Section 1285-J. Water pollution control revolving fund

1.  (a)  The
  corporation shall undertake and provide assistance  in  support  of  the
  program  to  make  financial  assistance  available to municipalities to
  encourage and support the  planning,  development  and  construction  of
  municipal  water  pollution  control  projects  in  accordance  with the
  provisions  of  this  section,  section  17-1909  of  the  environmental
  conservation law, and to make financial assistance available to eligible
  borrowers  through  linked  deposits  made  in  accordance  with article
  sixteen of the state finance law.
    (b) There is hereby established in the custody of  the  corporation  a
  special  fund to be known as the water pollution control revolving fund.
  Moneys in the water pollution control revolving fund shall be segregated
  from all other funds of or in the custody of the corporation subject  to
  any  rights  of  holders  of  corporation  bonds or notes issued for the
  purposes  of  this  section.  Moneys  in  the  water  pollution  control
  revolving  fund  shall only be used in accordance with the provisions of
  this section and section 17-1909 of the environmental conservation  law.
  The  moneys  in such fund shall be applied to or paid out for authorized
  purposes  of  such  fund  on  the  direction  of  the  chairman  of  the
  corporation  in  accordance  with  subdivision  four of this section and
  section 17-1909 of the environmental conservation  law,  or  such  other
  person  as  the  corporation  shall authorize to make such direction. In
  consultation with the director  of  the  division  of  the  budget,  the
  corporation  may,  subject  to  subparagraph  (ii)  of  paragraph  a  of
  subdivision seven of section 17-1909 of the  environmental  conservation
  law,  and  shall,  at the direction of the commissioner of environmental
  conservation pursuant to such subdivision, establish  within  the  water
  pollution  control revolving fund additional accounts or subaccounts and
  specify any conditions applicable to the transfer of moneys between such
  accounts or subaccounts. With respect  to  each  eligible  project,  the
  corporation  shall  establish  and  maintain  a record of the allocation
  provided for the benefit of such project in accordance with the terms of
  the applicable project financing agreement or loan agreement.
    2. As used in this section, the  terms  "allocation",  "construction",
  "eligible project", "fund", and "project financing agreement" shall have
  the   meanings  set  forth  in  section  17-1909  of  the  environmental
  conservation law.
    3. Such fund shall consist  of  all  of  the  following:  (a)  federal
  capitalization  grants  and  awards or other federal assistance provided
  pursuant to Title II or Title VI of the Federal Water Pollution  Control
  Act,  exclusive of any such grants, awards or assistance available under
  Title II, except as may be necessary to avoid the loss to New York state
  of any unobligated Title II money which can not be made available  as  a
  grant  or  grant  increase to a municipality, for purposes of deposit in
  the fund and appropriated by the state for deposit therein, (b)  federal
  capitalization  grants  and  awards or other federal assistance provided
  pursuant  to,  or  for  the  purposes  of,  the   Omnibus   Consolidated
  Rescissions  and  Appropriations  Act  of  1996 (Pub. L. 104-134) or wet
  weather quality grants as provided in  the  Consolidated  Appropriations
  Act  of  2001  (Pub.  L.  106-554), (c) moneys appropriated by the state
  legislature for the purpose of such fund or otherwise transferred by the
  state for deposit therein by the comptroller as  required  by  law,  (d)
  payments  of  principal  and interest made by municipalities pursuant to
  loan or other agreements entered into pursuant to subdivisions eight and
  nine of this section: provided, however, if such loans were financed  by
  the  issuance  of  bonds  or  notes  of the corporation, deposit of such
  payments into the fund shall be subject to the rights of the holders  of
  such  bonds  or notes to receive such moneys, (e) investment earnings on

  amounts  in  such  fund,  (f)   any   other   payments   received   from
  municipalities  pursuant  to  a loan or other agreement made pursuant to
  subdivisions eight and nine of this section for costs  of  managing  and
  administering  the program, (g) the proceeds of bonds or notes issued by
  the corporation  for  purposes  of  providing  financial  assistance  to
  municipalities,  (h)  the balance of any fees or penalties paid pursuant
  to the terms and conditions of a compliance or enforcement agreement for
  violations of the federal Marine Protection,  Research  and  Sanctuaries
  Act, as amended (33 U.S.C. §§ 1401 et seq.), occurring prior to December
  thirty-first,  nineteen hundred ninety-four, after payment has been made
  to the administrator  of  the  United  States  environmental  protection
  agency, a trust account, the ocean dumping alternatives account, and (i)
  the  balance  of  any  amount  in  a  trust  account  or, if applicable,
  municipal trust accounts of the clean oceans fund upon a finding by  the
  administrator  of the United States environmental protection agency that
  fees or penalties were not paid into such  trust  account  or  municipal
  trust  account  as  required  by  the  Marine  Protection, Research, and
  Sanctuaries Act, or an applicable compliance or enforcement agreement.
