Section 2435. Loans to municipalities

1.  The agency may purchase, and
  contract to purchase, municipal bonds from municipalities at such  price
  or  prices,  upon  such  terms  and  conditions  and in such manner, not
  inconsistent with the provisions of the local finance law, as the agency
  shall deem advisable; provided, however, that the average interest  rate
  payable  on  all  municipal  bonds (taken as a group) purchased with the
  proceeds of an issue of bonds shall equal or exceed the interest rate on
  such issue of bonds; and provided  further,  however,  that  the  agency
  shall  not  purchase  the  municipal  bonds  of  any municipality if the
  aggregate  principal  amount  thereof,  together  with   the   aggregate
  principal  balances  of  the  municipal  bonds of such municipality then
  outstanding and held by the  agency,  exceed  an  amount  equal  to  ten
  percent of the aggregate principal amount of the statutory authorization
  at  the time for the issuance of bonds and notes, as provided in section
  twenty-four hundred thirty-eight of this title, and the agency shall not
  purchase the municipal  bonds  of  any  municipality  if  the  aggregate
  principal amount thereof exceeds an amount equal to fifty percent of the
  aggregate  principal  amount  of  all  municipal bonds proposed to be so
  purchased at the time.
    2. The agency shall require as a condition of  purchase  of  municipal
  bonds from municipalities that each such municipality shall agree (i) to
  pledge its full faith and credit for the payment of the principal of and
  interest on such municipal bonds, (ii) to make annual appropriations for
  amounts  required  for  the  payment of such principal and interest, and
  (iii) if at any  time  the  municipality  fails  to  make  the  required
  appropriation  to  pay such principal and interest, or fails to make the
  payment of the  required  principal  and  interest,  the  provisions  of
  section  twenty-four  hundred  and  thirty-six  of this title shall take
  effect. All municipalities selling municipal bonds  to  the  agency  are
  hereby  authorized  to make and carry out the agreements with the agency
  required in this subdivision.
    3. In connection with the sale or proposed sale of municipal bonds  to
  the  agency, any municipality may, notwithstanding the provisions of any
  general or special law to the contrary, pay (i)  such  fixed  or  annual
  charges as may be prescribed from time to time by the agency for or with
  respect  to  the  purchase  by the agency of the municipal bonds of such
  municipality, and  (ii)  all  charges  or  expenses  necessary  for  the
  conversion  or  reconversion  of any of its municipal bonds from or into
  coupon form or registered form as may  be  required  by  the  agency  in
  connection with any sale or other disposition of such municipal bonds.