adopt guidelines for  the
  use of interest rate exchange or similar agreements which shall include,
  but not be limited to the following:
    (A) the conditions under which such contracts can be entered into;
    (B)  the  methods  by  which  such  contracts  are to be solicited and
  procured;
    (C) the form and content such contracts shall take;
    (D) the aspects of risk exposure associated with such contracts;
    (E) standards and procedures for counterparty selection;
    (F) standards for the procurement  of  credit  enhancement,  liquidity
  facilities,  or  the  setting  aside of reserves in connection with such
  contracts consistent with the limitations  of  section  168.00  of  this
  chapter;
    (G)   provisions  for  collateralization  or  other  requirements  for
  securing the financial interest in such contracts;
    (H) the long-term implications  associated  with  entering  into  such
  agreements,  such  as  costs  of  borrowing,  historical  trends, use of
  capacity for variable rate bonds and related  credit  enhancements,  and
  any  potential  impact  on  the  future ability to call bonds, including

  opportunities  to  refund  related   debt   obligations,   and   similar
  considerations;
    (I)  the  methods  to  be used to reflect such contracts in the city's
  financial statements;
    (J) financial monitoring and periodic assessment of such contracts  by
  the city; and
    (K)  such  other  matters  relating thereto as the finance board shall
  deem necessary and proper.
    (ii) The city shall issue a quarterly report to the  director  of  the
  budget, the chairs of the senate finance committee and the assembly ways
  and  means  committee,  and  the  state  comptroller,  on  or before the
  fifteenth day of each month following the end of each  such  quarter  in
  which  it  enters  into  or  continues  to  be a party to a contract for
  interest rate exchange or similar agreement, which shall list  all  such
  contracts  entered  into pursuant to this section and shall include, but
  not be limited to, the following information for each such contract,  as
  applicable:
    (A)  a  description  of the contract, including a summary of the terms
  and conditions, rates, maturity, the  estimated  market  value  of  each
  agreement, and other provisions thereof and the method of procurement;
    (B)  any  amounts which were required to be paid and received, and any
  amounts which actually were paid and received thereunder;
    (C) any credit enhancement, liquidity facility or reserves  associated
  therewith  including  an  accounting of all costs and expenses incurred,
  whether or not in conjunction with the procurement of credit enhancement
  or liquidity facilities;
    (D) a description of each counterparty;
    (E) an assessment of the  counterparty  risk,  termination  risk,  and
  other risks associated therewith; and
    (F)  such  report  shall  include a copy of the guidelines required by
  item (i) of this subdivision in the quarter after they  are  adopted  or
  subsequently modified.