    4. Moneys in the water  pollution  control  revolving  fund  shall  be
  applied   by   the   corporation  to  provide  financial  assistance  to
  municipalities  for  construction  of  eligible   projects   and,   upon
  consultation  with  the  director  of the division of the budget and the
  commissioner, for such other purposes permitted  by  the  Federal  Water
  Pollution Control Act, as amended, and to provide for the administrative
  and   management   costs   of  the  program.  All  moneys  from  federal
  capitalization grants  and  awards  or  other  federal  assistance  made
  available  pursuant to, or for the purposes of, the Omnibus Consolidated
  Rescissions and Appropriations Act of 1996  (Pub.  L.  104-134)  or  wet
  weather  quality  grants  as provided in the Consolidated Appropriations
  Act of 2001 (Pub. L.  106-554),  which  are  deposited  into  the  water
  pollution  control  fund  pursuant to subdivision three of this section,
  and any corresponding state match moneys, may be used by the corporation
  for the purposes permitted by the Omnibus Consolidated  Rescissions  and
  Appropriations  Act  of  1996 (Pub. L.   104-134) or wet weather quality
  grants as provided in the Consolidated Appropriations Act of 2001  (Pub.
  L.  106-554),  and  for  no  other  purposes.    As used in this section
  "financial assistance to municipalities" means any one or  more  of  the
  following:
    (a)  making  loans  to  municipalities  for  construction  of eligible
  projects, provided such loans (i) are made at  market  or  below  market
  rates,  (ii)  do  not  have  a  final maturity of more than twenty years
  following scheduled completion  of  the  eligible  project,  (iii)  have
  principal  and  interest payments which commence not later than one year
  after scheduled completion of the eligible project, and (iv) require the
  municipality to establish a dedicated source of revenue (which may be  a
  general  obligation of the municipality); unless otherwise determined by
  the  corporation  or  directed  by  the  commissioner  of  environmental
  conservation  pursuant  to  subdivision  eight of section 17-1909 of the
  environmental conservation law, the corporation shall  make  such  loans
  only  from  the  proceeds of the corporation's bonds or notes issued for
  purposes of this section;
    (b) buying or refinancing debt obligations of municipalities at market
  or below market rates, if work was commenced and debt was  incurred  for
  the eligible project after March seventh, nineteen hundred eighty-five;
    (c)  guarantying,  or purchasing insurance or other credit enhancement
  for municipal obligations where such action would improve credit  market
  access for or reduce interest rates on such municipal obligations;

    (d) providing a source of revenue or security for payment of principal
  and interest on bonds or notes issued by the corporation if the proceeds
  of the sale of such bonds or notes will be deposited in the fund;
    (e)  providing interest rate subsidy allocations to subsidize loans to
  municipalities made from the proceeds  of  the  corporation's  bonds  or
  notes;
    (f)  using  investment earnings on moneys in the fund to pay, pursuant
  to subdivision seven of this section, the costs of the  corporation  and
  the  department  of  environmental  conservation  of  administering  and
  managing the program described in this section and  section  17-1909  of
  the environmental conservation law.
    5. The corporation shall make payments to the sewage treatment program
  management  and administration fund in accordance with subdivision seven
  of this section to reimburse such fund for expenditures made pursuant to
  appropriation to pay the cost of the corporation and the  department  of
  environmental  conservation  for  administering  and  managing the water
  pollution  control  revolving  fund  program  established   in   section
  ninety-seven-l   of   the  state  finance  law,  for  such  costs.  Such
  reimbursement shall be made from (a) available  investment  earnings  on
  all  amounts in the water pollution control revolving fund excluding all
  amounts in the fund which  are  the  subject  of  allocations  or  other
  financial assistance to a municipality; and (b) payments received from a
  municipality  for such purpose pursuant to a project financing agreement
  or loan agreement; and (c) if the sources of revenue described  in  this
  paragraph  and  paragraphs  (a)  and  (b) of this subdivision are or are
  anticipated to be  insufficient,  then  from  the  proceeds  of  federal
  capitalization grants, awards or assistance appropriated to the fund for
  administration and management of such program.
    Notwithstanding the foregoing, if the sources of revenues described in
  paragraphs  (a),  (b)  and  (c)  of  this  subdivision  are  at any time
  insufficient to make a reimbursement  to  the  state  pursuant  to  this
  subdivision when due, the corporation shall make such reimbursement from
  any  other  available  amounts  in the water pollution control revolving
  fund, excluding  all  amounts  that  are  the  subject  of  allocations,
  provided,  that  the  amounts  paid  from  fund sources other than those
  described in paragraphs (a), (b) and (c) of this  subdivision  shall  be
  reimbursed  upon  a  determination  by  the  director of the budget that
  future revenues obtained from sources described in paragraphs  (a),  (b)
  and  (c)  of  this  subdivision  are in excess of the amounts reasonably
  needed to make future reimbursements pursuant to this subdivision.
    * 6. Moneys in the water  pollution  control  revolving  fund  may  be
  invested  as  provided  in  subdivision  four  of section twelve hundred
  eighty-four of this title and may be further invested (a) in  investment
  agreements  continuously  secured  by  obligations with any insurance or
  reinsurance company or corporate affiliate thereof rated by a nationally
  recognized rating agency in one of its two highest categories, any bank,
  trust company or broker or dealer, as defined by the securities exchange
  act of 1934, which is a dealer in government bonds,  which  reports  to,
  trades  with  and is recognized as a primary dealer by a federal reserve
  bank and is a member of the securities investors protection corporation,
  if,  (i)  such  obligations  securing  such  investment  agreements  are
  obligations  as  set  forth in section ten of the general municipal law,
  (ii) such obligations are delivered to a trustee for the benefit of  the
  corporation  or,  with  respect  to moneys pledged under an indenture of
  trust relating to bonds or notes of  the  corporation,  to  the  trustee
  under  such indenture, or are supported by a safe keeping receipt issued
  by a depository satisfactory to the corporation as applicable,  provided
  that  such  investment  agreements  must  provide  that the value of the

  underlying obligations shall be maintained at a  current  market  value,
  calculated  no less frequently than monthly, of not less than the amount
  deposited thereunder, (iii) a prior perfected security interest  in  the
  obligations  which  are  securing such agreement has been granted to the
  corporation, as applicable, and (iv) such obligations are free and clear
  of adverse third party claims, or (b) in obligations  as  set  forth  in
  section  ten of the general municipal law that are rated by a nationally
  recognized rating agency in one of its two highest rating categories.
    * NB Effective until September 30, 2011
    * 6. Moneys in the water  pollution  control  revolving  fund  may  be
  invested  as  provided  in  subdivision  four  of section twelve hundred
  eighty-four of this title and may be further invested (a) in  investment
  agreements  continuously  secured  by  obligations with any insurance or
  reinsurance company or corporate affiliate thereof rated by a nationally
  recognized rating agency in one of its two highest categories, any bank,
  trust company or broker or dealer, as defined by the securities exchange
  act of 1934, which is a dealer in government bonds,  which  reports  to,
  trades  with  and is recognized as a primary dealer by a federal reserve
  bank and is a member of the securities investors protection corporation,
  if,  (i)  such  obligations  securing  such  investment  agreements  are
  obligations  as  set  forth in section ten of the general municipal law,
  (ii) such obligations are delivered to a trustee for the benefit of  the
  corporation  or,  with  respect  to moneys pledged under an indenture of
  trust relating to bonds or notes of  the  corporation,  to  the  trustee
  under  such indenture, or are supported by a safe keeping receipt issued
  by a depository satisfactory to the corporation as applicable,  provided
  that  such  investment  agreements  must  provide  that the value of the
  underlying obligations shall be maintained at a  current  market  value,
  calculated  no less frequently than monthly, of not less than the amount
  deposited thereunder, (iii) a prior perfected security interest  in  the
  obligations  which  are  securing such agreement has been granted to the
  corporation, as applicable, and (iv) such obligations are free and clear
  of adverse third party claims, or (b) in  obligations  the  interest  on
  which is excludable from gross income under section one hundred three of
  the internal revenue code, provided that such obligations are rated by a
  nationally  recognized  rating  agency  in one of its two highest rating
  categories.
    * NB Effective September 30, 2011
    7. The corporation shall transfer  to  the  sewage  treatment  program
  management  and  administration  fund  established  pursuant  to section
  ninety-seven-l  of  the  state  finance  law  no  less  frequently  than
  semi-monthly  amounts  from  the fund sufficient to reimburse the sewage
  treatment program management and administration fund in accordance  with
  the provisions of subdivision five of this section.
    8.  In  addition to the powers of the corporation granted elsewhere in
  this chapter, the corporation shall have the power to enter into project
  financing agreements authorized by section 17-1909 of the  environmental
  conservation  law. Notwithstanding the powers granted to the corporation
  elsewhere in this title, the corporation's  power  to  finance  eligible
  projects from the fund is limited to eligible projects for which project
  financing  agreements  have been executed pursuant to section 17-1909 of
  the environmental conservation law.
    9. In addition to the powers granted to the corporation  elsewhere  in
  this  chapter,  the  corporation  may  make  loans to municipalities for
  purposes of financing eligible projects for which the fund may be  used,
  subject  to  the  limitations  of subdivision eight of this section, may
  accept the obligations of any municipality as security for the repayment
  of a loan to such municipality, and may assign and pledge such municipal

  obligations and loan  agreements  for  the  benefit  of  the  holder  of
  obligations of the corporation from the proceeds of which such loans are
  made.  Loan  proceeds  may  be disbursed to a municipality in accordance
  with  such  restrictions  as  may  be  imposed  by  the  corporation  in
  connection with such loan or obligations of  the  corporation  from  the
  proceeds of which such loan is made.
    10.  The  corporation is authorized to arrange for any audits required
  by law for the  purpose  of  issuing  its  bonds  or  notes  to  provide
  financial   assistance   to   municipalities,   and   provide   for  the
  implementation of any independently conducted reviews or audits arranged
  pursuant to subdivision seven of section 17-1909  of  the  environmental
  conservation law.
    11. In the event a municipality shall fail to make any payment due the
  corporation  pursuant  to  any  loan  agreement, financing agreement, or
  other obligation of the municipality sold to the corporation  or  issued
  as  security  for  the  undertaking  of the municipality thereunder, the
  corporation shall certify to the comptroller, and notify the chairman of
  the senate finance committee, the chairman  of  the  assembly  ways  and
  means  committee,  the  director  of  the division of the budget and the
  governing body of the municipality that such municipality has failed  to
  make  such  payment.  Such  certificate  shall be in such form as may be
  determined by the corporation provided such  certificate  shall  specify
  the  exact amount of debt service and surcharge, if applicable, required
  to satisfy such municipality's unpaid obligation. The comptroller,  upon
  receipt  of  such certificate from the corporation, is authorized to and
  shall, to the extent not otherwise prohibited by law and subject to  any
  other  provision  of  law  providing  for withholding of payments to the
  municipality which take precedence over this subdivision, withhold  from
  such  municipality  the  next  succeeding payments of state aid or local
  assistance otherwise payable to it to the extent necessary to  meet  the
  certified  amount  of debt service and surcharge, if applicable, due the
  corporation and shall immediately pay over to the corporation as a  debt
  service payment on behalf of such municipality the amount so withheld.
    12.  (a)  Notwithstanding the provisions of any general or special law
  to the contrary,  the  commissioner  of  environmental  conservation  on
  behalf  of the state and the corporation, subject to the approval of the
  director of the budget, are each hereby authorized to enter into a state
  revolving  fund  service  contract  or  contracts  providing   for   the
  administration  of  the  water  pollution control revolving fund and the
  financing by the corporation of the contributions made by the  state  to
  the  water  pollution  control  revolving  fund.  Any  such  contract or
  contracts shall be upon such terms and conditions as the corporation and
  the commissioner of environmental conservation  shall  determine  to  be
  reasonable,  including,  but  not limited to, provisions relating to the
  respective obligations of the state and the corporation with respect  to
  the  administration  of  the  water pollution control revolving fund and
  provisions providing for the payment of (i) all fees and  other  charges
  of,  and  expenses  incurred  by, the corporation in connection with the
  issuance and administration of special obligation bonds to provide funds
  to the state or reimburse the  state  for  contributions  to  the  water
  pollution  control  revolving fund and (ii) all debt service payments on
  such bonds.
    (b) Any such contract entered into pursuant to paragraph (a)  of  this
  subdivision shall provide that the obligation of the state to fund or to
  pay  the amounts therein provided for shall not constitute a debt of the
  state within the meaning of any constitutional  or  statutory  provision
  and  shall  be  deemed  executory only to the extent of moneys available
  therefore and that no liability shall be incurred by  the  state  beyond

  the  moneys  available  for  such  purpose,  and that such obligation is
  subject to annual appropriation by the legislature.
    (c)  Any  such  contract or any payments made or to be made thereunder
  may be assigned and pledged by the corporation as security for its bonds
  and notes issued for the purpose of financing the state contribution  to
  the water pollution control revolving fund.
    (d)   The  comptroller  is  hereby  authorized  to  receive  from  the
  corporation any portion of special  obligation  bond  proceeds  paid  to
  provide  funds  to  or  reimburse  the state for its contribution to the
  water pollution control revolving fund and to credit such amounts to the
  capital projects fund or any other appropriate fund.
    13. In addition to the powers  granted  to  the  corporation  in  this
  section,  the  corporation is authorized to exercise the powers, perform
  the responsibilities and take the actions assigned to it  under  section
  17-1909 of the environmental conservation law.